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Grant of Individual Exemptions; The Southwest Gas Corporation (Southwest Gas) [08/21/2006]
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Volume 71, Number 161, Page 48788-48792
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
[Prohibited Transaction Exemption 2006-09; Exemption Application No. D-
11033 et al.]
Grant of Individual Exemptions; The Southwest Gas Corporation
(Southwest Gas)
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
(ERISA or 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, DC. 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 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.
The Southwest Gas Corporation (Southwest Gas) Located in Las Vegas,
Nevada
[Prohibited Transaction Exemption 2006-09; Exemption Application No. D-
11033]
Exemption
Section I--Transactions & Conditions
The sanctions resulting from the application of section 4975 of the
Code, by reason of section 4975(c)(1)(A) and (D) of the Code, shall not
apply to the direct or indirect purchase, from Southwest Gas, of the
common stock of Southwest Gas by an individual retirement account (IRA)
that is (i) established for the benefit of a non-employee of Southwest
Gas,\1\ (ii) operated pursuant to the terms of the Southwest Gas
Corporation Dividend Reinvestment and Stock Purchase Plan (the DRIP),
and (iii) maintained in part through administrative services provided
by Southwest Gas, a disqualified person with respect to the IRA,
provided that the following conditions are satisfied:
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\1\ Pursuant to 29 CFR 2510.3-2(d), the subject IRAs are not
``employee benefit plans'' covered by Title I of the Act. However,
because the IRA is a ``plan'' for purposes of section 4975 of the
Code, the Department has jurisdiction under Title II of the Act over
this matter.
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(a) The IRA that is established by a DRIP participant pursuant to
the terms of the DRIP (the DRIP IRA) is maintained for the exclusive
benefit of the individual covered under the IRA (the IRA Owner), his or
her spouse, or their beneficiaries;
(b) Southwest Gas complies with all applicable securities laws
relating to the Southwest Gas DRIP;
(c) Administrative and recordkeeping services provided by Southwest
Gas to the DRIP IRA are rendered pursuant to a written agreement
between Southwest Gas and an independent trustee of the DRIP IRA (the
IRA Trustee) in which Southwest Gas agrees to act as the IRA Trustee's
agent for the provision of such services;
[[Page 48789]]
(d) Southwest Gas receives no compensation, fees, or commissions,
directly or indirectly, for the provision of such administrative and
recordkeeping services, including any portion of the fees that the IRA
Trustee may be entitled to receive from the DRIP IRA;
(e) The combined total of all fees and other consideration
received, direct or indirect, by any disqualified persons (other than
Southwest Gas) for the provision of services to the DRIP IRA is not in
excess of ``reasonable compensation'' within the meaning of section
4975(d)(2) of the Code;
(f) The DRIP IRA and/or IRA Owner does not pay a brokerage fee or
commission in connection with the purchase of the common stock of
Southwest Gas;
(g) Neither Southwest Gas, the IRA Trustee, nor any affiliate
thereof has any discretionary authority or control regarding the
determination to acquire, manage, or dispose of the DRIP IRA assets, or
renders investment advice (within the meaning of 26 CFR 54.4975-9(c))
respecting those assets;
(h) Cash dividends paid on Southwest Gas common stock held in the
DRIP IRA account that are used to purchase Original Issue Shares of
Southwest Gas common stock are automatically reinvested in additional
shares of Southwest Gas common stock on the earliest date that such
dividends can reasonably be segregated;
(i) Cash dividends paid on Southwest Gas common stock held in a
DRIP IRA account that will be used to purchase Open Market Shares of
Southwest Gas common stock under the DRIP are temporarily invested by
the IRA Trustee, on the earliest date that such cash dividends can
reasonably be segregated, in a no-load money market mutual fund
registered under the Investment Company Act of 1940, and earnings
accrued thereon are allocated at the end of each quarter on a pro-rata
basis among those IRA Owners who earned such dividends during that
quarter and then applied immediately towards the purchase of additional
shares of Southwest Gas common stock for the accounts of such IRA
Owners;
(j) Pending the IRA Trustee's investment of the cash contributions
of IRA Owners (including rollover contributions), such amounts are
temporarily invested by the IRA Trustee, on the earliest date that the
IRA Owners' contributions can reasonably be segregated, in a no-load
money market mutual fund registered under the Investment Company Act of
1940, and earnings accrued thereon are allocated at the end of each
quarter on a pro-rata basis among those IRA Owners who made a
contribution during that quarter and then applied immediately towards
the purchase of additional shares of Southwest Gas common stock for the
accounts of such IRA Owners;
(k) The terms of both the money market mutual fund and of any
purchase of Southwest Gas common stock pursuant to the terms of the
DRIP (including the purchase price) are at least as favorable to the
DRIP IRA as those obtainable in a comparable arm's length transaction
with an unrelated party;
(l) Prior to participation in the DRIP IRA, each IRA Owner receives
a written disclosure, drafted in a manner calculated to be understood
by the average IRA Owner, which contains: (i) The general terms and
conditions of the DRIP IRA; (ii) The identity of the no-load money
market mutual fund; (iii) Any fees, commissions, or compensation paid
to the IRA Trustee and/or its affiliates in connection with the DRIP
IRA, including the investment advisory and other fees paid by the
mutual fund to the IRA Trustee and/or its affiliates; (iv) A disclosure
of the right of IRA Owners to receive written notice of any amendment
to the terms of the DRIP or the DRIP IRA at least 30 days in advance of
its effective date (and the right of such IRA Owners to refuse consent
to any amendment); and (v) Information about this exemption from the
prohibited transaction rules applicable to the DRIP IRA and the right
of each IRA Owner to request a copy of both the April 28, 2006 notice
of proposed exemption and a copy of this final exemption;
(m) An IRA Owner participating in the DRIP IRA is furnished
periodically with a statement, at least quarterly, containing (i) the
date, quantity, and price with respect to each purchase of common stock
that occurred during the prior quarter and (ii) information concerning
the quarterly, pro rata allocation of money market mutual fund earnings
attributable to each IRA Owner's account during the period immediately
preceding the investment of cash amounts in Southwest Gas stock;
(n) Southwest Gas retains, at least annually and at its own
expense, an independent certified public accountant to perform an
audit, in accordance with generally accepted auditing standards, of the
DRIP IRAs, and provides the IRA Trustee with the current audit report
prepared by such accountant, together with any written commentary from
the accountant that accompanies the audit; and
(o) The IRA Owner is permitted to terminate his or her
participation in the DRIP IRA at any time, without penalty, and
transfer his or her IRA account balance to an IRA at another financial
institution.
Section II--Definitions
(a) The term ``IRA'' means an individual retirement account
described in Code section 408(a). For purposes of this exemption, the
term ``IRA'' shall not include an individual retirement account that is
an employee benefit plan covered by Title I of the Act.
(b) The term ``DRIP'' (an acronym for Dividend Reinvestment Plan)
refers to the ``Southwest Gas Corporation Dividend Reinvestment and
Stock Purchase Plan'', which allows investors to purchase Southwest Gas
common stock and to automatically reinvest cash dividends paid on such
stock into additional shares of Southwest Gas stock.
(c) The term ``Original Issue Shares'' refers to authorized but
unissued shares of Southwest Gas common stock purchased directly from
Southwest Gas.
(d) The term ``Open Market Shares'' refers to outstanding shares of
Southwest Gas common stock purchased on the open market or through
negotiated transactions.
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 April 28, 2006 at 71 FR
25229.
For Further Information Contact: Mr. Mark Judge of the Department,
telephone (202) 693-8339. (This is not a toll-free number.)
Massachusetts Mutual Life Insurance Company Located in Springfield,
Massachusetts
[Prohibited Transaction Exemption 2006-10; Exemption Application Number
D-11228]
Exemption
Section I--Transactions
(a) If the conditions of Sections II, III and V are met, the
restrictions of section 406(a)(1)(B) and (D) of the Act, and the
sanctions resulting from the application of section 4975 of the Code,
by reason of section 4975(c)(1)(B) and (D) of the Code, shall not apply
to: (1) The extension of credit (``Market Rate Advance or Advances'')
by Massachusetts Mutual Life Insurance Company (``MassMutual'') to a
participant-directed individual account plan (``the Plan''); and (2)
the Plan's repayment of a Market Rate Advance or Advances, plus accrued
interest; and
(b) If the conditions of Sections II, IV and V are met, the
restrictions of section 406(a)(1)(B) and (D) and 406(b)(2) of the
[[Page 48790]]
Act and the sanctions resulting from the application of section 4975 of
the Code, by reason of section 4975(c)(1)(A) through (D) of the Code,
shall not apply to: (1) The interest-free extension of credit
(``Interest-free Advance'') to a Plan by its respective sponsor (``the
Plan Sponsor'') and (2) the repayment, by the Plan to the Plan Sponsor,
of any Interest-free Advance.
Section II--General Conditions
(a) Each Market Rate Advance and each Interest-free Advance
(collectively ``the Advance or Advances'') is made in connection with
the administration of a portion of the Plan's assets by MassMutual as a
unitized fund (``Unitized Fund'') in order to enable daily
transactions, such as participant investment transfers, distributions
or participant loans, and to facilitate redemptions from the Unitized
Fund;
(b) Each Advance is unsecured, uncollateralized, and without
recourse;
(c) No commitment fees or commissions are paid by the Plan with
respect to the Advances;
(d) The aggregate amount advanced on any business day that an
Advance is initiated does not, after the Advance is made, exceed 25% of
the total market value of the Unitized Fund;
(e) Each Advance is made in accordance with the terms of a written
agreement between MassMutual, the Plan, and, if Interest-free Advances
by the Plan Sponsor are being offered, the Plan Sponsor (``the
Agreement''). The Agreement describes the terms and procedures for the
Advances, including instructions addressing the initiation, amount and
repayment. With respect to Market Rate Advances, the Agreement sets
forth the formula or method for determining the interest rate payable
with respect to each Advance. The Agreement is approved in writing by a
fiduciary of the Plan who is independent of, and not an affiliate of,
MassMutual (``Independent Plan Fiduciary'');
(f) The Agreement may be terminated by the Independent Plan
Fiduciary at any time, subject to the Plan's repayment of any
outstanding Advances, with no penalty for such termination;
(g) The fair market value of the assets in the Unitized Fund is
determined by an objective method specified in the Agreement;
(h) Any employer security in a Unitized Fund is a ``publicly traded
qualifying employer security'' as defined below;
(i) The Plan is required to repay each Advance and any accrued
interest in accordance with the terms of the Agreement as soon as
possible after the initiation of the advance;
(j) Within one business day after an Advance is initiated,
MassMutual notifies the Independent Plan Fiduciary of the amount of the
Advance and, if a Market Rate Advance, the actual interest rate to be
applied;
(k) Within ten (10) days after a Market Rate Advance is fully
repaid, MassMutual provides the Independent Plan Fiduciary with a
confirmation statement including the date of repayment, the amount of
the Advance, and if a Market Rate Advance, the actual interest rate
applied, and the total amount of interest paid by the Plan;
(l) Each Advance is initiated, accounted for and administered by
MassMutual, in accordance with the terms of the Agreement and the Act;
(m) Neither MassMutual nor any of its affiliates is: (1) A trustee
of the Plan (other than a nondiscretionary trustee who does not render
investment advice with respect to the assets of the Unitized Fund); (2)
a plan administrator (within the meaning of section 3(16)(A) of the Act
and Code section 414(g)); (3) a fiduciary who is expressly authorized
in writing to manage, acquire, or dispose of, on a discretionary basis,
any assets of the Unitized Fund; or (4) an employer any of whose
employees are covered by the Plan;
(n) MassMutual maintains or causes to be maintained for a period of
six years, in a manner that is accessible for audit and examination,
the records necessary to enable the persons described in the next
paragraph to determine whether the conditions of this exemption have
been met, except that:
(1) if the records necessary to enable the persons described in the
next paragraph to determine whether the conditions of the exemption
have been met are lost or destroyed, due to circumstances beyond the
control of MassMutual, then no prohibited transaction will be
considered to have occurred solely on the basis of the unavailability
of those records; and
(2) No party in interest, other than MassMutual which is
responsible for recordkeeping, shall be subject to the civil penalty
that may be assessed under section 502(i) of the Act or the taxes
imposed by section 4975(a) and (b) of the Code if the records are not
maintained or are not available for examination as required by the next
paragraph;
(o)(1) Except as provided below in subparagraph (2) and
notwithstanding any provisions of section 504(a)(2) and (b) of the Act,
the records referred to in the above paragraph are unconditionally
available at their customary location for examination during normal
business hours by--
(A) Any duly authorized employee or representative of the
Department or the Internal Revenue Service;
(B) Any fiduciary of the plan or any duly authorized employee or
representative of such fiduciary;
(C) Any contributing employer and any employee organization whose
members are covered by the plan, or any authorized employee or
representative of these entities; or
(D) Any participant or beneficiary of the plan or the duly
authorized representative of such participant or beneficiary.
(2) None of the persons described in subparagraph (1)(B)-(D) above
shall be authorized to examine trade secrets or commercial or financial
information which is privileged or confidential.
Section III--Conditions Specific to Market Rate Advances
The relief provided under Section I (a) is available only if the
following conditions are met:
(a) Market Rate Advances are made on terms at least as favorable to
the Plan as those the Plan could obtain in an arm's length transaction
with an unrelated party;
(b) Neither MassMutual nor its affiliate has or exercises any
discretionary authority or control with respect to the initiation of a
Market Rate Advance, the amount of a Market Rate Advance, the interest
rate payable on a Market Rate Advance, or the repayment of the Market
Rate Advance;
(c) Interest payable by the Plan on each Market Rate Advance is
determined in accordance with an objective formula or method described
in the Agreement.
Section IV--Conditions Specific to Interest-free Advances
The relief provided under Section I (b) is available only if the
following conditions are met:
(a) No interest or other fee is charged to the Plan, and no
discount for payment in cash is relinquished by the Plan, in connection
with the Interest Free Advance;
(b) The Interest-free Advance is not a loan described in section
408(b)(3) of ERISA and the regulations promulgated there under (29 CFR
2550.408b-3) or section 4975(d)(3) of the Code and the regulations
promulgated there under (26 CFR 54.4975-7(b));
(c) The Interest-free Advance is not made directly or indirectly by
an employee benefit plan;
(d) Any Interest-free Advance that is entered into for a term of 60
days or
[[Page 48791]]
longer must be made pursuant to a written loan agreement that contains
all of the material terms of such loan.
Section V--Definitions
(a) The term ``affiliate'' means (i) any person directly or
indirectly, through one or more intermediaries, controlling, controlled
by, or under common control with such other person; (ii) any officer,
director, employee or relative (as defined in section 3(15) of the Act)
of such other person; and (iii) any corporation or partnership of which
such other person is an officer, director or partner.
(b) The term ``control'' means the power to exercise a controlling
influence over the management or policies of a person other than an
individual.
(c) The term ``Plan Sponsor'' means the employer of the employees
covered by the Plan.
(d) The term ``publicly traded qualifying employer security,'' for
purposes of this exemption, means a security that meets the definition
of ``stock'' pursuant to section 407(d)(5)(A) of the Act and the
definition of ``NMS stock'' as defined in SEC Regulation NMS, 17 CFR
242.600(b)(47).
(e) The term ``unitized fund'' for purposes of the exemption means
a fund that, to facilitate trading and/or accounting, has established
``units'' representing undivided interests in all of the assets of such
fund.
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 in the Federal Register on
April 28, 2006 at 71 FR 25233.
For Further Information Contact: Christopher Motta, Office of
Exemption Determinations, Employee Benefits Security Administration,
U.S. Department of Labor, telephone (202) 693-8540. (This is not a
toll-free number.)
The Revlon Employees Savings, Investment and Profit Sharing Plan (the
Plan) Located in New York, New York
[Prohibited Transaction Exemption No. 2006-11; Application No. D-11355]
Exemption
The restrictions of sections 406(a), 406(b)(1) and (b)(2) and
407(a) of the Act and the sanctions resulting from the application of
section 4975 of the Code, by reason of section 4975(c)(1)(A) through
(E) of the Code, shall not apply, effective February 17, 2006, to (1)
the acquisition of certain stock rights (Stock Right(s)) by the Plan in
connection with a Stock Rights offering by Revlon, Inc. (Revlon), a
holding company that wholly owns Revlon Consumer Products Corporation
(RCPC), a party in interest with respect to the Plan; (2) the holding
of the Stock Rights by the Plan during the subscription period of the
Stock Rights offering; and (3) the disposition or exercise of the Stock
Rights by the Plan, provided that the following conditions were met:
(a) The Stock Rights were acquired pursuant to Plan provisions for
individually-directed investment of such accounts;
(b) The Plan's receipt of the Stock Rights occurred in connection
with a Stock Rights offering made available on the same terms to all
shareholders of common stock of Revlon;
(c) All decisions regarding the holding and disposition of the
Stock Rights by the Plan were made, in accordance with the Plan
provisions for individually-directed investment of participant
accounts, by the individual Plan participants whose accounts in the
Plan received Stock Rights in connection with the Stock Rights
offering;
(d) The Plan's acquisition of the Stock Rights resulted from an
independent act of Revlon as a corporate entity, and all holders of the
Stock Rights, including the Plan, were treated in the same manner with
respect to the acquisition; and
(e) The Plan received the same proportionate number of Stock Rights
as other owners of Class A common stock.
Effective Date: This exemption will be effective as of February 17,
2006.
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 June 2, 2006 at 71 FR
32132.
During a conversation with the Department, the applicant sought
clarification with respect to a condition in the Notice, which is
discussed below. On page 32132 of the Notice, condition (e) states the
following:
(e) The price received by the Plan for the Stock Rights was no less
than the fair market value of the Stock Rights on the date of the Stock
Rights offering.
Upon discussion with the applicant, the Department has determined
that condition (e) should be revised to read as follows:
(e) The Plan received the same proportionate number of Stock Rights
as other owners of Class A common stock;
The Department hereby modifies the exemption to incorporate such
change.
For Further Information Contact: Khalif Ford of the Department,
telephone (202) 693-8540 (this is not a toll-free number).
Retail Clerks Welfare Trust Health and Welfare Plan (the Plan) Located
in Seattle, Washington
[Prohibited Transaction Exemption 2006-12; Exemption Application No. L-
11258]
Exemption
The restrictions of section 406(a), 406(b)(1) and (b)(2) of the Act
shall not apply, effective July 1, 2005, to the purchase by Plan
participants and beneficiaries of prescription drugs from pharmacies
established and maintained by contributing employers to the Plan, or
their affiliates (the Custom Network), which are parties in interest
with respect to the Plan, provided the following conditions are
satisfied:
(a) The terms of each transaction are at least as favorable to the
Plan as those the Plan could obtain in a similar arm's-length
transaction with an unrelated third party;
(b) All determinations regarding which party in interest
pharmacies, if any, may participate in the Custom Network, will be made
by the Plan's independent fiduciary based on objective standards
developed by the independent fiduciary in reliance on information
provided by NMHCrx, the Plan's Pharmacy Benefits Manager, an entity
which is independent of any contributing employer to the Plan, and the
Plan's independent actuarial consultants;
(c) At least 50% of the providers participating in the Custom
Network are pharmacies of contributing employers other than the
employer of any individual Plan participant;
(d) In the aggregate, on an on-going basis, the costs for each plan
year for the Plan from participants using the Custom Network pharmacies
will be at least one percentage point less than would be the costs
through the use of NMHCrx's preferred provider network pharmacies (the
PPN pharmacies);
(e) In the aggregate, on an on-going basis, the costs for each plan
year for the Plan from participants using the PPN pharmacies will be
significantly less than costs for the retail purchase of prescription
drugs from non-participating pharmacies;
(f) The Plan's independent fiduciary will monitor the subject
transactions to ensure that all conditions of the exemption, including
conditions (d) and (e) regarding pricing, continue to be satisfied
during each plan year; and
(g) All future updated summary plan descriptions, furnished to
participants, will state that the purchase price of a particular
prescription drug at Custom
[[Page 48792]]
Network pharmacies may be less than the purchase price that is
available either through the use of the PPN pharmacies or through
retail non-participating pharmacies, and that the cost of prescription
drugs in the aggregate over the course of a 12-month plan year will be:
(i) Lower at Custom Network pharmacies than at the PPN pharmacies and
(ii) Significantly lower at the Custom Network pharmacies than at non-
participating retail pharmacies.
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 June 2, 2006 at 71 FR
32129.
Effective Date: This exemption is effective July 1, 2005.
For Further Information Contact: Gary H. Lefkowitz of the
Department, telephone (202) 693-8546. (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 14th day of August, 2006.
Ivan Strasfeld,
Director of Exemption Determinations, Employee Benefits Security
Administration, U.S. Department of Labor.
[FR Doc. E6-13622 Filed 8-18-06; 8:45 am]
BILLING CODE 4510-29-P
