Notice2026-03827
Exemption Involving the International Union of Operating Engineers Local Union 627 Training Fund of Oklahoma (the Plan or the Applicant) Located in Oklahoma City, OK
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
February 26, 2026
Effective
February 26, 2026
Issuing agencies
Labor DepartmentEmployee Benefits Security Administration
Abstract
This document provides notice of an individual exemption from certain prohibited transaction restrictions of the Employee Retirement Income Security Act of 1974 (ERISA) and/or the Internal Revenue Code of 1986 (the Code). This exemption permits certain loans (the Loans) by the International Union of Operating Engineers Local Union 627 (Local 627) to the Plan, so the Plan can purchase heavy machinery.
Full Text
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<title>Federal Register, Volume 91 Issue 38 (Thursday, February 26, 2026)</title>
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[Federal Register Volume 91, Number 38 (Thursday, February 26, 2026)]
[Notices]
[Pages 9642-9645]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-03827]
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DEPARTMENT OF LABOR
Employee Benefits Security Administration
[Prohibited Transaction Exemption No. 2026-02; Application No. L-12004]
Exemption Involving the International Union of Operating
Engineers Local Union 627 Training Fund of Oklahoma (the Plan or the
Applicant) Located in Oklahoma City, OK
AGENCY: Employee Benefits Security Administration, Labor.
ACTION: Notice of exemption.
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SUMMARY: This document provides notice of an individual exemption from
certain prohibited transaction restrictions of the Employee Retirement
Income Security Act of 1974 (ERISA) and/or the Internal Revenue Code of
1986 (the Code). This exemption permits certain loans (the Loans) by
the International Union of Operating Engineers Local Union 627 (Local
627) to the Plan, so the Plan can purchase heavy machinery.
DATES: Exemption date: This final exemption will be in effect as of
February 26, 2026.
FOR FURTHER INFORMATION CONTACT: Nicholas Schroth, Office of Exemption
Determinations, Employee Benefits Security Administration, U.S.
Department of Labor, (202) 693-8571 (this is not a toll-free number).
SUPPLEMENTARY INFORMATION: The Plan previously submitted an exemption
application to the Department requesting permission to engage in the
Loans and to grant a security interest in the heavy machinery purchased
by the Plan pursuant to the Loans (the Covered Transactions). In the
application, the Plan stated that, among other things: (1) the Loans
would have an interest rate set at two percentage points below the U.S.
Prime lending rate, where such rate would not be lower than 1% or
higher than 3%; and (2) the Plan would be represented by an independent
fiduciary for all purposes with respect to the Loans.
After reviewing the Plan's application for an exemption, the
Department tentatively determined that the Covered Transactions would
be in the interest of, and protective of, the Plan and its participants
and beneficiaries, and would also be administratively feasible. On
September 10, 2025, the Department published a proposed exemption that
would permit the Covered Transactions subject to certain conditions
(the Proposed Exemption).\1\ The Proposed Exemption invited interested
persons to submit comments and hearing requests (where appropriate) to
the Department regarding the Proposed Exemption. No comments or hearing
requests were received by the Department.
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\1\ See 90 FR 436535.
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Based on the record and representations made by the Applicant, the
Department has determined to grant the Proposed Exemption. The
exemption contains certain minor, non-substantive edits that more
clearly define certain capitalized terms set forth in the Proposed
Exemption. The terms of the exemption are set forth in Sections I and
II below.
The Department makes the requisite findings under ERISA section
408(a) that the exemption is: (1) administratively feasible for the
Department, (2) in the interest of the Plan and its participants and
beneficiaries, and (3) protective of the rights of the participants and
beneficiaries of the Plan, based on the Applicant's adherence to all
the conditions and definitions of the exemption at all times.
Accordingly, affected parties should be aware that the conditions and
definitions incorporated in this exemption are, taken individually and
as a whole, necessary for the Department to grant the relief requested
by the Applicant. This
[[Page 9643]]
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.
The complete application file (L-12004) will remain 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 Proposed Exemption.
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 other provisions of ERISA, including 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 participants
and beneficiaries of the plan 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 (1) administratively feasible for the
Department, (2) in the interests of affected plans and of their
participants and beneficiaries, and (3) protective of the rights of
participants and beneficiaries of such plans;
(3) The 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 of determining whether the transaction is in fact a
prohibited transaction; and
(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.
Exemption \2\
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\2\ The Department notes that the availability of this exemption
is subject to the express condition that the material facts and
representations contained in the above referenced proposed exemption
and the application L-12004 are true and complete at all times, and
accurately describe all material terms of the transactions covered
by the exemption. If there is any material change in a transaction
covered by the exemption, or in a material fact or representation
described in the application, the exemption will cease to apply as
of the date of the change.
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The Department grants this exemption under the authority of ERISA
section 408(a), and in accordance with the procedures set forth in the
exemption procedure regulation.\3\
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\3\ 29 CFR part 2570, subpart B (76 FR 66637, 66644, October 27,
2011).
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Section I. Covered Transactions
If the conditions in Section II are met, the restrictions of ERISA
sections 406(a)(1)(A), (B), and (D), 406(b)(1), and 406(b)(2) will not
apply to: one or more loans (the Loan(s)) by the International Union of
Operating Engineers Local Union 627 (Local 627) to the International
Union of Operating Engineers Local Union 627 Training Fund of Oklahoma
(the Plan) for the Plan's purchase of heavy machinery equipment that
will solely be used in the Plan's apprenticeship training (the
Equipment); the Plan's repayment of the Loan(s) to Local 627; and the
Plan's grant to Local 627 of a security interest in the Equipment,
provided the conditions set forth in Section II are met.
Section II. Conditions
(a) The terms and conditions of each Loan are at least as favorable
to the Plan and its participants and beneficiaries as the terms and
conditions that the Plan could have obtained in an arm's-length
transaction with an unrelated third party;
(b) The proceeds of each Loan are used solely for the Plan's
acquisition of a specific piece of Equipment;
(c) The determination to enter into a Loan on behalf of the Plan
must be made by a qualified independent fiduciary prudently selected by
the Employer Trustees \4\ (the Independent Fiduciary);
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\4\ The term ``Employer Trustees'' refers to individuals who are
appointed to serve on the board of trustees for the Plan by
employers who are signatories to the related collective bargaining
agreement.
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(d) The interest rate on each Loan must be two (2) percentage
points below the U.S. Prime Lending Rate, provided that the interest
rate for any Loan will be not less than one (1) percent nor greater
than three (3) percent;
(e) At the time a Loan is entered into, the interest rate on the
Loan must not be greater than the interest rate on a substantially
similar loan that could be obtained from an unrelated, third-party
lender;
(f) With respect to each Loan, the Plan will not pay any fees or
expenses, including any prepayment penalty, in connection with the
Loan, or be subject to payment of any other amounts other than
principal and interest, except that the Plan may pay direct expenses
reasonably incurred by the Independent Fiduciary and the Independent
Appraiser \5\ in the performance of their duties;
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\5\ The term ``Independent Appraiser'' is defined in Section
II(l), below.
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(g) Each Loan must be secured solely with the Equipment purchased
with the Loan's proceeds. If the Plan defaults on a Loan, then 30 days
after prior written notice delivered to the Employer Trustees, Local
627 may declare the entire Loan immediately due and payable or commence
proceedings to repossess the underlying Equipment securing the
defaulted Loan. However, in such an event, the Plan will not be liable
for any costs or expenses associated with the repossession of the
Equipment, including legal fees, administrative fees, or expenses
related to relocating any Equipment, and the Plan will not be liable
for any amount remaining on the Loan. The terms of each Loan must
provide that, if the Equipment that is the subject of the Loan is
repossessed by Local 627 consistent with the terms of this exemption,
and the Independent Fiduciary determines that the fair market value of
the Equipment exceeds the Loan balance, then Local 627 must pay the
Plan such excess within 30 days of the repossession;
(h) The trustees appointed by the employers of members of Local
627, which are signatories to the agreement establishing the Plan
(collectively, or individually, the Employer Trustee(s)) must
unanimously determine in accordance with their fiduciary duties of
loyalty and prudence, in writing, that the Loan program complies with
the terms of this exemption, is an appropriate means to finance the
purchase of the Equipment and is in the best interests of the Plan and
its participants and beneficiaries;
(i) The trustees appointed by Local 627 (collectively, or
individually, the Union Trustee(s)) will not play any role in the
operation of the Loan program and will not participate in any
discussion or vote regarding the Loan
[[Page 9644]]
program, except for the termination of the Loan program;
(j) The Independent Fiduciary represents that they understand and
accept the duties and responsibilities to act as a fiduciary under
ERISA when acting as a fiduciary on behalf of the Plan. The Independent
Fiduciary must also perform the following tasks:
(1) Review the needs, assets and mission of the Plan, and determine
that it is prudent for the Plan to enter into each Loan;
(2) Negotiate (if appropriate) and approve the terms and conditions
of each Loan;
(3) Determine that the terms of each Loan are in the interests of,
and protective of, the Plan and the Plan's participants or
beneficiaries;
(4) Continuously represent the Plan's interests for all purposes
with respect to each Loan, including:
(A) monitoring the Loan to ensure that the parties adhere to the
terms and conditions of each Loan agreement;
(B) enforcing the Plan's rights under a Loan's terms and the Loan
Procedures; \6\
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\6\ The term ``Loan Procedures'' is defined in Section II(n),
below.
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(C) taking appropriate steps to ensure that participation in the
Loan program remains in the best interest of the Plan and its
participants and beneficiaries; and
(D) monitoring the Equipment to ensure its usage is consistent with
the mission of the Plan;
(5) Ensure and verify that all the conditions of this exemption
continue to be met;
(6) Notify the Department by email at <a href="/cdn-cgi/l/email-protection#395c14767c7d795d5655175e564f"><span class="__cf_email__" data-cfemail="d0b5fd9f959490b4bfbcfeb7bfa6">[email protected]</span></a> upon
discovering any conduct that violates the conditions for the exemption
within seven (7) calendar days of the discovery, describing the conduct
involved and steps taken or intended to be taken by the Independent
Fiduciary to remedy the breach; and
(7) Annual Summary Reporting: Prepare a written report at the end
of each calendar year containing a summary of any new and outstanding
Loans made under the Loan program, including but not limited to a
description of the Equipment purchased using proceeds from such Loans;
and a certification that the Independent Fiduciary determined, in
accordance with its fiduciary duties under ERISA, that any new and
outstanding Loans: (a) are necessary for the Plan's operation; (b) are
on more favorable terms (including lower overall cost) to the Plan than
those offered by a third-party lender for a comparable loan; (c) were
entered into for the benefit of the Plan and not Local 627; and (d)
meet all the requirements of the Loan Procedures and this exemption.
The Annual Summary Report must be delivered to the Department and the
Plan's trustees no later than March 31st of the year that immediately
follows the year to which the Annual Summary Report corresponds. The
Annual Summary Report must also describe any amendment to the Loan
Procedures;
(k) The Independent Fiduciary's engagement agreement to provide
services in connection with any transaction described in this exemption
must not: (1) contain any provisions that violate ERISA section 410;
(2) include any provision that provides for the direct or indirect
indemnification or reimbursement of the 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 Independent
Fiduciary's work; (3) or waive any rights, claims, or remedies of the
Plan under ERISA, state, or Federal law against the Independent
Fiduciary with respect to any transaction described in this exemption;
(l) The Independent Fiduciary has sole authority to retain the
services of a qualified independent appraiser (the Independent
Appraiser), if necessary, to value any of the Plan's Equipment (or
parts of Equipment) that need to be purchased or replaced, provided
that any such Independent Appraiser must meet the Department's
definition for a qualified independent appraiser as provided in the
Department's regulation codified at 29 CFR 2570.31(i) (as amended).
Furthermore, the Independent Appraiser retained by the Independent
Fiduciary may not enter into any agreement, arrangement or
understanding with the Plan, or with the Independent Fiduciary on
behalf of the Plan, that includes any provision that: (1) provides for
the direct or indirect indemnification or reimbursement of Independent
Appraiser by the Plan or another party for any failure to adhere to its
contractual obligations or to state or Federal laws applicable to the
Independent Appraiser's work; or (2) 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 Independent
Appraiser with respect to the transaction(s) that are the subject of
the exemption;
(m) Termination of the Independent Fiduciary. The Employer Trustees
must provide the Department with notice of the termination of the
Independent Fiduciary's services contract for any reason within 15
business days after the Employer Trustees have knowledge of such
termination. The Employer Trustees must notify the Department before
retaining the services of a new Independent Fiduciary and entering into
any Loan approved by such new Independent Fiduciary, and must provide a
written report to the Department describing the methodology used by the
Employer Trustees to select such Independent Fiduciary containing the
information required by the Department's exemption procedure regulation
at 29 CFR 2570.34(d) (as amended), including a certification that
neither the proposed new Independent Fiduciary nor any entity related
to such new Independent Fiduciary has a prior or current relationship
with the Plan or Local 627. The Independent Fiduciary will be deemed
approved by the Department within 10 business days unless the
Department objects by electronic mail within such time period. The
Department may approve or object to the proposed new Independent
Fiduciary in its sole discretion based on factors established in the
Department's regulation codified at 29 CFR 2570.31(j) (as amended);
(n) The Loan program is governed by a written set of procedures
(Loan Procedures) requiring that:
(1) The terms of each Loan comply with the provisions of this
exemption;
(2) Each Loan and each repayment of a Loan comply with the terms of
the Loan program and the Loan Procedures;
(3) The Loan Procedures may be amended by the Employer Trustees if
the amendment is consistent with this exemption and approved by the
Independent Fiduciary, and the Independent Fiduciary may also propose
to amend the Loan Procedures consistent with the terms of this
exemption, in consultation with the Employer Trustees, to facilitate
compliance with its obligations under the exemption; and
(4) The Loan program may be terminated by a majority vote of the
Plan's Trustees after paying off all outstanding Loans between the Plan
and Local 627, unless the Plan is prudently required to terminate the
Loan program immediately, which termination may be by majority vote of
the Employer Trustees only. Unless the Employer Trustees immediately
terminate the Loan program, the Plan will provide Local 627 with 90
days' advance written notice of the Plan's intent to cease the Loan
program and Local 627 must provide the Plan with 180 days' advance
written notice of its intent to stop issuing Loans under the Loan
program;
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(o) All the material facts and representations set forth in the
Summary of Facts and Representations as set forth in the Proposed
Exemption for Certain Prohibited Transactions Involving the
International Union of Operating Engineers Local Union 627 Training
Fund of Oklahoma \7\ are true and accurate at all times; and
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\7\ See 90 FR 43635 (September 10, 2025).
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(p) The Plan will maintain, for six (6) years beginning immediately
following any conduct that is taken in relation to any transaction that
is detailed above in Section I, all records necessary to demonstrate
that the conditions of this exemption have been met and make such
records available to the Department within 30 calendar days of the
Department's request.
Exemption date: The exemption will be in effect as of the date the
grant notice is published in the Federal Register.
Signed at Washington, DC, this 17th day of February 2026.
Christopher Motta,
Acting Director, Office of Exemption Determinations, Employee Benefits
Security Administration, U.S. Department of Labor.
[FR Doc. 2026-03827 Filed 2-25-26; 8:45 am]
BILLING CODE 4510-29-P
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</html>Indexed from Federal Register on February 26, 2026.
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.