Notice2025-00810
Exemption From Certain Prohibited Transaction Restrictions Involving Boilermakers Western States Apprenticeship Fund, Located in Page, Arizona
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
January 15, 2025
Effective
January 15, 2025
Issuing agencies
Labor DepartmentEmployee Benefits Security Administration
Abstract
This document gives notice of an individual exemption from certain prohibited transaction restrictions of the Employee Retirement Income Security Act of 1974 (ERISA). The exemption permits the purchase of a parcel of improved real property (the Property) by the Boilermakers Western States Apprenticeship Fund (the Plan or Applicant) from the "Navajo Nation" Lodge 4 of the International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmith, Forgers, and Helpers (Lodge 4) whose members may be participants in the Plan.
Full Text
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<title>Federal Register, Volume 90 Issue 9 (Wednesday, January 15, 2025)</title>
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[Federal Register Volume 90, Number 9 (Wednesday, January 15, 2025)]
[Notices]
[Pages 3923-3929]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-00810]
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
[Prohibited Transaction Exemption 2025-04; Exemption Application No. L-
12069]
Exemption From Certain Prohibited Transaction Restrictions
Involving Boilermakers Western States Apprenticeship Fund, Located in
Page, Arizona
AGENCY: Employee Benefits Security Administration.
ACTION: Notice of exemption.
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SUMMARY: This document gives notice of an individual exemption from
certain prohibited transaction restrictions of the Employee Retirement
Income Security Act of 1974 (ERISA). The exemption permits the purchase
of a parcel of improved real property (the Property) by the
Boilermakers Western States Apprenticeship Fund (the Plan or Applicant)
from the ``Navajo Nation'' Lodge 4 of the International Brotherhood of
Boilermakers, Iron Ship Builders, Blacksmith, Forgers, and Helpers
(Lodge 4) whose members may be participants in the Plan.
DATES: Exemption Date: This exemption is in effect as of January 15,
2025.
FOR FURTHER INFORMATION CONTACT: Mr. Frank Gonzalez, Office of
Exemption Determinations, Employee Benefits Security Administration,
U.S. Department of Labor, (202) 693-8553. (This is not a toll-free
number).
SUPPLEMENTARY INFORMATION: The Plan requested an exemption pursuant to
ERISA section 408(a) and supplemented the request with certain
additional information (that is collectively, referred to as the
``Application'').\1\ On November 4, 2024, the Department of Labor (the
Department) published a notice of proposed exemption in the Federal
Register (the Proposed Exemption).\2\
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\1\ The procedures for requesting an exemption are set forth in
29 CFR part 2570, subpart B (76 FR 66637, 66644, October 27, 2011).
\2\ 89 FR 87600.
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Based on the Applicant's representations contained in the
Application and the administrative record, the Department has
determined to grant the Proposed Exemption. This exemption provides
only the relief specified herein and does not provide relief from
violations of any law other than the prohibited transaction provisions
of ERISA.
Benefits of the Exemption: The Department is granting the exemption
based in part on the Applicant's representations that, among other
[[Page 3924]]
things, the Plan's purchase of the Property would avoid significant
time and cost of relocating the Plan's training program to an
alternative location (as the property has already been modified at the
Plan's own expense for its particular training purposes). The
transaction will be subject to further protection because an
independent fiduciary will be responsible for ensuring that the Plan
does not pay more than fair market value to purchase the Property.
As discussed below, the Department makes the requisite findings
under ERISA section 408(a) based on the Applicant's adherence to all
the exemption's conditions at all times. Accordingly, affected parties
should be aware that the Applicant's adherence to all conditions
incorporated in this exemption is necessary for the Department to grant
the relief that the Applicant requested. Absent these conditions, the
Department would not have granted this exemption.
Background
1. As discussed in the Proposed Exemption, the Plan is an
apprenticeship program trust fund created to provide training benefits
to individuals engaged in the boilermaker construction trade.
2. The Plan was created pursuant to collective bargaining
agreements (under the Taft-Hartley Act of 1947) \3\ between signatory
contractors/employers (the Employers) and the International Brotherhood
of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers, and Helpers
(the Boilermakers Union). As of December 31, 2023, the approximate
aggregate fair market value of the Plan's total assets was $12,611,589.
As of May 17, 2024, there are 369 apprentices currently active in the
Plan's apprenticeship program. The program graduated 84 apprentices in
2022, 65 in 2023, and 51 as of May 17, 2024. The Plan admits
apprentices on a rolling basis. There have been 1,233 apprentices
participating in the Plan's training from May 13, 2019, through May 13,
2024.
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\3\ The Department notes that the Taft-Hartley Act is commonly
known as the Labor Management Relations Act of 1947; see 29 U.S.C.
141.
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3. The Plan provides training and education to eligible
participants located in the following states: Alaska, Arizona,
California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico,
Oregon, Utah, Washington, and Wyoming (the Western States Area).
4. The Plan is sponsored by the Boilermakers National
Apprenticeship Program (the BNAP).\4\ The BNAP sponsors apprenticeship
programs in four different geographical areas, including the Western
States Area.
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\4\ ERISA Section 3(16)(B) defines the term Plan Sponsor to mean
in pertinent part . . . (ii) the employee organization in the case
of a plan established or maintained by an employee organization,
(iii) in the case of a plan established or maintained by two or more
employers or jointly by one or more employers and one or more
employee organizations, the association, committee, joint board of
trustees, or other similar group of representatives of the parties
who establish or maintain the plan. . . .''
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5. A board of trustees--the Boilermakers National Apprenticeship
Board--administers the Plan (the Board of Trustees). The Board of
Trustees consists of equal representation from locals of the
Boilermakers Union (the Union Trustees) and signatory contractors/
employers (the Employer Trustees). The Board of Trustees has discretion
over the Plan's assets, including over the investment of such assets.
6. The Plan receives funding through collectively bargained
contributions from contributing employers and grants, among other
income sources provided under the Plan's governing documents. According
to the Plan's governing documents, the Plan's assets may be used to
provide apprenticeship and training benefits and to finance the
operation and administration of such apprenticeship and training
benefits within the Western States Area. As described in the Proposed
Exemption, the Plan provides benefits in two ways: through a regional
training center, the JG Cooksey Training Center in Salt Lake City,
Utah; and through subsidizing apprenticeship and training programs
maintained by locals of the Boilermakers Union within the Western
States Area.
7. During a five-year period ending on February 11, 2022, the Plan
nearly doubled its apprentice numbers, and the participation rate
continued to increase as of May 17, 2024, as the demand for
boilermakers in the Western States Area continues to rise. Accordingly,
the Plan is interested in opening a new regional training center and is
seeking to purchase an improved real estate parcel (the Property) from
Lodge 4, a labor union, located in Page, Arizona, that is affiliated
with the Boilermakers Union. Lodge 4 is a separate legal entity from
both the Boilermakers Union and the other lodges of the Boilermakers
Union. The Board of Trustees does not currently have any Union Trustees
who were appointed by Lodge 4. Rather, the Union Trustees serving on
the Plan's Board of Trustees are appointed either by the Boilermakers
Union or other lodges of the Boilermakers Union (e.g., Boilermakers
Lodge 502).
8. The Property. The Property is an improved real estate parcel
located at 294 Cowboy Ray Road, Page, Arizona. The Property's site is
1.678 acres, with two office/warehouse buildings totaling 5,000 square
feet in usable space. As discussed further below, the Plan's
apprentices currently use the Property's buildings as training
facilities (the Training Facility). The Applicant represents that this
use of the Training Facility is essential for the Plan to fulfill its
purpose of providing education and training opportunities to its
apprentices. As described in the Proposed Exemption, Lodge 4 has
decided to move and no longer desires to operate the Training Facility.
9. The Applicant represents that the Property has been modified to
carry out the purposes of the Plan and is ideally situated to be a
regional training facility for boilermaker apprentices and
journeypersons and suited for the Plan's purposes. The Property also
has administrative space for the Plan's headquarters.\5\
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\5\ The Plan maintains an administrative office in Page,
Arizona, three miles away from the Property, that it began leasing
from Marquis Realty LLC, an unrelated party to the Plan, on July 1,
2014 (the Leased Office).
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10. The Union Trustees recused themselves from voting with respect
to the Plan's decision to enter into the Transaction, and the Plan's
Employer Trustees \6\ determined it would be in the interest of the
Plan to purchase the Property because: (a) the Training Facility is
already suited for the needs of the Plan; (b) the purchase of the
Property would allow the Plan to maintain the Training Program at the
Training Facility notwithstanding Lodge 4's decision to terminate
operating the Training Facility; (c) using the Property to create a
regional training facility would meet the increasing demand for the
training of participants, including apprentices within the Western
States Area; (d) the purchase of the Property from Lodge 4 would allow
the Plan to pay the Property's fair market value without incurring any
commission costs or other expenses in connection with the purchase; and
(e) the Plan's continued use of the Property for training purposes
would provide additional benefits to participants and provide other
financial benefits to the Plan.\7\
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\6\ The Applicant represents that the Union Trustees recused
themselves from the vote to enter into the Proposed Transaction with
Lodge 4 on behalf of the Plan. The recusal is described in more
detail below.
\7\ The Department understands that the Plan would financially
benefit from the Transaction (and indirectly benefit the Plan's
participants and beneficiaries), because it (1) would not need to
pay for the removal of the Plan's specialized air venting system
from the Training Facility (the venting system is explained further
below) and (2) could relocate its administrative office to the
Property instead of paying for the Leased Office . The Applicant
also stated that participants would benefit by having the ability to
visit the Plan's administration office and training facilities at
the same location after the office is moved from the Leased Office
to the Property.
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[[Page 3925]]
11. On January 20, 2022, the Employer Trustees gave their approval
for the Plan to proceed with the purchase of the Property (the
Transaction), subject to the Department's grant of this exemption. The
Plan intends to purchase the Property from Lodge 4 within ninety (90)
days following the Department's grant of this exemption. The Applicant
represents that the Plan considered other possible locations and
properties for a regional center, but after consulting with various
service providers, it ultimately determined that purchasing the
Property was the most appropriate given the Plan's goals, as explained
below.
12. In connection with the Transaction, the Plan would pay the
lesser of: (i) the Property's fair market value of $920,000 identified
in the appraisal conducted on April 1, 2021; and (ii) the updated
appraised fair market value of the Property as determined by the
qualified independent appraiser on the purchase date. The Plan may
finance its purchase of the Property. In this regard, the exemption
prohibits the Plan from financing the acquisition of the Property with
any bank that has any pecuniary interest in, or that is owned, managed,
or controlled in any manner by a party in interest with respect to the
Plan as defined in ERISA section 3(14).
13. Lodge 4 and the Plan will each pay half of the costs associated
with this exemption, including but not limited to fees for qualified
independent fiduciary services, qualified independent appraiser
services, and legal fees for preparing the Plan's application to the
Department requesting the Exemption.\8\
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\8\ Matters pertaining to services being provided by the
independent fiduciary and independent appraiser with respect to the
Transaction, including their qualifications and independence, are
explained further below.
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14. ERISA Prohibited Transaction Analysis. Lodge 4 is an employee
organization whose members are covered by the Plan; therefore, it is a
party in interest to the Plan pursuant to ERISA section 3(14)(D).\9\
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\9\ ERISA section 3(14)(D) defines, in part, the term party in
interest to an employee benefit plan as ``an employee organization
any of whose members are covered by such plan.''
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15. ERISA section 406(a)(1)(A) prohibits a plan fiduciary from
causing the sale or exchange, or leasing, of property between a plan
and a party in interest. ERISA section 406(a)(1)(D) provides that a
plan fiduciary shall not cause the plan to engage in a transaction if
(1) that fiduciary knows or should know that such transaction
constitutes a direct or indirect transfer of any of the plan's assets
to a party in interest or (2) would result in the plan's assets being
used by or for the benefit of a party in interest.
16. The Plan's purchase of the Property from Lodge 4 in exchange
for the Plan's funds would constitute a prohibited sale and transfer of
Plan assets in violation of ERISA sections 406(a)(1)(A) and (D),
respectively.
17. Additionally, ERISA Section 406(b)(1) prohibits a plan
fiduciary from dealing with a plan's assets ``. . . in his own interest
or for his own account.'' ERISA Section 406(b)(2) prohibits a plan
fiduciary ``in his individual or in any other capacity [from acting] in
any transaction involving the plan on behalf of a party (or represent a
party) whose interests are adverse to the interests of the plan or the
interests of its participants or beneficiaries.''
18. The Union Trustees may have an interest in benefitting Lodge 4,
a party in interest to the Plan, because Lodge 4 is also a Boilermakers
Union lodge, and as such, it is affiliated with the Boilermakers Union.
Although the Applicant represents that the Union Trustees ``recused''
themselves from voting on the Plan's decision to enter into the
Transaction, whether the Union Trustees' recusal from any aspects of
the Transaction negates a violation of ERISA section 406(b)(1) or (2),
involves an inherently factual determination that is beyond the scope
of this exemption. Therefore, the Department cannot determine from the
record whether the Union Trustees sufficiently recused themselves from
engaging in the deliberations regarding of the Transaction or using
their positions to influence the Employer Trustees' decision to approve
the Transaction in order to determine definitively that there was no
violation of ERISA section 406(b)(1) or (b)(2). To the extent the Union
Trustees exercised any authority, control, or responsibility that make
them a fiduciary to cause the Plan to engage in the Transaction, they
would have violated ERISA Section 406(b)(1) and (b)(2), because the
Transaction would benefit Lodge 4, an entity in which the Union
Trustees have an interest and involve Union Trustees acting on behalf
of both the Plan and Lodge 4.\10\
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\10\ The Department notes that ``the prohibitions of section
406(b) supplement the other prohibitions of section 406(a) of
[ERISA] by imposing on parties in interest who are fiduciaries a
duty of undivided loyalty to the plans for which they act. These
prohibitions are imposed upon fiduciaries to deter them from
exercising the authority, control, or responsibility which makes
such persons fiduciaries when they have interests which may conflict
with the interests of the plans for which they act. In such cases,
the fiduciaries have interests in the transaction which may affect
the exercise of their best judgment as fiduciaries.'' See 29 CFR
2550.408b-2(e)(1).
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19. Applicant's Representations Regarding the Merits of the
Transaction. The Applicant represents that the Transaction would
benefit the Plan because the Training Facility is currently operated by
Lodge 4 to conduct trainings and the Plan would not have to make any
improvements or modifications to continue using it.\11\
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\11\ The Applicant explains that a reimbursement policy between
the Plan and Lodge 4 govern the Plan's reimbursement of Lodge 4 for
the direct costs that Lodge 4 incurs in conducting training (the
Reimbursement Policy) in accordance with ERISA section 408(b)(2).
Whether the Reimbursement Policy complies with the requirements of
ERISA section 408(b)(2) is an inherently factual inquiry that is
beyond the scope of this exemption and with respect to which the
Department offers no opinion.
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20. The Applicant represents that the Plan has also invested nearly
$600,000 in equipment at the Training Facility to equip 24 welding
stations, including installing a $250,000 custom ventilation system
designed to remove noxious fumes that are produced by the welding
machines. The Applicant states that the Plan still owns this equipment,
which is only used in connection with the training of participants by
Lodge 4 in connection with the provision of services to the Plan,
described in more detail below.\12\
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\12\ The costs for these pieces of equipment are not included as
part of the Property's value appraisal.
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21. The Applicant represents that the Transaction would benefit the
Plan because Lodge 4 intends to terminate its involvement with the
Training Facility. If Lodge 4 no longer runs the Training Facility, the
Plan could no longer provide training there. Furthermore, the Training
Facility is currently equipped with Plan-purchased equipment that is
used to provide training for participants. If Lodge 4 terminates its
involvement with the Training Facility and/or sells the Property, the
Plan would need to remove and relocate the equipment at significant
time and expense.
22. The Applicant represents that the Plan wants to create a
regional training center on the Property due to the transient nature of
the boilermaker trade and industry. The Property is centrally located
in the Southern portion of the Western States Area with convenient
[[Page 3926]]
access from New Mexico, Arizona, Southern Nevada, and Southern
California. The Property also is located on the edge of the Navajo
Nation reservation, which has traditionally been a large source of
apprenticeship participants in that area, making the Property a
convenient location to a segment of current and future apprenticeship
participants.
23. The Applicant represents further that the Transaction would
benefit the Plan, because the Property will become the site for the
Plan's administrative headquarters. If the Plan moves its
administrative headquarters to the Property, the Leased Office will no
longer be needed. Additionally, co-locating the Plan's administrative
offices at the Training Facility will facilitate the Plan staff's
ability to monitor the Training Facility and interact with
apprenticeship and journeyperson participants.
24. The Applicant represents that the Plan would also benefit from
the Transaction because the Property provides flexibility for expansion
as the number of Boilermaker apprentices continues to grow and
significant space for: (a) large training sessions where there are
numerous vehicles and recreational vehicles utilized by participants;
(b) outdoor training components such as training involving a rigging
tower; and (c) expansion of training facilities and/or demonstrations.
25. The Property's Appraisal. The Property was appraised at
$920,000 by an independent appraiser (Qualified Independent
Appraiser).\13\ The exemption's conditions for relief require the
appraisal to be updated by the Qualified Independent Appraiser to
reflect the fair market value of the Property on the Transaction's
closing date. The Plan does not expect that the cost to update the
appraisal will exceed $3,750.
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\13\ See Paragraphs 29-32 of the Proposed Exemption for
information regarding the independent appraiser retained by the
Plan, at 89 FR 87604.
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26. The Independent Fiduciary. Wagner Law Group was retained by the
Plan to serve as the Plan's independent fiduciary with respect to the
Proposed Transaction (Wagner).\14\ The Proposed Exemption describes
Wagner's conclusions regarding the Proposed Transaction. In this
regard, Wagner opined that the Proposed Transaction for a price of the
lesser of $920,000 or the Property's appraised value on the date of
sale, under the terms and conditions required by the exemption, would
be in the best interest and protective of the rights of the Plan's
participants and beneficiaries.\15\
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\14\ See Paragraphs 33-36 of the Proposed Exemption for
information regarding the selection of Wagner as the Plan's
independent fiduciary, at 89 FR 87604.
\15\ Wagner's conclusions are described in Paragraphs 37-43 of
the Proposed Exemption at 89 FR 87604-05. Among other things, Wagner
noted that the Plan already owns the training equipment currently
housed at the Training Facility, and removing and relocating this
equipment to another location would be extremely costly. Because of
this, the Plan will receive significant cost savings by purchasing
the Property as compared to purchasing a comparable facility and
having to pay to relocate this equipment or purchase new equipment
to furnish the new facility.
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27. Protective Conditions. In addition to the conditions mentioned
above, this exemption requires the parties' adherence to the protective
conditions that are summarized below.\16\
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\16\ The Department notes that this is a summary of the
conditions intended for the convenience of a reader; however, the
governing conditions for the transaction are those reflected in
Section III of the exemption.
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28. The Transaction must be a one-time transaction in which the
Plan pays the lesser of the Property's fair market value of $920,000 or
an updated appraised value to be determined on the date of purchase,
subject to cost sharing allocations regarding the cost for this
exemption. The updated appraisal must be provided to the Department and
will be made a part of the administrative record for this exemption's
application.
29. Acting as the Plan's independent fiduciary, Wagner must:
(a) Determine that the Transaction is in the interest of and
protective of the rights of the Plan and its participants and
beneficiaries;
(b) Determine whether it is prudent for the Plan to proceed with
the Transaction;
(c) Review, negotiate, and approve the terms and conditions of the
Transaction;
(d) Represent the Plan's interests in connection with the
Transaction, including monitoring the parties' compliance with terms of
the contract of sale and the closing contract, enforcing the Plan's
rights under the contract of sale and the closing contract, and
ensuring the satisfaction of all preconditions for the Plan's purchase
of the Property, including the terms of the financing from an unrelated
third-party bank;
(e) Monitor the Transaction to ensure that all conditions in the
exemption are met and take whatever actions are necessary to protect
the rights of the Plan and its participants and beneficiaries in the
Transaction;
(f) Review the Appraisal Report and confirm that the underlying
methodology is reasonable and accurate such that the valuation of the
Property was reasonably derived;
(g) Ensure that the Appraisal Report is based on complete, current,
and accurate information; the appraiser was prudently selected; the
methodology used by the Qualified Independent Appraiser is consistent
with sound valuation principles; and that it is reasonable under the
circumstances to rely upon the Appraisal Report, as updated, to
determine the fair market value of the Property as of the date of the
transaction; and
(h) Not have entered into, or must not enter into, any agreement or
instrument that violates either ERISA Section 410, or the Department's
Regulations codified at 29 CFR 2509.75-4; \17\
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\17\ ERISA section 410 provides, in part, that ``except as
provided in ERISA sections 405(b)(1) and 405(d), any provision in an
agreement or instrument which purports to relieve a fiduciary from
responsibility or liability for any responsibility, obligation, or
duty under this part [meaning Part 4 of Title I of ERISA] shall be
void as against public policy.''
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30. Furthermore, Wagner must not have entered into, and must not
enter into, any agreement, arrangement, or understanding that includes
any provision that provides for the direct or indirect indemnification
or reimbursement of Wagner by the Plan or other party for any failure
to adhere to its contractual obligations or to state or Federal laws
applicable to Wagner's work; or waives any rights, claims, or remedies
of the Plan under ERISA, state, or Federal law against Wagner with
respect to the Transaction;
31. The Qualified Independent Appraiser must not have entered into,
and must not enter into, any agreement, arrangement, or understanding
that includes any provision that provides for the direct or indirect
indemnification or reimbursement of the Qualified Independent Appraiser
by the Plan or any other party for any failure to adhere to its
contractual obligations or to state or Federal laws applicable to the
Qualified Independent Appraiser's work. The Plan also must not waive
any rights, claims or remedies of the Plan or its participants and
beneficiaries under ERISA, the Code, or other Federal and state laws
against the Qualified Independent Appraiser with respect to the
Transaction.
32. The Employer Trustees but not the Union Trustees must determine
that the Transaction is prudent and in the Plan's interest to proceed
with the Transaction; the Union Trustees cannot participate or in any
way influence the Employer Trustees' determination.
33. The terms and conditions of the Transaction must be at least as
favorable
[[Page 3927]]
to the Plan as the terms and conditions the Plan would have received in
an arm's length transaction between unrelated and independent parties.
The Transaction must not be part of an agreement, arrangement, or
understanding designed to benefit Lodge 4.
34. The conditions for relief also require that any mortgage loan
secured by the Plan to purchase the Property must be approved by the
Qualified Independent Fiduciary, and its monthly payments must not
exceed $10,000. Further, the collateral for such loan must be limited
to a first mortgage lien and assignment of lease and rents on the
Property. Finally, the Plan may not obtain a mortgage loan from a bank
that has any pecuniary interest in, or is owned, managed, or controlled
in any degree by any party in interest with respect to the Plan as
defined in ERISA section 3(14).
35. The Plan must not pay any commissions, costs, or other expenses
in connection with the Transaction, and Lodge 4 must pay half of the
costs associated with the exemption including but not limited to fees
for Wagner's services, fees for Qualified Independent Appraiser
services, and fees for preparing the Plan's application to the
Department requesting this exemption (but not including the actual
purchase price of the Property).
36. No later than 30 days after the Transaction is completed,
Wagner must submit to the Department a written certification that all
of the conditions of the exemption have been met. Wagner must also
provide a statement of its determination that the Transaction is in the
interests of the Plan and of its participants and beneficiaries
explaining the reasons on which its determination is based.
37. This relief under this exemption is also subject to a
recordkeeping requirement, and a requirement for all the material facts
and representations set forth in the Summary of Facts and
Representations to be true and accurate at all times.
Written Comments Received Regarding the Proposed Exemption
38. In the Proposed Exemption, the Department invited all
interested persons to submit written comments and/or requests for a
public hearing with respect to such notice, which comment period ended
on December 19, 2024. The Department did not receive any comments and
it did not receive any hearing requests.
39. The complete application file (L-12069) is available for public
inspection in the Public Disclosure Room of the Employee Benefits
Security Administration, Room N-1515, U.S. Department of Labor, 200
Constitution Avenue NW, Washington, DC, 20210, reachable by telephone
at (202) 693-8673. For a more complete statement of the facts and
representations supporting the Department's decision to grant this
exemption, please refer to the notice of proposed exemption published
on November 4, 2024, at 89 FR 87600.
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 ERISA section 408(a) does not relieve a fiduciary or other party
in interest from certain requirements of other ERISA provisions,
including but not limited to any prohibited transaction provisions to
which the exemption does not apply and the general fiduciary
responsibility provisions of ERISA section 404, which, among other
things, require a fiduciary to discharge their duties respecting the
plan solely in the interest of the plan's participants and
beneficiaries and in a prudent fashion in accordance with ERISA section
404(a)(1)(B).
(2) As required by ERISA section 408(a), the Department hereby
finds that the exemption is: (a) administratively feasible for the
Department; (b) in the interests of the Plan and the Plan's
participants and beneficiaries; and (c) protective of the rights of the
Plan and the Plan's participants and beneficiaries.
(3) This exemption is supplemental to, and not in derogation of,
any other ERISA provisions, 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 for determining whether the transaction is in fact a
prohibited transaction.
(4) The availability of this exemption is subject to the express
condition that the material facts and representations contained in the
application accurately describe all material terms of the transactions
that are the subject of the exemption and are true at all times.
Accordingly, after considering the entire record developed in
connection with the Applicant's exemption application, the Department
has determined to grant the following exemption under the authority of
ERISA section 408(a) in accordance with the Department's exemption
procedures set forth in 29 CFR part 2570, subpart B at 76 FR 66637,
66644 (October 27, 2011).
Exemption
Section I. Definitions
(a) The term ``Qualified Independent Fiduciary'' means the Wagner
Law Group, and any of its employees that provide any fiduciary service
to the Plan in respect to this exemption; or such other ``qualified
independent fiduciary'' as defined under 29 CFR part 2570, subpart B,
as updated from time to time.
(b) The term ``Qualified Independent Appraiser'' means Accurity
Morley & McConkie, LC, and any of its employees that provide any
appraisal related service to the Plan in connection with this
exemption.
(c) The term ``Mortgage Loan'' means a mortgage loan from an
independent, third-party bank consisting of a five-year term with
payments based on 20-year amortization, ballooning at maturity, or such
other mortgage loan prudently entered into by the Independent Fiduciary
on behalf of the Plan.
Section II. Transactions
The restrictions of ERISA Sections 406(a)(1)(A), (D), and 406(b)(1)
and (2) shall not apply to the purchase of the improved real property
located at 294 Cowboy Ray Road, Page, Arizona (the Property), by the
Boilermakers Western States Apprenticeship Fund's (the Plan) from the
``Navajo Nation'' Lodge 4 of the International Brotherhood of
Boilermakers, Iron Ship Builders, Blacksmith, Forgers, and Helpers
(Lodge 4), a party in interest with respect to the Plan (the Purchase);
provided that the conditions in Section III are satisfied.
Section III. Conditions
(a) The Purchase is a one-time transaction for the lesser of
$920,000 in cash or an updated appraised value to be determined by the
Qualified Independent Appraiser as of the Purchase's closing date (the
Price). The updated report from the Qualified Independent Appraiser
must be submitted to the Department within 30 days before the date the
Purchase is completed for inclusion in the record for this exemption's
application;
(b) Approval of the Purchase must be made solely by Plan trustees
that are not, and were not, appointed by a labor union that is
affiliated with the International Brotherhood of Boilermakers, and such
Plan trustees must prudently determine in a writing that the Purchase
is in the Plan's best interest. Such non-union appointed Plan trustees
must have considered other possible locations and properties that were
unrelated to Lodge 4 prior to determining that the Purchase is the most
appropriate given the Plan's goals.
[[Page 3928]]
Any trustee appointed by a labor union that is affiliated with the
International Brotherhood of Boilermakers cannot participate or in any
way influence a non-union appointed Plan trustee;
(c) The Plan must retain the services of a Qualified Independent
Fiduciary and the Qualified Independent Fiduciary must prudently:
(1) Determine that the Purchase is in the interest of, and
protective of, the Plan and the Plan's participants;
(2) Determine whether it is prudent for the Plan to proceed with
the Purchase;
(3) Review, negotiate, and approve the terms and conditions of the
Purchase;
(4) Represent the Plan's interests in connection with the Purchase,
including monitoring the parties' compliance with terms of the sales
contract and the closing contract, enforcing the Plan's rights under
the sale contract and closing contract, and ensuring the satisfaction
of all conditions precedent to complete the Purchase, including the
terms of the Mortgage Loan;
(5) Monitor to ensure that all of the conditions in this exemption
are met and take whatever actions are necessary to protect the rights
of the Plan and its participants and beneficiaries with respect to the
Purchase;
(6) Review the Qualified Independent Appraisal Report and confirm
that the underlying methodology is reasonable and accurate and that the
valuation of the Property was reasonably derived;
(7) Ensure that the Qualified Independent Appraisal Report is based
on complete, current, and accurate information; the Qualified
Independent Appraiser was prudently selected; the methodology used by
the Qualified Independent Appraiser is consistent with sound valuation
principles; and that it is reasonable under the circumstances to rely
upon the Qualified Independent Appraisal's report to determine the fair
market value of the Property as of the date of the Purchase; and
(8) Not have entered into, and must not enter into, any agreement
or instrument that violates either ERISA section 410, or the
Department's Regulations codified at 29 CFR 2509.75-4;
(d) The terms and conditions of the Purchase must be at least as
favorable to the Plan as the terms and conditions the Plan would have
received in an arm's length transaction with an unrelated and
independent party, each of which had full knowledge of the relevant
facts, and neither of which were under any compulsion to buy or sell;
(e) The Purchase must not be part of an agreement, arrangement, or
understanding designed to benefit Lodge 4 or the International
Brotherhood of Boilermakers;
(f) In the event the Purchase is financed with a Mortgage Loan,
then the Mortgage Loan must be approved by the Qualified Independent
Fiduciary, and its monthly payments must not exceed $10,000;
(g) The Mortgage Loan collateral is limited to a first mortgage
lien and assignment of lease and rents on the Property. The Plan may
not obtain a Mortgage Loan from a bank that has any pecuniary interest
in, or is owned, managed, or controlled in any degree by any party in
interest with respect to the Plan as defined in ERISA section 3(14);
(h) The Plan must not pay any commissions, costs, or other expenses
in connection with the Purchase subject to the cost sharing allocations
regarding the cost for this exemption as provided below in paragraph
(i);
(i) Lodge 4 and the Plan must each pay half of the costs associated
with the exemption including but not limited to fees for Qualified
Independent Fiduciary services, fees for Qualified Independent
Appraiser services, and fees for preparing the Plan's application to
the Department requesting this exemption, but not including the Price;
(j) The Qualified Independent Fiduciary must not have entered into,
and must not enter into, any agreement, arrangement, or understanding
that includes any provision that provides for the direct or indirect
indemnification or reimbursement of the Qualified Independent Fiduciary
by the Plan or other party for any failure to adhere to its contractual
obligations or to state or Federal laws applicable to the Qualified
Independent Fiduciary's work; or that waives any rights, claims, or
remedies of the Plan under ERISA, state, or Federal law against the
Qualified Independent Fiduciary with respect to the Purchase;
(k) The Qualified Independent Appraiser must not have entered into,
and must not enter into, any agreement, arrangement, or understanding
that includes any provision that provides for the direct or indirect
indemnification or reimbursement of the Qualified Independent Appraiser
by the Plan or any other party for any failure to adhere to its
contractual obligations or to state or Federal laws applicable to the
Qualified Independent Appraiser's work; or that waives any rights,
claims or remedies of the Plan or its participants and beneficiaries
under ERISA, the Code, or other Federal and state laws against the
Qualified Independent Appraiser with respect to the Purchase;
(l) The Plan's trustees and the Qualified Independent Fiduciary
maintain for a period of six (6) years from the date of any transaction
related to the Purchase, in a manner that is convenient and accessible
for audit and examination, the records necessary to enable the persons
described in paragraph (m)(1) below to determine whether conditions of
this exemption have been met, except that (i) a prohibited transaction
will not be considered to have occurred if, due to circumstances beyond
the control of the Plan's trustees and/or the Qualified Independent
Fiduciary, the records are lost or destroyed prior to the end of the
six-year period, and (ii) no party in interest other than the Plan's
trustees or the Qualified Independent Fiduciary shall be subject to the
civil penalty that may be assessed under ERISA section 502(i) if the
records are not maintained, or are not available for examination as
required by paragraph (n) below; and
(m)(1) Except as provided in section (2) of this paragraph and not
withstanding any provisions of subsections (a)(2) and (b) of ERISA
Section 504, the records referred to in paragraph (l) above shall be
unconditionally available at their customary location during normal
business hours to:
(i) any duly authorized employee or representative of the
Department or the Internal Revenue Service;
(ii) the Plan's trustees or any duly authorized representative of
the Plan's trustees;
(iii) the Qualified Independent Fiduciary or any duly authorized
representative of the Qualified Independent Fiduciary;
(iv) any participant or beneficiary of the Plan, or any duly
authorized representative of such participant or beneficiary;
(2) Should Lodge 4 or any party refuse to disclose information to a
person on the basis that such information is exempt from disclosure,
such party shall provide a written notice advising that person of the
reasons for the refusal and that the Department may request such
information by the close of the thirtieth (30th) day following the
request;
(n) Within 30 calendar days after the Property is purchased, the
Qualified Independent Fiduciary must provide to the Department a
written certification that all of this exemption's conditions have been
met and must provide to the Department the Statement documenting its
conclusion that the Proposed Transaction is in the Plan's best
interest; and
[[Page 3929]]
(o) All the material facts and representations set forth in the
Proposed Exemption's Summary of Facts and Representations are true and
accurate at all times.
Exemption Date: This exemption is in effect as of January 15, 2025.
Signed at Washington, DC.
George Christopher Cosby,
Director, Office of Exemption Determinations, Employee Benefits
Security Administration, U.S. Department of Labor.
[FR Doc. 2025-00810 Filed 1-14-25; 8:45 am]
BILLING CODE 4510-29-P
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</html>Indexed from Federal Register on January 15, 2025.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.