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41470 Federal Register / Vol. 71, No.

140 / Friday, July 21, 2006 / Notices

ending June 30, 2006, and is seeking matters to be addressed in the reports. record for these investigations may be
input from interested members of the All submissions should be addressed to viewed on the Commission’s electronic
public. The Commission expects to the Secretary, United States docket (EDIS–ON LINE) at http://
make its data series available to the International Trade Commission, 500 E edis.usitc.gov. Persons with mobility
public in November 2006 in electronic Street SW., Washington, DC 20436, and impairments who will need special
format, posted on the Commission’s should be received no later than the assistance in gaining access to the
Web site. close of business on August 31, 2006. Commission should contact the Office
FOR FURTHER INFORMATION CONTACT: All written submissions must conform of the Secretary at 202–205–2000.
Timothy McCarty (202–205–3324, with the provisions of section 201.8 of By order of the Commission.
timothy.mccarty@usitc.gov) or Jonathan the Commission’s Rules of Practice and
Issued: July 17, 2006.
Coleman (202–205–3465, Procedure (19 CFR 201.8). Section 201.8
of the rules requires that a signed Marilyn R. Abbott,
jonathan.coleman@usitc.gov), Secretary to the Commission.
Agriculture and Fisheries Division, original (or a copy designated as an
original) and fourteen (14) copies of [FR Doc. E6–11565 Filed 7–20–06; 8:45 am]
Office of Industries, U.S. International
Trade Commission, 500 E Street, SW., each document be filed. In the event BILLING CODE 7020–02–P

Washington DC, 20436, for general that confidential treatment of the

information, or William Gearhart (202– document is requested, at least four (4)
205–3091, william.gearhart@usitc.gov), additional copies must be filed, in DEPARTMENT OF LABOR
Office of the General Counsel, U.S. which the confidential information
must be deleted (see the following Employee Benefits Security
International Trade Commission, for
paragraph for further information Administration
information on legal aspects.
regarding confidential business [Application No. D–11330, et al.]
information). The Commission’s rules
Background.—Section 316 of the
do not authorize filing submissions with Proposed Exemptions; The Young
North American Free-Trade Agreement
the Secretary by facsimile or electronic Men’s Christian Association
Implementation Act (NAFTA
means, except to the extent permitted by Retirement Fund-Retirement Plan (the
Implementation Act) (19 U.S.C. 3881)
section 201.8 of the rules (see Handbook Plan)
requires that the Commission monitor for Electronic Filing Procedures, ftp://
U.S. imports of fresh or chilled tomatoes ftp.usitc.gov/pub/reports/ AGENCY: Employee Benefits Security
(HTS heading 0702.00) and fresh or electronic_filing_handbook.pdf ). Administration, Labor.
chilled peppers, other than chili Any submissions that contain ACTION: Notice of proposed exemptions.
peppers (HTS subheading 0709.60.00), confidential business information must
until January 1, 2009, for purposes of also conform with the requirements of SUMMARY: This document contains
expediting an investigation concerning section 201.6 of the Commission’s Rules notices of pendency before the
provisional relief under section 202 of of Practice and Procedure (19 CFR Department of Labor (the Department) of
the Trade Act of 1974 or section 302 of 201.6). Section 201.6 of the rules proposed exemptions from certain of the
the NAFTA Implementation Act. requires that the cover of the document prohibited transaction restrictions of the
Section 316 does not require that the and the individual pages be clearly Employee Retirement Income Security
Commission publish reports on this marked as to whether they are the Act of 1974 (the Act) and/or the Internal
monitoring activity or otherwise make ‘‘confidential’’ or ‘‘non-confidential’’ Revenue Code of 1986 (the Code).
the information available to the public. version, and that the confidential Written Comments and Hearing
However, the Commission maintains business information be clearly Requests
current data files on tomatoes and identified by means of brackets. All
peppers in order to conduct an written submissions, except for All interested persons are invited to
expedited investigation should a request confidential business information, will submit written comments or requests for
be received. In response to the be made available in the Office of the a hearing on the pending exemptions,
monitoring requirement, the Secretary to the Commission for unless otherwise stated in the Notice of
Commission instituted investigation No. inspection by interested parties. Proposed Exemption, within 45 days
332–350, Monitoring of U.S. Imports of The Commission will not publish from the date of publication of this
Tomatoes (59 FR 1763) and such confidential business information Federal Register Notice. Comments and
investigation No. 332–351, Monitoring in the monitoring reports it posts on its requests for a hearing should state: (1)
of U.S. Imports of Peppers (59 FR 1762). Web site in a manner that would reveal The name, address, and telephone
The Commission will make its reports the operations of the firm supplying the number of the person making the
available to the public in electronic information. However, the Commission comment or request, and (2) the nature
format, and will maintain electronic may include such information in the of the person’s interest in the exemption
copies of its reports on its Web site until report it sends to the President under and the manner in which the person
one year after the monitoring section 202 of the Trade Act of 1974 or would be adversely affected by the
requirement expires on January 1, 2009. section 302 of the NAFTA exemption. A request for a hearing must
The most recent Commission Implementation Act, if it is required to also state the issues to be addressed and
monitoring reports in this series were conduct an investigation involving these include a general description of the
published in November 2005 and are products under either of these statutory evidence to be presented at the hearing.
available on the Commission’s Web site. authorities. Hearing-impaired ADDRESSES: All written comments and
Written submissions.—The individuals are advised that information requests for a hearing (at least three
rwilkins on PROD1PC63 with NOTICES_1

Commission does not plan to hold a on this matter can be obtained by copies) should be sent to the Employee
public hearing in connection with contacting our TDD terminal on (202) Benefits Security Administration
preparation of these reports. However, 205–1810. General information (EBSA), Office of Exemption
interested persons are invited to submit concerning the Commission may also be Determinations, Room N–5700, U.S.
written statements containing data and obtained by accessing its Internet server Department of Labor, 200 Constitution
other information concerning the (http://www.usitc.gov). The public Avenue, NW., Washington, DC 20210.

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Federal Register / Vol. 71, No. 140 / Friday, July 21, 2006 / Notices 41471

Attention: Application No. lll, section 4975(c)(2) of the Code and in timely remit participant contributions to
stated in each Notice of Proposed accordance with the procedures set the Plan.
Exemption. Interested persons are also forth in 29 CFR part 2570, subpart B (55 (2) A determination by the Plan to
invited to submit comments and/or FR 32836, 32847, August 10, 1990). consider a contribution due to the Plan
hearing requests to EBSA via e-mail or from any participating employer any of
Transactions and Conditions whose employees are covered by the
FAX. Any such comments or requests
should be sent either by e-mail to: (a) If the proposed exemption is Plan as uncollectible and to terminate
moffitt.betty@dol.gov, or by FAX to granted, the restrictions of section efforts to collect such contribution, if
(202) 219–0204 by the end of the 406(a) of the Act and the sanctions the following conditions are met:
scheduled comment period. The resulting from the application of section (i) Prior to making such
applications for exemption and the 4975 of the Code, by reason of section determination, the Plan has made, or
comments received will be available for 4975(c)(1)(A) through (D) of the Code, has caused to be made, such reasonable,
public inspection in the Public shall not apply, effective July 1, 2006, diligent and systematic efforts as are
Documents Room of the Employee to: appropriate under the circumstances to
Benefits Security Administration, U.S. (1) Any arrangement, agreement or collect such contribution or any part
Department of Labor, Room N–1513, understanding between The Young thereof;
200 Constitution Avenue, NW., Men’s Christian Association Retirement (ii) Such determination is set forth in
Washington, DC 20210. Fund-Retirement Plan (the Plan) and writing and is reasonable and
any participating employer whose appropriate based on the likelihood of
Notice to Interested Persons employees are covered by the Plan, collecting such contribution or the
Notice of the proposed exemptions whereby the time is extended for the approximate expenses that would be
will be provided to all interested making of a contribution by such a incurred if the Plan continued to
persons in the manner agreed upon by participating employer to such Plan, if attempt to collect such contribution or
the applicant and the Department the following conditions are met: any part thereof;
within 15 days of the date of publication (i) Prior to entering into such (iii) The Notice provided to all
in the Federal Register. Such notice arrangement, agreement or participating employers, which is
shall include a copy of the notice of understanding, the Plan has made, or described in section (a)(1)(iv) above,
proposed exemption as published in the has caused to be made, such reasonable, must also contain the methodology used
Federal Register and shall inform diligent and systematic efforts as are by the Plan with respect to the
interested persons of their right to appropriate under the circumstances to determination that the delinquent
comment and to request a hearing collect such contribution; contribution is uncollectible and in
(where appropriate). (ii) The terms of such arrangement, deciding to terminate efforts to collect
SUPPLEMENTARY INFORMATION: The agreement or understanding are set forth such contribution; and
proposed exemptions were requested in in writing and are reasonable under the (iv) The determination that the
applications filed pursuant to section circumstances based on the likelihood contribution is uncollectible and the
408(a) of the Act and/or section of collecting such contribution or the decision to terminate efforts to collect
4975(c)(2) of the Code, and in approximate expenses that would be such contribution do not apply to any
accordance with procedures set forth in incurred if the Plan continued to failure of an employer to timely remit
29 CFR part 2570, subpart B (55 FR attempt to collect such contribution participant contributions to the Plan.
32836, 32847, August 10, 1990). through means other than such (b) If an employer any of whose
Effective December 31, 1978, section arrangement, agreement or employees are covered by the Plan
102 of Reorganization Plan No. 4 of understanding; enters into an arrangement, agreement
1978, 5 U.S.C. App. 1 (1996), transferred (iii) Such arrangement, agreement or or understanding with the Plan as
the authority of the Secretary of the understanding is entered into or described in subparagraph (a)(1) with
Treasury to issue exemptions of the type renewed by the Plan in connection with respect to the payment of such
requested to the Secretary of Labor. the collection of such contribution and contribution, or if the Plan makes a
Therefore, these notices of proposed for the exclusive purpose of facilitating determination described in
exemption are issued solely by the the collection of such contribution; subparagraph (a)(2), such employer
Department. (iv) The Plan’s procedures and the shall not be subject to the civil penalty
The applications contain guidelines to be followed in undertaking which may be assessed under section
representations with regard to the to collect such contributions are 502(i) of the Act, or to the taxes imposed
proposed exemptions which are described in a notice provided to all the by section 4975(a) and (b) of the Code,
summarized below. Interested persons employers participating in the Plan. by reason of section 4975(c)(1)(A)
are referred to the applications on file This notice details the Plan’s standard through (D) of the Code, except in the
with the Department for a complete operating guidelines for the collection of case of an arrangement, agreement or
statement of the facts and late employer contributions (the Notice). understanding described in
representations. The Notice provided to all participating subparagraph (a)(1), where the terms
The Young Men’s Christian employers contains the methodology of thereof are clearly unreasonable under
Association Retirement Fund- the Plan that applies with respect to the the circumstances based on the
Retirement Plan, (the Plan) Located in determination to extend the time period likelihood of collecting such
New York, NY, [Application No. D– for the making of such delinquent contribution or the approximate
11330]. contribution or to permit such expenses that would be incurred if the
delinquent contribution to be made in Plan continued to attempt to collect
Proposed Exemption
rwilkins on PROD1PC63 with NOTICES_1

periodic payments. New participating such contribution through means other

Based on the facts and representations employers will receive the Notice than such arrangement, agreement or
set forth in the application, the within 30 days of signing the written understanding.
Department is considering granting an participation agreement; and (c) The Plan maintains for a period of
exemption under the authority of (v) The extension of time does not six years the records necessary to enable
section 408(a) of the Act (or ERISA) and apply to any failure of an employer to the persons described in paragraph (d)

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41472 Federal Register / Vol. 71, No. 140 / Friday, July 21, 2006 / Notices

below to determine whether the The Applicant states that other ERISA 1% of such contribution to the
conditions of this exemption have been fiduciaries include the senior officers of Retirement Plan.
met, except that: the Fund in their capacity as plan 3. The Applicant states that, under the
(1) A prohibited transaction will not administrator. These executive officers Plan, a participant’s benefit is based
be considered to have occurred if, due are employees of the Fund, who may act upon the sum of the contributions made
to circumstances beyond the control of as plan administrator, and they by the participant and his employer,
the Plan, the records are lost or acknowledge fiduciary responsibility in plus interest that is periodically
destroyed prior to the end of the six- that context. The Sponsor will bear the credited as determined by the Board of
year period, and costs of the exemption application and Trustees of the Sponsor. According to
(2) No party in interest other than the notifying interested persons. the Applicant, pursuant to the terms of
Plan’s fiduciaries shall be subject to the 2. The Applicant states that the Plan the Plan, participation by a YMCA
civil penalty that may be assessed under is a multiple employer church money employer in the Plan is voluntary but if
section 502(i) of ERISA or to the taxes purchase pension plan under Code a YMCA does participate, it is
imposed by section 4975(a) and (b) of section 401(a). The Applicant further mandatory that the YMCA submit
the Code if the records are not states that as of July 1, 2006, the Plan employer contributions to the Plan on
maintained or not available for will be treated as having made an behalf of all of its eligible employees,
examination as required by paragraph election under Code section 410(d) and, including employees located at the
(d) below. thus, will be an ‘‘electing’’ money YMCA’s various chapters (also known
(d)(1) Except as provided in purchase defined contribution church as branches). The Applicant represents
subparagraph (d)(2) below and plan, subject to the applicable that, pursuant to the Legislation,
notwithstanding any provisions of provisions of ERISA and the Code.1 The commencing with the plan year
section 504(a)(2) and (b) of ERISA, the Sponsor is a separately incorporated beginning on July 1, 2006, the Plan (but
records referred to in paragraph (c) New York not-for-profit corporation, not any reserves held by the Sponsor
above are unconditionally available at which was established in 1921 for the with respect to such Plan or other assets
their customary location for express purpose of providing retirement held by the Sponsor) will be treated as
examination during normal business benefits to employees of Young Men’s having made an election under Code
hours by: Christian Associations (YMCAs or section 410(d). At that time, the Plan
(i) Any duly authorized employee or employers) throughout the United will be treated as an ‘‘electing’’ church
representative of the Department of States. plan subject to the applicable provisions
Labor or the Internal Revenue Service; Since its founding, the Plan has of ERISA and the Code.
(ii) Any fiduciary of the Plan or any provided retirement benefits to the The Applicant notes that, pursuant to
duly authorized employee or employees of participating YMCAs. As Sections 1.4 and 14.3 of the Plan,
representative of such fiduciary; of June 30, 2005, the Plan covered more participating YMCA employers are
(iii) Any participating employer of the than 75,000 participants, including over required to sign a written participation
Plan; and 8,600 retired participants and agreement with the Board of Trustees of
(iv) Any participant or beneficiary of beneficiaries. The Plan’s participating the Sponsor, pursuant to which the
the Plan or duly authorized employee or employers consist entirely of separately employer agrees to make participation
representative of such participant or incorporated YMCAs throughout the in the Plan a condition of employment
beneficiary. United States. As of May 5, 2006, there for all new employees and also agrees to
(2) None of the persons described in enroll its eligible employees and make
were 967 corporate chartered YMCAs
subparagraph (d)(1)(ii), (iii) and (iv) regular timely payments required by the
that operate 2,600 branches. As of June
above shall be authorized to examine Plan on behalf of its employees. In
30, 2005, the Plan had 920 participating
commercial or financial information addition, each participating association
employers, and in the last year, has
which is privileged or confidential, or agrees to permit auditors selected by the
received over $168 million in plan
records that are unrelated to the Plan. Sponsor’s Board of Trustees to examine
contributions. As of June 30, 2005, the
DATES: Effective Date: This proposed most recent available valuation date for the books and records of the
exemption, if granted, will be effective participating employer to determine
the Plan, the aggregate fair market value
as of July 1, 2006, the date of the whether the participating employer is
of the Plan’s assets was $2,171,230,098,
beginning of the Plan year. participating in accordance with the
and as of June 30, 2005, the fair market
provisions of the Plan.
Summary of Facts and Representations value of the total assets that are 4. The Applicant asserts that the Plan,
1. The Application for this proposed attributable to the contributions to the like many other multiple employer
exemption was submitted on behalf of Plan was approximately $803,355,137. plans, especially plans analogous in
the Young Men’s Christian Association The fair market value of the total assets size, from time to time encounters
Retirement Fund (the Sponsor or Fund) that are attributable to contributions participating employers who fail to
and the Plan it sponsors, The Young made to the Plan in the three year make timely contributions to the Plan.
Men’s Christian Association Retirement period ending June 30, 2005 was $480 This delinquency in the past has
Fund—Retirement Plan (the Plan) with million of which approximately resulted from various reasons, including
respect to the Plan’s procedures for the $400,000 represented delinquent personnel changes at the participating
collection of employer contributions employer contributions. The delinquent YMCA which caused an administrative
from participating employers in the Plan amounts represent less than one tenth of failure to make the contribution on time
for plan years commencing July 1, 2006 1 The Applicant notes that pursuant to legislation
and failures relating to data collection
and thereafter. The Applicant states that passed by Congress and signed into law by
issues at the participating employers.
rwilkins on PROD1PC63 with NOTICES_1

no provision of the proposed exemption President Bush on December 21, 2004 (Pub. L. 108– These delinquencies have been pursued
would extend to the failure of an 476) (Legislation), the Sponsor’s status as a church through reasonable, diligent and
employer to timely forward participant pension fund (within the meaning of Code section systematic collection efforts by the
414(e)(3)(A)) and the Plan’s status as a defined
contributions to the Plan. contribution money purchase church pension plan
Sponsor, which require that the
The Fund is the named fiduciary for (within the meaning of Code section 414(e)) was employer make up the contributions
the Plan and acts as trustee of the Plan. confirmed. with interest.

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Federal Register / Vol. 71, No. 140 / Friday, July 21, 2006 / Notices 41473

The YMCA Retirement Fund determination by the Plan that a through diligent and systematic
Collection Procedure submitted by the delinquent contribution is uncollectible collection efforts, has been able to
Applicant in a June 28, 2006 (the Notice).2 New participating recover delinquent employer
correspondence to the Department employers will receive the Notice contributions, plus interest. By virtue of
provides that employer contributions within 30 days of signing the written the Plan’s efforts to collect delinquent
are required to be transmitted by the participation agreement. The Notice will payments, including extending the time
YMCA employers to the Fund by the provide the participating employers by which participating employers must
15th business day of the month with a detailed explanation of the steps make such contributions, the Plan has
following the due date. On the 9th used by the Plan to determine: the time benefited by increasing the total assets
business day of the following month, period for the making of such available to provide retirement benefits
the Fund sends an ‘‘urgent reminder’’ delinquent contribution; whether to to its participants. By continuing such
fax or email to the Plan Administrator permit such delinquent contribution to collection efforts, the participants and
of the participating employers who have be made in periodic payments; that the beneficiaries of the Plan will benefit
not yet remitted their contributions. On delinquent contribution is uncollectible; through the receipt of the full amount of
the 12th business day, a second notice and whether to terminate efforts to their promised plan benefits.
is sent to the employer’s CFO and on the collect such contribution. 7. Once the Plan’s Code section 410(d)
14th business day, a third notice is sent 6. The Applicant states that often the election becomes effective, for the July
to the employer’s CEO. On the 16th day, delinquency is a result of an 1, 2006 plan year and plan years
the Fund sends a letter indicating administrative failure, and as a result of thereafter, the Plan will be subject to the
contributions are delinquent to the its diligent collection efforts, the prohibited transaction provisions of
employer’s CFO and copies the CEO and contributions and interest, are made to section 406 of ERISA. Under ERISA
the Chairman of the employer’s Board of the Plan. The Applicant notes, however, sections 406(a)(1)(B) and 406(a)(1)(D), a
Trustees. At 2 months past due, a that in certain situations, the fiduciary shall not cause a plan to
personal letter is sent to the CEO of the participating employer is not able to engage in a transaction if he knows or
employer and at 3 months past due, a make the required contributions, for should know that such transaction
personal letter is sent to the CEO and example, when the participating constitutes a direct or indirect (i)
the Chairman. At 4 months past due, the employer’s solvency is in jeopardy or lending of money or other extension of
Fund sends a letter to each participant where there are other adverse financial credit between the plan and a party in
at the employer outlining the situation conditions that exist. In such cases, the interest; or (ii) a transfer to, or use by
with copies to the CEO and the Sponsor still seeks full contributions or for the benefit of, a party in interest,
Chairman. At 5 months past due, the from the participating employer, of any assets of the plan. Section 4975
Fund sends a letter to the CEO and the although often the Sponsor will agree to of the Code contains parallel prohibited
Chairman detailing the IRS accept the required contributions over a transaction provisions. By allowing
consequences for delinquent longer period of time in installments participating employers to make
contributions and offering assistance in until the solvency issues are resolved. In payments at a later date, over a longer
working out a payment schedule if the rare cases, the Sponsor decides to period of time than prescribed by the
YMCA is experiencing ‘‘extreme terminate further collection efforts Plan or in rare instances, ceasing
financial hardship.’’ At 6 to 8 months based on the participating employer’s collection efforts against a participating
past due, there are continued efforts to insolvency coupled with the expense of employer (where the costs of collection
encourage payments by the employer continued collection efforts with respect may far outweigh the amounts
and a possible warning of expulsion to such participating employer. The involved), the Plan may be viewed as
from the Fund. Sponsor may, as it deems appropriate, extending credit from the Plan to the
Delinquencies are reported monthly expel a delinquent YMCA employer and participating employer, (i.e., a party in
to the corporate offices of the YMCA of preclude it from all future participation interest pursuant to ERISA section
the U.S.A. and to the appropriate in the Plan or pursue civil action against 3(14)(C)), or transferring plan assets to a
regional Network Consultants after the a delinquent YMCA employer to collect participating employer in violation of
close of the month. Quarterly contributions. The Applicant further ERISA sections 406(a)(1)(B) and
confirmations are sent to the CEO of states that, although the Sponsor seeks 406(a)(1)(D) (and the related parallel
each employer indicating whether to prevent such delinquent payments prohibited transaction provisions under
contributions were made timely. The through communication and the use of the Code).
Fund’s Finance Department periodically the audit function permitted by the The Applicant represents that the
runs reports to track any employers that Plan, given the size of the Plan, the Sponsor, as a church pension fund
are delinquent and the Executive V.P. of number of participating employers, and sponsoring a multiple employer church
the Fund maintains a ‘‘Past Due the varying size of the workforces at the pension plan under the Code, is a
Contributions Report’’ on the status of participating employers, it is likely that unique organization. However, in the
each delinquent employer. The Fund’s the Plan will face delinquent context of multiple employer plans
management may determine that yearly contributions in the future. This is even generally, the practice of delaying or
reminders or questionnaires regarding more significant given the amount of extending the time for payment of
timely remittance of employer contributions the Plan receives. employer contributions under the plan
contributions should be sent to The approximately 920 participating is not uncommon. Prohibited
previously delinquent employers to employers in the Plan vary in size and Transaction Class Exemption 76–1 (41
encourage compliance. On occasion, the financial health, which can at times FR 12740, Mar. 26, 1976) (PTE 76–1)
Fund’s internal audit staff will conduct result in the delinquent payment of provides an exemption from ERISA
rwilkins on PROD1PC63 with NOTICES_1

on-site reviews to access an employer’s contributions to the Plan. The Plan, sections 406(a) and 407(a) for multiple
compliance. employer plans maintained pursuant to
5. The Plan will distribute a notice to 2 The Notice will be distributed in conjunction
one or more collective bargaining
the participating employers describing with the notice to interested persons that is agreements between an employee
required to be provided within 30 days after this
the Plan’s procedures for the collection proposed exemption is published in the Federal organization and more than one
of late employer contributions and the Register. employer. The preamble to the proposed

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41474 Federal Register / Vol. 71, No. 140 / Friday, July 21, 2006 / Notices

class exemption recognizes that ‘‘letter of comment did not contain time for a participating employer to
‘‘multiemployer plans are often sufficient information regarding this make its contributions to the Plan aides
confronted with the problem of question and, therefore, the Department the Plan in helping a participating
delinquency in participating employer and the Service are not able at this time employer manage its retirement plan
contributions * * * and at times one or to grant a class exemption covering obligations when the participating
more participating employers may be plans which are not collectively employer is going through a difficult
delinquent in making such bargained.’’ The Department, however, financial period or when it experiences
contributions.’’ 40 FR 23798 (Jun. 2, noted that the agencies are ‘‘prepared to personnel changes or administrative
1975). Further, the preamble notes, ‘‘[I]n consider applications for an exemption issues that prevent the employer from
the course of their collection efforts, for transactions involving the collection making its contributions on time.
multiemployer plans frequently delay or of delinquent employer contributions by The Applicant believes the proposed
extend the time for payment of employee benefit plans which are not exemption will permit the Plan to
contributions pursuant to collectively bargained.’’ facilitate employer participation, which,
understandings, arrangements or 9. The Applicant asserts that the Plan in turn, supports the provision of
agreements in circumstances where it requires employers to make retirement benefits to all YMCA
appears that collection of the full contributions in order to provide employees. The proposed transaction is
amount due the plan would be participants and beneficiaries with protective of the rights of the Plan
jeopardized were the plan to attempt to retirement benefits. To the extent that participants and its beneficiaries
force immediate full payment.’’ Id. an employer does not make such because the ability to collect delinquent
8. The Applicant states that although required contributions, delinquent employer contributions will result in
PTE 76–1 was reserved for multiple contributions would directly and increased assets for the Plan. The
employer plans 3 maintained pursuant adversely affect the value of the account Applicant adds that the manner in
to a collective bargaining agreement, balances for the plan participants of that which collection of such delinquent
such fact does not decrease the employer, which in turn could contributions is proposed to be carried
significance of the acknowledgement adversely affect the amount converted out protects participants’ and
that multiple employer plans (regardless into a retirement annuity by the Sponsor beneficiaries’ interests.
of the industry or whether it is pursuant for such participants. As a defined
10. In summary, the Applicant
to a collective bargaining agreement) contribution plan, benefits are measured
represents that the proposed
face the same issues that were the basis directly by the value of a participant’s
account balance, which account is transactions meet the requirements set
for such class exemption. Any multiple forth in the proposed exemption in light
employer plan, especially one that is credited with employer contributions.
Failure to receive all required of the Plan’s adoption of procedures for
similar in size to the Plan, would the orderly collection of delinquent
confront the issue of delinquent contributions will diminish a
participant’s account balance value and, employer contributions that involve
contributions and the need for reasonable, diligent and systematic
reasonable and cost effective collection thus, his or her retirement benefit
amount and post-retirement financial methods for the review of employer
procedures. contribution accounts. Prior to the Plan
The Department notes that the security. Participants have a reasonable
expectation that the full amount of their entering into an alternative
preamble to PTE 76–1 recognized that arrangement, agreement or
the delinquency problem existed in employer’s contributions will be made
on their behalf. The Sponsor’s understanding, the Plan uses
other contexts in responding to a reasonable, diligent and systematic
comment received from an employer procedure for the recovery of delinquent
contributions allows the participants’ efforts, as appropriate under the
association, the sponsor of an employee circumstances, to collect outstanding
benefit plan which was not collectively retirement benefit expectations to be
realized. employer contributions. The terms of
bargained, that had a significant number such arrangement or the Plan’s
of unaffiliated employers contributing to Additionally, the Applicant states that
the extended payment plan determination to consider a contribution
the plan. The employer association due to the Plan as uncollectible and to
contributions are required under Plan
stated that its plan had many of the terminate efforts to collect such
procedures to include lost earnings
same problems regarding delinquent contribution, are in writing and are
(based upon the Plan’s crediting interest
employer contributions that are reasonable under the circumstances in
rate) and thus, the Plan’s procedures are
encountered by multiemployer plans light of the likelihood of collecting the
designed to make the participants
and, therefore, PTE 76–1 should be contributions weighed against the
made applicable to plans that are not The Applicant notes that, because the expenses that would be incurred by
collectively bargained. The Department proposed transaction is expected to be continuing to attempt to collect the
responded that ‘‘because plans which a recurring transaction between the Plan contributions through other means. Any
are not collectively bargained are not and the participating employers, the arrangement by the Plan in connection
jointly administered within the meaning Plan has established specified written with the collection of such
of section 302(c)(5) of the LMRA, the collection procedures, which create contributions will be for the exclusive
circumstances and safeguards involved appropriate safeguards that should make purposes of facilitating the collection of
in the collection of delinquent employer it feasible for the Department to grant such contributions. The Plan’s
contributions by such plans may be the requested exemption. The proposed procedures and the general guidelines to
different from those involved in transaction is in the interests of the Plan be followed in undertaking to collect
collectively bargained, jointly and its participants and beneficiaries such contributions or in determining
administered multiple employer plans.’’
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since the ability of the Plan to collect that the delinquent contribution is
The Department further noted that the employer contributions promotes the uncollectible and in deciding to
3 As the Department noted in paragraph (5) of the
purpose of the Plan of providing terminate efforts to collect such
General Information section of the preamble, this
retirement benefits to its participants contribution are described in a notice to
class exemption covers not only multiemployer and beneficiaries. Additionally, the be provided to all the participating
plans, but also other multiple employer plans. ability of the Plan to delay or extend the employers in the Plan.

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Notice to Interested Persons (b) The sales price for the Leased Fee physicians. Six of the physician owners
Interest is based on its fair market value are also partners in the Land Company.
The notice to interested persons, 5. Among the assets of the Plan is its
as established by a qualified,
along with the supplemental statement Leased Fee Interest in the Property,
independent appraiser, who updates the
required by Department Regulation which also bears the 10001 Lile Drive
appraisal on the date the sale is
2570.43(b)(2), will be provided by address and is legally described as ‘‘Lot
mailing notices to all terminated YMCA (c) The terms of the proposed 4A, Baptist Medical Center
employees who have a deferred vested transaction are at least as favorable to Development, City of Little Rock,
benefit under the Plan by first-class mail the Plan as those obtainable in an arm’s Pulaski County, Arkansas.’’ The Plan’s
to their last known address on the books length transaction with an unrelated Leased Fee Interest or ‘‘leased fee
and records of the Fund and to all active party. estate’’ 4 consists of a present possessory
YMCA employees who currently (d) The Plan does not pay any real interest in approximately 4.444 acres of
participate in the Plan by posting such estate fees or commissions in land that was acquired by the Plan in
notice at their place of employment in connection with the sale. 1972 for $56,000 from an unrelated
those locations which are customarily (e) An independent fiduciary is party. The Land is subject to the
reserved for employer-employee appointed to approve and monitor the provisions of the Ground Lease
communications or by personal sale transaction on behalf of the Plan. executed between the Plan and the Land
delivery. Interested persons include all (f) Within 90 days of the date the Company. In addition, the Plan’s Leased
active employees who currently notice granting this exemption is Fee Interest includes a future
participate in the Plan and all former published in the Federal Register, the reversionary interest in a 64,945 square
YMCA employees with deferred vested Little Rock Diagnostic Clinic, P.A. foot medical building (the Building) that
benefits. The notice to interested (LRDC), the Plan sponsor, files a Form was constructed on the Land by the
persons, which will contain the 5330 with the Internal Revenue Service Land Company in 1976. The Land
information required by Department (the Service) and pays all applicable Company leases the Building to LRDC.
Regulation § 2570.43, will be mailed, excise taxes that are attributed to the At the conclusion of the Ground Lease,
posted or delivered, as the case may be, past and continued leasing arrangement both the Land and the Building will
within 30 days after the Notice of (the Ground Lease) between the Plan revert to the Plan. The Land and the
Proposed Exemption is published in the and the LRDC Land Company (the Land Building, which are together referred to
Federal Register. The notice to Company) of certain land (the Land) herein as ‘‘the Property,’’ are contiguous
interested persons will inform such comprising part of the Property. to other real property owned by the
persons of their right to comment on the LLC.5
proposed exemption within 60 days Summary of Facts and Representations 6. On July 20, 1982, the Department
after the Notice of Proposed Exemption 1. The Plan is a defined contribution granted Prohibited Transaction
is published in the Federal Register. profit sharing plan, which as stated Exemption (PTE) 82–126 at 47 FR
above, is sponsored by LRDC. The 31457. PTE 82–126 permitted the Plan
Wendy M. McColough of the Plan’s current trustees and decision to lease the Land 6 underlying the
Department, telephone (202) 693–8540. makers with respect to Plan investments Building to the Land Company under
(This is not a toll-free number.) Little are Richard W. Houk, J. Neal Beaton and the provisions of the Ground Lease. In
Rock Diagnostic Clinic, P.A., Profit Paul Williams (the Trustees). The addition, PTE 82–126 allowed the Plan
Sharing Plan (the Plan). Located in Trustees are employees and to subordinate its title on the leased
Little Rock, AR, [Application No. D– shareholders of LRDC, and participants premises to the mortgage lien holder of
11350]. in the Plan. the Building constructed thereon, which
As of December 31, 2005, the Plan was an unrelated bank.
Proposed Exemption had 137 participants and beneficiaries. The Ground Lease was divided into
As of December 31, 2005, the Plan had two parts. It had a temporary term
The Department is considering beginning April 1, 1974 and ending July
approximately $23,917,262 in assets.
granting an exemption under the 2. LRDC is a professional corporation 31, 1975, and a permanent term of 25
authority of section 408(a) of the Act (or located on the campus of the Baptist years, beginning August 1, 1975 and
ERISA) and section 4975(c)(2) of the Medical Center at 10001 Lile Drive, ending July 31, 2000. The rent for the
Code and in accordance with the Little Rock, Arkansas. LRDC provides temporary term was equal to the 1974
procedures set forth in 29 CFR part medical services in the internal real estate taxes and any other taxes
2570, subpart B (55 FR 32836, 32847, medicine field as well as ancillary assessed against the premises. The rent
August 10, 1990). If the exemption is services such as laboratory work and for the permanent term was equal to
granted, the restrictions of sections radiology services. $27,000 per year subject to adjustment
406(a), 406(b)(1) and (b)(2) of the Act 3. The Land Company is a general every five years based on the Cost of
and the sanctions resulting from the partnership that was created in 1974 for
application of section 4975 of the Code, the sole purpose of leasing real property 5 The term ‘‘leased fee estate’’ refers to an

by reason of section 4975(c)(1)(A) to LRDC for the operation of a medical ownership interest held by a landlord with the right
through (E) of the Code, shall not apply of use and occupancy conveyed by lease to others.
clinic. The Land Company is owned The rights of the lessor (the leased fee estate owner)
to the proposed cash sale by the Plan of 24% by current shareholder/employees and the lessee are specified by contract terms
a leased fee interest (the Leased Fee of LRDC. The 76% remainder of the contained within the lease. See APPRAISAL
Interest) in certain real property (the Land Company is owned by former INSTITUTE, THE DICTIONARY OF REAL ESTATE
Property) to LRDC Real Estate, LLC (the APPRAISAL (4th ed. 2002).
shareholder/employees of LRDC and 6 Specifically, in Final Authorization Number
LLC), a party in interest with respect to
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former employees of LRDC who were 2005–11E (July 11, 2005), the Department approved
the Plan. not shareholders of LRDC. a transaction involving the sale by the Plan to the
This proposed exemption is subject to 4. The LLC is a limited liability LLC of a 2.2 acre tract of vacant real property (Tract
the following conditions: 2), that is adjacent to the subject Property.
company that was formed in 2005 for 6 Although PTE 82–126 states that the Land
(a) The sale is a one-time transaction the purpose of purchasing real estate. consists of 4.368 acres, this description is in error
for cash. The principals of the LLC are LRDC and should have been revised to read ‘‘4.444 acres.’’

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41476 Federal Register / Vol. 71, No. 140 / Friday, July 21, 2006 / Notices

Living Index published by the including making demand for timely the Ground Lease, due to the lack of
Department. At the time the proposal payment, bringing suit in the event of a oversight of such lease on a continuing
underlying PTE 82–126 was published breach, keeping accurate records basis by a qualified, independent
in the Federal Register (see 47 FR regarding computations of the cost-of- fiduciary.10
22251, May 21, 1982), the annualized living adjustments, and reporting 8. Although there has been
rent being paid to the Plan was $41,196 annually to the Trustees. development around the vicinity of the
or $3,433 per month, which was in Further, TCB reviewed the Property, the value of the Property has
excess of fair market value. The Ground subordination provision of the amended not appreciated significantly in recent
Lease was triple net to the Plan and it Ground Lease.7 In this regard, TCB years. Moreover, the Building is a
could be extended for two additional determined that the subordination single-use building that was constructed
five year terms, provided appropriate provisions were in accordance with in 1976. Due to the age of the Building,
notice was given to the Plan. normal business practices and the significant improvements would be
Pursuant to an agreement dated May requirements of lenders in the area and required to bring it up to current
8, 1974 and commencing August 1, 1975 this factor did not alter its opinion of medical office standards. The Property
for a period of 25 years (but subject to the contemplated transactions. has been on the market since December
extensions), the Land Company started On December 31, 1983, the Ground 2001 but it has drawn no firm offers. In
leasing the Building to LRDC under the Lease was again amended to make the order that the Plan may divest itself of
provisions of a written lease (the cost of living adjustment annual instead its Leased Fee Interest in the Property,
Building Lease). Rents generated from of once every five years and to remove the Trustees propose to sell such
the Building Lease were intended to pay an option to purchase provision. In interest to the LLC. Accordingly, an
the Land Company’s obligations under addition, the base period for the administrative exemption is requested
the Ground Lease and to amortize its calculating the cost of living adjustment from the Department.
indebtedness under the mortgage. (In was revised to ‘‘June 30, 1980’’ instead If the exemption is granted, the sale
effect, LRDC also commenced of ‘‘December 31, 1981.’’ will allow the Plan to convert the
subleasing the Land from the Land 7. The Ground Lease is currently in its Property into a liquid asset and provide
Company under the established leasing first five year extension and there is no a better opportunity for growth and
arrangements.) mortgage encumbering the Building.8 As permit Plan participants to direct their
Eventually, the Trustees and the Land of August 31, 2005, the amount of account balances in the Plan into other
Company proposed to amend the monthly rental was $7,994, which is investment vehicles. Also, in order to
Ground Lease to provide for annual cost above fair market rental value. At the pay participants who will retire in the
of living adjustments. On April 8, 1982, end of the Ground Lease on July 31, coming years, a significant amount of
the partners of the Land Company, who 2010, the Land and the Building will liquidity will be needed in the Plan’s
had a net worth in excess of $8 million revert to the Plan.9 Although it is portfolio. Therefore, a cash sale of the
agreed to indemnify the Plan from all represented that the provisions of the Property will provide the needed
losses, damages, and expenses the Plan Ground Lease have been complied with liquidity. Furthermore, due to its
might sustain by the subordination of its by the parties (i.e., rent has been paid ownership of a Leased Fee Interest, the
title under the terms of an in a timely manner and there have been Plan’s options for administration and
indemnification agreement. No other no defaults or delinquencies), LRDC management are limited.
modifications of the Ground Lease were acknowledges that the ‘‘independent 9. The proposed sale will be a one-
made. real estate investment manager’’ time transaction for cash. The sales
The fair market rental value of the described in the proposal to PTE 82–126 price for the Leased Fee Interest will be
amended Ground Lease was determined was not always present to oversee such based upon its fair market value, as
by Ronald E. Bragg, MAI, a qualified, lease. Accordingly, LRDC has agreed to determined by a qualified, independent
independent appraiser. In an appraisal file a Form 5330 with the Service within appraiser on the date the sale is
report dated August 28, 1981, Mr. Bragg 90 days of the date the notice granting consummated. Moreover, the Plan will
placed the fair market rental value of the this proposed exemption is published in not be required to pay any real estate
Land at $3,161.67 per month or $37,940, the Federal Register and pay all fees or commissions in connection with
annually. Mr. Bragg also determined applicable excise taxes that are the transaction.
that the fair market value of the Land attributed to the past and continued 10. The Property has been appraised
was $271,000 as of August 1981. prohibited leasing of the Land between annually by Mr. Ronald Bragg, the same
On September 10, 1981, Twin City the Plan and the Land Company under qualified, independent appraiser
Bank (TCB) of North Little Rock, utilized in PTE 82–126. Mr. Bragg
Arkansas, was appointed as an 7 The original loan for the construction of the
represents that he is independent of the
‘‘independent real estate investment Building was $1.35 million. At the time PTE 82–
126 was proposed, the loan balance was parties involved in the proposed
manager.’’ In this capacity, TCB had approximately $1.2 million. TCB estimated that the transaction, and states that he derives
sole responsibility and discretion to fair market value of the Building was $2.28 million less than 1% of his gross annual
direct the Trustees regarding the as of July 1, 1980 and that there was sufficient
revenues from LRDC and its affiliates.
management of real property held by the equity present to protect the Plan and its
participants. Mr. Bragg also states he is aware that his
Plan. TCB was responsible for making 8 Similarly, the Building Lease is subject to two appraisal will be used by the LLC for
the determination that the amended five year extensions. purposes of obtaining an administrative
Ground Lease was an appropriate and 9 The term ‘‘reversionary right’’ refers to ‘‘the
exemption from the Department.
suitable investment for the Plan and in right to possess and resume full and sole use and
the best interests of the Plan’s ownership of real property that has been
10 The Department is of the view that the presence
temporarily alienated by a lease, an easement, etc.;
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participants and beneficiaries. TCB was [sic] may become effective at a stated time or under of an independent fiduciary to represent the Plan’s
required to reconsider the certain conditions, e.g., the termination of a interest with respect to the Leased Fee Interest was
appropriateness of the amended Ground leasehold, the abandonment of a right of way, the a material factor in the Department’s determination
end of the estimated economic life of the to grant exemptive relief. Accordingly, PTE 82–126
Lease prior to the time of its execution improvements.’’ See APPRAISAL INSTITUTE, THE was no longer effective when TCB stopped acting
and to monitor and enforce the terms of DICTIONARY OF REAL ESTATE APPRAISAL (4th on behalf of the Plan as the ‘‘independent real estate
such lease on behalf of the Plan, ed. 2002). investment manager.’’

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In an appraisal report dated January 6, between the current rent paid by the the vacant land, Mr. Bragg represents
2006 (the 2006 Appraisal), Mr. Bragg Land Company under the Ground Lease that prospective buyers would have
states that the Property rights being and the current fair market ground rent. choices. Therefore, he does not believe
appraised are the rights of the holder of With respect to the fee simple value the LLC should be required to pay a
a ‘‘leased fee estate.’’ Mr. Bragg notes of the Property, Mr. Bragg states that it premium in order to acquire the Leased
that this ownership interest does not would be the fair market value of the Fee Interest.
confer to the Plan direct ownership Property if it were not encumbered by 13. The Bank of Ozarks (the Bank)
rights in the Building. However, he either the Ground Lease or the Building located in Little Rock, Arkansas will act
explains that the Plan will have Lease. In the 2006 Appraisal, he states on behalf of the Plan as the independent
reversion rights to the Building upon that he provided an estimate of $4.6 fiduciary with respect to the proposed
the termination of the Ground Lease. million as the projected reversion value sale. Specifically, the Bank through its
For these reasons, Mr. Bragg does not of the Property upon the termination of Trust Division, has agreed to undertake
believe the sales comparison approach the Ground Lease. He says this estimate the duties of the independent fiduciary.
or the cost approach to valuation is of value can also be considered as an The Bank is a custodian of plan assets
applicable. Nonetheless, he states that estimate of the fee simple value of the only and it maintains no retail banking
the sales comparison approach will be Property at that point in time when it is relationship with LRDC, its affiliates, or
utilized in projecting the future no longer encumbered by either the their principals.
reversion value of the Property. Ground Lease or the Building Lease. Writing on behalf of the Bank, Mr.
Therefore, Mr. Bragg concludes in the With respect to the contributory Rex W. Kyle, President of the Bank’s
2006 Appraisal that the only approach present value of the Property upon the Trust Division states, in a letter dated
to valuation that can directly address termination of the Ground Lease, Mr. January 4, 2006, that the Bank is an
the ownership benefits that accrue to Bragg again utilizes the $4.6 million Arkansas state-chartered bank with trust
the Plan is the income capitalization projected reversion value for the powers. He explains that the Trust
approach. He explains that the Property. He also has utilized a discount Division administers and/or manages in
ownership benefits are limited to the rate of 12% in converting the projected
excess of $500 million in accounts
Plan’s right to receive rental income reversion value (and the projected
which include ERISA accounts.
under the Ground Lease and the right to ground rent) into an indication of
Mr. Kyle states that the Bank is the
the reversion of the Land and the present value. On the basis of his
largest state chartered bank fiduciary in
Building at the termination of the calculations, Mr. Bragg concludes that
Arkansas and has $2.1 billion in assets.
Ground Lease. Under the income the projected reversion value of $4.6
million, four years and seven months Moreover, he indicates that the Bank’s
capitalization approach, he notes that
from January 9, 2006, discounted at staff has over 150 years of combined
the valuation would consist of a
12% would be $2,736,476. experience and has served as both an
discounted cash flow analysis based
As for the relationship between independent and special trustee in
upon the projected net cash flows to be
contract rent under the Ground Lease various fiduciary capacities. Mr. Kyle
generated under the terms of the Ground
and the current fair market ground rent, represents that the Bank understands
Lease and the projected reversion. This
Mr. Bragg states that if the Ground Lease and accepts its duties, responsibilities
analysis would include current rent,
projections of future rent increases as was negotiated today, the first year’s and liabilities under the Act in serving
required by the Ground Lease, and an rent would be based upon 10% of the as independent fiduciary for the Plan.
estimate of the net reversion value upon fee simple value of the Land ($700,000). 14. In determining whether the sale
the termination of the Ground Lease. Mr. Bragg explains that the annualized transaction is in the best interest of the
Mr. Bragg states that based on his rent would be $70,000 or $5,833.33 per Plan and its participants and
inspection, investigation and analysis of month. Because the current ground rent beneficiaries, Mr. Kyle states that the
the Property, it is his opinion that the of $7,994 per month is contract rent, Mr. Bank has relied on various appraisals of
fair market value of the Leased Fee Bragg further explains that such rent the Property, including the 2006
Interest was $3.1 million as of December substantially exceeds the fair market Appraisal. Based on these appraisals,
31, 2005. In making this determination, rental value of the Land. He notes that Mr. Kyle states that the sale would
Mr. Bragg projected the Plan’s this is not a recent occurrence. permit the conversion of an illiquid
reversionary interest in the Property at 12. With respect to the proximity of investment with potentially high future
$4.6 million upon the termination of the the subject Property to other real maintenance costs into cash. Mr. Kyle
Ground Lease. Then, selecting a property owned by the LLC (i.e., Tract also notes that the Building is over 20
discount rate of 12% to discount the 2, see Footnote 2), Mr. Bragg maintains years old and extensive renovations
Property’s income stream, Mr. Bragg that the proximity of the Property to would be necessary to modernize it. He
arrived at the $3.1 million estimated Tract 2 had no impact on his estimate explains that without these renovations,
market value of the Leased Fee Interest. of the fair market value of the Leased LRDC would be required to move.
Mr. Bragg will update his appraisal on Fee Interest and that no premium is Because there are no potential tenants in
the date of the sale. warranted. In this regard, Mr. Bragg the immediate area, Mr. Kyle indicates
Thus, based upon the 2006 Appraisal, notes that there is an abundance of that the Plan would hold an asset that
the Leased Fee Interest represents vacant, undeveloped land on the Baptist would generate no income.
approximately 13% of the Plan’s assets. Medical Center Campus and it is ‘‘basic Mr. Kyle states that based on the 2006
11. In an addendum to the 2006 supply and demand that creates value.’’ Appraisal, the sale is consistent with
Appraisal dated January 9, 2006, Mr. According to Mr. Bragg, market value sales of similar properties which might
Bragg has provided three related value does not consider the specific buyer and be achieved in the marketplace. He also
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issues concerning the subject Property: seller but rather the market at large. indicates that the sale would eliminate
(a) The fee simple value of the Property, Although Mr. Bragg concedes that the any conflict of interest and associated
as if unencumbered by the Ground Property is adjacent to Tract 2, he states administrative burdens of ongoing
Lease; (b) the contributory present value that the Property is also contiguous to supervision that would be involved in
of the projected future reversion value vacant land along its southern and continuing the Ground Lease. Moreover,
of the Property; and (c) the relationship western sides. Due to the presence of Mr. Kyle notes that the current rent

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41478 Federal Register / Vol. 71, No. 140 / Friday, July 21, 2006 / Notices

under the Ground Lease exceeds fair Labor, telephone (202) 693–8552. (This Section II
market rent for the Land. is not a toll-free number). If the exemption is granted, the
Additionally, Mr. Kyle states that the American Maritime Officers Safety & restrictions of sections 406(a) and
sale would allow a greater portion of the Education Plan (the S&E Plan); 406(b)(1) and 406(b)(2) of the Act and
Plan’s assets to be allocated to American Maritime Officers Pension the sanctions resulting from the
participant-directed accounts and Plan (the Pension Plan); American application of section 4975 of the Code,
would lower the overall cost of Maritime Officers Vacation Plan (the by reason of section 4975(c)(1)(A)
administration of the Plan. Vacation Plan); American Maritime through (E) of the Code, shall not apply
As independent fiduciary, the Bank Officers Medical Plan (the Medical to: (1) The AMO Plans sharing expenses
will monitor the sale transaction on Plan); and American Maritime Officers based on an internal expense allocation
behalf of the Plan and take all actions 401(k) Plan (the 401(k) Plan); model (the Allocation Model) for the
that are necessary and proper to enforce (Collectively the AMO Plan(s)). Located provision of food and lodging by the
and protect the rights of the Plan and its in Dania Beach, Florida and Toledo, S&E Plan at the Facilities to the AMO
participants and beneficiaries. In this Ohio, [Exemption Application Nos. L– Plans’ trustees (the Trustees)
regard, the Bank will be given full and 11148; D–11149; L–11150; L–11151; D– (Collectively the Trustee Transactions);
complete discretion regarding all 11152; and D–11153]. and (2) The AMO Plans, the JEC and
aspects of the sale. AMOS sharing expenses based on the
15. In summary, it is represented that Proposed Exemption Allocation Model for the provision of
the proposed sale transaction will food and lodging by the S&E Plan at the
satisfy the statutory criteria for an The Department is considering
Facilities (Professionals’ Transactions).
exemption under section 408(a) of the granting the following exemption under
Act because: the authority of section 408(a) of the Act Section III
(a) The sale will be a one-time and in accordance with the procedures If the exemption is granted, the
transaction for cash. set forth in 29 CFR part 2570, subpart restrictions of sections 406(a) and
(b) The sales price for the Leased Fee B (55 FR 32836, August 10, 1990). 406(b)(1) and (b)(2) of the Act shall not
Interest will be based on its fair market Section I apply to: (1) Contributing employers
value as established by a qualified, contracting with the S&E Plan to
independent appraiser, who will update If the exemption is granted, the provide one of its regular courses at a
the appraisal on the date of the sale is restrictions of sections 406(a) and special time (Specially Scheduled
consummated. 406(b)(1) and (b)(2) of the Act shall not Training); and (2) The S&E Plan
(c) The terms of the sale will be at apply to: (1) the S&E Plan entering into designing training programs or
least as favorable to the Plan as those an arrangement with the American undertaking special research or
obtainable in an arm’s length Maritime Officers (the Union), which is modeling that is tailored to the needs of
transaction with an unrelated party. a party in interest with respect to the a particular contributing employer or its
(d) The Plan will not pay any real AMO Plans, for the Union to pay the vessels (Specially-Designed Training).
estate fees or commissions in S&E Plan, where appropriate and at the Conditions
connection with the sale. rate established by the independent
(e) An independent fiduciary will fiduciary (the I/F), for the portion of the This proposed exemption is subject to
approve and monitor the proposed sale Union trustees’ food and lodging the following conditions:
transaction on behalf of the Plan. provided by the S&E Plan that is (a) Each AMO Plan will pay its
(f) Within 90 days of the date the attributable to attendance at certain appropriate share of expenses based on
notice granting this exemption is Union meetings (Union Transactions) at the Allocation Model;
published in the Federal Register, LRDC the Dania Beach, Florida (the Dania (b) The I/F retained by the AMO Plans
will file a Form 5330 with the Service Beach facility) and Toledo, Ohio (the will:
and pay all applicable excise taxes that (1) Make a determination of whether
Toledo facility) (collectively, the
are attributed to the past and continued the proposed transactions (the
Facilities); (2) the S&E Plan entering
prohibited leasing of the Land under the Transaction(s)) are prudent and in the
into an arrangement with the Union and
provisions of the Ground Lease. best interest of the relevant AMO
certain contributing employers, who are
Notice to Interested Persons parties in interest with respect to the (2) Establish the terms for each of the
AMO Plans, to pay the S&E Plan at a Transactions, including:
Notice of the proposed exemption rate established by the I/F, for food and (i) The price to be charged for the
will be given to interested persons lodging provided by the S&E Plan at the services provided pursuant to the
within 5 calendar days of the Facilities for the representatives of the Transactions; and
publication of the notice of proposed Union and the respective contributing (ii) The terms and conditions ensuring
exemption in the Federal Register. The employers that is attributable to that the Transactions are fair to the
notice will be provided to active attendance at various conferences involved AMO Plans;
participants in the Plan by personal (Conference Transactions); and (3) the (3) Develop policies and guidelines
delivery and it will be mailed by first- S&E Plan entering into an arrangement for the implementation of the
class mail to all others. The notice will with the governing bodies of the Transactions;
inform interested persons of their right American Maritime Officers Joint (4) Monitor the Transactions on an
to comment on and/or to request a Employment Committee (the JEC), and on-going basis, including periodic
hearing with respect to the proposed the American Maritime Officers Service reviews of the Transactions, to ensure
rwilkins on PROD1PC63 with NOTICES_1

exemption. Comments and requests for (AMOS), who are parties in interest compliance with the I/F policies and
a hearing are due within 35 days of the with respect to the AMO Plans, to pay guidelines;
publication of the proposed exemption the S&E Plan at a rate established by the (5) On a periodic basis, review the
in the Federal Register. I/F, for food and lodging provided by terms of each of the Transactions,
FOR FURTHER INFORMATION CONTACT: Ms. the S&E Plan at the Facilities (Non-Plan including the fair market value of the
Ekaterina A. Uzlyan, U.S. Department of Transactions). services provided; and

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(6) Prepare an annual report, (iii) any contributing employer and employers pursuant to collective
summarizing the Transactions for that any employee organization whose bargaining agreements. The purpose of
year; members are covered by the AMO Plans, the Medical Plan is to provide medical
(c) The costs associated with or any authorized employee or and hospitalization benefits for
recordkeeping and all forms of representative of these entities; or participants and their families. As of
independent oversight will be included (iv) any participant or beneficiary of January 6, 2006, the Medical Plan has
in the daily rate established by the I/F the AMO Plans or the duly authorized 5,455 participants and beneficiaries and
for food and lodging provided by the employee or representative of such $32,363,519 in plan assets.
S&E Plan at the Facilities; participant or beneficiary. The 401(k) Plan is a multiemployer
(d) An independent auditor will (2) None of the persons described in profit-sharing plan, with a cash or
perform annual audits of all the AMO paragraphs (ii), (iii) and (iv) of deferred arrangement, funded by
Plans to identify and reconcile any paragraph (g)(1) shall be authorized to contributions from participants and
discrepancies regarding the examine trade secrets or commercial or contributing employers pursuant to
recordkeeping involving the financial information which is collective bargaining agreements. The
Transactions and provide an annual privileged or confidential. purpose of the 401(k) Plan is to provide
evaluation of all allocation models and retirement benefits, including death
Summary of Facts and Representations
produce approval letters explicitly benefits, to participants and their
affirming that the models are Description of the AMO Plans beneficiaries. As of January 6, 2006, the
satisfactory; The S&E Plan is a multiemployer 401(k) Plan has 4,471 participants and
(e) The Room Master Software System training plan funded pursuant to a beneficiaries and $157,636,687 in plan
(RM Software) will create an invoice for collective bargaining agreement. The assets.
lodging and food service accounting purposes of the S&E Plan are to (a) Section I Transactions
functions and related services at the develop and execute programs for the
Facilities; (1) Union Transactions: The Union
education, development and often schedules its meetings at the same
(f) The AMO Plans’ fiduciaries improvement of licensed marine
maintain or cause to be maintained, for time as the Trustees’ meetings to
officers, (b) develop and execute minimize travel burdens and ease
a period of six years from the date of the programs to increase safety in the
covered transactions, such records as scheduling. Scheduling Union meetings
operation of marine vessels, (c) create during this time facilitates the
are necessary to enable the persons and execute programs to develop and
described in paragraph (g) to determine attendance of Union-side Trustees who
maintain a skilled pool of licensed are already at the Facility to attend
whether the conditions of this marine officers and (d) develop and
exemption were met, except that: Trustees’ meetings. The Union
execute a research program on a variety Transactions will only occur when the
(1) If the records necessary to enable of issues of interest to S&E Plan
the persons described in paragraph (g) Union meeting at issue (a) takes place
participants and their employers. The during the same days as scheduled
to determine whether the conditions of S&E Plan conducts training at the
the exemption have been met are lost or Trustees’ meetings, (b) takes place on a
Facilities and accommodates the day or days immediately and
destroyed, due to circumstances beyond students attending training at the
the control of the AMO Plans’ continuously preceding the days of
Facilities as well. As of January 6, 2006, scheduled Trustees’ meetings, or (c)
fiduciaries, then no prohibited the S&E Plan has 3,495 participants and
transaction will be considered to have takes place on a day or days
beneficiaries and $43,563,887 in plan immediately and continuously
occurred solely on the basis of the assets.
unavailability of those records; and following the days of the scheduled
The Pension Plan is a multiemployer
(2) No party in interest, other than the Trustees’ meetings.
defined benefit pension plan funded by The AMO Plans wish to have their
AMO Plans’ fiduciaries responsible for contributions from contributing Trustees stay at one of the Facilities
recordkeeping, shall be subject to the employers pursuant to collective during the Trustees’ meetings. Because
civil penalty that may be assessed under bargaining agreements. The purpose of the Union often schedules its meetings
section 502(i) of the Act or to the taxes the Pension Plan is to provide pension to coincide with Trustees’ meetings, it
imposed by section 4975(a) and (b) of and retirement benefits, including death would be unworkable or inefficient for
the Code if the records are not benefits, to eligible participants and affected Union-side Trustees to move to
maintained or are not available for their beneficiaries. The Pension Plan different lodging for the Union
examination as required by paragraph also features a money purchase pension meetings. Instead, it is requested that
(g) below; component. As of January 6, 2006, the the Union share in the costs of
(g)(1) Except as provided below in Pension Plan has 6,238 participants and accommodating Union-side Trustees
paragraph (g)(2) and notwithstanding beneficiaries and $515,160,000 in plan during multi-day meetings that include
the provisions of section (a)(2) and (b) assets. Union meetings.
of section 504 of the Act, the records The Vacation Plan is a multiemployer
referred to above in paragraph (f) are welfare benefit plan funded by The Union Transactions will not occur
unconditionally available for contributions from contributing with respect to Union meetings scheduled
entirely independent of and not attendant to
examination during normal business employers pursuant to collective Trustees’ meetings. When the Union
hours at their customary location by the bargaining agreements. The purpose of schedules its meetings at the Facilities to
following persons or an authorized the Vacation Plan is to provide paid benefit from the presence of the Trustees, it
representative thereof: vacation time to eligible participants. As would only be equitable that the Union
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(i) Any duly authorized employee or of January 6, 2006, the Vacation Plan should share, where appropriate, the food
representative of the Department or the has 3,690 participants and beneficiaries and lodging expenses incurred during the
Internal Revenue Service; and $29,464,387 in plan assets. multi-day series of meetings that are
(ii) any fiduciary of the AMO Plans or The Medical Plan is a multiemployer attributable to non-S&E Plan business.
any duly authorized employee or welfare benefit plan funded by (2) Conference Transactions: The
representative of such fiduciary; or contributions from contributing Joint Training Advisory Committee

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41480 Federal Register / Vol. 71, No. 140 / Friday, July 21, 2006 / Notices

(JTAC) and the Deep Sea Employer the Union and the employers on industry. The JEC, and the AMOS will
Conference (DSEC) are groups, which training needs and requirements serves pay the S&E Plan for their proportionate
consist of representatives of Great Lakes one of the overall purposes of the S&E share of the costs for food and lodging
contributing employers and Deep Sea Plan, i.e., to improve the quality of at the Facilities provided by the S&E
contributing employers, respectively, licensed marine officers. This type of Plan at the rates approved by the I/F.
and representatives of the Union.11 The interaction allows the S&E Plan to Because both entities share
Union and contributing employers, who remain up-to-date on its participants’ administrative services with the AMO
will pay for their respective training needs. The S&E Plan believes Plans, they would pay the S&E Plan for
representatives to attend JTAC and that hosting the JTAC and DSEC their use of the Facilities based on the
DSEC meetings, are parties in interest meetings is particularly helpful because Allocation Model.
with respect to the S&E Plan. the representatives of the contributing The JEC, and the AMOS take
The S&E Plan would like to provide employers attending such meetings are advantage of the scheduling of the
food and lodging for the representatives those responsible for training, and are Trustees’ meetings to hold their
of the Union and the respective not the Trustees or labor relations staff meetings. Thus, these meetings become
contributing employers attending the who are more likely to visit the Facility part of the multi-day agenda associated
JTAC and the DSEC meetings at the on other occasions, e.g., Trustee with the Trustees’ meetings. Structuring
Facilities. meetings. Thus, the JTAC/DSEC the meeting schedule this way saves
The JTAC and DSEC were formed in meetings facilitate interaction between costs and minimizes the travel burdens
response to the rapidly changing the S&E Plan and the representatives of on Trustees. Because a portion of the
regulatory environment in the maritime the employers who are responsible for multi-day agenda will be devoted to the
industry and in response to chronic training. JEC, and the AMOS meetings, it would
manpower shortages. The Union and The S&E Plan is requesting exemptive only be equitable for these entities to
contributing employers thought it relief for the Conference Transactions pay the S&E Plan their proportionate
would be beneficial to have periodic because such meetings may be beyond share of the costs.
meetings to address new regulatory the scope of those benefits provided in The S&E Plan wishes to enter into the
requirements and strategies to address accordance with the S&E Plan through Transactions because of the efficiencies
the shortage of trained officers, among contributions made pursuant to offered by consolidating the meetings
other issues pertinent to the industry. collective bargaining agreements, even and because it believes that holding
The JTAC and DSEC meetings primarily though the stated purposes of the S&E such meetings at the Facilities benefits
focus on training needs, although Plan are quite broad. As such, in the the S&E Plan overall by improving
matters relating to other AMO Plans are interest of caution, the S&E Plan communication and interaction with
also discussed. requests exemptive relief. these entities in ways that are helpful to
The contributing employers and the The primary reason for entering into the S&E Plan.
Union desire that the JTAC and DSEC the Conference Transactions is that they
Section II Transactions
meetings be held at the Facilities. The serve the AMO Plan’s primary purpose
meetings would involve not only the of providing training to participants (1) Trustee Transactions: The
use of meeting space, but also the use covered by the S&E Plan. Trustees of the AMO Plans may be
of overnight lodging and catering Representatives to the JTAC and DSEC parties in interest with respect to the
Facilities. The attendees of the JTAC meeting are not employer Trustees to S&E Plan for a number of different
and the DSEC meetings (or, more likely, the AMO Plans. The JTAC and DSEC reasons. Those who are Trustees of the
the party on whose behalf they attend) gather periodically to address a variety S&E Plan are parties in interest by
would pay the S&E Plan for its costs of issues important to the maritime reason of being fiduciaries. Others may
incurred in hosting the meetings at the industry, including the training be employees or officers of contributing
rates approved by the I/F. curriculum, course design, scheduling employers or the Union.
Portions of JTAC and DSEC meetings and budget issues. The AMO Plans generally hold their
pertain to the S&E Plan and S&E Plan (3) Non-Plan Transactions: The JEC is respective Trustees’ meetings at the
personnel generally make presentations a labor management committee under Facilities. The AMO Plans typically
at such meetings. Thus, it would be section 302(c)(9) of the Labor schedule their Trustees’ meetings over
convenient for the S&E Plan personnel Management Relations Act. Employers several consecutive days. Each AMO
to hold the meetings at the Facilities. make contributions to the JEC pursuant Plan’s Trustees’ meeting has a separate
The S&E Plan believes it is better able to the terms of collective bargaining agenda and separate minutes are
to make its presentations to the JTAC agreements and the JEC performs maintained for each meeting. The
and DSEC meetings if they are held at employment placement services for individual Trustees, however, are
the Facilities because the S&E Plan licensed maritime officers through an usually at the Facilities to attend a
personnel would then have access to the administrative services contract with number of different Trustees’ meetings
technology and training capabilities at the Union. Appropriately qualified and and other meetings.
licensed Union members are placed Each of the AMO Plans will pay the
the Facilities.
with contributing employers who are S&E Plan its share of the Trustees’ room
The S&E Plan also believes that it
seeking such personnel. The committee and board expenses based on the
benefits from the JTAC and DSEC
members of the JEC are also Trustees of Allocation Model. Accommodating the
meetings being held at the Facilities
various AMO Plans. The applicant Trustees at the Facilities during
because regular communication with
represents that although the JEC is not Trustees’ meetings makes sense in light
11 The applicant represents that the JTAC and a plan, it may nevertheless be classified of the fact that the Trustees are at the
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DSEC are not incorporated or otherwise organized as a party in interest with respect to the Facilities for a number of days to attend
in any legal sense and membership in the groups S&E Plan because it may be considered a series of meetings. Providing food and
is not fixed. Rather, the JTAC and DSEC are the an employee organization whose lodging services to the Trustees at the
names used to describe periodic gatherings of
Union representatives and representatives of members are covered by the S&E Plan. Facilities maximizes the efficiency of
contributing employers to address issues of The AMOS was formed to serve as a such meetings by eliminating travel
importance to the maritime industry. business league for the maritime time to and from the meetings and by

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Federal Register / Vol. 71, No. 140 / Friday, July 21, 2006 / Notices 41481

encouraging and facilitating interaction of the regularly scheduled training MBRHT, AMOS, and the JEC are
among the Trustees, AMO Plans’ courses. The S&E Plan requests collectively referred to as other entities
participants and AMO Plans’ personnel. exemptive relief to contract with (Other Entities)) based on the number of
Another reason for entering into the contributing employers to provide AMO Plans and Other Entities that each
Trustee Transactions is cost savings. It regular courses at special times to Trustee represents. For example, where
is likely to cost the AMO Plans less to accommodate the employers’ a Trustee represents four AMO Plans
provide food and lodging services to scheduling demands. and one Other Entity, one fifth of the
Trustees at the Facilities compared to (2) Specially-Designed Training: A costs attributed to that Trustee will be
providing such services at nearby hotels contributing employer may wish the allocated to each AMO Plan or Other
and restaurants. The AMO Plans must S&E Plan to design training programs or Entity.
cover the reasonable expenses incurred undertake special research or modeling The direct attendance expenses
by their Trustees while attending that is tailored to the needs of that attributable to the Trustee meetings for
Trustees’ meetings in any event. Thus, particular employer or its vessels. In each Trustee are allocated among the
minimizing these expenses would be these circumstances, contributing AMO Plans that the Trustee represents.
beneficial to the AMO Plans and their employers will need to contract with the Direct attendance expenses include the
participants. S&E Plan to develop special training cost of items like travel, meals, and
The AMO Plans believe that holding programs or conduct specially designed lodging. Those direct attendance
Trustees’ meetings is necessary for the research or modeling to meet their expenses for meals and lodging that are
administration and operation of the particular needs. The S&E Plan requests not attributable to the Trustee meetings
AMO Plans, and that providing food exemptive relief to provide such are deducted before the allocation. Non-
and lodging for Trustees would appear services tailored to the special needs of attributable billable expenses are billed
to be a concomitant part therefore. It is a particular contributing employer or its directly to AMO Plan professionals,
not clear, however, whether the vessels. Trustees and the Union as required by
provision of lodging and food is the type The S&E Plan wishes to enter into the the AMO Plans Policy and Guidelines
of service that fits within any statutory special training transactions to meet the on Trustee Expense Reimbursement and
or class exemptions. needs of participants in a way that is are not allocated among the AMO Plans
The I/F will decide whether it is fair to all employers without requiring and Other Entities. Such costs arise
appropriate for an AMO Plan to enter the renegotiation of the collective when individuals arrive early or extend
into a Trustee Transaction with the S&E bargaining agreements. their stays beyond the dates of the
Plan for the Trustees’ food and lodging. In addition, coordinating with Trustee meetings in order to attend a
The Allocation Model will ensure that employers to develop specially designed Union meeting.
each AMO Plan pays its respective share training and research programs benefits The percentage of the total direct
of the expenses. the purposes of the S&E Plan by attendance expenses allocated to each
(2) Professionals’ Transactions: developing and executing programs to AMO Plan or Other Entity is used as the
Professionals providing services to the improve the overall quality of maritime basis for allocating the indirect
AMO Plans, such as attorneys, and officers. Once special courses are attendance expenses. The indirect
accountants often need to visit the designed, the materials from such attendance expenses are the costs
Facilities to attend to the business of courses are available to all participants incurred by the AMO Plans’ staff,
one or more of the AMO Plans. The in the S&E Plan and to all S&E Plan counsel, and accountants and other
Allocation Model will ensure that each instructors. The S&E Plan believes that expenses related to hosting the meeting.
AMO Plan shares the appropriate entering into these contracts with the Again, non-attributable billable
expenses such professionals incur in contributing employers improves the expenses, as described above, are not
visiting the Facility as an administrative quality of the instruction provided by allocated among the AMO Plans and
expense of the respective AMO Plans. the S&E Plan by expanding the Other Entities.
The respective AMO Plans, the JEC, and knowledge and expertise of the S&E Finally, the direct attendance
the AMOS would reimburse the S&E Plan instructors and expanding the expenses of AMO Plans’ professionals
Plan for their proportionate share of the training curriculum. and AMOS employees who are only
costs incurred in accommodating the For both Specially Scheduled attending meetings of specific AMO
visiting plan professionals at the rates Training and Specially-Designed Plans are allocated among those AMO
approved by the I/F. The reimbursement Training, the contributing employer Plans based on the number of meetings
would be made through the Allocation would pay the S&E Plan directly for (1) that each individual is attending. Then
Model. the specially scheduled training, and (2) the direct and indirect attendance
The AMO Plans believe that there is the specially designed training, expenses allocated to each AMO Plan
an advantage to having plan research, and modeling. The individual are totaled.
professionals stay and dine at the employer would be responsible for Internal Plans Policy and Procedure:
Facilities so that there are more paying the S&E Plan for such services in The AMO Plans have set up a series of
opportunities for interaction between order to avoid the inequity of burdening systems, policies and procedures to
the professionals and the relevant all contributing employers with the internally track and audit use of the
Trustees, personnel and participants. additional costs of the S&E Plan’s efforts lodging and the Facilities and related
to meet the needs of an individual services. These include the STAR
Section III Transactions contributing employer. Payment Center Registrar (the Registrar), RM
(1) Specially Scheduled Training: amounts would be at the rates approved Software and the AMO Plans’
Contributing employers may need to by the I/F. Accounting Department (the Accounting
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contract with the S&E Plan to provide The Allocation Model: The costs of Department). In order to maximize the
one of its regular courses at a special the Trustee Transactions and the effectiveness, security and accuracy of
time. This need may arise when special Professionals’ Transactions are allocated these systems, the Registrar is
circumstances, such as a shipping to the AMO Plans, the Maritime completely independent of RM
schedule, prevent the employees of a Building Realty Holding Trust (the Software. The Accounting Department,
particular employer from attending one MBRHT), the AMOS, and the JEC (the nonetheless, receives the records of both

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41482 Federal Register / Vol. 71, No. 140 / Friday, July 21, 2006 / Notices

for internal auditing purposes and information for their assigned course, These systems will produce multiple
compares these records to its own and rules and regulations while on and auditable records of the Facilities
accounting records. In addition, the campus. use. For example, with such systems in
Accounting Department reviews records If this exemptive relief is provided, place, a Trustee’s attendance at a
for consistency with the purposes of the the use of RM Software will be Trustee meeting would generate a
Facilities, the S&E Plan and the STAR expanded to provide the same reviewable paper trail that begins with
Center in mind. reservation, recordkeeping, and the Trustee’s response to the notice of
More specifically, RM Software reconciliation services for Trustees, a Trustee meeting sent out by the Office
creates an invoice for lodging and food Union representatives, AMO Plan of the Executive Director of the AMO
service accounting functions and related professionals, non-plan entities, Plans, which maintains a calendar of all
services at the Facilities, while the contributing employers and others scheduled Trustee meetings. The
Registrar creates a record of curriculum, whose use of the Facilities would serve Trustees’ response to the meeting notice
attendance and certifications. Records the overall purposes of the AMO Plan. would be entered into Room Master,
from both systems are turned over to For example, RM Software would documenting the response and setting
Accounting for review, audit, billing, provide room reservations to Trustees, up a reservation for the duration of the
receiving, and resolution of professionals or others attending meeting.
discrepancies. These records serve as meetings at the facility. Meeting and When the Trustee arrives the Trustee
the basis for the allocation of expenses training rooms and food services also would check in, receive an ID and a key
among the AMO Plans. would be reserved through Room that is activated for only the duration of
Records from all three sources are Master. In addition, Room Master would the meeting. The Trustee’s attendance at
subject to audit by the external auditor confirm the appropriateness of all each meeting would be recorded. When
and review and analysis by the I/F. lodging and food services arrangements the meeting is over, the Room Master
When the I/F begins full operation the with established meeting schedules and record, containing all accrued expenses,
entire system will be subject to its membership lists. Room Master records and attendance records would be sent to
review and, if required, adjustments also provide daily occupancy the Accounting Department. The
will be made in response to its information that can be compared to Accounting Department would review
recommendations. The I/F and external galley inventory and meal services to individual records for internal
auditor will also use these records to ensure consistency. consistency and aggregated records for
review and verify the accuracy of the Upon arrival, the identification of consistency with food, housekeeping
allocation of expenses to each AMO each guest is verified and each guest is and other expenses. The Accounting
Plan. issued a photo ID, which must be worn Department would also apply the
The Registrar: All AMO Plan at all times while at the Facilities. allocation model so that business
participants interested in participating Guests are also provided with an expenses could be distributed
in training programs are required to electronic key to access perimeter gates appropriately among the AMO Plans
contact the Star Center to register for and their guest rooms. Keys are only that the attending Trustee represents.
specific classes. The Registrar maintains activated for the scheduled stay and The package of records, allocations, and
training records for all S&E Plan automatically deactivate on the date of analysis compiled by the Accounting
participants so that training history and scheduled departure. Department then can be audited.
requirements are easily retrievable. The Room Master system combined The I/F: To ensure that the interests
AMO Plan participants are registered for with the use of photo IDs and electronic of the AMO Plans and their participants
specific training programs on specific keys helps to ensure that all guests are are well protected, the AMO Plans have
dates. The Registrar enables the Star provided with only the accommodations retained American Realty Advisors as
Center to identify particular training and services appropriate for the the I/F with respect to the
requirements for individuals, ensure designated and independently Transactions.12 The I/F has extensive
that the appropriate level of training is confirmed purpose of their visit. experience advising ERISA plans on the
provided, and prevents unnecessary Accounting Department: The
management of their real estate assets.
repetition of training programs. Course Accounting Department is required to
The I/F will review each of the
schedules, registration and attendance audit the use of the Facilities’ lodging,
proposed uses of the Facilities and make
are also maintained at this level. Thus, food and related services against course
determinations whether such uses are
the Registrar documents class registrations, contracts, billings and
prudent, appropriate and in the best
attendance, exam results, training receipts, and the purpose of services
interest of the AMO Plans and their
upgrades for the Coast Guard, and the provided. Any discrepancies are
participants. The I/F will also have
required ratings and certifications. resolved promptly. For example, when
responsibility for monitoring the use of
Room Master: RM Software, a hotel the STAR Center finalizes an approved
the Facilities to ensure that the
software system, is used for lodging and contract, the contract is turned over to
Transactions never displace S&E Plan
food service accounting functions and Accounting. This contract is reviewed
participants who wish to attend training
related services. Room Master provides against Room Master for lodging
at the Facilities.
the reservation system for guest rooms, information and against the Registrar to
The I/F will establish or approve
classrooms, and meeting rooms. It also verify attendance at classes. The
reasonable terms and conditions for the
tracks demand for housekeeping, Accounting Department receives the
Transactions, including the price to be
dining, and other related services. lodging record of all guests on a daily
charged and the Facilities being
Currently, AMO Plan participants basis and reviews these records against
attending training programs at the Star the Registrar System to identify and 12 If it becomes necessary in the future to appoint
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Center receive a room reservation record the purpose of each guest’s stay. a successor independent fiduciary (the Successor)
through Room Master once their The Accounting Department also to replace American Realty Advisors, the applicant
registration by the STAR Center reconciles lodging and attendance will notify the Department sixty (60) days in
advance of the appointment of the Successor. Any
Registrar is confirmed. Training records with meal services provided to Successor will have the responsibilities, experience
participants also are given a welcome identify and remedy potential and independence similar to those of American
package that provides classroom inconsistencies. Realty Advisors.

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Federal Register / Vol. 71, No. 140 / Friday, July 21, 2006 / Notices 41483

provided in the Transactions. The I/F based on input from and the policies telephone (202) 693–8562. (This is not
will ensure that the Transactions are fair and procedures developed by the I/F. a toll-free number.)
to all of the AMO Plans involved. The The costs associated with recordkeeping
I/F will also develop guidelines General Information
and all forms of independent oversight
pursuant to which the AMO Plans’ including the I/F will be allocated The attention of interested persons is
personnel will carry out the approved equally among the parties participating directed to the following:
Transactions. in each respective transaction.
The I/F will also have an on-going (1) The fact that a transaction is the
In summary, the applicant represents subject of an exemption under section
monitoring role, including periodic
that the proposed transactions satisfy 408(a) of the Act and/or section
reviews of the Transactions to ensure
the statutory criteria for an exemption 4975(c)(2) of the Code does not relieve
compliance with the I/F policies and the
terms of any exemption issued by the under section 408(a) of the Act for the a fiduciary or other party in interest or
Department. The I/F will review all uses following reasons: (a) Each AMO Plan disqualified person from certain other
of the Facility on a periodic basis to will pay its appropriate share of provisions of the Act and/or the Code,
determine whether the use thereof expenses based on the Allocation including any prohibited transaction
remains in the interests of the AMO Model; (b) The I/F retained by the AMO provisions to which the exemption does
Plans and their participants and Plans will: (1) Make a determination of not apply and the general fiduciary
whether the terms of the Transactions, whether the proposed the Transaction(s) responsibility provisions of section 404
including the amount charged for the are prudent and in the best interest of of the Act, which, among other things,
Facilities provided, continue to be the relevant AMO Plan(s); (2) Establish require a fiduciary to discharge his
appropriate. The I/F will also prepare an the terms for each of the Transactions, duties respecting the plan solely in the
annual report, summarizing the including: (i) The price to be charged for interest of the participants and
Transactions for that year. the services provided pursuant to the beneficiaries of the plan and in a
The duties of the I/F will include the Transactions; and (ii) Ensuring that the prudent fashion in accordance with
verification and monitoring of lodging Transactions are fair to the involved section 404(a)(1)(b) of the Act; nor does
and the Facilities use on a quarterly AMO Plans; (3) Develop policies and it affect the requirement of section
basis. It also will include review and guidelines for the implementation of the 401(a) of the Code that the plan must
analysis of the system used to allocate Transactions; (4) Monitor the operate for the exclusive benefit of the
expenses among the AMO Plans as well Transactions on an on-going basis, employees of the employer maintaining
as the actual allocations. American including periodic reviews of the the plan and their beneficiaries;
Realty also will develop and implement Transactions, to ensure compliance with
(2) Before an exemption may be
recommended policies and procedures the I/F policies and guidelines; (5) On
granted under section 408(a) of the Act
for engaging in the transactions covered a periodic basis, review the terms of
and/or section 4975(c)(2) of the Code,
by the requested exemption. They will each of the Transactions, including the
the Department must find that the
define precise requirements for staying fair market value of the services
exemption is administratively feasible,
at the facility, class attendance, use of provided; and (6) Prepare an annual
in the interests of the plan and of its
the simulators, and other related report, summarizing the Transactions
participants and beneficiaries, and
activities. for that year; (c) The costs associated
protective of the rights of participants
In addition, American Realty will with recordkeeping and all forms of
and beneficiaries of the plan;
monitor the covered transactions on an independent oversight will be included
on-going basis to verify compliance with in the daily rate established by the I/F (3) The proposed exemptions, if
the policies and procedures that they for food and lodging provided by the granted, will be supplemental to, and
have developed and the terms of the S&E Plan at the Facilities; (d) An not in derogation of, any other
prohibited transaction exemption. As independent auditor will perform provisions of the Act and/or the Code,
part of its duties as I/F, American Realty annual audits of all the AMO Plans to including statutory or administrative
also will develop policies and identify and reconcile any discrepancies exemptions and transitional rules.
procedures to ensure that its regarding the recordkeeping involving Furthermore, the fact that a transaction
recommendations are carried out. the Transactions and provide an annual is subject to an administrative or
The I/F role will ensure that the evaluation of all allocation models and statutory exemption is not dispositive of
Transactions proposed herein remain in produce approval letters explicitly whether the transaction is in fact a
the AMO Plans’ and participants’ affirming that the models are prohibited transaction; and
interest and are consistent with the satisfactory; and (e) RM Software will (4) The proposed exemptions, if
conditions of the proposed exemption. create an invoice for lodging and food granted, will be subject to the express
In addition, the AMO Plans have service accounting functions and related condition that the material facts and
retained Bond Beebe C.P.A. (Bond services at the Facilities. representations contained in each
Beebe) as outside auditors to perform application are true and complete, and
the annual audit of all AMO Plans. Notice to Interested Persons
that each application accurately
Bond Beebe currently audits the S&E Notice of the proposed exemption describes all material terms of the
Plan including the use of lodging and shall be given to all interested persons transaction which is the subject of the
the Facilities. They also identify and in the manner agreed upon by the exemption.
reconcile any discrepancies between the applicant and Department within 15
Registrar, Room Master and Accounting Signed at Washington, DC, this 14th day of
days of the date of publication in the July, 2006.
Department records. In addition, Bond Federal Register. Comments and
rwilkins on PROD1PC63 with NOTICES_1

Beebe will provide an annual evaluation Ivan Strasfeld,

requests for a hearing are due forty-five
of all allocation models and produce Director of Exemption Determinations,
(45) days after publication of the notice Employee Benefits Security Administration,
approval letters explicitly affirming that in the Federal Register.
the models are satisfactory. Department Of Labor.
The responsibilities of the FOR FURTHER INFORMATION CONTACT: [FR Doc. E6–11548 Filed 7–20–06; 8:45 am]
independent auditor will be expanded Khalif Ford of the Department, BILLING CODE 4510–29–P

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