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Secretary of Labor Hilda L. Solis
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EBSA Notices

Grant of Individual Exemptions and Prohibited Transaction Exemptions Involving: M&T Bank Corporation Pension Plan, PTE 2009-26; Bank of New York Mellon Corporation, PTE 2009-27; and Ford Motor Company and Its Affiliates (Collectively, Ford), PTE 2009-28   [9/25/2009]
[PDF]
FR Doc E9-23167
[Federal Register: September 25, 2009 (Volume 74, Number 185)]
[Notices]               
[Page 49034-49040]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25se09-133]                         

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DEPARTMENT OF LABOR

Employee Benefits Security Administration

 
Grant of Individual Exemptions and Prohibited Transaction 
Exemptions Involving: M&T Bank Corporation Pension Plan, PTE 2009-26; 
Bank of New York Mellon Corporation, PTE 2009-27; and Ford Motor 
Company and Its Affiliates (Collectively, Ford), PTE 2009-28

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.

M&T Bank Corporation Pension Plan, Located in Buffalo, NY.
[Prohibited Transaction Exemption 2009-26
Exemption Application No. D-11470]

[[Page 49035]]

Exemption

Section I. Transactions

    Effective January 18, 2007, the restrictions of sections 
406(a)(1)(A) through (D) and 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 in-kind redemptions (the Redemptions) of shares (the 
Shares) held by the M&T Bank Corporation Pension Plan (the Plan) of the 
MTB Mid Cap Growth Fund and the MTB Large Cap Stock Fund (the Fund(s)) 
for which affiliates of Manufacturers and Traders Trust Company (M&T) 
provide investment advisory services and other services.

Section II. Conditions

    This exemption is subject to the following conditions:
    (a) The Plan paid no sales commissions, redemption fees, or other 
similar fees in connection with the Redemptions (other than customary 
transfer charges paid to parties other than M&T and affiliates of M&T 
(M&T Affiliates).
    (b) The assets transferable to the Plan consisted of only cash and 
Transferable Securities, as defined in Section III;
    (c) With certain exceptions explained in Representation 6 below, 
the Plan received a pro rata portion of the Transferable Securities, 
pursuant to the Redemptions that, when added to the cash received, was 
equal in value to the number of Shares redeemed for such Transferable 
Securities, as determined in a single valuation (using sources 
independent of M&T and M&T affiliates) performed in the same manner and 
as of the close of business on the same day as the day of the 
Redemptions, in accordance with Rule 2a-4 under the Investment Company 
Act of 1940, as amended from time to time (the 1940 Act), and the then-
existing procedures established by the Fund that are in compliance with 
the 1940 Act, and the Plan received the Transferable Securities on the 
next business day following the date of the Redemptions;
    (d) Neither M&T nor any M&T Affiliate received any fees, including 
any fees payable pursuant to Rule 12b-1 under the 1940 Act, in 
connection with the Redemptions;
    (e) M&T retained an Independent Fiduciary, as such term is defined 
in Section III. The Independent Fiduciary determined that the terms of 
the Redemptions were fair to the participants of the Plan and 
comparable to and no less favorable than terms obtainable at arm's 
length between unaffiliated parties, and that the Redemptions were in 
the best interest of the Plan and its participants and beneficiaries;
    (f) M&T or the relevant Fund provided to the Independent Fiduciary 
a written confirmation regarding such Redemptions containing:
    (1) The number of Shares held by the Plan immediately before the 
Redemptions (and the related per Share net asset value and the total 
dollar value of the Shares held),
    (2) the identity (and related aggregate dollar value) of each 
Transferable Security provided to the Plan at the time of the 
Redemptions, including each Transferable Security valued in accordance 
with Rule 2a-4 under the 1940 Act and the then-existing procedures 
established by the Fund (using sources independent of M&T and M&T 
Affiliates) for obtaining prices from independent pricing services or 
market-makers,
    (3) the market price of each Transferable Security received by the 
Plan at the time of the Redemptions, and
    (4) the identity of each pricing service or market-marker consulted 
in determining the value of each Transferable Security at the time of 
the Redemptions.
    (g) The value of the Transferable Securities and cash received by 
the Plan for each redeemed Share equaled the net asset value of such 
Share at the time of the transaction, and such value equaled the value 
that would have been received by any other investor for shares of the 
same class of the Fund at the time;
    (h) For a period of six months following the Redemptions, MTB 
Investment Advisors (MTBIA), an M&T Affiliate and the investment 
advisor to the MTB Group of Funds (MTB Funds) reimbursed the Plan for 
commissions and fees incurred in connection with Transferable 
Securities received as a result of the Redemptions and subsequently 
sold;
    (i) Following the Redemptions, M&T, on behalf of the Plan, has paid 
and will continue to pay investment management fees for the Plan's 
investment in the separate accounts so long as MTBIA serves as the 
investment manager for the Plan;
    (j) Subsequent to the Redemptions, the Independent Fiduciary 
performs a post-transaction review that includes, among other things, 
testing a sampling of material aspects of the Redemptions deemed in its 
judgment to be representative, including pricing;
    (k) M&T maintains, or causes to be maintained, for a period of six 
years from the date the Redemptions, such records as are necessary to 
enable the person described in paragraph (l)(1) below to determine 
whether the conditions of this exemption have been met, except that
    (1) if the records necessary to enable the persons described in 
Section II(l)(1) to determine whether the conditions of this exemption 
have been met are lost, or destroyed, due to circumstances beyond the 
control of M&T, 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 with respect to the Plan other than M&T 
shall be subject to the civil penalty that 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 such records are not maintained or are not 
available for examination as required by Section II(k).
    (l)(1) Except as provided in this Section II(l)(2) and 
notwithstanding any provision of section 504(a)(2) and (b) of the act, 
the records referred to in Section II(k) are unconditionally available 
at their customary locations for examination during normal business 
hours by:
    (i) Any duly authorized employee or representative of the United 
States Department of Labor (the Department), the Internal Revenue 
Service, or the Securities and Exchange Commission,
    (ii) any fiduciary of the Plan or any duly authorized 
representative of such participant or beneficiary,
    (iii) any participant or beneficiary of the Plan or duly authorized 
representative of such participant or beneficiary,
    (iv) any employer whose employees are covered by the Plan, and
    (v) any employee organization whose members are covered by such 
Plan;
    (2) None of the persons described in Section II(l)(1)(ii) through 
(v) shall be authorized to examine trade secrets of M&T, the Funds, or 
the investment advisor for the Funds, or commercial or financial 
information which is privileged or confidential; and
    (3) Should M&T, the Funds, or the investment advisor for the Funds 
refuse to disclose information on the basis that such information is 
exempt from disclosure pursuant to Section II(l)(2) above, M&T, the 
Funds, or the investment advisor shall, by the close of the 30th day 
following the request, provide a written notice advising that person of 
the reasons for the refusal and that the Department may request such 
information.

[[Page 49036]]

Section III--Definitions

    For purposes of this proposed exemption,
    (a) The term ``M & T'' means Manufacturers and Traders Trust 
Company which is a wholly-owned subsidiary of the M&T Bank Corporation.
    (b) The term ``affiliate'' means:
    (1) Any person (including a corporation or partnership) directly or 
indirectly through one or more intermediaries, controlling, controlled 
by, or under common control with the person;
    (2) Any officer, director, employee, or partner in any such person; 
and
    (3) Any corporation or partnership of which such person is an 
officer, director, partner, or employee.
    (c) The term ``control'' means the power to exercise a controlling 
influence over the management or policies of a person other than an 
individual.
    (d) The term ``net asset value'' means the amount for purposes of 
pricing all purchases and sales calculated by dividing the value of 
securities, determined by a method as set forth in the Fund's 
prospectus and statement of additional information, and other assets 
belonging to the Fund, less the liabilities charged to each such 
Portfolio, by the number of outstanding shares.
    (e) The term ``Independent Fiduciary'' means a fiduciary who is:
    (1) Independent of and unrelated to M&T and its affiliates, and
    (2) Appointed to act on behalf of the Plan with respect to the 
Redemptions.
    For purposes of this exemption, a fiduciary will not be deemed to 
be independent of and unrelated to M&T if:
    (3) Such fiduciary directly or indirectly controls, is controlled 
by or is under common control with M&T;
    (4) Such fiduciary, directly or indirectly receives any 
compensation or other consideration in connection with any transaction 
described in this exemption (except that an independent fiduciary may 
receive compensation from M&T in connection with the transactions 
discussed herein if the amount or payment of such compensation is not 
contingent upon or in any way affected by the independent fiduciary's 
ultimate decision); or
    (5) Such fiduciary receives, in its current fiscal year, from M&T 
or its affiliates, an amount that would have exceeded one percent (1%) 
of such fiduciary's gross income in the prior fiscal year.
    (f) The term ``Transferable Securities'' shall mean securities
    (1) For which market quotations are readily available from persons 
independent of M&T as determined pursuant to procedures established by 
the Funds under Rule 2a-4 of the 1940 Act; and
    (2) Which are not:
    (i) Securities which, if publicly offered or sold, would require 
registration under the Securities Act of 1933;
    (ii) Securities issued by entities in countries which (A) restrict 
or prohibit the holding of securities by non-nationals other than 
through qualified investment vehicles, such as the Funds, or (B) permit 
transfers of ownership of securities to be effected only by 
transactions conducted on a local stock exchange;
    (iii) Certain portfolio positions (such as forward foreign currency 
contracts, futures and options contracts, swap transactions, 
certificates of deposit and repurchase agreements) that, although they 
may be liquid and marketable, involve the assumption of contractual 
obligations, require trading facilities or can only be traded with the 
counter-party to the transaction to effect a change in beneficial 
ownership;
    (iv) Cash equivalents (such as certificates of deposit, commercial 
paper and repurchase agreements);
    (v) Other assets which are not readily distributable (including 
receivables and prepaid expenses), net of all liabilities (including 
accounts payable); and
    (vi) Securities subject to ``stop transfer'' instructions or 
similar contractual restrictions on transfer. Effective Date: This 
exemption is effective as of the date of this grant.

Written Comments

    In the Notice of Proposed Exemption (the Notice), the Department 
invited all interested persons to submit written comments and requests 
for a hearing.
    During the comment period, the Department received no requests for 
a hearing. The Department did receive a comment from the Applicant 
dated May 1, 2009. The Applicant cited several issues with regard to 
the Notice as follows.
    1) Section II(c) of the Notice reads as follows:

    With certain exceptions explained in Representation 6 below, the 
Plan received a pro rata portion of the Transferable Securities, 
pursuant to the Redemptions that, when added to the cash received, 
was equal in value to the number of Shares redeemed for such 
Transferable Securities, as determined in a single valuation (using 
sources independent of M&T and M&T affiliates) performed in the same 
manner and as of the close of business on the same day as the day of 
receipt of the Transferable Securities, in accordance with Rule 2a-4 
under the Investment Company Act of 1940, as amended from time to 
time (the 1940 Act), and the then-existing procedures established by 
the Fund that are in compliance the 1940 Act;

The Applicant explains that the valuation described in section II(c) of 
the Notice and the actual receipt of the Transferable Securities by the 
Plan could have occurred on different days. The Applicant represents 
that although the valuation occurred on the same day as the date of the 
Redemptions, the actual receipt of the Transferable Securities by the 
Plan occurred on the next business day following the date of the 
Redemptions. Based on the Applicant's clarification, the Department has 
determined to amend the language of section II(c) as follows:

    With certain exceptions explained in Representation 6 below, the 
Plan received a pro rata portion of the Transferable Securities, 
pursuant to the Redemptions that, when added to the cash received, 
was equal in value to the number of Shares redeemed for such 
Transferable Securities, as determined in a single valuation (using 
sources independent of M&T and M&T affiliates) performed in the same 
manner and as of the close of business on the same day as the day of 
the Redemptions, in accordance with Rule 2a-4 under the Investment 
Company Act of 1940, as amended from time to time (the 1940 Act), 
and the then-existing procedures established by the Fund that are in 
compliance the 1940 Act, and the Plan received the Transferable 
Securities on the next business day following the date of the 
Redemptions;

    2) The Applicant requested that section II(i) and subparagraph (e) 
of Paragraph 15 of the Summary of Facts and Representations of the 
Notice should be deleted. The condition set forth in Section II(i) of 
the Notice and subparagraph (e) of Paragraph 15 reads as follows:

    Following the Redemptions, M&T, on behalf of the Plan, has paid 
and will continue to pay total annual expenses, including investment 
management fees for the Plan's investment in the separate accounts;

In addition, the subparagraph (d) of Paragraph 14 of the Summary of 
Facts and Representations of the Notice reads as follows:

    The Plan will no longer pay investment management fees with 
respect to its investment in the separate accounts charged by MTBIA.

The Applicant clarified its application to indicate that it intended to 
pay only investment management fees on behalf of the Plan's investment 
in the M&T separate accounts. In this regard, Evercore Trust Company, 
N.A.

[[Page 49037]]

(Evercore), the independent fiduciary and the successor of U.S. Trust 
Company, stated in a June 9, 2009 letter to the Department that the 
Funds' total annual expenses include certain expenses that have no 
clear counterpart when assets are separately managed (e.g., transfer 
agency fees, custody fees, shareholder servicing fees). The only fees 
specifically associated with a separately managed arrangement are the 
manager's investment management fees. Given that M&T has agreed to pay 
for the investment management fees associated with the separate 
accounts, it is therefore consistent to describer the Plan's on-going 
savings as the Fund's total annual expenses.
    The Applicant also clarified its application to indicate that it 
did not intend to absorb permanently the investment management costs 
associated with the separate accounts on behalf of the Plan. The 
Applicant represents that if the Plan should cease using MTBIA and hire 
an investment manager unaffiliated with the Applicant, the Applicant 
may at that time cease paying the investment management fees.
    The Department has revised section II(i) of the Notice to read as 
follows:

    Following the Redemptions, M&T, on behalf of the Plan, has paid 
and will continue to pay investment management fees for the Plan's 
investment in the separate accounts so long as MTBIA serves as the 
investment manager for the Plan;

In addition, subparagraph (d) of Paragraph 14 and subparagraph (e) of 
Paragraph 15 of the Summary of Facts and Representations in the Notice 
should read as follows:

    Following the Redemptions, M&T, on behalf of the Plan, has paid 
and will continue to pay investment management fees for the Plan's 
investment in the separate accounts so long as MTBIA serves as the 
investment manager for the Plan;

    3) The Applicant requests that the language contained in paragraph 
2 of the Summary of Facts and Representations in the Notice be revised, 
in order to reflect the fact that M&T manages Plan investments and does 
not manage the Plan itself. Paragraph 2 of the Summary of Facts and 
Representations in the Notice reads as follows:

    ``M&T serves as trustee of the Plan and manages the Plan.''

The Department concurs with the Applicant's suggested revision. In this 
regard, the last sentence of paragraph 2 of the Summary of Facts and 
Representations, as set forth in the Notice, should read as follows:

    ``M&T serves as trustee of the Plan and manages the Plan's 
investments.''

    (4) The Applicant requested that the second sentence of paragraph 5 
of the Summary of Facts and Representations in the Notice be clarified. 
The second sentence of Paragraph 5 of the Summary of Facts and 
Representations in the Notice reads as follows:

    M&T determined that the Plan's investments in the Funds were 
large enough so that an all-cash redemption would adversely impact 
the Funds and to proceed with the Redemptions.

The Applicant represents that specifically, it was the board of the MTB 
Funds that determined that an all-cash redemption would adversely 
impact the MTB Funds.
    The Department concurs with the Applicant's suggested revisions. In 
this regard, the second sentence of paragraph 5 of the Summary of Facts 
and Representations, as set forth in the Notice is revised to read as 
follows:

    The board of the MTB Funds determined that the Plan's 
investments in the Funds were large enough so that an all-cash 
redemption would adversely impact the Funds and to proceed with the 
Redemptions.

    (5) The Applicant requested a clarification of the word ``it'' 
which should have read the ``MTB Funds'' in the third sentence of 
footnote 9 of the Summary of Facts and Representations. The third 
sentence of footnote 9 of the Summary of Facts and Representations in 
the Notice reads as follows:

    M&T represents it has adopted procedures in accordance with the 
Signature Financial Letter for use in affiliated transactions, and 
those procedures must be followed for transactions with the Plan, as 
the Plan is treated as an affiliate under the 1940 Act of the funds 
whose shares are being redeemed.

    The Department concurs with the Applicant's suggested revisions. In 
this regard, the third sentence of footnote 9 of the Summary of Facts 
and Representations in the Notice is amended to read as follows:

    M&T represents that the MTB Funds have adopted procedures in 
accordance with the Signature Financial Letter for use in affiliated 
transactions, and those procedures must be followed for transactions 
with the Plan, as the Plan is treated as an affiliate under the 1940 
Act of the funds whose shares are being redeemed.

After reviewing the entire record, including the comments submitted, 
the Department has decided to grant this exemption as revised herein. 
For a more complete statement of the facts and representations 
supporting the Department's decision to grant this exemption refer to 
the Notice published on February 25, 2009, 74 FR 8576.

FOR FURTHER INFORMATION CONTACT: Anh-Viet Ly of the Department, 
telephone (202) 693-8648. (This is not a toll-free number).

Bank of New York Mellon Corporation, Located in Pittsburgh, PA.
[Prohibited Transaction Exemption 2009-27
[Application No. D-11553]

Exemption

    The restrictions of sections 406(a)(1)(A) through (D), 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,\1\ shall not apply, effective 
November 25, 2008, to the cash sale of certain securities (the 
Securities) issued by Lehman Brothers Holdings Inc. or its affiliates 
(Lehman) for an aggregate purchase price of approximately $5,512,395 by 
the EB SMAM Securities Lending Temporary Investment Fund (the Cash 
Collateral Fund) to the Bank of New York Mellon Corporation (BNYMC), a 
party in interest with respect to the employee benefit plans (the 
Plan(s)) invested, directly or indirectly, in the Cash Collateral Fund; 
provided that the following conditions are met:
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    \1\ For purposes of this exemption, references to specific 
provisions of Title I of the Act, unless otherwise specified, refer 
also to the corresponding provisions of the Code.
---------------------------------------------------------------------------

    (a) The sale of the Securities was a one-time transaction for cash;
    (b) The Cash Collateral Fund received an amount for the sale of the 
Securities which was equal to the sum of:
    (1) The amortized cost of the Securities, and
    (2) The accrued but unpaid interest on each of the Securities, 
determined as of the earlier of: (A) The date of the sale of the 
Securities, or (B) the maturity date of each of the Securities;
    (c) The amount received by the Cash Collateral Fund for the sale of 
the Securities was greater than the aggregate market value of the 
Securities at the time of the sale, as determined based on information 
regarding the then prevailing trading prices for the Securities 
obtained from two independent broker-dealers;
    (d) The Cash Collateral Fund did not bear any commissions, fees, 
transactions costs, or other expenses in connection with the sale of 
the Securities;
    (e) The Bank of New York Mellon (BNY Mellon), as trustee of the 
Cash Collateral Fund, determined that the sale of the Securities was 
appropriate for and in the best interest of the Cash Collateral Fund, 
and the Plans invested,

[[Page 49038]]

directly or indirectly, in the Cash Collateral Fund, at the time of the 
transaction;
    (f) BNY Mellon took all appropriate actions necessary to safeguard 
the interests of the Cash Collateral Fund, and the Plans invested, 
directly or indirectly, in the Cash Collateral Fund, in connection with 
the transaction, given that Lehman had filed for bankruptcy and that 
the value of the Securities had declined substantially;
    (g) If the exercise of any of BNYMC's rights, claims, or causes of 
action in connection with its ownership of the Securities results in 
BNYMC recovering from Lehman, the issuer of the Securities, or from any 
third party, an aggregate amount that is more than the sum of:
    (1) The purchase price paid for such Securities by BNYMC; and
    (2) The interest due on the Securities from and after the date 
BNYMC purchased the Securities from the Cash Collateral Fund, 
determined at the last-published interest rate on the Securities 
preceding Lehman's bankruptcy filing, BNYMC will refund such excess 
amount promptly to the Cash Collateral Fund (after deducting all 
reasonable expenses incurred in connection with the recovery);
    (h) BNY Mellon and its affiliates, as applicable, maintain, or 
cause to be maintained, for a period of six (6) years from the date of 
the transaction such records as are necessary to enable the persons 
described, below, in paragraph (i)(1), to determine whether the 
conditions of this exemption have been met, except that--
    (1) No party in interest with respect to a Plan which engages in 
the transaction, other than BNY Mellon and its affiliates, as 
applicable, shall be subject to a civil penalty under section 502(i) of 
the Act or the taxes imposed by section 4975(a) and (b) of the Code, if 
such records are not maintained, or not available for examination, as 
required, below, by paragraph (i)(1); and
    (2) A separate prohibited transaction shall not be considered to 
have occurred solely because, due to circumstances beyond the control 
of BNY Mellon and its affiliates, as applicable, such records are lost 
or destroyed prior to the end of the six-year period.
    (i)(1) Except as provided, below, in paragraph (i)(2), and 
notwithstanding any provisions of subsections (a)(2) and (b) of section 
504 of the Act, the records referred to, above, in paragraph (h) are 
unconditionally available at their customary location for examination 
during normal business hours by--
    (A) Any duly authorized employee or representative of the 
Department, the Internal Revenue Service, or the Securities and 
Exchange Commission; or
    (B) Any fiduciary of a Plan that engages in the transaction, or any 
duly authorized employee or representative of such fiduciary; or
    (C) Any employer of participants and beneficiaries and any employee 
organization whose members are covered by a Plan that engages in the 
transaction, or any authorized employee or representative of these 
entities; or
    (D) Any participant or beneficiary of a Plan that engages in the 
transaction, or duly authorized employee or representative of such 
participant or beneficiary;
    (2) None of the persons described, above, in paragraph (i)(1)(B)-
(D) shall be authorized to examine trade secrets of BNY Mellon and its 
affiliates, as applicable, or commercial or financial information which 
is privileged or confidential; and
    (3) Should BNY Mellon and its affiliates, as applicable, refuse to 
disclose information on the basis that such information is exempt from 
disclosure, BNY Mellon and its affiliates, as applicable, shall, by the 
close of the thirtieth (30th) day following the request, provide a 
written notice advising that person of the reasons for the refusal and 
that the Department may request such information.
    Effective Date: This exemption is effective, as of November 25, 
2008.
    After giving full consideration to the entire record, the 
Department has decided to grant the exemption, as described above. The 
complete application file is made available for public inspection in 
the Public Documents Room of the Employee Benefits Security 
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 published on July 23, 2009, at 74 FR 36515.

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

Ford Motor Company and Its Affiliates, (collectively, Ford)
Located in Detroit, MI.
[Prohibited Transaction Exemption 2009-28 Application No. L-11451]

Exemption

Section I. Covered Transactions

    The restrictions of sections 406(a)(1)(B), 406(a)(1)(D), 406(b)(1), 
and 406(b)(2) of the Act shall not apply, effective July 13, 2006, to: 
(1) monthly cash advances to Ford by the Independent Health Care Trust 
for UAW Retirees of Ford Motor Company (the DC VEBA), as defined in 
section III(f), below, of this exemption, to reimburse Ford for the 
estimated mitigation of certain health care expenses (the Mitigation), 
as defined in section III(h), below, of this exemption, and during the 
period from July 14, 2006 through February 28, 2007, for the payment of 
dental expenses incurred by participants in the DC VEBA; and (2) an 
annual ``true-up'' of the Mitigation payments and dental expenses 
against the actual expenses incurred, with the result that: (a) if Ford 
has been underpaid by the DC VEBA, Ford receives the balance 
outstanding from the DC VEBA with interest, or (b) if the DC VEBA has 
overpaid Ford, Ford reimburses the DC VEBA for the amount overpaid, 
with interest.

Section II. Conditions

    This exemption is conditioned upon adherence to the material facts 
and representations described in application for exemption, and upon 
satisfaction of the following conditions:
    (a) A committee (the Committee), as defined in section III(d), 
below, of this exemption, acting as a fiduciary independent of Ford, 
has represented and will continue to represent the DC VEBA and its 
participants and beneficiaries for all purposes with respect to the 
Mitigation process under the settlement agreement (the DC VEBA 
Settlement Agreement or the Settlement Agreement), as defined in 
section III(g), below, of this exemption.
    (b) The Committee for the DC VEBA has discharged and will continue 
to discharge its duties consistent with the terms of the DC VEBA and 
the Settlement Agreement.
    (c) The Committee and actuaries retained by the Committee have 
reviewed and approved and will continue to review and approve the 
estimation process involved in the Mitigation, which results in the 
monthly Mitigation amount paid to Ford.
    (d) Outside auditors retained by the Committee, along with an 
administrative company that is partly owned by the DC VEBA, have 
audited and will audit the calculation of the true-up to determine 
whether there are any differences between the estimated Mitigation and 
actual Mitigation amounts and have made and will make such information 
available to Ford.
    (e) Ford has provided various reports and records to the Committee 
concerning dental care reimbursements

[[Page 49039]]

for the period from July 14, 2006, through February 28, 2007, which 
were subject to review and audit by the Committee, and Ford has 
provided and will continue to provide various reports and records to 
the Committee concerning the Mitigation required under the Settlement 
Agreement which were and will continue to be subject to review and 
audit by the Committee.
    (f) The terms of the covered transactions are no less favorable and 
will continue to be no less favorable to the DC VEBA than the terms 
negotiated at arm's length under similar circumstances between 
unrelated third parties.
    (g) The interest rate applied to any true-up payments is a 
reasonable rate, as set forth in the DC VEBA Settlement Agreement, and 
will continue to be a reasonable rate that runs from the beginning of 
the year being trued up and does not and will not present a windfall or 
detriment to either party.
    (h) The DC VEBA has not incurred and will continue not to incur any 
fees, costs, or other charges (other than those described in the DC 
VEBA and the DC VEBA Settlement Agreement) as a result of the covered 
transactions described herein.
    (i) Ford and the Committee have maintained and will continue to 
maintain for a period of six (6) years from the date of any of the 
covered transactions, any and all records necessary to enable the 
persons described in section II(j), below, of this exemption to 
determine whether conditions of this exemption have been and will 
continue to be met, except that (1) a prohibited transaction will not 
be considered to have occurred if, due to circumstances beyond the 
control of Ford or the Committee, the records are lost or destroyed 
prior to the end of the six-year period, and (2) no party in interest 
other than Ford or the Committee shall be subject to the civil penalty 
that may be assessed under section 502(i) of the Act if the records are 
not maintained, or are not available for examination as required by 
section II(j), below, of this exemption.
    (j)(1) Except as provided in section II(j)(2), below, of this 
exemption and notwithstanding any provisions of subsections (a)(2) and 
(b) of section 504 of the Act, the records referred to in section 
II(i), above, of this exemption have been or will be unconditionally 
available at their customary location during normal business hours to:
    (A) Any duly authorized employee or representative of the 
Department;
    (B) The International Union, United Automobile, Aerospace and 
Agricultural Implement Workers of America (the UAW) or any duly 
authorized representative of the UAW;
    (C) Ford or any duly authorized representative of Ford; and
    (D) Any participant or beneficiary of the DC VEBA, or any duly 
authorized representative of such participant or beneficiary.
    (2) None of the persons described in section II(j)(1)(B) or (D), 
above, in this exemption is authorized to examine the trade secrets of 
Ford, or commercial or financial information that is privileged or 
confidential.

Section III. Definitions

    For purposes of this exemption, the term--
    (a) ``Ford'' means Ford Motor Company and its affiliates.
    (b) ``Affiliate'' means:
    (1) Any person directly or indirectly, through one or more 
intermediaries, controlling, controlled by, or under common control 
with such other person;
    (2) Any officer, director, or partner, employee or relative (as 
defined in section 3(15) of the Act) of such other person; or
    (3) Any corporation, partnership or other entity of which such 
other person is an officer, director or partner. (For purposes of this 
definition, the term ``control'' means the power to exercise a 
controlling influence over the management or policies of a person other 
than an individual.)
    (c) ``Class'' or ``Class Members'' mean all persons who, as of the 
ratification date (the Ratification Date), as defined in section I(a) 
of the Settlement Agreement, (i.e., December 22, 2005) were: (1) Ford/
UAW hourly employees who had retired from Ford with eligibility to 
participate in retirement in the Hospital-Surgical-Medical-Drug-Dental-
Vision Program (the Original Plan), as in effect prior to the 
Ratification Date, or (2) the spouses, surviving spouses, and 
dependents of Ford/UAW hourly employees, who, as of the Ratification 
Date, were eligible for post-retirement or surviving spouse health care 
coverage under the Original Plan as a consequence of a Ford/UAW hourly 
employee's retirement from Ford or death prior to retirement. Active 
employees, as defined in section I(A) of the Settlement Agreement, are 
not members of the Class.
    (d) ``Committee'' means the seven (7) individuals, consisting of 
two classes: (1) the UAW with three members, and (2) the public class 
with four members, who act as the named fiduciary and administrator of 
the DC VEBA.
    (e) ``Court'' or ``Michigan District Court'' means the United 
States District Court for the Eastern District of Michigan.
    (f) ``DC VEBA'' means the defined contribution--Voluntary 
Employees' Beneficiary Association trust established by Ford pursuant 
to the Settlement Agreement and the trust agreement (the Trust 
Agreement).
    (g) ``DC VEBA Settlement Agreement'' or the ``Settlement 
Agreement'' means the agreement, dated February 13, 2006, which was 
entered into between Ford, the UAW, and class representatives, on 
behalf of a class of plaintiffs in a class action suit cited as Int'l 
Union, UAW, et al. v. Ford Motor Company (Civil Case No. 05-74730 (E.D. 
Mich. July 13, 2006), aff'd, 497 F.3d 615 (6th Cir. 2007) (hereinafter 
referred to as the Hardwick I Case).
    (h) ``Mitigation'' means the reduction of monthly contributions, 
deductibles, out-of-pocket maximums, co-insurance payments, or any 
other payment in accordance with section 14 of the Settlement Agreement 
to the extent payments from the DC VEBA are made, as directed by the 
Committee, to Ford and/or to providers, insurance carriers and other 
agreed-upon entities.
    (i) ``OPEB'' means Other Post-Employment Benefits. The OPEB 
Valuation is an actuarially developed valuation of a company's post 
retirement benefit obligations, other than for pension and other 
retirement income plans. The OPEB Valuation is based on a set of 
uniform financial reporting standards promulgated by the Financial 
Accounting Standards Board and embodied in Financial Accounting 
Standard 106, as revised from time to time. The types of benefits 
addressed in an OPEB Valuation typically are retiree healthcare 
(medical, dental, vision, hearing) life insurance, tuition assistance, 
and legal services
    (j) ``Shares'' or ``Stock'' refers to the common stock of Ford for 
which the par value is $.01.
    (k) ``UAW'' means the International Union, United Automobile, 
Aerospace and Agricultural Implement Workers of America or the United 
Auto Workers, if shortened.
    (l) ``VEBA'' means a voluntary employees' beneficiary association.
    (m) ``Defined Contribution Plan'' or ``the Defined Contribution 
Plan of the Independent Health Care Trust for UAW Retirees of Ford 
Motor Company'' means the defined contribution welfare benefit plan 
funded by the DC VEBA following the effective date (the Effective 
Date), as defined in section I(A) of the Settlement Agreement (i.e., 
July 13, 2006), which will include the requirement to make 
contributions to

[[Page 49040]]

the DC VEBA, as set forth in section 13 of the Settlement Agreement.
    Effective Date: This exemption is effective, as of July 13, 2006.

Written Comments

    In the Notice of Proposed Exemption (the Notice), 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 
June 26, 2009.
    During the comment period, the Department received no requests for 
a hearing. However, the Department received a comment from the 
applicant informing the Department of a correction to certain language 
contained in the heading of the Notice. In this regard, the references 
to ``Ford Motor Corporation,'' as set forth in the heading of the 
Notice on page 30635, should be revised to read ``Ford Motor Company.''
    The Department acknowledges the correction, as requested by the 
applicant, and in the final exemption has amended the reference to Ford 
Motor Company.
    After giving full consideration to the entire record, the 
Department has decided to grant the exemption, as amended above. The 
complete application file is made available for public inspection in 
the Public Documents Room of the Employee Benefits Security 
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 published on June 26, 2009, at 74 FR 30635.

FOR FURTHER INFORMATION CONTACT: Angelena C. Le Blanc of the Department 
at telephone number 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 21st day of September 2009.
Ivan Strasfeld,
Director of Exemption Determinations, Employee Benefits Security 
Administration, U.S. Department of Labor.
[FR Doc. E9-23167 Filed 9-24-09; 8:45 am]

BILLING CODE 4510-29-P