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Employee Benefits Security Administration

EBSA Federal Register Notice

Prohibited Transaction Exemption 2004-05; [Exemption Application No. D-10957] et al.; Grant of Individual Exemptions; John Hancock Life Insurance Company [03/24/2004]

[PDF Version]

Volume 69, Number 57, Page 13878-13883

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DEPARTMENT OF LABOR

Employee Benefits Security Administration

 
Prohibited Transaction Exemption 2004-05; [Exemption Application 
No. D-10957] et al.; Grant of Individual Exemptions; John Hancock Life 
Insurance Company

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Grant of individual exemptions.

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SUMMARY: This document contains exemptions issued by the Department of 
Labor (the Department) from certain of the prohibited transaction 
restrictions of the Employee Retirement Income Security Act of 1974 
(the Act) and/or the Internal Revenue Code of 1986 (the Code).
    A notice was published in the Federal Register of the pendency 
before the Department of a proposal to grant such exemption. The notice 
set forth a summary of facts and representations contained in the 
application for exemption and referred interested persons to the 
application for a complete statement of the facts and representations. 
The application has been available for public inspection at the 
Department in Washington, D.C. The notice also invited interested 
persons to submit comments on the requested exemption to the 
Department. In addition the notice stated that any interested person 
might submit a written request that a public hearing be

[[Page 13879]]

held (where appropriate). The applicant has represented that it has 
complied with the requirements of the notification to interested 
persons. No requests for a hearing were received by the Department. 
Public comments were received by the Department as described in the 
granted exemption.
    The notice of proposed exemption was issued and the exemption is 
being granted solely by the Department because, effective December 31, 
1978, section 102 of Reorganization Plan No. 4 of 1978, 5 U.S.C. App. 1 
(1996), transferred the authority of the Secretary of the Treasury to 
issue exemptions of the type proposed to the Secretary of Labor.

Statutory Findings

    In accordance with section 408(a) of the Act and/or section 
4975(c)(2) of the Code and the procedures set forth in 29 CFR part 
2570, subpart B (55 FR 32836, 32847, August 10, 1990) and based upon 
the entire record, the Department makes the following findings:

(a) The exemption is administratively feasible;
(b) The exemption is in the interests of the plan and its participants 
and beneficiaries; and
(c) The exemption is protective of the rights of the participants and 
beneficiaries of the plan.

John Hancock Life Insurance Company, Located in Boston, Massachusetts; 
[Prohibited Transaction Exemption 2004-05 Application No. D-10957]

Exemption

    The restrictions of section 406(b)(2) of the Act shall not apply to 
purchases and sales of farmland asset(s) (the Farmland Asset(s)), as 
defined in Condition 12(b), or entire farmland account(s) (the Entire 
Farmland Account(s)), as defined in Condition 12(n), between various 
account(s) (the Account(s)), as defined in Condition 12(a), that are 
managed by Hancock Natural Resource Group, Inc. (HNRG) or the 
affiliate(s) (the Affiliate(s)), as defined in Condition 12(e), of John 
Hancock Life Insurance Company (JHLIC).

Conditions and Definitions

    This exemption is subject to the following conditions:
    1. A plan or plans covered by the Act (the ERISA-Covered Plan(s)), 
as defined in Condition 12(c), may participate in a subject transaction 
only if each such plan has total assets in excess of $100 million.
    2. At least 30 days prior to entering a subject transaction, each 
affected customer (the Customer(s)), as defined in Condition 12(l), 
invested in an Account participating in such transaction will be 
provided with information regarding the Farmland Asset(s) or the Entire 
Farmland Account involved and the terms of the transaction, including 
the purchase price and how the transaction would meet the goals and 
investment policies of each such affected Customer. Notice of any 
change in the purchase price will be provided to each affected Customer 
at least 30 days prior to the consummation of the transaction.
    3. An independent fiduciary (an Independent Fiduciary), as defined 
in Condition 12(h), is appointed by JHLIC or an Affiliate as follows:
    (a) One Independent Fiduciary is appointed to represent the 
Account(s) in which an ERISA-Covered Plan or ERISA-Covered Plans is/are 
invested, whether the Account(s) is/are the buyer(s) or the seller(s) 
in a subject transaction, where one side of such transaction involves 
one or more: (i) ERISA-Covered Plan(s), (ii) pooled separate account(s) 
(the Pooled Separate Account(s), as defined in Condition 12(k), in 
which an ERISA-Covered Plan or ERISA-Covered Plans invest, and/or (iii) 
other Account(s) holding ``plan assets'' subject to the Act \1\ and the 
other side of such transaction involves one or more plan(s) or other 
customer(s) not covered by the Act (the Non-ERISA Plan(s) or Non-ERISA 
Customer(s), as defined in Condition 12(d)),
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    \1\ See 29 CFR 2510.3-101 for the Department's definition of 
``plan assets'' relating to plan investments.
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    (b) One Independent Fiduciary is appointed to represent the buying 
account(s) (the Buying Account(s)), as defined in Condition 12(f), in a 
subject transaction, where such transaction is between two (2) or more: 
(i) ERISA-Covered Plans, (ii) Pooled Separate Accounts in which an 
ERISA-Covered Plan or ERISA-Covered Plans invest, and/or (iii) other 
Accounts holding ``plan assets'' subject to the Act, and the decision 
to liquidate the Farmland Asset(s) or Entire Farmland Account is the 
result of one or more ``triggering events,'' as described below. A 
``triggering event'' will exist whenever:
    (1) JHLIC or an Affiliate receives a direction from a Customer to 
liquidate such Customer's Entire Farmland Account, and the decision to 
liquidate such Entire Farmland Account is outside of the control of 
JHLIC and its Affiliates; or
    (2) JHLIC or an Affiliate receives a request by a Customer to 
liquidate a specified Farmland Asset or Farmland Assets held in the 
Customer's Account, and the decision to liquidate the Farmland Asset(s) 
is outside of the control of JHLIC and its Affiliates; or
    (3) a liquidation of all of the Farmland Assets held in a selling 
account(s) (the Selling Account(s)), as defined in Condition 12(g), or 
an Entire Farmland Account, or a particular Farmland Asset or Farmland 
Assets held by such Account(s) is required under the terms of the 
investment contract, insurance contract, or investment guidelines 
governing the Account(s), and the decision to select any particular 
Farmland Asset(s) to be sold or the decision to sell an Entire Farmland 
Account is outside of the control of JHLIC and its Affiliates; and
    (c) One Independent Fiduciary is appointed to represent the Buying 
Account(s) and one Independent Fiduciary is appointed to represent the 
Selling Account(s) involved in a subject transaction:
    (1) where such transaction is between two (2) or more: (i) ERISA-
Covered Plans, (ii) Pooled Separate Accounts in which an ERISA-Covered 
Plan or ERISA-Covered Plans invest, and/or (iii) other Accounts holding 
``plan assets'' subject to the Act, and there is no ``triggering 
event,'' as described above in Condition 3(b), or
    (2) where such transaction is between two (2) or more: (i) ERISA-
Covered Plans, (ii) Pooled Separate Accounts in which an ERISA-Covered 
Plan or ERISA-Covered Plans invest, and/or (iii) other Accounts holding 
``plan assets'' subject to the Act, and one or more of the participants 
in such transaction is a Pooled Separate Account and/or other Account 
holding ``plan assets'' subject to the Act in which a John Hancock plan 
(the Hancock Plan(s)), as defined in Condition 12(m), participates.
    4. With respect to each transaction requiring the participation of 
an Independent Fiduciary, as described in Condition 3, the purchase and 
sale of a Farmland Asset or Farmland Assets or an Entire Farmland 
Account shall not be consummated, unless the Independent Fiduciary 
determines that the transaction, including the price to be paid or 
received for each Farmland Asset or Entire Farmland Account, would be 
in the best interest of the particular Account(s) involved based on the 
investment policies and objectives of such Account(s).
    5. Each Account which buys or sells a particular Farmland Asset or 
Farmland Assets or Entire Farmland Account pays no more than or 
receives no less than the fair market value of each Farmland Asset or 
Entire Farmland Account at the time of the transaction. For a Farmland 
Asset, fair market value

[[Page 13880]]

shall be determined by a qualified, independent real estate appraiser 
experienced with the valuation of farmland properties similar to the 
type involved in the transaction, and may include customary closing 
adjustments, as described in Condition 12(o).
    For an Entire Farmland Account, fair market value shall be 
determined by a qualified, independent entity experienced in the 
auditing and valuation of farmland accounts similar to the type 
involved in the transaction and the valuation of assets or liabilities 
other than Farmland Assets, including but not limited to assets such as 
short-term investments or accounts receivable from prior crop sales or 
leases, and liabilities such as investment or property management fees 
payable or property taxes payable, and may include customary closing 
adjustments, as described in Condition 12(o).
    6. Each purchase or sale of a Farmland Asset or Farmland Assets or 
Entire Farmland Account between Accounts is a one-time cash 
transaction. A Buying Account may assume liabilities associated with an 
Entire Farmland Account, subject to valuation procedures described in 
Condition 5, above.
    7. Each Account involved in the purchase or sale of a Farmland 
Asset or Farmland Assets or Entire Farmland Account pays no real estate 
commissions or brokerage fees relating to the transaction.
    8. JHLIC or an Affiliate acts as a discretionary investment manager 
for the assets of the Account(s) involved in each transaction, provided 
that this condition will not fail to have been satisfied solely because 
the Customer retains the right to veto or approve the purchase or sale 
of a Farmland Asset or Farmland Assets or Entire Farmland Account.
    9. An Account may not participate in a subject transaction, if the 
assets of any Hancock Plan or Hancock Plans in the Account exceed 20 
percent (20%) of the total assets of the Account.
    10. No purchase or sale transaction shall be designed to benefit 
the interests of one particular Account over another.
    11. The general accounts of both JHLIC and John Hancock Variable 
Life Insurance Company (JHVLIC) (the General Accounts) shall not 
participate, directly or indirectly, in the subject transactions;
    12. For purposes of this exemption:
    (a) The term, ``Account(s),'' means a separate account or separate 
accounts (the Separate Account(s)), as defined in Condition 12(i), 
including Non-Pooled Separate Account(s), or Pooled Separate 
Account(s), as well as holding entities (Holding Entities), such as: 
(1) a partnership, corporation, trust, or any other form of entity 
established and maintained by JHLIC or an Affiliate and for which JHLIC 
or an Affiliate serves as general partner, investment manager, or 
adviser; or (2) a limited liability company or any other form of entity 
established by pension plan investors;
    (b) the term, ``Farmland Asset(s),'' means a fee simple in farmland 
(and appurtenant rights), an interest in related equipment, a farmland 
lease, farm improvements, contractual agreements with respect to the 
production and harvesting of farm products, such as crop quotas, crop 
receivables, or delivery contracts, stock in farm cooperatives, and 
direct or indirect interest in entities holding such assets. With 
respect to any farmland lease: (i) the underlying fee simple must be 
owned by a person other than JHLIC or an Affiliate or any Account at 
the time of sale; and (ii) the entire lease originally acquired by the 
Selling Account must be sold to the Buying Account;
    (c) the term, ``ERISA-Covered Plan(s),'' means an employee benefit 
plan or plans as defined under section 3(3) of the Act and not excluded 
from coverage under section 4 of the Act;
    (d) the terms, ``Non-ERISA Plan(s)'' or ``Non-ERISA Customer(s),'' 
mean an entity or entities or investor(s) not covered by the provisions 
of Title I of the Act, such as a governmental plan, a university 
endowment fund, or other institutional investor, whose assets are 
managed in an Account for which JHLIC or an Affiliate acts as 
investment manager;
    (e) the term, ``Affiliate(s),'' means any person(s) directly or 
indirectly through one or more intermediaries, controlling, controlled 
by, or under common control with such person;
    (f) the term, ``Buying Account(s),'' means the Account(s) that 
seek(s) to purchase a Farmland Asset or Farmland Assets or an Entire 
Farmland Account from another Account;
    (g) the term, ``Selling Account(s),'' means the Account(s) that 
seek(s) to sell a Farmland Asset or Farmland Assets or an Entire 
Farmland Account to another Account;
    (h) the term, ``Independent Fiduciary,'' means a person or entity 
with authority to both review the appropriateness of a subject 
transaction for an Account, that is considered to hold ``plan assets'' 
subject to the fiduciary responsibility provisions of the Act, based on 
the investment policy established for that Account, and to negotiate 
the terms of the transaction, including the price to be paid for the 
Farmland Asset, the Farmland Assets, or the Entire Farmland Account. An 
individual or firm selected to serve as an Independent Fiduciary shall 
meet the following criteria:
    (1) The individual or firm shall have no current employment 
relationship with JHLIC or an Affiliate, although a prior employment 
relationship would not disqualify the individual or firm;
    (2) No individual or firm shall serve as an Independent Fiduciary 
during any year in which gross receipts received from business with 
JHLIC and its Affiliates for that year exceed five (5) percent of such 
individual's or firm's gross receipts from all sources for the prior 
year;
    (3) The individual or firm must be an expert with respect to 
farmland valuations;
    (4) The individual or firm must have the ability to access (itself 
or through persons engaged by it) appropriate farmland sales comparison 
data and make appropriate adjustments to the subject property, 
properties, or Account; and
    (5) The individual or firm must not have a criminal record 
involving fraud, fiduciary standards, or securities laws violations.
    (i) the term, ``Separate Account(s),'' means a segregated asset 
Account or Accounts which receive premiums or contributions from 
Customers, including employee benefit plans subject to the Act, in 
connection with group annuity contracts and funding agreements, with 
investments held in the name of JHLIC, but where the value of the 
contract or agreement to the Customer (contract holder) fluctuates with 
the value of the investment associated with such Account;
    (j) the terms, ``Non-Pooled Separate Account(s)'' or ``Non-Pooled 
Account(s),'' mean a Separate Account or Separate Accounts established 
to back a single contract issued to one Customer, which may be an 
employee benefit plan subject to the Act;
    (k) the terms, ``Pooled Separate Account(s),'' or ``Pooled 
Account(s),'' mean a Separate Account or Separate Accounts established 
to back a group of substantially identical contracts issued to a number 
of unrelated Customers, including employee benefit plans subject to the 
Act;
    (l) the term, ``Customer(s),'' means a person or persons or entity 
or entities that act as the authorized representative for the investor 
in an Account involved in a purchase or sale of Farmland Assets or an 
Entire Farmland Account, that is independent of JHLIC and its 
Affiliates, provided, however, that for any Hancock Plan, as defined in 
Condition

[[Page 13881]]

12(m), below, a ``Customer'' shall mean the Plan Investment Advisory 
Committee of JHLIC;
    (m) the term, ``Hancock Plan(s),'' means an employee benefit plan 
or employee benefit plans sponsored by JHLIC or an Affiliate which 
invest(s) in an Account;
    (n) the term, ``Entire Farmland Account(s),'' means all the assets 
and liabilities of an Account or Accounts, as defined in Condition 
12(a), including but not limited to the Farmland Assets in such Account 
or Accounts; and
    (o) ``customary closing adjustments'' for purposes of this 
exemption are limited to the following: management fees, taxes, 
assessments, water rates, assignment of amounts under leases, recording 
taxes, survey costs, title review and title insurance costs and 
premiums, due diligence costs, escrow fees, licensing fees, fuel costs, 
equipment leases or contracts, reimbursements and adjustments for 
capital expenditures by the seller, crop adjustments, adjustments for 
documented expenses incurred by the seller during a growing period 
prior to closing, and agreement that a buyer may retain a certain 
amount of crops upon harvest, and the seller will receive all or part 
of the proceeds for any crops in excess of the amount retained by the 
buyer.

Written Comments

    In the Notice of Proposed Exemption (the Notice), the Department of 
Labor (the Department) invited all interested persons to submit written 
comments and requests for a hearing on the proposed exemption within 
forty-five (45) days of the date of the publication of the Notice in 
the Federal Register on November 14, 2003. All comments and requests 
for a hearing were due by December 29, 2003.
    During the comment period, the Department received no requests for 
a hearing. However, the Department did receive a comment letter from 
the applicant. In this regard, in a letter dated December 24, 2003, the 
applicant requested certain amendments to the conditions of the 
exemption, as proposed in the Notice, and various changes to the 
representations which according to the applicant should have been 
reflected in the Summary of Facts and Representations (the SFR) in the 
Notice, as published in the Federal Register.
    The applicant's comments on the conditions of the exemption and on 
the representations in the SFR, and the Department's responses, 
thereto, are discussed in the numbered paragraphs below in an order 
that corresponds to the appearance of the relevant language in the 
Notice.
    1. The applicant requests modification of Condition 11 of the 
exemption. Condition 11, as set forth in the Notice, at 68 FR 64645, 
column 2, lines 45-50, reads as follows:

The general accounts (the General Accounts) of both JHLIC and John 
Hancock Variable Life Insurance Company (JHVLIC) shall not 
participate, directly or indirectly, in the subject transactions.

    To make clear that references to ``General Accounts,'' in the 
exemption only include the general accounts of JHLIC and its 
affiliates, the applicant proposes that Condition 11 be revised as 
follows:

The general accounts of both JHLIC and John Hancock Variable Life 
Insurance Company (JHVLIC) (the General Accounts) shall not 
participate, directly or indirectly, in the subject transactions.

    The Department concurs with the applicant's request, and 
accordingly, has amended the language of Condition 11 in the exemption.
    2. The applicant requests modification of Condition 12(a) of the 
exemption. Condition 12(a), as set forth in the Notice, at 68 FR 64645, 
column 2, lines 51-65, reads as follows:

    (a) the term, ``Account(s),'' means a separate account or 
separate accounts (the Separate Account(s)), as defined in Condition 
12(i), including Non-Pooled Separate Account(s), or Pooled Separate 
Account(s), as well as holding entities (Holding Entities), such as 
a partnership, corporation, or trust for which JHLIC or an Affiliate 
serves as general partner, investment manager, or adviser and 
include entities established or maintained by JHLIC, and limited 
liability companies established by pension plan investors (emphasis 
added).

    In the opinion of the applicant, it is unclear whether the phrase 
emphasized in the quotation above is intended by the Department as a 
further limitation on what may be defined as a Holding Entity. The 
applicant confirms that currently Holding Entities are limited to 
entities established by JHLIC and limited liability companies 
established by pension plan investors. However, the applicant believes 
it is not clear what purpose is served by limiting future use of the 
exemption to these entities, when pension plans may wish to establish 
partnerships or trusts that would qualify as Holding Entities under the 
exemption, but for the emphasized language. Accordingly, the applicant 
requests that the definition of ``Account(s),'' as published in 
Condition 12(a) of the Notice be modified to delete the phrase 
emphasized in the quotation above.
    The Department concurs in part and disagrees in part. Specifically, 
the Department concurs with the applicant's request to delete the 
phrase, ``and include entities established or maintained by JHLIC, and 
limited liability companies established by pension plan investors,'' 
from the definition of ``Account(s),'' as set forth in Condition 12(a). 
However, the Department believes that the reference to Holding Entities 
should be limited. Accordingly, the definition of ``Account(s),'' as 
set forth in Condition 12(a), as set forth in the exemption had been 
amended to read as follows:

    (a) the term, ``Account(s),'' means a separate account or 
separate accounts (the Separate Account(s)), as defined in Condition 
12(i), including Non-Pooled Separate Account(s), or Pooled Separate 
Account(s), as well as holding entities (Holding Entities), such as: 
(1) a partnership, corporation, trust, or any other form of entity 
established and maintained by JHLIC or an Affiliate and for which 
JHLIC or an Affiliate serves as general partner, investment manager, 
or adviser; or (2) a limited liability company or any other form of 
entity established by pension plan investors.

    3. The applicant requests modification of Condition 12(d) of the 
exemption. Condition 12(d), as set forth in the Notice, at 68 FR 64645, 
column 3, lines 21-29, reads as follows:

    (d) the terms, ``Non-ERISA Plans'' or ``Non-ERISA Customers,'' 
mean entities or investors not covered by the provisions of Title I 
of the Act, such as a governmental plan, a university endowment 
fund, or other institutional investors, whose assets are managed in 
an Account for which JHLIC or an Affiliate acts as investment 
manager.

    The applicant proposes that the terms, ``Non-ERISA Plans'' and 
``Non-ERISA Customers,'' be changed to ``Non-ERISA Plan(s)'' and ``Non-
ERISA Customer(s)'' in order to maintain consistency with the way 
singular and plural terms were treated in other provisions of the 
exemption.
    The Department concurs with the applicant's request, and 
accordingly, has modified the language of Condition 12(d) in the 
exemption to read as follows:

    (d) the terms, ``Non-ERISA Plan(s)'' or ``Non-ERISA 
Customer(s),'' mean an entity or entities or investor(s) not covered 
by the provisions of Title I of the Act, such as a governmental 
plan, a university endowment fund, or other institutional investor, 
whose assets are managed in an Account for which JHLIC or an 
Affiliate acts as investment manager.

    4. The applicant requests modification of Condition 12(o) of the 
exemption. Condition 12(o), as set forth in the Notice, at 68 FR 64646, 
column 2, lines 1-14, reads as follows:


[[Page 13882]]


    (o) ``customary closing adjustments'' means adjustments that may 
arise where agricultural land bearing crops is sold prior to harvest 
and may involve an agreement between the buyer and seller that 
either: (1) the buyer reimburse the seller for documented expenses 
incurred during the growing period in the cultivation of such crops, 
up to the date of closing; or (2) the buyer retain a certain amount 
of the crops and the seller receive the proceeds for any crops in 
excess of the amount retained by the buyer.

    The applicant confirms that this definition is consistent with the 
examples provided to the Department regarding the types of expenses 
that may be considered ``customary closing adjustments.'' However, the 
applicant believes that this definition of ``customary closing 
adjustments'' could be unnecessarily restrictive. For example, 
additional closing adjustments for management fees, real and personal 
property taxes, assignment of leases, and certain capital expenditures 
by the seller between an agreed-upon date and the date of closing are 
also ``customary.'' Accordingly, in their comment letter, dated 
December 24, 2003, the applicant requested that the term, ``customary 
closing adjustments,'' be defined as follows:

    (o) ``customary closing adjustments'' means those mutually 
agreed upon adjustments to the consideration paid or received by a 
party made at closing that are customary or common in similar 
agricultural transactions, such as, but not limited to (1) 
adjustments for documented expenses incurred by the seller during a 
growing period prior to closing, or (2) agreement that a buyer may 
retain a certain amount of crops upon harvest, and the seller will 
receive all or part of the proceeds for any crops in excess of the 
amount retained by the buyer.

    Subsequently, in response to the Department's concern that the 
requested amendment to the definition of ``customary closing 
adjustments'' did not specifically list such adjustments, the 
applicant, in a letter, dated March 4, 2004, proposed the following 
revised language for the definition:

    (o) ``customary closing adjustments'' means those mutually 
agreed upon adjustments to the consideration paid or received by a 
party made at closing that are customary or common in similar 
agricultural transactions including management fees, taxes, 
assessments, water rates, assignment of amounts under leases, 
recording taxes, survey costs, title review and title insurance 
costs and premiums, due diligence costs, escrow fees, licensing 
fees, fuel costs, equipment leases or contracts, reimbursements and 
adjustments for capital expenditures by the seller, crop 
adjustments, adjustments for documented expenses incurred by the 
seller during a growing period prior to closing, and agreement that 
a buyer may retain a certain amount of crops upon harvest, and the 
seller will receive all or part of the proceeds for any crops in 
excess of the amount retained by the buyer.

    The Department believes that the applicant's revisions to the 
definition of ``customary closing adjustments'' are too open-ended. In 
this regard, the Department believes that the definition of ``customary 
closing adjustments'' for purposes of the exemption should be limited 
to a list of potential adjustments clearly enumerated. Accordingly, the 
Department has determined that Condition 12(o) in the exemption should 
read as follows:

    (o) ``customary closing adjustments'' for purposes of this 
exemption are limited to the following: management fees, taxes, 
assessments, water rates, assignment of amounts under leases, 
recording taxes, survey costs, title review and title insurance 
costs and premiums, due diligence costs, escrow fees, licensing 
fees, fuel costs, equipment leases or contracts, reimbursements and 
adjustments for capital expenditures by the seller, crop 
adjustments, adjustments for documented expenses incurred by the 
seller during a growing period prior to closing, and agreement that 
a buyer may retain a certain amount of crops upon harvest, and the 
seller will receive all or part of the proceeds for any crops in 
excess of the amount retained by the buyer.

    5. The applicant requests a change to the language in the SFR, 
describing ``customary closing adjustments,'' as set forth in the 
Notice, at 68 FR 64648, column 3, lines 57-68 and at 68 FR 64649, 
column 1, lines 1-2. Specifically, the applicant requested that the 
description of ``customary closing adjustments,'' in the SFR conform to 
the applicant's requested modification of the language of Condition 
12(o).
    As the Department did not concur with the applicant's requested 
modification to the language of Condition 12(o), the Department does 
not agree to the change requested by the applicant to the description 
of ``customary closing adjustment,'' as set forth in the SFR, at 68 FR 
64648, column 3, lines 57-68 and at 68 FR 64649, column 1, lines 1-2. 
It is the Department's view that, the definition of ``customary closing 
adjustments,'' as set forth in Condition 12(o) of this final exemption, 
should supercede the description of ``customary closing adjustments'' 
in the SFR, as set forth in the Notice.
    6. The applicant requests that changes should have been made to the 
language in various locations in the SFR, as set forth in the Notice. 
Specifically, the applicant states that: (a) the word, ``Account(s),'' 
should have been used instead of the phrase, ``Farmland Separate 
Account(s),'' and (b) the word, ``Account's,'' should have been used 
instead of the phrase, ``Farmland Separate Account's,'' or the phrase, 
``Farmland Account's,'' in the following locations:
    a. in paragraph 7, 68 FR 64647, column 2, lines 7-8, 10-11, 36, 46-
47, 51-52, 56-57, 57-58, and 61-62;
    b. in paragraph 8, 68 FR 64647, column 3, lines 16-17, 25-26, 29-
30, 32, 36, 42-43, 45, 48, 52, 57-58 and 64;
    c. in paragraph 8, 68 FR 64648, column 1, lines 10-11, 11-12, and 
23;
    d. in paragraph 10, 68 FR 64648, column 1, lines 59-60;
    e. in paragraph 12, 68 FR 64648, column 2, line 46;
    f. in paragraph 18, 68 FR 64649, column 1, lines 64-65;
    g. in paragraph 18, 68 FR 64649, column 2, lines 23-24; and
    h. in paragraph 19, 68 FR 64649, column 2, line 55.
    The Department concurs.
    7. Paragraph 8 of the SFR contains a description of the operation 
of HAIG's investment queue procedures in the event that a Farmland 
Asset or Entire Farmland Account would be an appropriate investment for 
more than one Account. In this regard, paragraph 8 of the Notice, as 
set forth at 68 FR 64647, column 3, 51-55, reads:

In the event that two or more Farmland Separate Accounts have 
objectives and constraints that are sufficiently similar, HAIG 
implements its investment queue procedures.

    The applicant notes that one condition of participation in the 
investment queue is that an investor have assets awaiting investment in 
farmland. Accordingly, the applicant proposes that the quotation, as 
set forth in the Notice, should have read as follows:

In the event that two or more Accounts have objectives and 
constraints that are sufficiently similar and have assets awaiting 
investment in farmland, HAIG implements its investment queue 
procedures.

    The Department concurs.
    8. The applicant points out a typographical error in the SFR, as 
set forth in the Notice. In this regard, it appears that the word, 
``is,'' is missing, in paragraph 13 of the Notice, as set forth at 68 
FR 64648, column 2, line 66. The applicant indicates that the word, 
``is,'' should have been inserted before the word, ``between.''
    The Department concurs. Accordingly, the SFR, as set forth in the 
Notice, at paragraph 13, 68 FR 64648, column 2, line 66, should have 
read as follows:

Where a transaction is between ERISA-Covered Plans and a triggering 
event has occurred, the fee for the services of the Independent 
Fiduciary will be charged as an

[[Page 13883]]

acquisition expense to the Buying Account(s).

    9. In order to maintain consistency with the language in the rest 
of the Notice, the applicant requests that certain changes should have 
been made to the language of the SFR, as set forth in the Notice. 
Specifically, in paragraph 14, at 68 FR 64648, column 3, line 34, the 
reference to ``proposed transactions,'' should have referred instead to 
``subject transactions.''
    The Department concurs. Accordingly, the language in the SFR in 
paragraph 14 of the Notice, at 68 FR 64648, column 3, line 34, should 
have read as follows:

In this regard, participation in the subject transactions by ERISA-
Covered Plans is limited to plans having total assets in excess of 
$100 million.

    After giving full consideration to the entire record, including the 
written comments from the applicant, the Department has decided to 
grant the exemption, as described, amended, clarified, and concurred in 
above. In this regard, the comment letter submitted by the applicant to 
the Department has been included as part of the public record of the 
exemption application. The complete application file, including all 
supplemental submissions received by the Department, is made available 
for public inspection in the Public Documents Room of the Pension 
Welfare Benefits Administration, Room N-1513, U. S. Department of 
Labor, 200 Constitution Avenue, NW., Washington, DC 20210.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption refer to 
the Notice of Proposed Exemption published on November 14, 2003, at 68 
FR 64643.

FOR FURTHER INFORMATION CONTACT: Ms. Angelena C. Le Blanc of the 
Department, telephone (202) 693-8540. (This is not a toll-free number.)

Painters District Council No. 4 Apprenticeship, Upgrading & Retraining 
Trust Fund (the Plan) Located in Cheektowaga, New York [Prohibited 
Transaction Exemption No. 2004-06; [Application No. L-11190]

Exemption

    The restrictions of section 406(a) of the Act shall not apply to a 
lease (the Lease) of certain space (the Leased Premises) in a building 
(the Building) owned by the Plan to Lipsitz, Green, Fahringer, Roll, 
Salisbury & Cambria, LLP (the Applicant), a party in interest with 
respect to the Plan. This exemption is conditioned upon the adherence 
to the material facts and representations described herein and upon the 
satisfaction of the following requirements:
    (a) All terms and conditions of the Lease are at least as favorable 
to the Plan as those which the Plan could obtain in an arm's-length 
transaction with an unrelated party;
    (b) The decision by the Plan to enter into the Lease will be made 
by the trustees of the Plan (the Trustees); and
    (c) The fair market rental amount for the Lease will be determined 
by an independent, qualified appraiser as of the date of the 
commencement of the Lease; and
    (d) After commencement of the Lease, an additional fair market 
rental appraisal of the Leased Premises will be performed by an 
independent, qualified appraiser every thirty months with the rental 
rate being adjusted accordingly.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption, refer to 
the Notice of Proposed Exemption published on December 17, 2003 at 68 
FR 70310.

FOR FURTHER INFORMATION CONTACT: Khalif Ford of the Department, 
telephone (202) 693-8540 (this is not a toll-free number).

General Information

    The attention of interested persons is directed to the following:
    (1) The fact that a transaction is the subject of an exemption 
under section 408(a) of the Act and/or section 4975(c)(2) of the Code 
does not relieve a fiduciary or other party in interest or disqualified 
person from certain other provisions to which the exemption does not 
apply and the general fiduciary responsibility provisions of section 
404 of the Act, which among other things require a fiduciary to 
discharge his duties respecting the plan solely in the interest of the 
participants and beneficiaries of the plan and in a prudent fashion in 
accordance with section 404(a)(1)(B) of the Act; nor does it affect the 
requirement of section 401(a) of the Code that the plan must operate 
for the exclusive benefit of the employees of the employer maintaining 
the plan and their beneficiaries;
    (2) This exemption is supplemental to and not in derogation of, any 
other provisions of the Act and/or the Code, including statutory or 
administrative exemptions and transactional rules. Furthermore, the 
fact that a transaction is subject to an administrative or statutory 
exemption is not dispositive of whether the transaction is in fact a 
prohibited transaction; and
    (3) The availability of this exemption is subject to the express 
condition that the material facts and representations contained in the 
application accurately describes all material terms of the transaction 
which is the subject of the exemption.

    Signed at Washington, DC, this 19th day of March, 2004.
Ivan Strasfeld,
Director of Exemption Determinations, Employee Benefits Security 
Administration, Department of Labor.
[FR Doc. 04-6583 Filed 3-23-04; 8:45 am]

BILLING CODE 4510-29-P