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EBSA Final Rules

Prohibited Transaction Exemption Procedures; Employee Benefit Plans   [10/27/2011]
[PDF]
Federal Register, Volume 76 Issue 208 (Thursday, October 27, 2011)
[Federal Register Volume 76, Number 208 (Thursday, October 27, 2011)]
[Rules and Regulations]
[Pages 66637-66654]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-27312]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2570

RIN 1210-AB49


Prohibited Transaction Exemption Procedures; Employee Benefit 
Plans

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Final rule.

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SUMMARY: This document contains a final rule that supersedes the 
existing procedure governing the filing and processing of applications 
for administrative exemptions from the prohibited transaction 
provisions of the Employee Retirement Income Security Act of 1974 
(ERISA), the Internal Revenue Code of 1986 (the Code), and the Federal 
Employees' Retirement System Act of 1986 (FERSA). The Secretary of 
Labor is authorized to grant exemptions from the prohibited transaction 
provisions of ERISA, the Code, and FERSA and to establish an exemption 
procedure to provide for such relief. This final rule clarifies and 
consolidates the Department of Labor's exemption procedures and 
provides the public with a more comprehensive description of the 
prohibited transaction exemption process.

DATES: Effective Date: This final rule is effective December 27, 2011, 
and applies to all exemption applications filed on or after that date.

FOR FURTHER INFORMATION CONTACT: Eric A. Raps, Office of Exemption 
Determinations, Employee Benefits Security Administration, Room N-5700, 
U.S. Department of Labor, Washington, DC 20210, telephone (202) 693-
8532. This is not a toll-free number.

SUPPLEMENTARY INFORMATION: 

A. Background

    On August 30, 2010, the Department published a Notice of Proposed 
Rulemaking in the Federal Register (75 FR 53172) that would update the 
existing procedure governing the filing and processing of applications 
for administrative exemptions from the prohibited transaction 
provisions of ERISA, the Code, and FERSA, and invited written comments 
from the public concerning its contents. These comments are available 
for review at http://www.regulations.gov and also under ``Public 
Comments'' on the ``Laws & Regulations'' page of the Department's 
Employee Benefits Security Administration (EBSA) Web site at http://www.dol.gov/ebsa.

[[Page 66638]]

    The final rule contained in this document revises the prohibited 
transaction exemption procedure to reflect changes in the Department's 
exemption practices since the previous exemption procedure was issued 
in 1990 (the 1990 Exemption Procedure). Among other things, key 
elements of the exemption policies and guidance previously found in 
ERISA Technical Release 85-1 and the 1995 Exemption Publication have 
been consolidated within the text of a unitary, comprehensive final 
regulation. Adoption of this updated procedure should also promote the 
prompt and efficient consideration of all exemption applications by 
clarifying the types of information and documentation generally 
required for a complete filing, by affording expanded opportunities for 
the electronic submission of information and comments relating to an 
exemption, and by providing plan participants and other interested 
persons with a more thorough understanding of the exemption under 
consideration.

B. Overview of the Final Rule and Comments

    The exemption procedure contained in this document (and codified at 
29 CFR part 2570, subpart B) consists of 23 discrete sections (Sec.  
2570.30 through Sec.  2570.52), arranged by topic and generally 
reflecting the chronological order of steps involved in processing an 
exemption application. Set forth below is a summary of those aspects of 
the proposed rule on which the Department received comments, and the 
Department's response to those comments. Individuals interested in 
obtaining information concerning the content of the proposed rule not 
discussed herein should refer to the Notice of Proposed Rulemaking at 
75 FR 53172.

Section 2570.30 Scope of the Regulation

    Section 2570.30(b) of the proposed rule stated that ``the 
Department may conditionally or unconditionally exempt any fiduciary or 
transaction, or class of fiduciaries or transactions, from all or part 
of the restrictions imposed by section 406 of ERISA and the 
corresponding restrictions of the Code and FERSA.'' One commenter 
suggested that this formulation was too restrictive because, under the 
foregoing statutes, the Department has the authority to exempt not only 
fiduciaries engaged in prohibited transactions, but parties in interest 
(or disqualified persons under the Code) as well. Accordingly, the 
commenter requested that the Department broaden the scope of section 
2570.30(b) to include ``parties in interest.''
    The Department notes that section 2570.30(b) of the proposed rule 
simply restated the statutory language found at section 408(a) of ERISA 
concerning the scope of the Department's authority to grant 
administrative exemptions from the prohibited transaction provisions of 
ERISA. Because section 408(a) of the Act provides the Department with 
the authority to grant exemptions for ``any fiduciary or transaction, 
or class of fiduciaries or transactions,'' the Department also has the 
authority to provide exemptive relief to non-fiduciary parties in 
interest who engage in plan transactions. Therefore, it is unnecessary 
to adopt the commenter's suggested amendment. In this regard, the 
Department notes that, consistent with the legislative history of the 
Act,\1\ the Department has routinely granted exemptive relief to non-
fiduciary parties in interest and disqualified persons, and will 
continue to exercise its authority, as appropriate.
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    \1\ See H.R. Rep. No. 1280, 93d Cong., 2d Sess. 310 (1974), and 
also section 102 of Presidential Reorganization Plan No. 4 of 1978 
(3 CFR part 332 (1978), reprinted in 5 U.S.C. app. at 672 (2006) and 
in 92 Stat. 3790 (1978)), effective December 31, 1978, which 
generally transferred the authority of the Secretary of the Treasury 
to issue administrative exemptions under section 4975(c)(2) of the 
Code to the Department of Labor.
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Section 2570.31 Definitions

    Section 2570.31 of the proposed rule defines the following terms 
for purposes of the exemption procedure regulation: affiliate, class 
exemption, Department, exemption transaction, individual exemption, 
party in interest, pooled fund, qualified appraisal report, qualified 
independent appraiser, and qualified independent fiduciary.
    Definition of ``Affiliate''--Section 2570.31(a) of the proposed 
rule specifically defined the term ``affiliate'' to include any 
employee or officer of the person who is highly compensated or ``[h]as 
direct or indirect authority, responsibility, or control regarding the 
custody, management, or disposition of plan assets * * * '' One 
commenter expressed the view that the language of this definition 
should be clarified so that the term ``plan assets'' would refer only 
to those plan assets involved in the exemption transaction. The 
commenter stated that, absent such a modification, a person could be 
deemed to be an affiliate if he or she had responsibility with respect 
to the assets of any plan, without regard to whether the authority or 
control relates to the plan at issue or the plan assets at issue.
    In response to the commenter's suggestion, the Department has 
modified the definition of ``affiliate'' at section 2570.31(a) to 
clarify that the term applies to any employee or officer of the person 
who has direct or indirect authority, responsibility, or control 
regarding the custody, management, or disposition of plan assets 
involved in the subject exemption transaction. In addition, the 
Department, on its own motion, has further modified the term 
``affiliate'' to clarify the scope and meaning of the term ``control'' 
that is contained within that definition.
    Nature and Extent of Independence of Qualified Independent 
Appraisers and Fiduciaries--Two commenters objected to the definition 
of a ``qualified independent fiduciary'' (section 2570.31(j) of the 
proposed rule), which requires that a person serving in such capacity 
be ``independent of and unrelated to any party in interest engaging in 
the exemption transaction and its affiliates.'' One of the commenters 
also expressed a similar reservation with respect to the definition of 
a ``qualified independent appraiser'' (section 2570.31(i) of the 
proposed rule). One commenter opined that the words ``independent of'' 
and ``unrelated to'' are not defined in the proposed rule, particularly 
with respect to employees of the independent fiduciary who are related 
to employees of the party in interest (spouses, children, in-laws, 
etc.), and therefore should be deleted in the interests of clarity. 
Another commenter took the position that, if the Department's actual 
purpose in utilizing the foregoing language was to bar a qualified 
independent fiduciary from being an affiliate of the party in interest 
engaging in the transaction, then the Department should revise and 
simplify the text of section 2570.31(j) of the final rule accordingly.
    As noted previously, the purpose of including these definitions in 
the proposed rule was to emphasize that any independent fiduciary or 
appraiser retained in connection with an exemption transaction must not 
only be ``qualified'' (i.e., knowledgeable as to its duties and 
responsibilities under ERISA and knowledgeable as to the subject 
transaction and the markets, if any, where such transactions normally 
occur) to serve in that capacity, but also free from any relationships 
with the party in interest or its affiliates that could improperly 
affect its judgment. Because such relationships may be relevant to the 
Department's determination as to whether an appraiser or fiduciary is 
independent, the Department has not adopted the suggestions of the 
commenters for modifying these definitions.

[[Page 66639]]

    Standards for Measuring Compensation Received By Qualified 
Independent Appraisers and Fiduciaries--Several commenters indicated 
that the Department's use of the word ``income'' in the definitions in 
sections 2570.31(i) and (j) (and also in sections 2570.34(c)(7) and 
(d)(8)) to describe the overall annual compensation received by 
qualified independent appraisers and fiduciaries is problematic. Two of 
these commenters expressed the view that substitution of the word 
``revenues'' for income would be less susceptible to misinterpretation 
and more consistent with prior Departmental practice. One of the 
commenters also suggested that the text of section 2570.34(d)(8) be 
modified to reflect the substitution of the word ``revenues'' in place 
of the word ``income.'' Another commenter agreed with this view, and 
pointed out that the term ``income'' as a definitional term lends 
itself to a variety of interpretations--gross income, taxable income, 
etc. Similarly, another commenter suggested the substitution of the 
term ``gross revenue'' in lieu of the term ``income'' with respect to 
the compensation received by qualified independent appraisers. In 
general, the Department concurs, and has modified sections 2570.31(i) 
and (j) and sections 2570.34(c)(7) and (d)(8) in the final rule by 
substituting, where appropriate, the term ``revenue'' for the term 
``income.''
    In defining the terms ``qualified independent appraiser'' (section 
2570.31(i)) and ``qualified independent fiduciary'' (section 
2570.31(j)), the proposed rule provided that, in each instance, the 
determination as to the independence of the appraiser or fiduciary 
would be made ``on the basis of all relevant facts and circumstances.'' 
The definition of a ``qualified independent fiduciary'' further 
provided that, ``[a]s a general matter, an independent fiduciary 
retained in connection with an exemption transaction must not receive 
more than a de minimis amount of compensation (including amounts 
received for preparing fiduciary reports and other related duties) from 
the parties in interest to the transaction or their affiliates. For 
purposes of determining whether the compensation received by the 
fiduciary is de minimis, all compensation received by the fiduciary is 
taken into account. Such de minimis amount will ordinarily constitute 
1% or less of the annual income of the qualified independent fiduciary. 
In all events, the burden is on the applicant to demonstrate the 
independence of the fiduciary.'' The definition of a ``qualified 
independent appraiser'' under the proposed rule described the 
compensation to be received by such appraisers in virtually identical 
terms.
    The Department received a number of comments objecting to the 
content of the foregoing definitions under the proposed rule. Two 
commenters suggested that a de minimis or percentage test bears, at 
best, a narrow relationship to any duty or commitment to impartially 
perform independent fiduciary responsibilities under ERISA, and does 
not take into account the complexity, risk, expertise, or expenditure 
of time that such a commitment may entail. One commenter expressed the 
view that inserting the proposed de minimis and 1% standards in the 
text of a final regulation would mean that any firm that provides 
independent fiduciary services and whose compensation exceeds such 
thresholds is presumptively subject to improper influence from a party 
in interest to the exemption transaction. Two commenters further 
expressed the view that, if the 1% and de minimis aspects of the 
proposed rule were ultimately adopted, plan fiduciaries and officials 
required to retain independent fiduciaries and appraisers in connection 
with complex exemption transactions would inevitably limit their 
selections to a handful of large banking, fiduciary, or valuation firms 
whose compensation would satisfy the foregoing standards, thus reducing 
the overall level of competition for such services. By way of example, 
one commenter posited a complex exemption transaction which could 
reasonably be expected to command an independent fiduciary fee of 
$150,000 in a given year to be paid by a party in interest to the 
exemption transaction; the commenter concluded that, under the proposed 
rule, only firms with annual revenues of $15,000,000 or more would be 
presumptively independent of the party in interest.
    One commenter emphasized the negative effect that the de minimis 
standard would have upon smaller fiduciary and valuation firms, opining 
that smaller firms often possess greater expertise and objectivity with 
respect to evaluating exemption transactions than their larger 
institutional counterparts, and often provide their services to plans 
at less expense as a result of lower overhead costs. Two commenters 
expressed the view that the reduced competition resulting from the 
adoption of a 1% benchmark would likely have the undesirable effect of 
driving up the costs of engaging an independent fiduciary for exemption 
transactions; one of these commenters also ventured that such a 
provision might cause plans, rather than parties in interest, to pay 
the fees of such a fiduciary. Another commenter opined that the 
proposed compensation limitations in the proposed rule would make it 
especially difficult for newly-established independent fiduciary firms 
with few, if any, conflict of interest or affiliation problems to 
compete for significant assignments with respect to exemption 
transactions. This commenter further stated that this market access 
problem for new firms would persist even if the Department had 
specified a higher compensation threshold (e.g., 5%) in connection with 
the proposed de minimis standard.
    Several commenters stated that the 1% compensation threshold for 
independent fiduciaries contained in the proposed rule is substantially 
lower than the percentage guidelines often utilized by the Department 
in past administrative exemptions (and in other ERISA contexts) for 
evaluating whether fiduciaries have a relationship with a party in 
interest that renders them susceptible to inappropriate influences or 
pressures. Two commenters specifically noted that the Department has, 
in past individual exemptions, permitted independent fiduciaries to 
derive as much as 5% of their compensation from parties in interest 
involved in the exemption transaction. Several commenters stated that 
there are currently only a small number of firms that perform an 
independent fiduciary role in connection with complex exemption 
transactions, and that the restrictions on compensation contained in 
the proposed rule would tend to deter such firms from accepting these 
types of engagements in the future. One commenter also stated that the 
proposed de minimis /1% benchmark does not account for the fact that an 
independent fiduciary's fee arrangement often requires that a 
significant portion of the fiduciary's compensation is used to pay 
outside lawyers, actuaries, and other consultants for services that 
enable the fiduciary to meet its duties to the plan.
    Accordingly, several commenters expressed the opinion that the 
Department should consider alternatives in the final rule to the 1% and 
de minimis compensation standards for defining and evaluating the 
independence of fiduciaries and appraisers retained in connection with 
exemption transactions. In this connection, one commenter suggested 
that the Department should consider its proposed regulation relating to 
the definition of ``adequate consideration'' under section 3(18) of 
ERISA (see 53 FR

[[Page 66640]]

16732, proposed May 17, 1988), which enumerated various criteria for 
determining whether a plan fiduciary has made a good faith 
determination of the fair market value of an asset (other than a 
security for which there is a generally recognized market). One of the 
proposed criteria would require that the relevant fiduciary be 
independent of all parties to the transaction (other than the plan) and 
that the assessment of the independence of the fiduciary should be made 
in light of all relevant facts and circumstances. In this regard, the 
commenter noted that none of the proposed criteria made any references 
to amounts or percentages of compensation received by a fiduciary from 
a party in interest.
    While expressing various concerns about the possible effects of an 
express limitation on qualified independent fiduciary compensation, 
another commenter nevertheless acknowledged that a fiduciary whose 
compensation from parties in interest with respect to a proposed 
transaction represents a significant portion of the fiduciary's 
revenues can be, or can be perceived to be, susceptible to improper 
influence in carrying out its fiduciary duties. Accordingly, this 
commenter suggested the deletion of the Department's language at 
section 2570.31(j) in the proposed rule concerning de minimis amounts 
and the 1% compensation standard, and substituting a number of factors 
that the Department would utilize in evaluating the independence of a 
fiduciary. These factors would include the complexity of the exemption 
transaction, the amount of plan assets involved in the exemption 
transaction (expressed in both absolute terms and as a percentage of 
the plan's total assets), and the expected duration of the fiduciary's 
engagement.
    In response to these comments, the Department wishes to point out 
that, in defining the terms ``qualified independent appraiser'' and 
``qualified independent fiduciary'', the proposed rule provided that, 
in each instance, the final determination as to the independence of the 
appraiser or fiduciary is made ``on the basis of all relevant facts and 
circumstances.'' The Department also notes that the references to the 
one percent standard for compensation received by appraisers and 
fiduciaries in connection with an exemption transaction was not 
intended as an absolute limit with respect to compensation received by 
such persons from parties in interest.
    Thus, the Department concurs that this provision should be 
clarified. In this regard, the Department notes that the percentage of 
an appraiser's or fiduciary's annual revenue derived from a party in 
interest (or its affiliates) to an exemption transaction is an 
important factor in determining whether such person is, in fact, 
independent of the party in interest engaging in the covered 
transaction. The Department also continues to believe that the 
percentage of an appraiser's or fiduciary's annual revenue that is 
attributable to a party in interest should be a de minimis amount. 
Accordingly, absent facts and circumstances demonstrating a lack of 
independence, the Department will operate according to the presumption 
that such appraiser or fiduciary will be independent if the revenues it 
receives or is projected to receive, within the current federal income 
tax year, from parties in interest (and their affiliates) to the 
transaction are not more than 2% of such appraiser's or fiduciary's 
annual revenues based upon its prior income tax year. Although the 
presumption does not apply when the aforementioned percentage exceeds 
2%, an appraiser or fiduciary nonetheless may be considered independent 
based upon other facts and circumstances provided that the appraiser or 
fiduciary receives or is projected to receive revenues that are not 
more than 5% within the current federal income tax year, from parties 
in interest (and their affiliates) to the transaction based upon its 
prior income tax year.
    Accordingly, it is the Department's view that the language 
contained in sections 2570.31(i) and (j) in the final rule provides the 
Department with sufficient flexibility to take into account any and all 
relevant facts and circumstances that may have a bearing on its 
assessment of the qualifications and independence of appraisers and 
fiduciaries. In this connection, the Department further notes that the 
previously referenced factors cited by the commenter may be taken into 
account under this ``facts and circumstances'' standard.

Section 2570.33 Applications the Department Will Not Ordinarily 
Consider

    Section 2570.33 describes exemption applications that the 
Department will not ordinarily consider, such as applications involving 
a transaction or transactions that are the subject of an investigation 
under the reporting, disclosure and fiduciary responsibility provisions 
in parts 1 or 4 of subtitle B of Title I of ERISA. In connection with 
the application content provisions of the exemption regulation, one 
commenter suggested that the Department modify the language of the 
final rule to ensure the confidentiality of information disclosed in an 
application (or in any amendments or supplements thereto).\2\ In 
support of its view, the commenter stated that investigations by EBSA 
are confidential, and that the EBSA Enforcement Manual makes 
information about current enforcement proceedings subject to strict 
confidentiality (except with respect to other governmental agencies). 
The commenter also argued that, absent an amendment excluding this 
information from public access, certain applicants affected by the 
application content requirements could be stigmatized or might be 
deterred from applying for exemptive relief from the Department.
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    \2\ Specifically, the commenter suggested modifications to the 
language of sections 2570.35(a)(7) and 2570.35(b) to make allowances 
for the confidentiality of information submitted to the Department 
in connection with an exemption application. Section 2570.35(a)(7) 
requires that an application for an individual exemption include a 
brief statement to the Department disclosing whether, within the 
last five years, any plan affected by the exemption transaction or 
any party in interest involved in the exemption transaction has been 
under investigation or examination by, or has been engaged in 
litigation or a continuing controversy with, the Department, the 
Internal Revenue Service, the Justice Department, the Pension 
Benefit Guaranty Corporation, or the Federal Retirement Thrift 
Investment Board involving compliance with provisions of ERISA, 
provisions of the Code relating to employee benefit plans, or 
provisions of FERSA relating to the Federal Thrift Savings Fund. 
Section 2570.37(b) states that if, at any time during the pendency 
of an exemption application, the applicant or any other party in 
interest who would participate in the exemption transaction becomes 
the subject of an investigative or enforcement action by the 
foregoing agencies, the applicant must promptly notify the 
Department of such a fact. In considering this comment, the 
Department determined that it was appropriate to address the issue 
of information designated as confidential by an applicant under 
section 2570.33 of the final rule.
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    The Department does not concur that the final rule should be 
modified to address the commenter's concerns with respect to preserving 
the confidentiality of certain information submitted as part of an 
exemption application. Because such information comprises part of the 
record in support of an exemption, it enables the public to understand 
the basis for the Department's decision. Section 2570.51(a) of both the 
1990 Exemption Procedure and the proposed rule stipulates that ``[t]he 
administrative record of each exemption application will be open to 
public inspection and copying.'' Thus, the Department will not process 
exemption applications containing such designations unless the claim of 
confidentiality and privilege is withdrawn or the Department determines 
that the designated information is not material to the exemption 
request. Accordingly, in order to provide further clarity, the 
Department has redesignated paragraph

[[Page 66641]]

(c) of section 2570.33 as paragraph (d), and a new paragraph (c) 
describing the Department's policy on claims of confidentiality has 
been inserted.

Section 2570.34 Information To Be Included in Every Exemption 
Application

    Disclosure of Compensation Received by Qualified Independent 
Appraisers and Fiduciaries--Section 2570.34(d)(8) of the proposed rule 
would have required that any statement provided by a qualified 
independent fiduciary in support of an exemption application include, 
among other things, a representation ``disclosing the percentage of 
such fiduciary's current income that was derived from any party in 
interest involved in the transaction or its affiliates; in general, 
such percentage shall be computed by comparing, in fractional form: (i) 
The amount of the fiduciary's projected personal or business income for 
the current federal income tax year that will be derived from the party 
in interest or its affiliates (expressed as a numerator); and (ii) The 
fiduciary's gross personal or business income (excluding fixed, non-
discretionary retirement income) for the prior federal income tax year 
(expressed as a denominator).'' Section 2570.34(c)(7) of the proposed 
rule contained similar requirements for the content of statements 
submitted by a qualified independent appraiser in support of an 
exemption application.
    One commenter suggested that this provision be amended in the final 
rule to expressly state that, in instances where a qualified 
independent fiduciary provides its services to a plan through a 
specialized unit which is the subsidiary or affiliate of a larger 
business organization, the fiduciary's revenues (the denominator of the 
fraction described in this subsection) should be based solely upon the 
revenues of the specialized unit and not the larger organization. The 
commenter stated that, because the purpose of examining the proportion 
of the independent fiduciary's compensation derived from parties in 
interest is to determine the fiduciary's lack of susceptibility from 
undue influence, the revenues of the specialized unit should be the 
proper focus of such an inquiry.
    In addition, the commenter offered the view that the time frames 
contained in the foregoing denominator should reflect the greater of 
(i) The prior federal income tax year's income or (ii) the qualified 
independent fiduciary's good faith estimate of the current year's 
income. In the commenter's view, the relationship between the 
compensation in connection with the transaction in question and the 
current financial state of the business is as least as relevant as data 
that may be as much as a year old when the calculation is made.
    Because, as previously noted, the focus of this provision is on the 
revenues generated by the independent fiduciary, the Department 
believes no further changes to the language of this provision are 
necessary. Further, the Department declines to adopt the commenter's 
suggested modification of the content of the denominator (as described 
at section 2570.34(d)(8)) with respect to the relevant time frame for 
computing the revenues received by an independent fiduciary from all 
sources. The Department is of the view that the formula described in 
the final rule affords greater objectivity and certainty in determining 
such amounts.
    Specialized Statements--Section 2570.34(c) requires that a 
qualified independent appraiser act solely on behalf of the plan in 
preparing statements submitted in support of an application for 
exemption. In the Department's view, any appraiser retained to perform 
an asset valuation on behalf of a plan must discharge its 
responsibilities in an independent and impartial manner. In this 
regard, the Department expects the qualified independent appraiser's 
determination to be unbiased, fair, and objective, and to be made in 
good faith and based on a detailed analysis of the prevailing 
circumstances then known to the appraiser. The same general standards 
of professional conduct also apply, as appropriate, to statements 
prepared by other third party experts under section 2570.34(e).

Section 2570.35 Information To Be Included in Applications for 
Individual Exemptions Only

    Disclosure of party in interest investments--Under section 
2570.35(a)(16), as it appeared in the 1990 Exemption Procedure, the 
extent of applicant disclosure of plan investments with a party in 
interest was limited to whether or not the assets of the affected 
plans(s) were invested in loans to any party in interest involved in 
the exemption transaction, property leased to any such party in 
interest, or securities issued by any party in interest involved in the 
exemption transaction. Where such investments existed, the applicant 
was required to include an additional statement detailing the nature 
and extent of these investments, and whether a statutory or 
administrative exemption covered such investments.
    In the proposed rule, the Department proposed an amendment to this 
provision that would have required an applicant to disclose whether or 
not the assets of the affected plan(s) had been invested directly or 
indirectly in any other transactions (e.g., securities lending or 
extensions of credit), whether exempt or non-exempt, with the party in 
interest involved in the exemption transaction. Accordingly, such 
disclosure would not have been limited to plan investments in loans or 
leases involving the party in interest, or securities issued by the 
party in interest. In cases where any such investments existed, the 
applicant would have been required to provide the Department with 
additional information describing, among other things: (1) The type of 
investment to which the statement pertains; (2) The aggregate fair 
market value of all investments of this type as reflected in the plan's 
most recent annual report; (3) The approximate percentage of the fair 
market value of the plan's total assets as shown in such annual report 
that is represented by all investments of this type; and (4) The 
applicable statutory or administrative exemption covering these 
investments (if any).
    One commenter expressed the view that this proposed revision, which 
requires an exemption applicant to disclose all direct or indirect 
investments of a plan with the party in interest (regardless of whether 
such investments were exempt or non-exempt under the terms of ERISA) 
was ``overbroad'' and would be ``extraordinarily burdensome'' for 
applicants. The commenter stated that, for a plan with $10 billion in 
assets, there could be literally thousands of transactions with or 
through a party in interest that would be required to be disclosed 
under this revised provision, regardless of how relevant these 
transactions might be to the exemption under consideration. The 
commenter questioned whether the disclosure of these transactions (and 
the costs associated with such disclosure) would result in a more 
efficient exemption process, and added that it desired to see a 
continuation of the Department's existing practice of inquiring during 
the pendency of the exemption application about other relationships and 
transactions concerning a plan's investments with a party in interest.
    After consideration of the comment, the Department generally 
concurs with the concerns expressed by the commenter that compliance 
with the disclosure requirements described in the proposed revision to 
section 2570.35(a)(16) may pose practical difficulties for some 
prohibited transaction exemption applicants. The

[[Page 66642]]

purpose of this disclosure provision (as explained in the preamble of 
the 1990 Exemption Procedure) is to enable the Department to determine 
whether the exemption transaction, in conjunction with other plan 
investments involving parties in interest, would unduly concentrate the 
plan's assets in certain investments and parties so as to raise 
questions under the fiduciary responsibility provisions of ERISA. 
Accordingly, the Department has determined to modify the language in 
the final rule by reverting to the existing requirement, contained in 
the 1990 Exemption Procedure, which requires an applicant for an 
individual exemption to disclose information regarding any plan 
investments in loans to, property leased to, or securities issued by, 
any party in interest involved in the exemption transaction. In 
addition, it is noted that section 2570.35(a)(16) of the final rule 
does not preclude the Department from requesting, during the pendency 
of the exemption application, additional information from the 
applicant.
    Retroactive exemptions--In the proposed rule, the Department added 
a new section 2570.35(d) to provide guidance to applicants who are 
seeking retroactive relief for past prohibited transactions. This new 
subsection incorporates the standards for retroactive exemptions that 
were described by the Department in ERISA Technical Release 85-1 
(January 22, 1985). The Department believes that the inclusion of these 
standards as part of an updated and comprehensive exemption procedure 
regulation will provide greater clarity to applicants for retroactive 
relief, thereby facilitating the prompt evaluation of such 
applications. Among other things, the new subsection reaffirms that, as 
a general matter, the Department will consider granting retroactive 
relief for transactions already consummated only if the safeguards 
necessary for the grant of a prospective exemption were in place at the 
time of the consummated transaction. In this regard, an applicant 
should provide evidence that it acted in good faith at the time of the 
subject transaction by taking reasonable and appropriate steps to 
protect the plan from abuse and unnecessary risk. The new subsection 
also enumerates a variety of objective factors that the Department 
ordinarily takes into account when evaluating whether the conduct of 
the applicant at the time of a previously consummated transaction 
satisfies the good faith standard.
    One commenter expressed concern about the practical effect of one 
of these factors (section 2570.35(d)(2)(v)), under which the Department 
would take into account whether ``the applicant has submitted evidence 
that the plan fiduciary did not engage in an act or transaction knowing 
that such act or transaction was prohibited under section 406 of ERISA 
and/or section 4975 of the Code. In this regard, the Department will 
accord appropriate weight to the submission of a contemporaneous, 
reasoned legal opinion of counsel, upon which the plan fiduciary relied 
in good faith before entering the act or transaction * * *.''
    The commenter posited a situation in which, during the pendency of 
an application for prospective exemptive relief, certain exigencies 
(such as a change in the tax laws) create an incentive for a party in 
interest to immediately consummate the proposed transaction, despite 
the absence of administrative relief from the Department at that point 
in time. The commenter expressed the view that in such circumstances, 
where an applicant subsequently amends its application to obtain 
retroactive relief for a past prohibited transaction, the Department 
should adopt an accommodating posture with respect to those exigent 
circumstances that might induce a party in interest to a transaction to 
engage in that transaction prior to receiving a final grant of 
exemption.
    The Department notes that the good faith factors enumerated under 
section 2570.35(d) do not constitute an exclusive or an exhaustive list 
of the criteria that the Department may consider in evaluating an 
application for a retroactive exemption. The determination of whether a 
fiduciary has acted in good faith will be based upon a review of the 
totality of facts and circumstances surrounding a past prohibited 
transaction (including the exigencies of the transaction) before 
determining whether a retroactive exemption is warranted. In this 
connection, the applicant for a retroactive exemption must demonstrate 
that the safeguards necessary for the grant of a prospective 
transaction were in place at the time that the transaction was 
consummated. Accordingly, the Department has determined that no 
modifications to section 2570.35(d)(2)(v) are warranted.

Section 2570.37 Duty To Amend and Supplement Exemption Applications

    Section 2570.37(a) of the proposed rule required that an exemption 
applicant promptly notify the Department if, during the pendency of an 
exemption application, any material fact or representation contained in 
the application changes or is inaccurate. This section also required 
that, during the pendency of the exemption application, the applicant 
promptly notify the Department concerning any material fact or 
representation that had been omitted from the application. The 
determination whether, under the totality of the facts and 
circumstances, a particular statement contained in (or omitted from) an 
exemption application constitutes a material fact or representation is 
made by the Department.
    One commenter interpreted the phrase ``during the pendency of the 
application'' contained in paragraph (a) of section 2570.37 to mean the 
period ``under which the application/exemption is in force.'' With this 
interpretation in mind, the commenter expressed the view that changes 
to the facts underlying the original grant of an exemption (such as the 
size of a company, its business affiliations, lines of business, etc.) 
occur all of the time. As a consequence, the commenter opined that if a 
party in interest to a covered transaction fails to report any changes 
at all to the facts and representations underlying a granted exemption, 
such exemption may automatically become invalid. Accordingly, the 
commenter proposed that the Department should limit the changes that 
need to be reported to the Department to those occurring prior to the 
granting of an exemption.
    The Department does not concur with the commenter's interpretation 
of the words ``during the pendency of the application''. The applicable 
timeframe covered by section 2570.37(a) is the period between the 
submission of an exemption application and the point at which final 
administrative action is taken by the Department with respect to the 
application. In the case of a granted exemption involving a one-time 
transaction that has been consummated in accordance with the terms and 
conditions of the exemption, subsequent events do not affect the 
validity of the exemptive relief granted by the Department. In 
instances where the Department has granted an exemption for a 
transaction which is continuing in nature (e.g., a lease), section 
2570.49(d) of the procedure would apply. This provision stipulates that 
``[f]or transactions that are continuing in nature, an exemption ceases 
to be effective if, during the continuation of the transaction, there 
are material [emphasis added] changes to the original facts and 
representations underlying such exemption or if one or more of the 
exemption's conditions cease to be met.'' The materiality of such 
changes is determined by the

[[Page 66643]]

Department in light of the totality of the surrounding facts and 
circumstances.\3\ Accordingly, after considering this comment, the 
Department has determined not to modify the language of section 
2570.37(a) in the final rule. However, in the interests of clarity, the 
Department has, on its own motion, deleted paragraph (d) of section 
2570.37 in the final rule.
---------------------------------------------------------------------------

    \3\ Where applicants are in doubt as to the continued validity 
of exemptive relief that has been granted, such applicants may seek 
guidance from EBSA's Office of Exemption Determinations.
---------------------------------------------------------------------------

Sections 2570.40 and 2570.41 Conferences and Final Denial Letters

    The 1990 Exemption Procedure stipulated that the Department would 
attempt to schedule a conference concerning a tentative denial letter 
at a mutually convenient date and time during the 45-day period 
following the later of (1) The date the Department received the 
applicant's request for a conference, or (2) the date the Department 
notified the applicant, after reviewing additional information 
submitted pursuant to section 2570.39, that it was not prepared to 
propose the requested exemption. The Department's proposal (at section 
2570.40) would have replaced this 1990 rule by substituting a 
simplified procedure in order to facilitate the prompt and efficient 
scheduling of such conferences. The Department has largely retained the 
proposed language of this conference provision in the final rule, 
except for certain technical clarifications. In instances where the 
applicant has requested a conference and stated an intent to submit 
additional information in support of the application, the Department 
generally will schedule a conference for a date and time that occurs 
within 20 days after the date on which the Department has provided 
notification to the applicant that it remains unprepared to propose the 
requested exemption based upon the additional information submitted by 
the applicant. Alternatively, in instances where the applicant requests 
a conference without expressing an intent to submit additional 
information pursuant to section 2570.39, the Department generally will 
schedule a conference for a date and time that occurs within 40 days 
after the date of the issuance of the tentative denial letter.
    The Department, on its own motion, has made technical corrections 
to section 2570.40 in the final rule to clarify how the rule would 
apply where an exemption applicant, within 20 days of receiving a 
tentative denial letter, requests a conference and expresses an intent 
to submit additional written information, but fails to provide such 
information within 40 days from receipt of the tentative denial letter.
    To address this situation, the Department has inserted a new 
paragraph (f) in section 2570.40. This new paragraph specifies that, 
where an applicant has requested a conference and expressed an intent 
to submit additional information pursuant to section 2570.39(b), but 
has failed to furnish such information within 40 days from the date of 
the tentative denial letter, the Department will generally schedule a 
conference for a date and time occurring within 60 days after the date 
of the issuance of the tentative denial letter. As part of this 
technical correction, the Department also has redesignated sections 
2570.40(f) and (g) of the proposed rule, respectively, as sections 
2570.40(g) and (h) of the final rule.
    In addition, the Department has made an additional technical 
correction to the text of section 2570.41 of the final rule by deleting 
the reference in paragraph (b) to ``section 2570.40(e)'' and 
substituting ``section 2570.40.''

Section 2570.49 Limits on the Effect of Exemptions

    The Department, on its own motion, has made a technical refinement 
to this section of the final rule by adding a new paragraph (e), which 
clarifies that the Department possesses the sole discretion to 
determine the materiality of any fact or representation which underlies 
an administrative exemption.

C. Regulatory Impact Analysis

Executive Order 12866

    Under Executive Order 12866 (58 FR 51735), the Department must 
determine whether a regulatory action is ``significant'' and therefore 
subject to review by the Office of Management and Budget (OMB). Section 
3(f) of the Executive Order defines a ``significant regulatory action'' 
as an action that is likely to result in a rule (1) Having an annual 
effect on the economy of $100 million or more, or adversely and 
materially affecting a sector of the economy, productivity, 
competition, jobs, the environment, public health or safety, or State, 
local or tribal governments or communities (also referred to as 
``economically significant''); (2) creating serious inconsistency or 
otherwise interfering with an action taken or planned by another 
agency; (3) materially altering the budgetary impacts of entitlement 
grants, user fees, or loan programs or the rights and obligations of 
recipients thereof; or (4) raising novel legal or policy issues arising 
out of legal mandates, the President's priorities, or the principles 
set forth in the Executive Order. Pursuant to the terms of the 
Executive Order, it has been determined that this action is not 
``significant'' within the meaning of section 3(f) of the Executive 
Order and therefore is not subject to review by OMB.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501-3520) (PRA 95), the Department submitted the information 
collection request (ICR) included in the Notice of Proposed Rulemaking 
to OMB for review and clearance at the time the proposed rule was 
published in the Federal Register on August 30, 2010 (75 FR 53172). OMB 
approved the final amendment under OMB control number 1210-0160, on 
October 17, 2011. The approval will expire on October 31, 2014.
    The Department solicited comments concerning the ICR in connection 
with the Notice of Proposed Rulemaking. The Department received no 
comments addressing its burden estimates; therefore, no substantive 
changes have been made in the final rule that would affect the 
Department's earlier burden estimates.
    The paperwork burden estimates are summarized as follows:
    Type of Review: New collection.
    Agency: Employee Benefits Security Administration, Department of 
Labor.
    Title: Final Rule for Prohibited Transaction Exemption Procedures.
    OMB Number: 1210-0060.
    Affected Public: Business or other for-profit; not-for-profit 
institutions.
    Respondents: 56.
    Responses: 22,995.
    Frequency of Response: Occasionally.
    Estimated Total Annual Burden Hours: 2,564.
    Estimated Total Annual Burden Cost: $1,547,013.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) imposes 
certain requirements with respect to Federal rules that are subject to 
the notice and comment requirements of section 553(b) of the 
Administrative Procedure Act (5 U.S.C. 551 et seq.) and which are 
likely to have a significant economic impact on a substantial number of 
small entities. Unless the head of an agency certifies that a final 
rule is not likely to have a significant economic impact on a 
substantial number of small entities, section 603 of

[[Page 66644]]

the RFA requires that the agency present an initial regulatory 
flexibility analysis at the time of the publication of the notice of 
proposed rulemaking describing the impact of the rule on small entities 
and seeking public comment on such impact.
    For purposes of the RFA, the Department continues to consider a 
small entity to be an employee benefit plan with fewer than 100 
participants.\4\ Further, while some large employers may have small 
plans, in general small employers maintain most small plans. Thus, the 
Department believes that assessing the impact of this final rule on 
small plans is an appropriate substitute for evaluating the effect on 
small entities. The definition of small entity considered appropriate 
for this purpose differs, however, from a definition of small business 
that is based on size standards promulgated by the Small Business 
Administration (SBA) (13 CFR 121.201) pursuant to the Small Business 
Act (15 U.S.C. 631 et seq.). The Department requested comments on the 
appropriateness of the size standard used in evaluating the impact of 
the rule on small entities but did not receive any comments.
---------------------------------------------------------------------------

    \4\ The basis for this definition is found in section 104(a)(2) 
of the Act, which permits the Secretary of Labor to prescribe 
simplified annual reports for pension plans that cover fewer than 
100 participants. Pursuant to the authority of section 104(a)(3), 
the Department has previously issued at 29 CFR 2520.104-20, 
2520.104-21, 2520.104-41, 2520.104-46 and 2520.104b-10 certain 
simplified reporting provisions and limited exemptions from 
reporting and disclosure requirements for small plans, including 
unfunded or insured welfare plans covering fewer than 100 
participants and satisfying certain other requirements.
---------------------------------------------------------------------------

    By this standard, the Department estimates that nearly half the 
requests for exemptions are from small plans. Thus, of the 
approximately 613,000 ERISA-covered small plans, the Department 
estimates that 28 small plans (.000046% of small plans) file prohibited 
transaction exemption applications each year. The Department does not 
consider this to be a substantial number of small entities. Therefore, 
based on the foregoing, pursuant to section 605(b) of RFA, the 
Assistant Secretary of the Employee Benefits Security Administration 
hereby certifies that the final rule will not have a significant 
economic impact on a substantial number of small entities. The 
Department invited public comments on its certification and the 
potential impact of the rule on small entities at the proposed rule 
stage and did not receive any comments.

Congressional Review Act

    The final rule being issued here is subject to the provisions of 
the Congressional Review Act provisions of the Small Business 
Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq.) and 
will be transmitted to Congress and the Comptroller General for review.

Unfunded Mandates Reform Act

    For purposes of the Unfunded Mandates Reform Act of 1995 (Pub. L. 
104-4), the final rule does not include any federal mandate that may 
result in expenditures by State, local, or tribal governments, or 
impose an annual burden exceeding $100 million or more, adjusted for 
inflation, on the private sector.

Federalism Statement

    Executive Order 13132 (August 4, 1999) outlines fundamental 
principles of federalism and requires federal agencies to adhere to 
specific criteria in the process of their formulation and 
implementation of policies that have substantial direct effects on the 
States, or the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. This final rule does not have federalism 
implications, because it has no substantial direct effect on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. Section 514 of ERISA provides, with 
certain exceptions specifically enumerated, that the provisions of 
Titles I and IV of ERISA supersede any and all laws of the States as 
they relate to any employee benefit plan covered under ERISA. The 
requirements implemented in the rule do not alter the fundamental 
provisions of the statute with respect to employee benefit plans, and 
as such would have no implications for the States or the relationship 
or distribution of power between the national government and the 
States.

List of Subjects in 29 CFR Part 2570

    Administrative practice and procedure, Employee benefit plans, 
Employee Retirement Income Security Act, Federal Employees' Retirement 
System Act, Exemptions, Fiduciaries, Party in interest, Pensions, 
Prohibited transactions, Trusts and trustees.

    For the reasons set forth in the preamble, the Department amends 
subchapter G, part 2570 of chapter XXV of title 29 of the Code of 
Federal Regulations as follows:

PART 2570--PROCEDURAL REGULATIONS UNDER THE EMPLOYEE RETIREMENT 
INCOME SECURITY ACT

0
1. Revise the authority citation for part 2570 to read as follows:

    Authority:  5 U.S.C. 8477; 29 U.S.C. 1002(40), 1021, 1108, 1132, 
and 1135; sec. 102, Reorganization Plan No. 4 of 1978, 5 U.S.C. App 
at 672 (2006); Secretary of Labor's Order 3-2010, 75 FR 55354 
(September 10, 2010).


0
2. Revise subpart B to part 2570 to read as follows:
Subpart B--Procedures Governing the Filing and Processing of Prohibited 
Transaction Exemption Applications
Sec.
2570.30 Scope of rules.
2570.31 Definitions.
2570.32 Persons who may apply for exemptions.
2570.33 Applications the Department will not ordinarily consider.
2570.34 Information to be included in every exemption application.
2570.35 Information to be included in applications for individual 
exemptions only.
2570.36 Where to file an application.
2570.37 Duty to amend and supplement exemption applications.
2570.38 Tentative denial letters.
2570.39 Opportunities to submit additional information.
2570.40 Conferences.
2570.41 Final denial letters.
2570.42 Notice of proposed exemption.
2570.43 Notification of interested persons by applicant.
2570.44 Withdrawal of exemption applications.
2570.45 Requests for reconsideration.
2570.46 Hearings in opposition to exemptions from restrictions on 
fiduciary self-dealing.
2570.47 Other hearings.
2570.48 Decision to grant exemptions.
2570.49 Limits on the effect of exemptions.
2570.50 Revocation or modification of exemptions.
2570.51 Public inspection and copies.
2570.52 Effective date.

Subpart B--Procedures Governing the Filing and Processing of 
Prohibited Transaction Exemption Applications


Sec.  2570.30  Scope of rules.

    (a) The rules of procedure set forth in this subpart apply to 
prohibited transaction exemptions issued by the Department under the 
authority of:
    (1) Section 408(a) of the Employee Retirement Income Security Act 
of 1974 (ERISA);

[[Page 66645]]

    (2) Section 4975(c)(2) of the Internal Revenue Code of 1986 (the 
Code); \1\ or
---------------------------------------------------------------------------

    \1\ Section 102 of Presidential Reorganization Plan No. 4 of 
1978 (3 CFR part 332 (1978), reprinted in 5 U.S.C. app. at 672 
(2006), and in 92 Stat. 3790 (1978)), effective December 31, 1978, 
generally transferred the authority of the Secretary of the Treasury 
to issue administrative exemptions under section 4975(c)(2) of the 
Code to the Department of Labor.
---------------------------------------------------------------------------

    (3) The Federal Employees' Retirement System Act of 1986 (FERSA) (5 
U.S.C. 8477(c)(3)).
    (b) Under these rules of procedure, the Department may 
conditionally or unconditionally exempt any fiduciary or transaction, 
or class of fiduciaries or transactions, from all or part of the 
restrictions imposed by section 406 of ERISA and the corresponding 
restrictions of the Code and FERSA. While administrative exemptions 
granted under these rules are ordinarily prospective in nature, an 
applicant may also obtain retroactive relief for past prohibited 
transactions if certain safeguards described in this subpart were in 
place at the time the transaction was consummated.
    (c) These rules govern the filing and processing of applications 
for both individual and class exemptions that the Department may 
propose and grant pursuant to the authorities cited in paragraph (a) of 
this section. The Department may also propose and grant exemptions on 
its own motion, in which case the procedures relating to publication of 
notices, hearings, evaluation and public inspection of the 
administrative record, and modification or revocation of previously 
granted exemptions will apply.
    (d) The issuance of an administrative exemption by the Department 
under these procedural rules does not relieve a fiduciary or other 
party in interest or disqualified person with respect to a plan from 
the obligation to comply with certain other provisions of ERISA, the 
Code, or FERSA, including any prohibited transaction provisions to 
which the exemption does not apply, and the general fiduciary 
responsibility provisions of ERISA which require, among other things, 
that a fiduciary discharge his or her duties respecting the plan solely 
in the interests of the participants and beneficiaries of the plan and 
in a prudent fashion; 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.
    (e) The Department will not propose or issue exemptions upon oral 
request alone, nor will the Department grant exemptions orally. An 
applicant for an administrative exemption may request and receive oral 
advice from Department employees in preparing an exemption application. 
However, such advice does not constitute part of the administrative 
record and is not binding on the Department in its processing of an 
exemption application or in its examination or audit of a plan.
    (f) The Department will generally treat any exemption application 
that is filed solely under section 408(a) of ERISA or solely under 
section 4975(c)(2) of the Code as an exemption request filed under both 
section 408(a) and section 4975(c)(2) if it relates to a transaction 
that would be prohibited both by ERISA and the corresponding provisions 
of the Code.


Sec.  2570.31  Definitions.

    For purposes of these procedures, the following definitions apply:
    (a) An affiliate of a person means--
    (1) Any person directly or indirectly through one or more 
intermediaries, controlling, controlled by, or under common control 
with the person. For purposes of this paragraph, the term ``control'' 
means the power to exercise a controlling influence over the management 
or policies of a person other than an individual;
    (2) Any director of, relative of, or partner in, any such person;
    (3) Any corporation, partnership, trust, or unincorporated 
enterprise of which such person is an officer, director, or a 5 percent 
or more partner or owner; or
    (4) Any employee or officer of the person who--
    (i) Is highly compensated (as defined in section 4975(e)(2)(H) of 
the Code), or
    (ii) Has direct or indirect authority, responsibility, or control 
regarding the custody, management, or disposition of plan assets 
involved in the subject exemption transaction.
    (b) A class exemption is an administrative exemption, granted under 
section 408(a) of ERISA, section 4975(c)(2) of the Code, and/or 5 
U.S.C. 8477(c)(3), which applies to any transaction and party in 
interest within the class of transactions and parties in interest 
specified in the exemption when the conditions of the exemption are 
satisfied.
    (c) Department means the U.S. Department of Labor and includes the 
Secretary of Labor or his or her delegate exercising authority with 
respect to prohibited transaction exemptions to which this subpart 
applies.
    (d) Exemption transaction means the transaction or transactions for 
which an exemption is requested.
    (e) An individual exemption is an administrative exemption, granted 
under section 408(a) of ERISA, section 4975(c)(2) of the Code, and/or 5 
U.S.C. 8477(c)(3), which applies only to the specific parties in 
interest and transactions named or otherwise defined in the exemption.
    (f) A party in interest means a person described in section 3(14) 
of ERISA or 5 U.S.C. 8477(a)(4) and includes a disqualified person, as 
defined in section 4975(e)(2) of the Code.
    (g) Pooled fund means an account or fund for the collective 
investment of the assets of two or more unrelated plans, including (but 
not limited to) a pooled separate account maintained by an insurance 
company and a common or collective trust fund maintained by a bank or 
similar financial institution.
    (h) A qualified appraisal report is any appraisal report that 
satisfies all of the requirements set forth in this subpart at Sec.  
2570.34(c)(4).
    (i) A qualified independent appraiser is any individual or entity 
with appropriate training, experience, and facilities to provide a 
qualified appraisal report on behalf of the plan regarding the 
particular asset or property appraised in the report, that is 
independent of and unrelated to any party in interest engaging in the 
exemption transaction and its affiliates; in general, the determination 
as to the independence of the appraiser is made by the Department on 
the basis of all relevant facts and circumstances. In making this 
determination, the Department generally will take into account the 
amount of both the appraiser's revenues and projected revenues for the 
current federal income tax year (including amounts received for 
preparing the appraisal report) that will be derived from the party in 
interest or its affiliates relative to the appraiser's revenues from 
all sources for the prior federal income tax year. Absent facts and 
circumstances demonstrating a lack of independence, the Department will 
operate according to the presumption that such appraiser will be 
independent if the revenues it receives or is projected to receive, 
within the current federal income tax year, from parties in interest 
(and their affiliates) to the transaction are not more than 2% of such 
appraiser's annual revenues based upon its prior income tax year. 
Although the presumption does not apply when the aforementioned 
percentage exceeds 2%, an appraiser nonetheless may be considered 
independent based upon other facts and circumstances provided that it 
receives or is projected to receive revenues that are not more than 5% 
within the current federal income tax year from parties in interest 
(and their

[[Page 66646]]

affiliates) to the transaction based upon its prior income tax year.
    (j) A qualified independent fiduciary is any individual or entity 
with appropriate training, experience, and facilities to act on behalf 
of the plan regarding the exemption transaction in accordance with the 
fiduciary duties and responsibilities prescribed by ERISA, that is 
independent of and unrelated to any party in interest engaging in the 
exemption transaction and its affiliates; in general, the determination 
as to the independence of a fiduciary is made by the Department on the 
basis of all relevant facts and circumstances. In making this 
determination, the Department generally will take into account the 
amount of both the fiduciary's revenues and projected revenues for the 
current federal income tax year (including amounts received for 
preparing fiduciary reports) that will be derived from the party in 
interest or its affiliates relative to the fiduciary's revenues from 
all sources for the prior federal income tax year. Absent facts and 
circumstances demonstrating a lack of independence, the Department will 
operate according to the presumption that such fiduciary will be 
independent if the revenues it receives or is projected to receive, 
within the current federal income tax year, from parties in interest 
(and their affiliates) to the transaction are not more than 2% of such 
fiduciary's annual revenues based upon its prior income tax year. 
Although the presumption does not apply when the aforementioned 
percentage exceeds 2%, a fiduciary nonetheless may be considered 
independent based upon other facts and circumstances provided that it 
receives or is projected to receive revenues that are not more than 5% 
within the current federal income tax year from parties in interest 
(and their affiliates) to the transaction based upon its prior income 
tax year.


Sec.  2570.32  Persons who may apply for exemptions.

    (a) The Department will initiate exemption proceedings upon the 
application of:
    (1) Any party in interest to a plan who is or may be a party to the 
exemption transaction;
    (2) Any plan which is a party to the exemption transaction; or
    (3) In the case of an application for an exemption covering a class 
of parties in interest or a class of transactions, in addition to any 
person described in paragraphs (a)(1) and (2) of this section, an 
association or organization representing parties in interest who may be 
parties to the exemption transaction.
    (b) An application by or for a person described in paragraph (a) of 
this section, may be submitted by the applicant or by an authorized 
representative. An application submitted by a representative of the 
applicant must include proof of authority in the form of:
    (1) A power of attorney; or
    (2) A written certification from the applicant that the 
representative is authorized to file the application.
    (c) If the authorized representative of an applicant submits an 
application for an exemption to the Department together with proof of 
authority to file the application as required by paragraph (b) of this 
section, the Department will direct all correspondence and inquiries 
concerning the application to the representative unless requested to do 
otherwise by the applicant.


Sec.  2570.33  Applications the Department will not ordinarily 
consider.

    (a) The Department ordinarily will not consider:
    (1) An application that fails to include all the information 
required by Sec. Sec.  2570.34 and 2570.35 of this subpart or otherwise 
fails to conform to the requirements of these procedures; or
    (2) An application involving a transaction or transactions which 
are the subject of an investigation for possible violations of part 1 
or 4 of subtitle B of Title I of ERISA or section 8477 or 8478 of FERSA 
or an application involving a party in interest who is the subject of 
such an investigation or who is a defendant in an action by the 
Department or the Internal Revenue Service to enforce the above-
mentioned provisions of ERISA or FERSA.
    (b) An application for an individual exemption relating to a 
specific transaction or transactions ordinarily will not be considered 
if the Department has under consideration a class exemption relating to 
the same type of transaction or transactions. Notwithstanding the 
foregoing, the Department may consider such an application if the 
issuance of the final class exemption may not be imminent, and the 
Department determines that time constraints necessitate consideration 
of the transaction on an individual basis.
    (c) The administrative record of an exemption application includes 
the initial exemption application and any supporting information 
provided by the applicant (as well as any comments and testimony 
received by the Department in connection with an application). If an 
applicant designates as confidential any information required by these 
regulations or requested by the Department, the Department will 
determine whether the information is material to the exemption 
determination. If it determines the information to be material, the 
Department will not process the application unless the applicant 
withdraws the claim of confidentiality.
    (d) If for any reason the Department decides not to consider an 
exemption application, it will inform the applicant in writing of that 
decision and of the reasons therefore.


Sec.  2570.34  Information to be included in every exemption 
application.

    (a) All applications for exemptions must contain the following 
information:
    (1) The name(s) of the applicant(s);
    (2) A detailed description of the exemption transaction including 
identification of all the parties in interest involved, a description 
of any larger integrated transaction of which the exemption transaction 
is a part, and a chronology of the events leading up to the 
transaction;
    (3) The identity of any representatives for the affected plan(s) 
and parties in interest and what individuals or entities they 
represent;
    (4) The reasons a plan would have for entering into the exemption 
transaction;
    (5) The prohibited transaction provisions from which exemptive 
relief is requested and the reason why the transaction would violate 
each such provision;
    (6) Whether the exemption transaction is customary for the industry 
or class involved;
    (7) Whether the exemption transaction is or has been the subject of 
an investigation or enforcement action by the Department or by the 
Internal Revenue Service; and
    (8) The hardship or economic loss, if any, which would result to 
the person or persons on behalf of whom the exemption is sought, to 
affected plans, and to their participants and beneficiaries from denial 
of the exemption.
    (b) All applications for exemption must also contain the following:
    (1) A statement explaining why the requested exemption would be--
    (i) Administratively feasible;
    (ii) In the interests of affected plans and their participants and 
beneficiaries; and
    (iii) Protective of the rights of participants and beneficiaries of 
affected plans.
    (2) With respect to the notification of interested persons required 
by Sec.  2570.43:

[[Page 66647]]

    (i) A description of the interested persons to whom the applicant 
intends to provide notice;
    (ii) The manner in which the applicant will provide such notice; 
and
    (iii) An estimate of the time the applicant will need to furnish 
notice to all interested persons following publication of a notice of 
the proposed exemption in the Federal Register.
    (3) If an advisory opinion has been requested by any party to the 
exemption transaction from the Department with respect to any issue 
relating to the exemption transaction--
    (i) A copy of the letter concluding the Department's action on the 
advisory opinion request; or
    (ii) If the Department has not yet concluded its action on the 
request:
    (A) A copy of the request or the date on which it was submitted 
together with the Department's correspondence control number as 
indicated in the acknowledgment letter; and
    (B) An explanation of the effect of the issuance of an advisory 
opinion upon the exemption transaction.
    (4) If the application is to be signed by anyone other than an 
individual party in interest seeking exemptive relief on his or her own 
behalf, a statement which--
    (i) Identifies the individual signing the application and his or 
her position or title; and
    (ii) Explains briefly the basis of his or her familiarity with the 
matters discussed in the application.
    (5)(i) A declaration in the following form:

    Under penalty of perjury, I declare that I am familiar with the 
matters discussed in this application and, to the best of my 
knowledge and belief, the representations made in this application 
are true and correct.

    (ii) This declaration must be dated and signed by:
    (A) The applicant, in its individual capacity, in the case of an 
individual party in interest seeking exemptive relief on his or her own 
behalf;
    (B) A corporate officer or partner where the applicant is a 
corporation or partnership;
    (C) A designated officer or official where the applicant is an 
association, organization or other unincorporated enterprise; or
    (D) The plan fiduciary that has the authority, responsibility, and 
control with respect to the exemption transaction where the applicant 
is a plan.
    (c) Specialized statements, as applicable, from a qualified 
independent appraiser acting solely on behalf of the plan, such as 
appraisal reports or analyses of market conditions, submitted to 
support an application for exemption must be accompanied by a statement 
of consent from such appraiser acknowledging that the statement is 
being submitted to the Department as part of an application for 
exemption. Such statements must also contain the following written 
information:
    (1) A copy of the qualified independent appraiser's engagement 
letter with the plan describing the specific duties the appraiser shall 
undertake;
    (2) A summary of the qualified independent appraiser's 
qualifications to serve in such capacity;
    (3) A detailed description of any relationship that the qualified 
independent appraiser has had or may have with any party in interest 
engaging in the transaction with the plan, or its affiliates, that may 
influence the appraiser;
    (4) A written appraisal report prepared by the qualified 
independent appraiser, acting solely on behalf of the plan, rather 
than, for example, on behalf of the plan sponsor, which satisfies the 
following requirements:
    (i) The report must describe the method(s) used in determining the 
fair market value of the subject asset(s) and an explanation of why 
such method best reflects the fair market value of the asset(s);
    (ii) The report must take into account any special benefit that the 
party in interest or its affiliate(s) may derive from control of the 
asset(s), such as from owning an adjacent parcel of real property or 
gaining voting control over a company; and
    (iii) The report must be current and not more than one year old 
from the date of the transaction, and there must be a written update by 
the qualified independent appraiser affirming the accuracy of the 
appraisal as of the date of the transaction. If the appraisal report is 
a year old or more, a new appraisal shall be submitted to the 
Department by the applicant.
    (5) If the subject of the appraisal report is real property, the 
qualified independent appraiser shall submit a written representation 
that he or she is a member of a professional organization of appraisers 
that can sanction its members for misconduct;
    (6) If the subject of the appraisal report is an asset other than 
real property, the qualified independent appraiser shall submit a 
written representation describing the appraiser's prior experience in 
valuing assets of the same type; and
    (7) The qualified independent appraiser shall submit a written 
representation disclosing the percentage of its current revenue that is 
derived from any party in interest involved in the transaction or its 
affiliates; in general, such percentage shall be computed by comparing, 
in fractional form:
    (i) The amount of the appraiser's projected revenues from the 
current federal income tax year (including amounts received from 
preparing the appraisal report) that will be derived from the party in 
interest or its affiliates (expressed as a numerator); and
    (ii) The appraiser's revenues from all sources for the prior 
federal income tax year (expressed as a denominator).
    (d) For those exemption transactions requiring the retention of a 
qualified independent fiduciary to represent the interests of the plan, 
a statement must be submitted by such fiduciary that contains the 
following written information:
    (1) A signed and dated declaration under penalty of perjury that, 
to the best of the qualified independent fiduciary's knowledge and 
belief, all of the representations made in such statement are true and 
correct;
    (2) A copy of the qualified independent fiduciary's engagement 
letter with the plan describing the fiduciary's specific duties;
    (3) An explanation for the conclusion that the fiduciary is a 
qualified independent fiduciary, which also must include a summary of 
that person's qualifications to serve in such capacity, as well as a 
description of any prior experience by that person or other 
demonstrated characteristics of the fiduciary (such as special areas of 
expertise) that render that person or entity suitable to perform its 
duties on behalf of the plan with respect to the exemption transaction;
    (4) A detailed description of any relationship that the qualified 
independent fiduciary has had or may have with the party in interest 
engaging in the transaction with the plan or its affiliates;
    (5) An acknowledgement by the qualified independent fiduciary that 
it understands its duties and responsibilities under ERISA in acting as 
a fiduciary on behalf of the plan rather than, for example, acting on 
behalf of the plan sponsor;
    (6) The qualified independent fiduciary's opinion on whether the 
proposed transaction would be in the interests of the plan and of its 
participants and beneficiaries, and protective of the rights of 
participants and beneficiaries of such plan, along

[[Page 66648]]

with a statement of the reasons on which the opinion is based;
    (7) Where the proposed transaction is continuing in nature, a 
declaration by the qualified independent fiduciary that it is 
authorized to take all appropriate actions to safeguard the interests 
of the plan, and shall, during the pendency of the transaction:
    (i) Monitor the transaction on behalf of the plan on a continuing 
basis;
    (ii) Ensure that the transaction remains in the interests of the 
plan and, if not, take any appropriate actions available under the 
particular circumstances; and
    (iii) Enforce compliance with all conditions and obligations 
imposed on any party dealing with the plan with respect to the 
transaction; and
    (8) The qualified independent fiduciary shall submit a written 
representation disclosing the percentage of such fiduciary's current 
revenue that is derived from any party in interest involved in the 
transaction or its affiliates; in general, such percentage shall be 
computed by comparing, in fractional form:
    (i) The amount of the fiduciary's projected revenues from the 
current federal income tax year that will be derived from the party in 
interest or its affiliates (expressed as a numerator); and
    (ii) The fiduciary's revenues from all sources (excluding fixed, 
non-discretionary retirement income) for the prior federal income tax 
year (expressed as a denominator).
    (e) Specialized statements, as applicable, from other third-party 
experts, including but not limited to economists or market specialists, 
submitted on behalf of the plan to support an application for exemption 
must be accompanied by a statement of consent from such expert 
acknowledging that the statement prepared on behalf of the plan is 
being submitted to the Department as part of an application for 
exemption. Such statements must also contain the following written 
information:
    (1) A copy of the expert's engagement letter with the plan 
describing the specific duties the expert will undertake;
    (2) A summary of the expert's qualifications to serve in such 
capacity; and
    (3) A detailed description of any relationship that the expert has 
had or may have with any party in interest engaging in the transaction 
with the plan, or its affiliates, that may influence the actions of the 
expert.
    (f) An application for exemption may also include a draft of the 
requested exemption which describes the transaction and parties in 
interest for which exemptive relief is sought and the specific 
conditions under which the exemption would apply.


Sec.  2570.35  Information to be included in applications for 
individual exemptions only.

    (a) Except as provided in paragraph (c) of this section, every 
application for an individual exemption must include, in addition to 
the information specified in Sec.  2570.34 of this subpart, the 
following information:
    (1) The name, address, telephone number, and type of plan or plans 
to which the requested exemption applies;
    (2) The Employer Identification Number (EIN) and the plan number 
(PN) used by such plan or plans in all reporting and disclosure 
required by the Department;
    (3) Whether any plan or trust affected by the requested exemption 
has ever been found by the Department, the Internal Revenue Service, or 
by a court to have violated the exclusive benefit rule of section 
401(a) of the Code, section 4975(c)(1) of the Code, section 406 or 
407(a) of ERISA, or 5 U.S.C. 8477(c)(3), including a description of the 
circumstances surrounding such violation;
    (4) Whether any relief under section 408(a) of ERISA, section 
4975(c)(2) of the Code, or 5 U.S.C. 8477(c)(3) has been requested by, 
or provided to, the applicant or any of the parties on behalf of whom 
the exemption is sought and, if so, the exemption application number or 
the prohibited transaction exemption number;
    (5) Whether the applicant or any of the parties in interest 
involved in the exemption transaction is currently, or has been within 
the last five years, a defendant in any lawsuit or criminal action 
concerning such person's conduct as a fiduciary or party in interest 
with respect to any plan (other than a lawsuit with respect to a 
routine claim for benefits), and a description of the circumstances of 
such lawsuit or criminal action;
    (6) Whether the applicant (including any person described in Sec.  
2570.34(b)(5)(ii)) or any of the parties in interest involved in the 
exemption transaction has, within the last 13 years, been either 
convicted or released from imprisonment, whichever is later, as a 
result of: any felony involving abuse or misuse of such person's 
position or employment with an employee benefit plan or a labor 
organization; any felony arising out of the conduct of the business of 
a broker, dealer, investment adviser, bank, insurance company or 
fiduciary; income tax evasion; any felony involving the larceny, theft, 
robbery, extortion, forgery, counterfeiting, fraudulent concealment, 
embezzlement, fraudulent conversion, or misappropriation of funds or 
securities; conspiracy or attempt to commit any such crimes or a crime 
of which any of the foregoing crimes is an element; or any other crime 
described in section 411 of ERISA, and a description of the 
circumstances of any such conviction. For purposes of this section, a 
person shall be deemed to have been ``convicted'' from the date of the 
judgment of the trial court, regardless of whether that judgment 
remains under appeal;
    (7) Whether, within the last five years, any plan affected by the 
exemption transaction, or any party in interest involved in the 
exemption transaction, has been under investigation or examination by, 
or has been engaged in litigation or a continuing controversy with, the 
Department, the Internal Revenue Service, the Justice Department, the 
Pension Benefit Guaranty Corporation, or the Federal Retirement Thrift 
Investment Board involving compliance with provisions of ERISA, 
provisions of the Code relating to employee benefit plans, or 
provisions of FERSA relating to the Federal Thrift Savings Fund. If so, 
the applicant must provide a brief statement describing the 
investigation, examination, litigation or controversy. The Department 
reserves the right to require the production of additional information 
or documentation concerning any of the above matters. In this regard, a 
denial of the exemption application will result from a failure to 
provide additional information requested by the Department.
    (8) Whether any plan affected by the requested exemption has 
experienced a reportable event under section 4043 of ERISA, and, if so, 
a description of the circumstances of any such reportable event;
    (9) Whether a notice of intent to terminate has been filed under 
section 4041 of ERISA respecting any plan affected by the requested 
exemption, and, if so, a description of the circumstances for the 
issuance of such notice;
    (10) Names, addresses, and taxpayer identifying numbers of all 
parties in interest involved in the subject transaction;
    (11) The estimated number of participants and beneficiaries in each 
plan affected by the requested exemption as of the date of the 
application;
    (12) The percentage of the fair market value of the total assets of 
each affected

[[Page 66649]]

plan that is involved in the exemption transaction;
    (13) Whether the exemption transaction has been consummated or will 
be consummated only if the exemption is granted;
    (14) If the exemption transaction has already been consummated:
    (i) The circumstances which resulted in plan fiduciaries causing 
the plan(s) to engage in the transaction before obtaining an exemption 
from the Department;
    (ii) Whether the transaction has been terminated;
    (iii) Whether the transaction has been corrected as defined in Code 
section 4975(f)(5);
    (iv) Whether Form 5330, Return of Excise Taxes Related to Employee 
Benefit Plans, has been filed with the Internal Revenue Service with 
respect to the transaction; and
    (v) Whether any excise taxes due under section 4975(a) and (b) of 
the Code, or any civil penalties due under section 502(i) or (l) of 
ERISA by reason of the transaction have been paid. If so, the applicant 
should submit documentation (e.g., a canceled check) demonstrating that 
the excise taxes or civil penalties were paid.
    (15) The name of every person who has investment discretion over 
any plan assets involved in the exemption transaction and the 
relationship of each such person to the parties in interest involved in 
the exemption transaction and the affiliates of such parties in 
interest;
    (16) Whether or not the assets of the affected plan(s) are invested 
in loans to any party in interest involved in the exemption 
transaction, in property leased to any such party in interest, or in 
securities issued by any such party in interest, and, if such 
investments exist, a statement for each of these three types of 
investments which indicates:
    (i) The type of investment to which the statement pertains;
    (ii) The aggregate fair market value of all investments of this 
type as reflected in the plan's most recent annual report;
    (iii) The approximate percentage of the fair market value of the 
plan's total assets as shown in such annual report that is represented 
by all investments of this type; and
    (iv) The statutory or administrative exemption covering these 
investments, if any.
    (17) The approximate aggregate fair market value of the total 
assets of each affected plan;
    (18) The person(s) who will bear the costs of the exemption 
application and of notifying interested persons; and
    (19) Whether an independent fiduciary is or will be involved in the 
exemption transaction and, if so, the names of the persons who will 
bear the cost of the fee payable to such fiduciary.
    (b) Each application for an individual exemption must also include:
    (1) True copies of all contracts, deeds, agreements, and 
instruments, as well as relevant portions of plan documents, trust 
agreements, and any other documents bearing on the exemption 
transaction;
    (2) A discussion of the facts relevant to the exemption transaction 
that are reflected in these documents and an analysis of their bearing 
on the requested exemption;
    (3) A copy of the most recent financial statements of each plan 
affected by the requested exemption; and
    (4) A net worth statement with respect to any party in interest 
that is providing a personal guarantee with respect to the exemption 
transaction.
    (c) Special rule for applications for individual exemption 
involving pooled funds:
    (1) The information required by paragraphs (a)(8) through (12) of 
this section is not required to be furnished in an application for 
individual exemption involving one or more pooled funds;
    (2) The information required by paragraphs (a)(1) through (7) and 
(a)(13) through (19) of this section and by paragraphs (b)(1) through 
(3) of this section must be furnished in reference to the pooled fund, 
rather than to the plans participating therein. (For purposes of this 
paragraph, the information required by paragraph (a)(16) of this 
section relates solely to other pooled fund transactions with, and 
investments in, parties in interest involved in the exemption 
transaction which are also sponsors of plans which invest in the pooled 
fund.);
    (3) The following information must also be furnished--
    (i) The estimated number of plans that are participating (or will 
participate) in the pooled fund; and
    (ii) The minimum and maximum limits imposed by the pooled fund (if 
any) on the portion of the total assets of each plan that may be 
invested in the pooled fund.
    (4) Additional requirements for applications for individual 
exemption involving pooled funds in which certain plans participate.
    (i) This paragraph applies to any application for an individual 
exemption involving one or more pooled funds in which any plan 
participating therein--
    (A) Invests an amount which exceeds 20% of the total assets of the 
pooled fund, or
    (B) Covers employees of:
    (1) The party sponsoring or maintaining the pooled fund, or any 
affiliate of such party, or
    (2) Any fiduciary with investment discretion over the pooled fund's 
assets, or any affiliate of such fiduciary.
    (ii) The exemption application must include, with respect to each 
plan described in paragraph (c)(4)(i) of this section, the information 
required by paragraphs (a)(1) through (3), (a)(5) through (7), (a)(10), 
(a)(12) through (16), and (a)(18) and (19), of this section. The 
information required by this paragraph must be furnished in reference 
to the plan's investment in the pooled fund (e.g., the names, addresses 
and taxpayer identifying numbers of all fiduciaries responsible for the 
plan's investment in the pooled fund (Sec.  2570.35(a) (10)), the 
percentage of the assets of the plan invested in the pooled fund (Sec.  
2570.35(a)(12)), whether the plan's investment in the pooled fund has 
been consummated or will be consummated only if the exemption is 
granted (Sec.  2570.35(a)(13)), etc.).
    (iii) The information required by paragraph (c)(4) of this section 
is in addition to the information required by paragraphs (c)(2) and (3) 
of this section relating to information furnished by reference to the 
pooled fund.
    (5) The special rule and the additional requirements described in 
paragraphs (c)(1) through (4) of this section do not apply to an 
individual exemption request solely for the investment by a plan in a 
pooled fund. Such an application must provide the information required 
by paragraphs (a) and (b) of this section.
    (d) Retroactive exemptions:
    (1) Generally, the Department will favorably consider requests for 
retroactive relief, in all exemption applications, only where the 
safeguards necessary for the grant of a prospective exemption were in 
place at the time at which the parties entered into the transaction. An 
applicant for a retroactive exemption must have acted in good faith by 
taking reasonable and appropriate steps to protect the plan from abuse 
and unnecessary risk at the time of the transaction.
    (2) Among the factors that the Department would take into account 
in making a finding that an applicant acted in good faith include the 
following:
    (i) The participation of an independent fiduciary acting on behalf 
of the plan who is qualified to negotiate, approve and monitor the 
transaction;
    (ii) The existence of a contemporaneous appraisal by a qualified 
independent appraiser or reference to an objective third party source, 
such as a stock or bond index;

[[Page 66650]]

    (iii) The existence of a bidding process or evidence of comparable 
fair market transactions with unrelated third parties;
    (iv) That the applicant has submitted an accurate and complete 
application for exemption containing documentation of all necessary and 
relevant facts and representations upon which the applicant relied. In 
this regard, additional weight will be given to facts and 
representations which are prepared and certified by a source 
independent of the applicant;
    (v) That the applicant has submitted evidence that the plan 
fiduciary did not engage in an act or transaction knowing that such act 
or transaction was prohibited under section 406 of ERISA and/or section 
4975 of the Code. In this regard, the Department will accord 
appropriate weight to the submission of a contemporaneous, reasoned 
legal opinion of counsel, upon which the plan fiduciary relied in good 
faith before entering the act or transaction;
    (vi) That the applicant has submitted a statement of the 
circumstances which prompted the submission of the application for 
exemption and the steps taken by the applicant with regard to the 
transaction upon discovery of the violation;
    (vii) That the applicant has submitted a statement, prepared and 
certified by an independent person familiar with the types of 
transactions for which relief is requested, demonstrating that the 
terms and conditions of the transaction (including, in the case of an 
investment, the return in fact realized by the plan) were at least as 
favorable to the plan as that obtainable in a similar transaction with 
an unrelated party; and
    (viii) Such other undertakings and assurances with respect to the 
plan and its participants that may be offered by the applicant which 
are relevant to the criteria under section 408(a) of ERISA and section 
4975(c)(2) of the Code.
    (3) The Department, as a general matter, will not favorably 
consider requests for retroactive exemptions where transactions or 
conduct with respect to which an exemption is requested resulted in a 
loss to the plan. In addition, the Department will not favorably 
consider requests for exemptions where the transactions are 
inconsistent with the general fiduciary responsibility provisions of 
sections 403 or 404 of ERISA or the exclusive benefit requirements of 
section 401(a) of the Code.


Sec.  2570.36  Where to file an application.

    The Department's prohibited transaction exemption program is 
administered by the Employee Benefits Security Administration (EBSA). 
Any exemption application governed by these procedures may be mailed 
via first-class mail to: Employee Benefits Security Administration, 
Office of Exemption Determinations, U.S. Department of Labor, Room N-
5700, 200 Constitution Avenue NW., Washington, DC 20210. Alternatively, 
applications may be emailed to the Department at e-OED@dol.gov or 
transmitted via facsimile at (202) 219-0204. Notwithstanding the 
foregoing methods of transmission, applicants are also required to 
submit one paper copy of the exemption application for the Department's 
file.


Sec.  2570.37  Duty to amend and supplement exemption applications.

    (a) While an exemption application is pending final action with the 
Department, an applicant must promptly notify the Department in writing 
if he or she discovers that any material fact or representation 
contained in the application or in any documents or testimony provided 
in support of the application is inaccurate, if any such fact or 
representation changes during this period, or if, during the pendency 
of the application, anything occurs that may affect the continuing 
accuracy of any such fact or representation. In addition, an applicant 
must promptly notify the Department in writing if it learns that a 
material fact or representation has been omitted from the exemption 
application.
    (b) If, at any time during the pendency of an exemption 
application, the applicant or any other party in interest who would 
participate in the exemption transaction becomes the subject of an 
investigation or enforcement action by the Department, the Internal 
Revenue Service, the Justice Department, the Pension Benefit Guaranty 
Corporation, or the Federal Retirement Thrift Investment Board 
involving compliance with provisions of ERISA, provisions of the Code 
relating to employee benefit plans, or provisions of FERSA relating to 
the Federal Thrift Savings Fund, the applicant must promptly notify the 
Department.
    (c) The Department may require an applicant to provide 
documentation it considers necessary to verify any statements contained 
in the application or in supporting materials or documents.


Sec.  2570.38  Tentative denial letters.

    (a) If, after reviewing an exemption file, the Department 
tentatively concludes that it will not propose or grant the exemption, 
it will notify the applicant in writing. At the same time, the 
Department will provide a brief statement of the reasons for its 
tentative denial.
    (b) An applicant will have 20 days from the date of a tentative 
denial letter to request a conference under Sec.  2570.40 of this 
subpart and/or to notify the Department of its intent to submit 
additional information under Sec.  2570.39 of this subpart. If the 
Department does not receive a request for a conference or a 
notification of intent to submit additional information within that 
time, it will issue a final denial letter pursuant to Sec.  2570.41.
    (c) The Department need not issue a tentative denial letter to an 
applicant before issuing a final denial letter where the Department has 
conducted a hearing on the exemption pursuant to either Sec.  2570.46 
or Sec.  2570.47.


Sec.  2570.39  Opportunities to submit additional information.

    (a) An applicant may notify the Department of its intent to submit 
additional information supporting an exemption application either by 
telephone or by letter sent to the address furnished in the applicant's 
tentative denial letter, or electronically to the email address 
provided in the tentative denial letter. At the same time, the 
applicant should indicate generally the type of information that will 
be submitted.
    (b) The additional information an applicant intends to provide in 
support of the application must be in writing and be received by the 
Department within 40 days from the date of the tentative denial letter. 
All such information must be accompanied by a declaration under penalty 
of perjury attesting to the truth and correctness of the information 
provided, which is dated and signed by a person qualified under Sec.  
2570.34(b)(5) of this subpart to sign such a declaration.
    (c) If, for reasons beyond its control, an applicant is unable to 
submit all the additional information he or she intends to provide in 
support of his application within the 40-day period described in 
paragraph (b) of this section, he or she may request an extension of 
time to furnish the information. Such requests must be made before the 
expiration of the 40-day period and will be granted only in unusual 
circumstances and for a limited period as determined, respectively, by 
the Department in its sole discretion.
    (d) If an applicant is unable to submit all of the additional 
information he or she intends to provide within the 40-day period 
specified in paragraph (b) of this section, or within any additional 
period granted pursuant to paragraph (c)

[[Page 66651]]

of this section, the applicant may withdraw the exemption application 
before expiration of the applicable time period and reinstate it later 
pursuant to Sec.  2570.44.
    (e) The Department will issue, without further notice, a final 
denial letter denying the requested exemption pursuant to Sec.  2570.41 
where--
    (1) The Department has not received the additional information that 
the applicant stated his or her intention to submit within the 40-day 
period described in paragraph (b) of this section, or within any 
additional period granted pursuant to paragraph (c) of this section;
    (2) The applicant did not request a conference pursuant to Sec.  
2570.38(b) of this subpart; and
    (3) The applicant has not withdrawn the application as permitted by 
paragraph (d) of this section.


Sec.  2570.40  Conferences.

    (a) Any conference between the Department and an applicant 
pertaining to a requested exemption will be held in Washington, DC, 
except that a telephone conference will be held at the applicant's 
request.
    (b) An applicant is entitled to only one conference with respect to 
any exemption application. An applicant will not be entitled to a 
conference, however, where the Department has held a hearing on the 
exemption under either Sec.  2570.46 or Sec.  2570.47 of this subpart.
    (c) Insofar as possible, conferences will be scheduled as joint 
conferences with all applicants present where:
    (1) More than one applicant has requested an exemption with respect 
to the same or similar types of transactions;
    (2) The Department is considering the applications together as a 
request for a class exemption;
    (3) The Department contemplates not granting the exemption; and
    (4) More than one applicant has requested a conference.
    (d) In instances where the applicant has requested a conference 
pursuant to Sec.  2570.38(b) and also has submitted additional 
information pursuant to Sec.  2570.39, the Department will schedule a 
conference under this section for a date and time that occurs within 20 
days after the date on which the Department has provided either oral or 
written notification to the applicant that, after reviewing the 
additional information, it is still not prepared to propose the 
requested exemption. If, for reasons beyond its control, the applicant 
cannot attend a conference within the 20-day limit described in this 
paragraph, the applicant may request an extension of time for the 
scheduling of a conference, provided that such request is made before 
the expiration of the 20-day limit. The Department will only grant such 
an extension in unusual circumstances and for a brief period as 
determined, respectively, by the Department in its sole discretion.
    (e) In instances where the applicant has requested a conference 
pursuant to Sec.  2570.38(b) but has not expressed an intent to submit 
additional information in support of the exemption application as 
provided in Sec.  2570.39, the Department will schedule a conference 
under this section for a date and time that occurs within 40 days after 
the date of the issuance of the tentative denial letter described in 
Sec.  2570.38(a). If, for reasons beyond its control, the applicant 
cannot attend a conference within the 40-day limit described in this 
paragraph, the applicant may request an extension of time for the 
scheduling of a conference, provided that such request is made before 
the expiration of the 40-day limit. The Department will only grant such 
an extension in unusual circumstances and for a brief period as 
determined, respectively, by the Department in its sole discretion.
    (f) In instances where the applicant has requested a conference 
pursuant to Sec.  2570.38(b) of this subpart, has notified the 
Department of its intent to submit additional information pursuant to 
Sec.  2570.39, and has failed to furnish such information within 40 
days from the date of the tentative denial letter, the Department will 
schedule a conference under this section for a date and time that 
occurs within 60 days after the date of the issuance of the tentative 
denial letter described in Sec.  2570.38(a). If, for reasons beyond its 
control, the applicant cannot attend a conference within the 60-day 
limit described in this paragraph, the applicant may request an 
extension of time for the scheduling of a conference, provided that 
such request is made before the expiration of the 60-day limit. The 
Department will only grant such an extension in unusual circumstances 
and for a brief period as determined, respectively, by the Department 
in its sole discretion.
    (g) If the applicant fails to either timely schedule or appear for 
a conference agreed to by the Department pursuant to this section, the 
applicant will be deemed to have waived its right to a conference.
    (h) Within 20 days after the date of any conference held under this 
section, the applicant may submit to the Department (electronically or 
in paper form) any additional written data, arguments, or precedents 
discussed at the conference but not previously or adequately presented 
in writing. If, for reasons beyond its control, the applicant is unable 
to submit the additional information within this 20-day limit, the 
applicant may request an extension of time to furnish the information, 
provided that such request is made before the expiration of the 20-day 
limit described in this paragraph. The Department will only grant such 
an extension in unusual circumstances and for a brief period as 
determined, respectively, by the Department in its sole discretion.


Sec.  2570.41  Final denial letters.

    The Department will issue a final denial letter denying a requested 
exemption where:
    (a) The conditions for issuing a final denial letter specified in 
Sec.  2570.38(b) or Sec.  2570.39(e) of this subpart are satisfied;
    (b) After issuing a tentative denial letter under Sec.  2570.38 of 
this subpart and considering the entire record in the case, including 
all written information submitted pursuant to Sec. Sec.  2570.39 and 
2570.40 of this subpart, the Department decides not to propose an 
exemption or to withdraw an exemption already proposed; or
    (c) After proposing an exemption and conducting a hearing on the 
exemption under either Sec.  2570.46 or Sec.  2570.47 of this subpart 
and after considering the entire record in the case, including the 
record of the hearing, the Department decides to withdraw the proposed 
exemption.


Sec.  2570.42  Notice of proposed exemption.

    If the Department tentatively decides that an administrative 
exemption is warranted, it will publish a notice of a proposed 
exemption in the Federal Register. In addition to providing notice of 
the pendency of the exemption before the Department, the notice will:
    (a) Explain the exemption transaction and summarize the information 
and reasons in support of proposing the exemption;
    (b) Describe the scope of relief and any conditions of the proposed 
exemption;
    (c) Inform interested persons of their right to submit comments to 
the Department (either electronically or in writing) relating to the 
proposed exemption and establish a deadline for receipt of such 
comments; and
    (d) Where the proposed exemption includes relief from the 
prohibitions of section 406(b) of ERISA, section 4975(c)(1)(E) or (F) 
of the Code, or section 8477(c)(2) of FERSA, inform interested persons 
of their right to request a hearing under Sec.  2570.46 of this

[[Page 66652]]

subpart and establish a deadline for receipt of requests for such 
hearings.


Sec.  2570.43  Notification of interested persons by applicant.

    (a) If a notice of proposed exemption is published in the Federal 
Register in accordance with Sec.  2570.42 of this subpart, the 
applicant must notify interested persons of the pendency of the 
exemption in the manner and within the time period specified in the 
application. If the Department determines that this notification would 
be inadequate, the applicant must obtain the Department's consent as to 
the manner and time period of providing the notice to interested 
persons. Any such notification must include:
    (1) A copy of the notice of proposed exemption as published in the 
Federal Register; and
    (2) A supplemental statement in the following form:

    You are hereby notified that the United States Department of 
Labor is considering granting an exemption from the prohibited 
transaction restrictions of the Employee Retirement Income Security 
Act of 1974, the Internal Revenue Code of 1986, or the Federal 
Employees' Retirement System Act of 1986. The exemption under 
consideration is summarized in the enclosed [Summary of Proposed 
Exemption, and described in greater detail in the accompanying] \2\ 
Notice of Proposed Exemption. As a person who may be affected by 
this exemption, you have the right to comment on the proposed 
exemption by [date].\3\ [If you may be adversely affected by the 
grant of the exemption, you also have the right to request a hearing 
on the exemption by [date].] \4\
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    \2\ To be added in instances where the Department requires the 
applicant to furnish a Summary of Proposed Exemption to interested 
persons as described in Sec.  2570.43(d).
    \3\ The applicant will write in this space the date of the last 
day of the time period specified in the notice of proposed 
exemption.
    \4\ To be added in the case of an exemption that provides relief 
from section 406(b) of ERISA or corresponding sections of the Code 
or FERSA.
---------------------------------------------------------------------------

    All comments and/or requests for a hearing should be addressed 
to the Office of Exemption Determinations, Employee Benefits 
Security Administration, Room ------,\5\ U.S. Department of Labor, 
200 Constitution Avenue NW., Washington, DC 20210, ATTENTION: 
Application No.------.\6\ Comments and hearing requests may also be 
transmitted to the Department electronically at e-oed@dol.gov or at 
http://www.regulations.gov (follow instructions for submission), and 
should prominently reference the application number listed above. In 
addition, comments and hearing requests may be transmitted to the 
Department via facsimile at (202) 219-0204. Individuals submitting 
comments or requests for a hearing on this matter are advised not to 
disclose sensitive personal data, such as social security numbers.
---------------------------------------------------------------------------

    \5\ The applicant will fill in the room number of the Office of 
Exemptions Determinations. As of the date of this final regulation, 
the room number of the Office of Exemption Determinations is N-5700.
    \6\ The applicant will fill in the exemption application number, 
which is stated in the notice of proposed exemption, as well as in 
all correspondence from the Department to the applicant regarding 
the application.
---------------------------------------------------------------------------

    The Department will make no final decision on the proposed 
exemption until it reviews the comments received in response to the 
enclosed notice. If the Department decides to hold a hearing on the 
exemption request before making its final decision, you will be 
notified of the time and place of the hearing.

    (b) The method used by an applicant to furnish notice to interested 
persons must be reasonably calculated to ensure that interested persons 
actually receive the notice. In all cases, personal delivery and 
delivery by first-class mail will be considered reasonable methods of 
furnishing notice. If the applicant elects to furnish notice 
electronically, he or she must provide satisfactory proof of electronic 
delivery to the entire class of interested persons.
    (c) After furnishing the notification described in paragraph (a) of 
this section, an applicant must provide the Department with a written 
statement confirming that notice was furnished in accordance with the 
foregoing requirements of this section. This statement must be 
accompanied by a declaration under penalty of perjury attesting to the 
truth of the information provided in the statement and signed by a 
person qualified under Sec.  2570.34(b)(5) of this subpart to sign such 
a declaration. No exemption will be granted until such a statement and 
its accompanying declaration have been furnished to the Department.
    (d) In addition to the provision of notification required by 
paragraph (a) of this section, the Department, in its discretion, may 
also require an applicant to furnish interested persons with a brief 
summary of the proposed exemption (Summary of Proposed Exemption), 
written in a manner calculated to be understood by the average 
recipient, which objectively describes:
    (1) The exemption transaction and the parties in interest thereto;
    (2) Why such transaction would violate the prohibited transaction 
provisions of ERISA, the Code, and/or FERSA from which relief is 
sought;
    (3) The reasons why the plan seeks to engage in the transaction; 
and
    (4) The conditions and safeguards proposed to protect the plan and 
its participants and beneficiaries from potential abuse or unnecessary 
risk of loss in the event the Department grants the exemption.
    (e) Applicants who are required to provide interested persons with 
the Summary of Proposed Exemption described in paragraph (d) of this 
section shall furnish the Department with a copy of such summary for 
review and approval prior to its distribution to interested persons. 
Such applicants shall also provide confirmation to the Department that 
the Summary of Proposed Exemption was furnished to interested persons 
as part of the written statement and declaration required of exemption 
applicants by paragraph (c) of this section.


Sec.  2570.44  Withdrawal of exemption applications.

    (a) An applicant may withdraw an application for an exemption at 
any time by oral or written (including electronic) notice to the 
Department. A withdrawn application generally shall not prejudice any 
subsequent applications for an exemption submitted by an applicant.
    (b) Upon receiving an applicant's notice of withdrawal regarding an 
application for an individual exemption, the Department will confirm by 
letter the applicant's withdrawal of the application and will terminate 
all proceedings relating to the application. If a notice of proposed 
exemption has been published in the Federal Register, the Department 
will publish a notice withdrawing the proposed exemption.
    (c) Upon receiving an applicant's notice of withdrawal regarding an 
application for a class exemption or for an individual exemption that 
is being considered with other applications as a request for a class 
exemption, the Department will inform any other applicants for the 
exemption of the withdrawal. The Department will continue to process 
other applications for the same exemption. If all applicants for a 
particular class exemption withdraw their applications, the Department 
may either terminate all proceedings relating to the exemption or 
propose the exemption on its own motion.
    (d) If, following the withdrawal of an exemption application, an 
applicant decides to reapply for the same exemption, he or she may 
contact the Department in writing (including electronically) to request 
that the application be reinstated. The applicant should refer to the 
application number assigned to the original application. If, at the 
time the original application was withdrawn, any additional information 
to be submitted to the Department under Sec.  2570.39 was outstanding, 
that information must accompany the request for reinstatement of the

[[Page 66653]]

application. However, the applicant need not resubmit information 
previously furnished to the Department in connection with a withdrawn 
application unless reinstatement of the application is requested more 
than two years after the date of its withdrawal.
    (e) Any request for reinstatement of a withdrawn application 
submitted, in accordance with paragraph (d) of this section, will be 
granted by the Department, and the Department will take whatever steps 
remained at the time the application was withdrawn to process the 
application.


Sec.  2570.45  Requests for reconsideration.

    (a) The Department will entertain one request for reconsideration 
of an exemption application that has been finally denied pursuant to 
Sec.  2570.41 if the applicant presents in support of the application 
significant new facts or arguments, which, for good reason, could not 
have been submitted for the Department's consideration during its 
initial review of the exemption application.
    (b) A request for reconsideration of a previously denied 
application must be made within 180 days after the issuance of the 
final denial letter and must be accompanied by a copy of the 
Department's final letter denying the exemption and a statement setting 
forth the new information and/or arguments that provide the basis for 
reconsideration.
    (c) A request for reconsideration must also be accompanied by a 
declaration under penalty of perjury attesting to the truth of the new 
information provided, which is signed by a person qualified under Sec.  
2570.34(b)(5) to sign such a declaration.
    (d) If, after reviewing a request for reconsideration, the 
Department decides that the facts and arguments presented do not 
warrant reversal of its original decision to deny the exemption, it 
will send a letter to the applicant reaffirming that decision.
    (e) If, after reviewing a request for reconsideration, the 
Department decides, based on the new facts and arguments submitted, to 
reconsider its final denial letter, it will notify the applicant of its 
intent to reconsider the application in light of the new information 
presented. The Department will then take whatever steps remained at the 
time it issued its final denial letter to process the exemption 
application.
    (f) If, at any point during its subsequent processing of the 
application, the Department decides again that the exemption is 
unwarranted, it will issue a letter affirming its final denial.


Sec.  2570.46  Hearings in opposition to exemptions from restrictions 
on fiduciary self-dealing.

    (a) Any interested person who may be adversely affected by an 
exemption which the Department proposes to grant from the restrictions 
of section 406(b) of ERISA, section 4975(c)(1)(E) or (F) of the Code, 
or section 8477(c)(2) of FERSA may request a hearing before the 
Department within the period of time specified in the Federal Register 
notice of the proposed exemption. Any such request must state:
    (1) The name, address, telephone number, and email address of the 
person making the request;
    (2) The nature of the person's interest in the exemption and the 
manner in which the person would be adversely affected by the 
exemption; and
    (3) A statement of the issues to be addressed and a general 
description of the evidence to be presented at the hearing.
    (b) The Department will grant a request for a hearing made in 
accordance with paragraph (a) of this section where a hearing is 
necessary to fully explore material factual issues identified by the 
person requesting the hearing. A notice of such hearing shall be 
published by the Department in the Federal Register. The Department may 
decline to hold a hearing where:
    (1) The request for the hearing does not meet the requirements of 
paragraph (a) of this section;
    (2) The only issues identified for exploration at the hearing are 
matters of law; or
    (3) The factual issues identified can be fully explored through the 
submission of evidence in written (including electronic) form.
    (c) An applicant for an exemption must notify interested persons in 
the event that the Department schedules a hearing on the exemption. 
Such notification must be given in the form, time, and manner 
prescribed by the Department. Ordinarily, however, adequate 
notification can be given by providing to interested persons a copy of 
the notice of hearing published by the Department in the Federal 
Register within 10 days of its publication, using any of the methods 
approved in Sec.  2570.43(b).
    (d) After furnishing the notice required by paragraph (c) of this 
section, an applicant must submit a statement confirming that notice 
was given in the form, manner, and time prescribed. This statement must 
be accompanied by a declaration under penalty of perjury attesting to 
the truth of the information provided in the statement, which is signed 
by a person qualified under Sec.  2570.34(b)(5) to sign such a 
declaration.


Sec.  2570.47  Other hearings.

    (a) In its discretion, the Department may schedule a hearing on its 
own motion where it determines that issues relevant to the exemption 
can be most fully or expeditiously explored at a hearing. A notice of 
such hearing shall be published by the Department in the Federal 
Register.
    (b) An applicant for an exemption must notify interested persons of 
any hearing on an exemption scheduled by the Department in the manner 
described in Sec.  2570.46(c). In addition, the applicant must submit a 
statement subscribed as true under penalty of perjury like that 
required in Sec.  2570.46(d).


Sec.  2570.48  Decision to grant exemptions.

    (a) The Department may not grant an exemption under section 408(a) 
of ERISA, section 4975(c)(2) of the Code, or 5 U.S.C. 8477(c)(3) 
unless, following evaluation of the facts and representations 
comprising the administrative record of the proposed exemption 
(including any comments received in response to a notice of proposed 
exemption and the record of any hearing held in connection with the 
proposed exemption), it finds that the exemption is:
    (1) Administratively feasible;
    (2) In the interests of the plan (or the Thrift Savings Fund in the 
case of FERSA) and of its participants and beneficiaries; and
    (3) Protective of the rights of participants and beneficiaries of 
such plan (or the Thrift Savings Fund in the case of FERSA).
    (b) In each instance where the Department determines to grant an 
exemption, it shall publish a notice in the Federal Register which 
summarizes the transaction or transactions for which exemptive relief 
has been granted and specifies the conditions under which such 
exemptive relief is available.


Sec.  2570.49  Limits on the effect of exemptions.

    (a) An exemption does not take effect with respect to the exemption 
transaction unless the material facts and representations contained in 
the application and in any materials and documents submitted in support 
of the application were true and complete.
    (b) An exemption is effective only for the period of time specified 
and only under the conditions set forth in the exemption.
    (c) Only the specific parties to whom an exemption grants relief 
may rely on

[[Page 66654]]

the exemption. If the notice granting an exemption does not limit 
exemptive relief to specific parties, all parties to the exemption 
transaction may rely on the exemption.
    (d) For transactions that are continuing in nature, an exemption 
ceases to be effective if, during the continuation of the transaction, 
there are material changes to the original facts and representations 
underlying such exemption or if one or more of the exemption's 
conditions cease to be met.
    (e) The determination as to whether, under the totality of the 
facts and circumstances, a particular statement contained in (or 
omitted from) an exemption application constitutes a material fact or 
representation is made by the Department.


Sec.  2570.50  Revocation or modification of exemptions.

    (a) If, after an exemption takes effect, changes in circumstances, 
including changes in law or policy, occur which call into question the 
continuing validity of the Department's original findings concerning 
the exemption, the Department may take steps to revoke or modify the 
exemption.
    (b) Before revoking or modifying an exemption, the Department will 
publish a notice of its proposed action in the Federal Register and 
provide interested persons with an opportunity to comment on the 
proposed revocation or modification. Prior to the publication of such 
notice, the applicant will be notified of the Department's proposed 
action and the reasons therefore. Subsequent to the publication of the 
notice, the applicant will have the opportunity to comment on the 
proposed revocation or modification.
    (c) Ordinarily the revocation or modification of an exemption will 
have prospective effect only.


Sec.  2570.51  Public inspection and copies.

    (a) The administrative record of each exemption will be open to 
public inspection and copying at the EBSA Public Disclosure Room, U.S. 
Department of Labor, 200 Constitution Avenue NW., Washington, DC 20210.
    (b) Upon request, the staff of the Public Disclosure Room will 
furnish photocopies of an administrative record, or any specified 
portion of that record, for a specified charge per page.


Sec.  2570.52  Effective date.

    This subpart B is effective with respect to all exemptions filed 
with or initiated by the Department under section 408(a) of ERISA, 
section 4975(c)(2) of the Code, and/or 5 U.S.C. 8477(c)(3) at any time 
on or after December 27, 2011. Applications for exemptions under 
section 408(a) of ERISA, section 4975(c)(2) of the Code, and/or 5 
U.S.C. 8477(c)(3) filed on or after September 10, 1990, but before 
December 27, 2011 are governed by part 2570 of chapter XXV of title 29 
of the Code of Federal Regulations (title 29 CFR part 2570 as revised 
July 1, 1991).
* * * * *

    Signed at Washington, DC, this 18th day of October, 2011.
Phyllis C. Borzi,
Assistant Secretary, Employee Benefits Security Administration, 
Department of Labor.
[FR Doc. 2011-27312 Filed 10-26-11; 8:45 am]
BILLING CODE 4510-29-P