Voluntary Fiduciary Correction Program

Federal Register / Vol. 67, No. 227 / Monday, November 25, 2002 / Notices
their capacity, develop new and improved
products, and focus on improving overall
customer service. No firm could provide
superior products to customers at a sustained
loss.
The government understands this, though
they’re loathe to admit it. In paragraph 17 of
the complaint in this case, the Department of
Justice describes some of the reasons for the
dominance of just three firms in the boom
truck market: ‘‘superior production capacity
and capability, strong dealer networks, broad
product lines and strong reputation for safety
and reliability.’’ The government notes,
correctly, that it would be difficult for any
new competitor to quickly enter the market
because they would need to ‘‘establish a
strong reputation’’ in order to effectively
compete with the dominant firms. 7 But this
is not a weakness of the market, but a
strength. Every factor the government lists
above is the result of honest, ethical activity.
Manitowoc’s superior production capacity is
not the result of coercion. National Crane’s
strong reputation is not derived from violent
acts against competitors. This, essentially, is
the difference between ‘‘market power’’
derived from free trade, and ‘‘political
power’’ derived from the use of force. The
government’s case fails to make this crucial
distinction.
The remedy in the proposed final judgment
replaces market power with political power.
The defendants are forced to divest one of
their crane businesses to a yet-to-bedetermined third party. The government says
this will protect competition. It does no such
thing. ‘‘Competition’’ only exists in a
capitalist economy; a forced divestiture is
hardly capitalist, since it’s neither voluntary
nor based on respect for property rights. In
a capitalist system, the marketplace decides
economic outcomes. In the Department of
Justice’s system, however, economic
outcomes are decided by government
mandates. Such is the case here. The
government dislikes the potential postmerger structure of the boom truck market, so
they brought this case to rearrange things to
their liking. If the government did not have
a monopoly on the use of political force, it
would not be able to obtain this result.
And far from ‘‘protecting’’ consumers, the
government’s remedy here denies consumers
the fundamental right to act for themselves.
The government assumes consumers won’t
pay any price increase that may result from
the merger. But there’s no proof of this
hypothesis in the record. Consumers often
pay higher prices if they feel the product is
worth it, or it they believe that the product
will improve in the future. Consumers are
certainly a far better judge of these things
than attorneys at the Department of Justice.
The final judgment’s remedy wrecks all that,
however. By employing its political power,
the government has stripped consumers of
their economic power.
Finally, there is an obvious contradiction
in the government recognizing the factors
behind Manitowoc’s dominance on the one
hand, but ignoring these same factors in
fashioning the final judgment’s remedy. The
government says a new firm is unlikely to
7 Complaint

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enter the market because of the need to
‘‘establish a strong reputation,’’ among other
things. So how does creating a new
competitor by force accomplish this? Does
the government believe that a reputation can
be established simply by handing a
corporation assets and customers they didn’t
actually earn? If that’s the case, why doesn’t
the Department of Justice simply allocate
resources and market shares in all sectors of
American industry? They obviously consider
their judgment superior to consumers.
Conclusion
The government claims to serve the
‘‘public interest’’ in presenting this proposed
final judgment. But it’s unclear what those
interests are. It’s certainly not legal interests,
since no constitutional or statutory right of
consumers was violated by the defendants.
And it’s not economic interests, since a
capitalist economy is built on voluntary
actions free of government interference.
‘‘Free competition enforced by law is a
grotesque contradiction in terms,’’ 8 not to
mention a highly unstable way to govern an
economy. The companies prosecuted in this
case did compete and are competing. The
government just doesn’t like the outcome of
that competition, so they’ve come to court
seeking to overrule the judgment of
consumers and producers. The result of the
government’s actions is to introduce fear and
uncertainty into a market that previously
functioned well. It’s hard to see how that
serves any identifiable ‘‘public interest.’’
Since it is unlikely the Department of
Justice will see the error of its ways, CVT
respectfully asks the Court to consider our
comments and take appropriate action. We
believe the only just action here is to reject
entry of the proposed final judgment, and to
dismiss the government’s complaint with
prejudice.
Dated: October 18, 2002.
Respectfully Submitted,
Citizens for Voluntary Trade
S.M. Oliva,
President, 2000 F Street, N.W., Suite 315,
Washington, DC 20006; Telephone: (202)
223–0071; Facsimile: (760) 418–9010; Email: info@voluntarytrade.org.
[FR Doc. 02–29779 Filed 11–22–02; 8:45 am]
BILLING CODE 4410–11–M

PENSION AND WELFARE BENEFITS
ADMINISTRATION
[Prohibited Transaction Exemption 2002–
51; Application No. D–10933]

Class Exemption to Permit Certain
Transactions Identified in the
Voluntary Fiduciary Correction
Program
AGENCY: Pension and Welfare Benefits
Administration, U.S. Department of
Labor.
8 Ayn Rand, Antitrust: The Rule of Unreason, in
The Voice of Reason 255 (Leonard Peikoff, ed.,
1990).

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ACTION:

70623

Grant of class exemption.

SUMMARY: This document contains a
final exemption from certain prohibited
transaction restrictions of the Internal
Revenue Code of 1986 (the Code). The
exemption was proposed in conjunction
with the Department’s Voluntary
Fiduciary Correction (VFC) Program, the
final version of which was published in
the March 28, 2002, issue of the Federal
Register. The VFC Program allows
certain persons to avoid potential civil
actions under the Employee Retirement
Income Security Act of 1974 (ERISA)
initiated by the Department and the
assessment of civil penalties under
section 502(l) of ERISA in connection
with investigation or civil action by the
Department. The exemption will affect
plans, participants and beneficiaries of
such plans and certain other persons
engaging in such transactions.
EFFECTIVE DATE: The exemption is
effective November 25, 2002.
FOR FURTHER INFORMATION CONTACT:
Karen E. Lloyd, Office of Exemption
Determinations, Pension and Welfare
Benefits Administration, U.S.
Department of Labor, Room N–5649,
200 Constitution Avenue, NW.,
Washington, DC 20210, (202) 693–8540
(not a toll free number) or Cynthia
Weglicki, Plan Benefits Security
Division, Office of the Solicitor, U.S.
Department of Labor, 200 Constitution
Avenue, NW., Washington, DC 20210,
(202) 693–5600 (not a toll free number).
SUPPLEMENTARY INFORMATION: On March
28, 2002, the Department published a
notice in the Federal Register (67 FR
15083) of the pendency of a proposed
class exemption from the sanctions
resulting from the application of section
4975(a) and (b) of the Code, by reason
of section 4975(c)(1)(A) through (E) of
the Code. The Department proposed the
class exemption on its own motion
pursuant to section 4975(c)(2) of the
Code, and in accordance with the
procedures set forth in 29 CFR part
2570, subpart B (55 FR 32836, August
10, 1990).1
The notice of pendency gave
interested persons an opportunity to
comment or request a public hearing on
the proposal. Two (2) public comments
were received by the Department. Upon
consideration of the comments received,
the Department has determined to grant
the proposed class exemption subject to
certain modifications. These
1 Section 102 of the Reorganization Plan No. 4 of
1978, 5 U.S.C. App. 1 (1996) generally transferred
the authority of the Secretary of the Treasury to
issue exemptions under section 4975(c)(2) of the
Code to the Secretary of Labor.

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Federal Register / Vol. 67, No. 227 / Monday, November 25, 2002 / Notices

modifications and the comments are
discussed below.
Executive Order 12866
Under Executive Order 12866, the
Department must determine whether a
regulatory action is ‘‘significant’’ and
therefore subject to the requirements of
the Executive Order and subject to
review by the Office of Management and
Budget (OMB). Under section 3(f), the
order defines a ‘‘significant regulatory
action’’ as an action that is likely to
result in a rule (1) having an annual
effect on the economy of $100 million
or more, or adversely and materially
affecting a sector of the economy,
productivity, competition, jobs, the
environment, public health or safety, or
State, local or tribal governments or
communities (also referred to as
‘‘economically significant’’); (2) creating
serious inconsistency or otherwise
interfering with an action taken or
planned by another agency; (3)
materially altering the budgetary
impacts of entitlement grants, user fees,
or loan programs or the rights and
obligations of recipients thereof; or (4)
raising novel legal or policy issues
arising out of legal mandates, the
President’s priorities, or the principles
set forth in the Executive Order.
Pursuant to the terms of the Executive
Order, it was determined that this action
is ‘‘significant’’ under Section 3(f)(4) of
the Executive Order. Accordingly, this
action has been reviewed by OMB.
Paperwork Reduction Act
In accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501–
3520)(PRA 95), the Department
submitted the information collection
request (ICR) included in the Proposed
Class Exemption to Permit Certain
Transactions Identified in the Voluntary
Fiduciary Correction to the Office of
Management and Budget (OMB) for
review and clearance at the time the
Notice of the Proposed Class Exemption
was published in the Federal Register
(March 28, 2002, 67 FR 15083). OMB
approved the Notice under OMB control
number 1210–0118. The approval will
expire on November 30, 2003.
The Department solicited comments
concerning the ICR in connection with
the Notice of Proposed Class Exemption.
The Department received no comments
addressing its burden estimates and no
substantive changes have been made in
the final exemption that would affect
the Department’s earlier burden
estimates.
Agency: Pension and Welfare Benefits
Administration, Department of Labor.
Title: Voluntary Fiduciary Correction
Program.

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OMB Number: 1210–0118.
Affected Public: Business or other forprofit; Not-for-profit institutions.
Respondents: 700.
Frequency of Response: On occasion.
Responses: 700.
Estimated Total Burden Hours: 5,710
hours.
Total Burden Cost (Operating and
Maintenance): $272,928.
Discussion of Comments Received
The Department received two
comments regarding the proposed class
exemption. The commenters requested
specific modifications to the proposal in
the following areas:
1. Notice to Interested Persons
Both commenters addressed Section
IV of the proposed exemption which
required applicants to provide notice to
interested persons of the transaction and
the method of correction. It was noted
that, in many cases, applicants who may
be subject to the excise taxes under
section 4975 of the Code will not be the
employer whose employees are covered
by the plan, and may be unrelated to the
employer.
In this regard, one of the commenters
stated that, without the cooperation of
the employer, applicants might find it
difficult to provide notice to
participants and beneficiaries because
they would not have access to the
participants’ and beneficiaries’ names
and addresses. The commenter further
noted that employers might not be
willing to provide access to such
information due to privacy concerns or
concerns that receipt of the notice might
cause confusion among the participants
and beneficiaries.
In the commenter’s view, relief under
the exemption should not be
conditioned on the cooperation of an
employer or other person that is
unrelated to the applicant, particularly
since the underlying prohibited
transaction will have been corrected
pursuant to the VFC Program. The
commenter proposed that, in the case of
an applicant unrelated to the employer
whose employees are covered by the
plan, the exemption permit notice to be
provided to the employer or other plan
fiduciary unrelated to the applicant who
was not involved in the transaction that
is the subject of the VFC Program
application, rather than each participant
and beneficiary. The commenter noted
that the unrelated fiduciary could then
determine whether plan participants
and beneficiaries should be notified of
the underlying transaction and its
correction under the VFC Program.
The other commenter stated generally
that the notice requirement was

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unnecessary and burdensome, but
subsequently clarified that it had the
same concerns as the first commenter.
The Department concurs with the
commenters’ views on the notice issue.
In this regard, the Department notes that
the proposed exemption does not
contain a definition of interested
persons to whom notice must be
provided. It is the view of the
Department that, where an applicant is
unaffiliated with, and unrelated to, the
employer whose employees are covered
by the plan, the notice requirement will
be deemed satisfied if the applicant
provides notice to a fiduciary of the
plan who is unrelated to the applicant
and all other parties involved in the
prohibited transaction. In many cases,
this may be the employer or an
administrative committee composed of
officers and employees of the employer.
However, the Department cautions that
the notice requirement will not be
considered satisfied if notice is given to
an employer who is not unrelated to all
parties involved in the prohibited
transaction. Under no circumstances
should plan assets be used to pay for the
notice.
2. Three Year Rule
One of the commenters also was
concerned about Section II.F. of the
proposed exemption, which provided
that an applicant seeking relief under
the exemption could not have taken
advantage of the relief provided under
the VFC Program and this exemption for
a similar type of transaction identified
in the current application during the
period which is three years prior to the
submission of the current application.
The commenter argued that applicants
that are service providers, as opposed to
plan officials, should be permitted to
take advantage of the VFC Program as
often as necessary without regard to the
three year rule.
The commenter stated that subjecting
service providers to the three year rule
would not, in all cases, further the rule’s
purpose of ensuring that relief is not
provided to fiduciaries who repeatedly
make the same legal mistake. In contrast
to plan sponsors, for example, service
providers such as broker-dealers, banks
and insurance companies may engage in
numerous transactions with plans each
day which could be prohibited except
for the availability of a statutory or
administrative exemption. The
commenter noted that, if the plan
fiduciary directing the transaction is
relying on an exemption to deal with a
party in interest, and that fiduciary is
factually incorrect on an element of the
exemption, the broker-dealer may

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Federal Register / Vol. 67, No. 227 / Monday, November 25, 2002 / Notices
engage in many transactions that would
need relief under this exemption.
As an example, the commenter
explained that a service provider could
enter into a transaction that otherwise
would be prohibited based on a
fiduciary’s representation that the
QPAM class exemption (PTE 84–14) (49
FR 9494, March 13, 1984) applied. The
QPAM class exemption requires, among
other things, that neither the QPAM, an
affiliate, nor any owner of a 5% or more
interest in the QPAM, have been
convicted or released from
imprisonment as a result of certain
crimes within the ten years immediately
preceding the transaction. Information
regarding past crimes of affiliates and
5% owners of the QPAM is not likely to
be within the knowledge of the service
provider, and the service provider must
rely on the QPAM for assurance that the
condition is satisfied.
The commenter suggested that
Section II.F. be modified to provide an
exception from the three year rule for
applicants that are banks, broker-dealers
or insurance companies (or affiliates
thereof) which did not exercise
discretionary authority or control to
cause the plan to enter into the
transaction. The commenter proposed
that the exception be limited to
applicants that were parties in interest
(including fiduciaries) solely by reason
of providing services to the plan (or
solely by reason of a relationship to
such service provider described in
section 3(14)(F), (G), (H), or (I) and the
corresponding provisions of the Code),
and that ‘‘did not believe that an
exemption was unavailable’’ with
respect to the transaction. The
commenter suggested that the applicant
must have established written policies
and procedures reasonably designed to
ensure compliance with the prohibited
transaction rules, and have engaged in
periodic monitoring for compliance, at
the time of the transaction.
The Department agrees that, in the
narrow circumstances described above,
such service providers should not be
excluded from obtaining relief under the
exemption by the three year rule.
Accordingly, the Department has
modified Section II.F. to clarify that the
exemption will continue to be available
notwithstanding the applicant’s
inability to satisfy the three year rule,
provided that:
• The applicant was a broker-dealer
registered under the Securities
Exchange Act of 1934, a bank
supervised by the United States or a
State thereof, a broker-dealer or bank
subject to foreign government
regulation, an insurance company

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qualified to do business in a State, or
any affiliate thereof;
• The applicant was a party in
interest (including a fiduciary) solely by
reason of providing services to the plan
or solely by reason of a relationship to
such service provider described in
section 3(14)(F), (G), (H) or (I) (and/or
the corresponding provisions of section
4975 of the Code);
• Neither the applicant nor any
affiliate (i) was a fiduciary (within the
meaning of section 3(21)(A) of ERISA)
with respect to the assets of the plan
involved in the transaction, and (ii)
used its discretion to cause the plan to
engage in the transaction;
• The individuals acting on behalf of
the applicant in connection with the
transaction had no actual knowledge or
reason to know that the transaction was
not exempt pursuant to a statutory or
administrative exemption under ERISA
and/or the Code; and
• Prior to the transaction, the
applicant established written policies
and procedures that were reasonably
designed to ensure compliance with the
prohibited transaction rules and the
applicant engaged in periodic
monitoring for compliance.
3. Participant Loan Repayments
The Department has made one
additional modification to the final
exemption. As discussed more fully
below, the exemption provides relief for
certain transactions described in the
VFC Program, including the failure to
transmit participant contributions to a
pension plan within the time frames
described in the Department’s
regulations at 29 CFR 2510.3–102.
Subsequent to the publication of the
final VFC Program, the Department
issued guidance stating that applicants
may correct the failure to forward
participant loan repayments to a plan in
a timely fashion under the VFC Program
in the same manner.2 Accordingly, the
Department revised the language of
Section I.A. of the exemption to
explicitly cover the failure to transmit
participant loan repayments to a
pension plan within a reasonable time
after withholding or receipt by the
employer.
2 See Frequently Asked Questions on the VFC
Program, at http://www.dol.gov/pwba/faqs/
faq_vfcp2.html. For the Department’s views on the
time frames for repayment of participant loans to
pension plans, see the preamble to the final
participant contribution regulation, 29 CFR section
2510.3–102, published at 61 FR 41220, 41226
(August 7, 1996). See also DOL Advisory Opinion
No. 2002–02A (May 17, 2002).

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70625

Description of the Exemption
1. Scope
The exemption provides relief from
the sanctions imposed under section
4975(a) and (b) of the Code, by reason
of section 4975(c)(1)(A) through (E) of
the Code, for certain eligible
transactions identified in the VFC
Program. The exemption does not
provide relief for any transactions
identified in the VFC Program that are
not specifically described as eligible
transactions under Section I of the
exemption.
The four eligible transactions
described in the exemption are as
follows:
(A) The failure to transmit participant
contributions to a pension plan within
the time frames described in the
Department’s regulations at 29 CFR
section 2510.3–102 and/or the failure to
transmit participant loan repayments to
a pension plan within a reasonable time
after withholding or receipt by the
employer.
(B) The making of a loan by a plan at
a fair market interest rate to a party in
interest with respect to the plan.
(C) The purchase or sale of an asset
(including real property) between a plan
and a party in interest at fair market
value.
(D) The sale of real property to a plan
by the employer and the leaseback of
such property to the employer, at fair
market value and fair market rental
value, respectively.
The eligible transactions may be
illustrated by the following examples:
Example (1): Corporation A sponsors a
pension plan for its employees. Corporation
A borrowed $100,000 from the plan. The loan
was made at an interest rate no less than that
available for a loan with similar terms (for
example, the amount of the loan, amount
and type of security, repayment schedule,
and duration of loan) obtainable in an arm’slength transaction between unrelated parties.
Example (2): Corporation B sponsors a
pension plan for its employees. The plan sold
a parcel of real property to Corporation B.
The price Corporation B paid to the plan was
the fair market value of the property as
determined by a qualified independent
appraiser as of the date of the transaction and
reflected in a qualified appraisal report. (If
there is a generally recognized market for the
property, such as the New York Stock
Exchange, the fair market value of the
property is the value objectively determined
by reference to the price on such market on
the date of the transaction, and a
determination by a qualified independent
appraiser is not required.)
Example (3): Corporation C sponsors a
pension plan for its employees. Corporation
C sold a parcel of real property to the plan
which was simultaneously leased back to
Corporation C. The price paid by the plan for
the property was its fair market value, and

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the rent paid by Corporation C to the plan is
the fair market rental value, as determined by
a qualified independent appraiser and
reflected in a qualified appraisal report. The
terms of the lease (for example, rent, duration
and allocation of expenses) are not less
favorable to the plan than those obtainable in
an arm’s-length transaction between
unrelated parties.

2. General Conditions
Section II of the exemption contains
general conditions, as discussed below,
which the Department views as
necessary to ensure that any transaction
covered by the exemption would be in
the interests of plan participants and
beneficiaries, and to support a finding
that the exemption met the statutory
requirements of section 4975(c)(2) of the
Code.
With respect to a transaction
involving delinquent transmittal of
participant contributions and/or
participant loan repayments to a
pension plan, the exemption requires
that the contributions or repayments be
transmitted to the pension plan not
more than 180 calendar days from the
date the amounts were received by the
employer (in the case of amounts that a
participant or beneficiary pays to an
employer) or the date the amount
otherwise would have been payable to
the participant in cash (in the case of
amounts withheld by an employer from
a participant’s wages).
Second, the exemption requires that,
with respect to the transactions
described in Sections I.B., I.C. and I.D.,
the amount of plan assets involved in
the transaction did not exceed 10
percent of the fair market value of all
the assets of the plan at the time of the
transaction. For purposes of this
requirement, the 10 percent limitation
would apply after aggregating the value
of a series of related transactions.
Third, under the exemption, the fair
market value of any plan asset involved
in a transaction described in Sections
I.C. or I.D. must have been determined
in accordance with section 5 of the VFC
Program. Section 5 of the VFC Program
requires that the valuation meet the
following conditions: (1) If there is a
generally recognized market for the
property (e.g., the New York Stock
Exchange), the fair market value of the
asset is the average value of the asset on
such market on the applicable date,
unless the plan document specifies
another objectively determined value
(e.g., the closing price); and (2) if there
is no generally recognized market for
the asset, the fair market value of that
asset must be determined in accordance
with generally accepted appraisal
standards by a qualified independent
appraiser and reflected in a written

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appraisal report signed by the appraiser.
For purposes of these requirements
under the VFC Program, an appraiser is
considered qualified if the appraiser has
met the education, experience and
licensing requirements that are
generally recognized for appraisal of the
type of asset being appraised. An
appraiser is ‘‘independent’’ if the
appraiser is not one of the following,
does not own or control any of the
following, and is not owned or
controlled by, or affiliated with, any of
the following: (i) The prior owner of the
asset, if the asset was purchased by the
plan; (ii) the purchaser of the asset, if
the asset was or is now being sold by the
plan; (iii) any other owner of the asset,
if the plan is not the sole owner; (iv) a
fiduciary of the plan; (v) a party in
interest with respect to the plan (except
to the extent the appraiser becomes a
party in interest when retained to
perform this appraisal for the plan); or
(vi) the VFC Program applicant.
Fourth, under the exemption, the
terms of a transaction described in
Sections I.B., I.C., or I.D., must have
been at least as favorable to the plan as
the terms generally available in arm’slength transactions between unrelated
parties.
Fifth, with respect to all of the eligible
transactions, the transaction may not
have been part of an agreement,
arrangement or understanding designed
to benefit a party in interest. The
Department notes that the intent of this
condition is not to deny a direct benefit
to the party in interest but, rather, to
exclude relief for transactions that are
part of a broader overall agreement,
arrangement or understanding designed
to benefit parties in interest.
Sixth, with respect to all of the
eligible transactions, the applicant may
not have taken advantage of the relief
provided by the VFC Program and the
exemption for a similar type of
transaction identified in the application
during the three-year period prior to the
submission of the application. As
modified, however, the final exemption
contains a limited exception from this
condition for service providers.
Pursuant to the amended Section II.F.,
a broker-dealer, bank or insurance
company that is a service provider to a
plan would not be subject to this
condition if it engaged in a prohibited
transaction described in Section I,
provided that: it was not a fiduciary that
used its discretion to cause the plan to
engage in the transaction; individuals
acting on its behalf in connection with
the transaction had no actual knowledge
or reason to know that the transaction
was not exempt pursuant to a statutory
or administrative exemption under

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ERISA and/or the Code; and, prior to the
transaction, it established written
policies and procedures that were
reasonably designed to ensure
compliance with the prohibited
transaction rules and it engaged in
periodic monitoring for compliance.
3. Compliance with VFC Program
In addition to compliance with the
general conditions set forth above,
Section III of the exemption requires
that the applicant meet the requirements
set forth in the VFC Program that are
applicable to the particular transaction.
The exemption also requires that the
applicant have received a no action
letter issued by PWBA with respect to
such transaction, which must be an
eligible transaction otherwise described
in Section I of the exemption. However,
the fact that an applicant receives a no
action letter issued by PWBA should not
be viewed as a determination by PWBA
that the applicant has satisfied all of the
conditions of the exemption. Each
applicant must determine whether the
pertinent conditions of the exemption
have been met.
4. Notice
Notice under the exemption must be
given to interested persons within 60
calendar days following the date of the
submission of an application under the
VFC Program to the Department. Plan
assets may not be used to pay for the
notice. The exemption does not specify
the format or specific content of the
notice. However, the notice must
include an objective description of the
transaction and the steps taken to
correct it, written in a manner
reasonably calculated to be understood
by the average plan participant or
beneficiary. The notice also must
provide for a period of 30 calendar days,
beginning on the date the notice is
distributed, for interested persons to
provide comments to the appropriate
Regional Office of the United States
Department of Labor, Pension and
Welfare Benefits Administration. The
notice must include the address and
telephone number of such Regional
Office.
A copy of the notice to interested
persons, along with an indication of the
date on which it was distributed, must
be provided to the appropriate Regional
Office within the same 60-day period
following the date of the submission of
the application. Accordingly, applicants
under the VFC Program who intend to
take advantage of the relief provided
under this exemption would indicate on
the checklist submitted as part of the
VFC Program application that they will,
within 60 calendar days following the

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Federal Register / Vol. 67, No. 227 / Monday, November 25, 2002 / Notices
date of the submission of the
application, provide the Department’s
Regional Office with a copy of the
notice to interested persons.
Notice may be given in any manner
that is reasonably calculated, taking into
consideration the particular
circumstances of the plan, to result in
the receipt of such notice by interested
persons, including but not limited to
posting, regular mail, or electronic mail,
or any combination thereof.
General Information
The attention of interested persons is
directed to the following:
(1) The fact that a transaction is the
subject of an exemption under section
4975(c)(2) of the Code does not relieve
a fiduciary or other party in interest or
disqualified person with respect to a
plan from certain other provisions of
ERISA and the Code, including any
prohibited transaction provisions to
which the exemption does not apply,
the requirement that all assets of an
employee benefit plan be held in trust
by one or more trustees, and the general
fiduciary responsibility provisions of
ERISA which require, among other
things, that a fiduciary discharge his or
her duties respecting the plan solely in
the interests of the participants and
beneficiaries of the plan and in a
prudent fashion; nor does it affect the
requirement of section 401(a) of the
Code that the plan must operate for the
exclusive benefit of the employees of
the employer maintaining the plan and
their beneficiaries.
(2) The exemption does not extend to
transactions prohibited under section
4975(c)(1)(F) of the Code.
(3) In accordance with section
4975(c)(2) of the Code, the Department
finds that the exemption is
administratively feasible, in the
interests of plans and their participants
and beneficiaries, and protective of the
rights of participants and beneficiaries
of such plans.
(4) The exemption is supplemental to,
and not in derogation of other
provisions of ERISA and the Code,
including statutory or administrative
exemptions and transitional rules.
Furthermore, the fact that a transaction
is subject to an administrative or
statutory exemption is not dispositive of
whether the transaction is in fact a
prohibited transaction.
(5) The exemption is applicable to a
transaction only if the conditions
specified in the class exemption are
satisfied.
Exemption
Accordingly, the following exemption
is granted under the authority of section

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4975(c)(2) of the Code, and in
accordance with the procedures set
forth in 29 CFR part 2570, subpart B (55
FR 32836, 32847, August 10, 1990).
Section I: Eligible Transactions
The sanctions resulting from the
application of section 4975(a) and (b) of
the Code, by reason of section
4975(c)(1)(A) through (E) of the Code,
shall not apply to the following eligible
transactions described in section 7 of
the Voluntary Fiduciary Correction
(VFC) Program (67 FR 15061, March 28,
2002), provided that the applicable
conditions set forth in Sections II, III
and IV are met:
A. Failure to transmit participant
contributions to a pension plan within
the time frames described in the
Department’s regulation at 29 CFR
section 2510.3–102, (see VFC Program,
section 7.A.1.), and/or the failure to
transmit participant loan repayments to
a pension plan within a reasonable time
after withholding or receipt by the
employer.
B. Loan at a fair market interest rate
to a party in interest with respect to a
plan. (See VFC Program, section 7.B.1.).
C. Purchase or sale of an asset
(including real property) between a plan
and a party in interest at fair market
value. (See VFC Program, sections 7.C.1.
and 7.C.2.).
D. Sale of real property to a plan by
the employer and the leaseback of the
property to the employer, at fair market
value and fair market rental value,
respectively. (See VFC Program, section
7.C.3.).
Section II: Conditions
A. With respect to a transaction
involving participant contributions or
loan repayments to pension plans
described in Section I.A., the
contributions or repayments were
transmitted to the pension plan not
more than 180 calendar days from the
date the amounts were received by the
employer (in the case of amounts that a
participant or beneficiary pays to an
employer) or the date the amounts
otherwise would have been payable to
the participant in cash (in the case of
amounts withheld by an employer from
a participant’s wages).
B. With respect to the transactions
described in Sections I.B., I.C., or I.D.,
the plan assets involved in the
transaction, or series of related
transactions, did not, in the aggregate,
exceed 10 percent of the fair market
value of all the assets of the plan at the
time of the transaction.
C. The fair market value of any plan
asset involved in a transaction described
in Sections I.C. or I.D. was determined

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70627

in accordance with section 5 of the VFC
Program.
D. The terms of a transaction
described in Sections I.B., I.C., or I.D.
were at least as favorable to the plan as
the terms generally available in arm’slength transactions between unrelated
parties.
E. With respect to any transaction
described in Section I, the transaction
was not part of an agreement,
arrangement or understanding designed
to benefit a party in interest.
F. (1) With respect to any transaction
described in Section I, the applicant has
not taken advantage of the relief
provided by the VFC Program and this
exemption for a similar type of
transaction(s) identified in the current
application during the period which is
three years prior to submission of the
current application.
(2) Notwithstanding the foregoing,
Section II.F.(1) shall not apply to an
applicant provided that:
(a) The applicant was a broker-dealer
registered under the Securities
Exchange Act of 1934, a bank
supervised by the United States or a
State thereof, a broker-dealer or bank
subject to foreign government
regulation, an insurance company
qualified to do business in a State, or an
affiliate thereof;
(b) The applicant was a party in
interest (including a fiduciary) solely by
reason of providing services to the plan
or solely by reason of a relationship to
such service provider described in
section 3(14)(F), (G), (H) or (I) (and/or
the corresponding provisions of section
4975 of the Code);
(c) Neither the applicant nor any
affiliate (i) was a fiduciary (within the
meaning of section 3(21)(A) of ERISA)
with respect to the assets of the plan
involved in the transaction and (ii) used
its discretion to cause the plan to engage
in the transaction;
(d) Individuals acting on behalf of the
applicant had no actual knowledge or
reason to know that the transaction was
not exempt pursuant to a statutory or
administrative exemption under ERISA
and/or the Code; and
(e) Prior to the transaction, the
applicant established written policies
and procedures that were reasonably
designed to ensure compliance with the
prohibited transaction rules and the
applicant engaged in periodic
monitoring for compliance.
Section III: Compliance with VFC
Program
A. The applicant has met all of the
applicable requirements of the VFC
Program.

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70628

Federal Register / Vol. 67, No. 227 / Monday, November 25, 2002 / Notices

B. PWBA has issued a no action letter
to the applicant pursuant to the VFC
Program with respect to a transaction
described in Section I.
Section IV: Notice
A. Written notice of the transaction(s)
for which the applicant is seeking relief
pursuant to the VFC Program and this
exemption, and the method of
correcting the transaction, was provided
to interested persons within 60 calendar
days following the date of the
submission of an application under the
VFC Program. A copy of the notice was
provided to the appropriate Regional
Office of the United States Department
of Labor, Pension and Welfare Benefits
Administration within the same 60-day
period, and the applicant indicated the
date upon which notice was distributed
to interested persons. Plan assets were
not used to pay for the notice. The
notice included an objective description
of the transaction and the steps taken to
correct it, written in a manner
reasonably calculated to be understood
by the average plan participant or
beneficiary. The notice provided for a
period of 30 calendar days, beginning
on the date the notice was distributed,
for interested persons to provide
comments to the appropriate Regional
Office. The notice included the address
and telephone number of such Regional
Office.
B. Notice was given in a manner that
was reasonably calculated, taking into
consideration the particular
circumstances of the plan, to result in
the receipt of such notice by interested
persons, including but not limited to
posting, regular mail, or electronic mail,
or any combination thereof. The notice
informed interested persons of the
applicant’s participation in the VFC
Program and intention of availing itself
of relief under the exemption.
Signed at Washington, DC, this 11th day of
November, 2002.
Ivan L. Strasfeld,
Director of Exemption Determinations,
Pension and Welfare Benefits Administration,
U.S. Department of Labor.
[FR Doc. 02–29799 Filed 11–22–02; 8:45 am]
BILLING CODE 4510–29–P

NATIONAL LABOR RELATIONS
BOARD
Order Delegating Authority to the
General Counsel; Before Members
Wilma B. Liebman, William B. Cowen,
and Michael J. Bartlett
November 19, 2002.

The Board is faced with the prospect
that it may for a temporary period have

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fewer than three Members of its
statutorily prescribed full complement
of five Members. The Board recognizes
that it has a continuing responsibility to
fulfill its statutory obligations in the
most effective and efficient manner
possible. To assure that the Agency will
be able to meet its obligations, the Board
has decided to temporarily delegate to
the General Counsel full authority to
certify the results of any secret ballot
election conducted under the National
Emergency provisions of the Labor
Management Relations Act, sections
206–210, 29 U.S.C. 176–180.1 This
delegation shall be effective during any
time when the Board has fewer than
three Members and is made under the
authority granted to the Board under
sections 3, 4, 6, and 10 of the National
Labor Relations Act.
Accordingly, the Board delegates to
the General Counsel full and final
authority and responsibility on behalf of
the Board to certify to the Attorney
General the results of any secret ballot
elections held among employees on the
question of whether they wish to accept
the final offer of settlement made by
their employer pursuant to section
209(b) of the Labor Management
Relations Act, 29 U.S.C. 179(b). This
delegation shall cease to be effective
whenever the Board has at least three
Members.
This delegation relates to the internal
management of the National Labor
Relations Board and is therefore,
pursuant to 5 U.S.C. 553, exempt from
the notice and comment requirements of
the Administrative Procedure Act.
Further, public notice and comment is
impractical because of the immediate
need for Board action. The public
interest requires that this delegation
take effect immediately.
All existing delegations of authority to
the General Counsel and to staff in effect
prior to the date of this order remain in
full force and effect, including the
December 14, 2001, delegation regarding
court litigation authority and the April
1, 1955, delegation by the Board to the
General Counsel of the authority and
responsibility to conduct secret ballots
pursuant to section 209(b) of the Labor
Management Relations Act, 29 U.S.C.
179(b). For the reasons stated above, the
Board finds good cause to make this
order effective immediately in
accordance with 5 U.S.C. 553(d).
By direction of the Board.
1 On December 14, 2001, the Board previously
delegated to the General Counsel, on the same basis,
full authority on all court litigation matters that
would otherwise require Board authorization,
effective during any time when the Board has fewer
than three Members. See 66 FR 65998 (December
21, 2001).

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Dated in Washington, DC, November 19,
2002.
Lester A. Heltzer,
Acting Executive Secretary, National Labor
Relations Board.
[FR Doc. 02–29917 Filed 11–22–02; 8:45 am]
BILLING CODE 7545–01–P

NATIONAL SCIENCE FOUNDATION
Notice of Permits Issued Under the
Antarctic Conservation Act of 1978
National Science Foundation.
Notice of permits issued under
the Antarctic Conservation of 1978,
Public Law 95–541.
AGENCY:
ACTION:

SUMMARY: The National Science
Foundation (NSF) is required to publish
notice of permits issued under the
Antarctic Conservation Act of 1978.
This is the required notice.
FOR FURTHER INFORMATION CONTACT:
Nadene G. Kennedy, Permit Office,
Office of Polar Programs, Rm. 755,
National Science Foundation, 4201
Wilson Boulevard, Arlington, VA 22230.
SUPPLEMENTARY INFORMATION: On
October 11, 2002, the National Science
Foundation published a notice in the
Federal Register of a permit
applications received. Permits were
issued on November 19, 2002 to: Arthur
L. DeVries, Permit No. 2003–013; Joan
Myers, Permit No. 2003–2003–015.

Nadene G. Kennedy,
Permit Officer.
[FR Doc. 02–29875 Filed 11–22–02; 8:45 am]
BILLING CODE 7555–01–M

NUCLEAR REGULATORY
COMMISSION
Notice of Issuance of Director’s
Decision Under 10 CFR 2.206
Notice is hereby given that the
Director, Office of Nuclear Reactor
Regulation, has issued a Director’s
Decision with regard to a petition dated
March 11, 2002, and supplements dated
March 21, 22, and 27, 2002 (the
Petition), submitted by Mr. David A.
Lochbaum, a Nuclear Safety Engineer in
the Washington, DC Office of the Union
of Concerned Scientists (UCS), and the
co-petitioners identified in the petition
supplements dated March 21 and March
22, 2002 (the Petitioners). The
Petitioners have requested that the U.S.
Nuclear Regulatory Commission (NRC
or the Commission) take action with
regard to the nuclear power facilities
listed in Attachment 1 to the Petition
(multiple nuclear power facilities). The

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