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Secretary of Labor Thomas E. Perez
Grant of Individual Exemptions [Notices] [03/22/1996]

EBSA (Formerly PWBA) Federal Register Notice

Grant of Individual Exemptions [03/22/1996]

[PDF Version]

Volume 61, Number 57, Page 11875-11878

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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
[[Prohibited Transaction Exemption 96-17; Exemption Application No. D-
09930, et al.]

 
Grant of Individual Exemptions; General Motors Hourly-Rate 
Employees Pension Plan; General Motors Retirement Program for Salaried 
Employees; Saturn Individual Retirement Plan for Represented Team 
Members; Saturn Personal Choices Retirement Plan for Non-Represented 
Team Members; Employees' Retirement Plan for GMAC Mortgage Corporation; 
National Car Rental System, Inc. Salaried Employees Pension Plan; and 
National Car Rental System, Inc. Hourly Paid Employees Pension Plan 
(Collectively, the Plans), et al.

AGENCY: Pension and Welfare Benefits 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).
    Notices were published in the Federal Register of the pendency 
before the Department of proposals to grant such exemptions. The 
notices set forth a summary of facts and representations contained in 
each application for exemption and referred interested persons to the 
respective applications for a complete statement of the facts and 
representations. The applications have been available for public 
inspection at the Department in Washington, D.C. The notices also 
invited interested persons to submit comments on the requested 
exemptions to the Department. In addition, the notices stated that any 
interested person might submit a written request that a public hearing 
be held (where appropriate). The applicants have represented that they 
have complied with the requirements of the notification to interested 
persons. No public comments and no requests for a hearing, unless 
otherwise stated, were received by the Department.

[[Page 11876]]

    The notices of proposed exemption were issued and the exemptions 
are being granted solely by the Department because, effective December 
31, 1978, section 102 of Reorganization Plan No. 4 of 1978 (43 FR 
47713, October 17, 1978) 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 exemptions are administratively feasible;
    (b) They are in the interests of the plans and their participants 
and beneficiaries; and
    (c) They are protective of the rights of the participants and 
beneficiaries of the plans.

General Motors Hourly-Rate Employes Pension Plan; General Motors 
Retirement Program for Salaried Employes; Saturn Individual Retirement 
Plan for Represented Team Members; Saturn Personal Choices Retirement 
Plan for Non-Represented Team Members; Employees' Retirement Plan for 
GMAC Mortgage Corporation; National Car Rental System, Inc. Salaried 
Employees Pension Plan; and National Car Rental System, Inc. Hourly 
Paid Employees Pension Plan (collectively, the Plans) Located in New 
York, New York

[Prohibited Transaction Exemption 96-17; Exemption Application Nos. D-
09930, D-09931]

Exemption

    (a) General Exemption. The restrictions of section 406(a)(1)(A) 
through (D) 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 
(D) of the Code, shall not apply to any transaction arising in 
connection with the acquisition, ownership, management, development, 
leasing, financing, or sale of real property (including the 
acquisition, ownership or sale of any joint venture or partnership 
interest in such property) or the borrowing or lending of money in 
connection therewith, between a party in interest and the Plans, 
provided that the following conditions are satisfied:
    (1) The terms of the transaction are negotiated on behalf of the 
Plans by, or under the authority and general direction of, General 
Motors Investment Management Corporation (GMIMCo), as described in the 
summary of facts in the notice of proposed exemption, and GMIMCo makes 
the decision to invest the assets of the Plans in such transaction. 
Notwithstanding the foregoing, a transaction involving an amount of $20 
million or more, which has been negotiated on behalf of a Plan by 
GMIMCo will not fail to meet the requirements of this section (a)(1) 
solely because General Motors Corporation or its designee retains the 
right to veto or approve such transaction;
    (2) Any such party in interest is not--
    (i) GMIMCo or any person directly or indirectly controlling, 
controlled by, or under common control with GMIMCo, any officer, 
director or employee of GMIMCo or any of its subsidiaries, or any 
partnership in which GMIMCo is a 10 percent or more (directly or 
indirectly in capital or profits) partner;
    (ii) General Motors Corporation (GM) or any of its subsidiaries, 
any officer or director of GM or any of its subsidiaries;
    (iii) any named fiduciary of any Plan, or any person who has 
discretionary authority in the selection, supervision or operation of 
GMIMCo or any of its officers, directors or employees;
    (iv) a sponsor of any of the Plans (Plan Sponsor) or any subsidiary 
of a Plan Sponsor, or a ten percent or more shareholder, partner, or 
joint venturer of a Plan Sponsor, or any officer or director of any of 
them;
    (v) any person who exercises discretionary authority, 
responsibility or control, or who provides investment advice [within 
the meaning of 29 CFR 2510.3-21(c)], with respect to the investment of 
Plan assets involved in the transaction;
    (3) The transaction is not part of an agreement, arrangement or 
understanding designed to benefit a party in interest;
    (4) At the time the transaction is entered into, and at the time of 
any subsequent renewal or modification thereof that requires the 
consent of GMIMCo, the terms of the transaction are at least as 
favorable to the Plans as the terms generally available in arm's-length 
transactions between unrelated parties;
    (4) GM or GMIMCo shall maintain for a period of six years from the 
date of each transaction mentioned above the records necessary to 
enable the persons described in subparagraph (5) of this section (a) to 
determine whether the conditions of this exemption have been met, 
except that (i) a prohibited transaction will not be deemed to have 
occurred if, due to circumstances beyond the control of GM and GMIMCo, 
the records are lost or destroyed prior to the end of the six-year 
period, and (ii) no party in interest except GM and GMIMCo shall be 
subject to the civil penalty which may be assessed under section 502(i) 
of the Act, or to 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 subparagraph (5) below;
    (5)(i) Except as provided in subsection (ii) of this subparagraph 
(5) and notwithstanding any provisions of subsections (a)(2) and (b) of 
section 504 of the Act, the records referred to in subparagraph (4) of 
this section (a) are unconditionally available at GM's headquarter 
offices, or, upon prior arrangement with GM, at any other customary 
location for the maintenance and/or retention of such records, for 
examination during normal business hours by:
    (A) Any duly authorized employee or representative of the 
Department of Labor or the Internal Revenue Service,
    (B) Any fiduciary of a Plan or any duly authorized employee or 
representative of such fiduciary, and
    (C) Any participant or beneficiary of any Plan or any duly 
authorized representative of such participant or beneficiary.
    (ii) None of the persons described in subdivisions (i)(B) and 
(i)(C) of this subparagraph (5) shall be authorized to examine GM's 
trade secrets or commercial or financial information which is 
privileged, confidential or of a proprietary nature.
    (b) Specific exemption. The restrictions of sections 406(a)(1) (A) 
through (D) and sections 406(b)(1) and (2) 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 to 
the furnishing of services, facilities, and any goods incidental 
thereto by a place of public accommodation which is or may be 
considered an asset of a Plan if the services, facilities or incidental 
goods are furnished on a comparable basis to the general public, and if 
the requirements of subparagraphs (a)(4) and (5) of this exemption are 
met.
    For a more complete statement of the facts and representations 
supporting this exemption, refer to the notice of proposed exemption 
published on November 28, 1995 at 60 FR 58662.

EFFECTIVE DATE: This exemption is effective as of July 1, 1994.

TEMPORARY NATURE OF THE EXEMPTION: This exemption is temporary in 
nature and will expire on the date of

[[Page 11877]]
publication by the Department of the final class exemption for plan 
asset transactions determined by in-house asset managers, which was 
proposed by the Department on March 24, 1995 at 60 FR 15597 
(application no. D-09602).

WRITTEN COMMENTS: The Department received one written comment and no 
requests for a hearing. The comment, which was submitted by the 
applicant, General Motors Corporation, informed the Department that two 
additional pension plans (the New Plans) became participants in the 
General Motors Hourly-Rate Employees Pension Trust effective August 1, 
1995: (1) the National Car Rental System, Inc. Salaried Employees 
Pension Plan, plan no. 001, with 1,439 participants as of December 31, 
1994, and (2) the National Car Rental System, Inc. Hourly Paid 
Employees Pension Plan, plan no. 002, with 2,363 participants as of 
December 31, 1994. The applicant requested that the New Plans be 
included among the Plans to which the exemption is applicable.
    In response to the comment, the Department has added the New Plans 
to the Plans identified in the heading of the exemption.
    After consideration of the entire record, the Department has 
determined to grant the exemption.

FOR FURTHER INFORMATION CONTACT: Ronald Willett of the Department, 
telephone (202) 219-8881. (This is not a toll-free number.)

H.E.B. Investment and Retirement Plan (the Plan) Located in San 
Antonio, Texas

[Prohibited Transaction Exemption 96-18; Application No. D-10035]

Exemption

    The restrictions of sections 406(a), 406(b)(1) and 406(b)(2) 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 to the proposed cash sale by the Plan to H.E. Butt 
Grocery Company (the Company), a party in interest with respect to the 
Plan, of an interest in a certain parcel of improved real property (the 
Property) known as the South Congress Shopping Center in Austin, Texas, 
provided that the following conditions are met:
    (a) The sale is a one-time transaction for cash;
    (b) The Plan will receive an amount equal to the greater of either: 
(1) $2,975,666, or (2) the fair market value of the Property at the 
time of the transaction, as determined by a qualified, independent 
appraiser;
    (c) The Plan will not pay any commissions or other expenses with 
respect to the sale; and
    (d) The Plan's trustees determine that the sale of the Property to 
the Company is appropriate for the Plan and in the best interests of 
the Plan and its participants and beneficiaries at the time of 
transaction.
    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 January 31, 1996, at 61 
FR 3474.

WRITTEN COMMENTS: The Department received one written comment on the 
notice of proposed exemption, which was from a former employee and Plan 
participant who is now retired (the Commenter). The Commenter indicated 
that he was familiar with the Property and supported the granting of an 
exemption for the sale of the Property to the Company.
    No other written comments, and no requests for a hearing, were 
received by the Department.
    Accordingly, the Department has determined to grant the exemption.

FOR FURTHER INFORMATION CONTACT: Mr. E.F. Williams of the Department, 
telephone (202) 219-8194. (This is not a toll-free number.)

Rose's Stores, Inc., Retirement Savings 401(k) Plan, (the Retirement 
Savings Plan), Located in Henderson, NC

[Prohibited Transaction Exemption 96-19; Exemption Application No. D-
10062]

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 to (1) the past acquisition and 
holding by the Rose's Stores, Inc. Variable Investment Plan (the 
Variable Investment Plan) of subscription rights (the Subscription 
Rights) offered by Rose's Stores, Inc. (the Employer) to purchase 
shares of new common stock (the New Stock) upon the emergence of the 
Employer from bankruptcy; (2) the past acquisition and continued 
holding by the Variable Investment Plan and subsequently, the 
Retirement Savings Plan, of warrants (the Warrants) to purchase shares 
of the Employer's New Stock; and (3) the proposed acquisition of shares 
of the New Stock by the Retirement Savings Plan upon the exercise of 
the Warrants.
    This exemption is subject to the following conditions:
    (a) The acquisition and holding of the Subscription Rights and the 
Warrants by the Variable Investment Plan occurred in connection with 
the Employer's bankruptcy proceeding pursuant to which all holders of 
the old common stock of the Employer were treated in the same manner.
    (b) The Variable Investment Plan had little, if any, ability to 
affect the negotiation of the Employer's plan of reorganization with 
respect to the bankruptcy proceeding.
    (c) The Subscription Rights and the Warrants were acquired 
automatically and without any action on the part of the Variable 
Investment Plan.
    (d) The Variable Investment Plan did not pay any fees or 
commissions in connection with the receipt and holding of the 
Subscription Rights and the Warrants, nor will the Retirement Savings 
Plan pay any fees or commissions in connection with the holding and 
exercise of the Warrants.
    (e) Any decision to exercise the Warrants now held by the 
Retirement Plan will be made by participants in accordance with the 
terms of such Plan.

EFFECTIVE DATE: This exemption will be effective February 7, 1995 with 
respect to the acquisition and holding by the Variable Investment Plan 
of the Subscription Rights and April 28, 1995 with respect to the 
acquisition and holding by the Variable Investment Plan (and 
subsequently the Retirement Savings Plan) of the Warrants.
    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 January 31, 1996 at 61 FR 
3485.

Comments

    The Department received one written comment with respect to the 
proposed exemption and no requests for a public hearing. In the 
comment, the commentator requested assurance that her pension benefits 
would not be jeopardized in the event future problems affected the 
Employer's business. Following a discussion of the comment with a 
Department representative, the commentator decided to withdraw the 
comment.
    Thus, after giving full consideration to the entire record, the 
Department has decided to grant the subject exemption. The comment 
letter 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 and

[[Page 11878]]
Welfare Benefits Administration, Room N-5638, U.S. Department of Labor, 
200 Constitution Avenue, N.W., Washington, D.C. 20210.

FOR FURTHER INFORMATION CONTACT: Ms. Jan D. Broady, Department of 
Labor, telephone (202) 219-8881. (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 exemptions 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) These exemptions are 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 these exemptions is subject to the express 
condition that the material facts and representations contained in each 
application are true and complete and accurately describe all material 
terms of the transaction which is the subject of the exemption. In the 
case of continuing exemption transactions, if any of the material facts 
or representations described in the application change after the 
exemption is granted, the exemption will cease to apply as of the date 
of such change. In the event of any such change, application for a new 
exemption may be made to the Department.

    Signed at Washington, D.C., this 19th day of March, 1996.
Ivan Strasfeld,
Director of Exemption Determinations, Pension and Welfare Benefits 
Administration, U.S. Department of Labor.
[FR Doc. 96-6990 Filed 3-21-96; 8:45 am]
BILLING CODE 4510-29-P