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EBSA Notices

Grant of Individual Exemptions; General Electric Pension Trust (the Trust)   [4/6/2000]
[PDF]
[Federal Register: April 6, 2000 (Volume 65, Number 67)]
[Notices]               
[Page 18132-18134]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06ap00-116]                         

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DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

[Prohibited Transaction Exemption 2000-15; Exemption Application No. D-
10679, et al.]

 
Grant of Individual Exemptions; General Electric Pension Trust 
(the Trust)

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, DC. 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.
    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, 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.

[[Page 18133]]

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 Electric Pension Trust (the Trust), Located in Fairfield, 
Connecticut

[Prohibited Transaction Exemption 2000-15; Exemption Application Nos. 
D-10679 through D-10682]

Exemption

    The restrictions of sections 406(a), 406(b)(1) and (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, as of October 1, 1998, to the lease (the Lease) by the 
Trust of office space in a certain commercial office building (the 
Property) to Transport International Pool, Inc. (TIP), a party in 
interest with respect to employee benefit plans of General Electric 
Company (GE) and/or an affiliate whose assets are held in the Trust, 
provided that the following conditions are satisfied:
    (1) The Trust was and is represented for all purposes under the 
Lease by a qualified, independent fiduciary;
    (2) The terms and conditions of the Lease are at least as favorable 
to the Trust as those the Trust could have obtained in a comparable 
arm's length transaction with an unrelated party;
    (3) The rent paid to the Trust under the Lease is no less than the 
fair market rental value of the office space occupied by TIP, as 
established by a qualified, independent appraiser;
    (4) The independent fiduciary for the Trust reviewed the terms and 
conditions of the Lease on behalf of the Trust and determined that the 
Lease was in the best interests of the Trust;
    (5) The independent fiduciary monitors and enforces compliance with 
all of the terms and conditions of the Lease, and of the exemption, 
throughout the duration of the Lease; and
    (6) The independent fiduciary expressly approves any renewal of the 
Lease, and the rental rate under such renewal is based upon an updated 
independent appraisal of the office space being leased to TIP (but in 
no event shall the rental rate be less than that for the preceding 
period).

EFFECTIVE DATE: The exemption is effective as of October 1, 1998.
    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 August 26, 1999 at 64 FR 
46728.

Written Comments

    The Department received two written comments with respect to the 
notice of proposed exemption.
    1. The first comment was submitted by a participant in the GE 
Pension Plan. This commenter expressed opposition to the proposed 
exemption on the basis of its retroactive effective date. He stated 
that the trustees of the Trust had a fiduciary responsibility to obtain 
an exemption prior to the execution of the Lease, given the conflicts 
of interest involved.
    The applicant responded that the Department has a long-standing 
policy of granting retroactive exemptions ``if the safeguards necessary 
for the grant of a prospective exemption were in place at the time of 
the consummated transaction.'' (See ERISA Technical Release 85-1.) The 
applicant also responded that the trustees were mindful of their 
fiduciary responsibility with respect to the Lease. The trustees 
identified the potential prohibited transaction and appropriately 
sought legal counsel prior to the execution of the Lease. They were 
advised to file an exemption application with the Department and to 
structure the Lease in a manner such that all the necessary safeguards 
for the grant of an exemption would be in place, including review and 
approval of the Lease by a qualified, independent fiduciary. Thus, the 
applicant asserts that all potential conflicts of interest were 
adequately addressed.
    2. The second comment was submitted by the applicant. The applicant 
wishes to correct certain representations made in the Summary of Facts 
and Representations (the Summary).
    a. First, the applicant notes that, as of the effective date of the 
exemption, the assets of the Knolls Atomic Laboratories Pension Plan 
were no longer held in the Trust. (See the first paragraph in Item 1 of 
the Summary at 64 FR 46728).
    b. Second, the applicant notes that the agreed upon tenant 
improvements in the Lease were substantially completed in November, 
1998--not October, 1998, as stated in the first paragraph in Item 6 of 
the Summary (64 FR 46729). In addition, the third sentence in the third 
paragraph of Item 6 of the Summary (64 FR 46729) should be revised to 
read as follows (change in bold): ``In addition, TIP is responsible for 
any additional taxes levied or assessed that are attributable to TIP's 
improvements to or personal property within the leased space, its 
activities within the leased space, or any transactions involving the 
leased space.''
    The Department concurs with the applicant's assertion that the 
standards for a retroactive exemption have been satisfied. The 
Department also acknowledges the applicant's corrections to the 
Summary. Thus, after a careful consideration of the entire record, the 
Department has determined to grant the exemption as proposed.

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

Cullen Incorporated Profit Sharing Plan and Trust (the Profit 
Sharing Plan), Cullen Incorporated Employees Defined Contribution 
Pension Plan and Trust (the Money Purchase Plan) (Collectively the 
Plans), Located in Fredericksburg, Virginia

[Prohibited Transaction Exemption 2000-16; Exemption Application No. D-
10823 and D-10824]

Exemption

    The restrictions of sections 406(a), 406(b)(1) and (b)(2) of the 
Act and the sanctions resulting from the application of section 4975(a) 
and (b) of the Code, by reason of section 4975(c)(1)(A) through (E) of 
the Code, shall not apply to the past sale (the Sale) by the Plan of 
property located in Fredericksburg, Virginia (the Property) to Robert 
C. O'Neill (Mr. O'Neill), the trustee of the Plans, President and sole 
shareholder of the Plan Sponsor, and a party in interest with respect 
to the Plans, provided that the following conditions are satisfied:
    (a) The Sale was a one time transaction for a lump sum cash 
payment;
    (b) The purchase price was the fair market value of the Property as 
of the date of the Sale;
    (c) The Property has been appraised by a qualified, independent 
real estate appraiser; and
    (d) The Plans paid no commissions or other expenses relating to the 
Sale.
    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 February 1, 2000 at 65 FR 
4851.

[[Page 18134]]


EFFECTIVE DATE OF EXEMPTION: The effective date of this exemption is 
November 6, 1998.

FOR FURTHER INFORMATION CONTACT: J. Martin Jara of the Department, 
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 accurately describes all material terms of the transaction 
which is the subject of the exemption.

    Signed at Washington, D.C., this 30th day of March, 2000.
Ivan Strasfeld,
Director of Exemption Determination, Pension and Welfare Benefits 
Administration, U.S. Department of Labor.
[FR Doc. 00-8447 Filed 4-5-00; 8:45 am]
BILLING CODE 4510-29-P