Exemption for Certain Prohibited Transactions Involving Mid-America Carpenters Regional Council Apprentice and Training Fund (the Fund or Applicant) Located in St. Louis, Missouri

Issuing agencies

Abstract

This exemption permits the sale by the Fund of real property to the Mid-America Carpenters Regional Council (the Sale). Without this exemption, the Sale would be prohibited by the Employee Retirement Income Security Act of 1974 (ERISA).

Full Text

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<title>Federal Register, Volume 91 Issue 161 (Friday, August 21, 2026)</title>
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[Federal Register Volume 91, Number 161 (Friday, August 21, 2026)]
[Notices]
[Pages 54380-54383]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-17144]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration

[Prohibited Transaction Exemption 2026-06; Application No. L-12103]


Exemption for Certain Prohibited Transactions Involving Mid-
America Carpenters Regional Council Apprentice and Training Fund (the 
Fund or Applicant) Located in St. Louis, Missouri

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Notice of exemption.

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SUMMARY: This exemption permits the sale by the Fund of real property 
to the Mid-America Carpenters Regional Council (the Sale). Without this 
exemption, the Sale would be prohibited by the Employee Retirement 
Income Security Act of 1974 (ERISA).

DATES: Exemption date: This final exemption will be in effect as of the 
date of publication in the Federal Register.

FOR FURTHER INFORMATION CONTACT: Ms. Blessed Chuksorji-Keefe, Office of 
Exemption Determinations, Employee Benefits Security Administration, 
U.S. Department of Labor, <a href="/cdn-cgi/l/email-protection#72311a0719011d00181b5c301e170101171632161d1e5c151d04"><span class="__cf_email__" data-cfemail="86c5eef3edf5e9f4ecefa8c4eae3f5f5e3e2c6e2e9eaa8e1e9f0">[email&#160;protected]</span></a>.

SUPPLEMENTARY INFORMATION: 
    The Exemption: The exemption permits the Sale of 1.13 acres of 
improved real property (the Parcel), which is a portion of a 5.67-acre 
parcel of real property located at 8955 E Terrace, Kansas City, 
Missouri (the Real Property), by the Fund to the Mid-America Carpenters 
Regional Council (MACRC).\1\ The MACRC will pay the estimated value of 
both the Parcel and the wellness center ($3.4 million) to the Fund and 
the MACRC will receive a credit for approximately $3.18 million that 
the MACRC spent on construction costs, resulting in approximately 
$220,000 of net proceeds being received by the Fund at closing.\2\
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    \1\ The MACRC is an ``employee organization'' within the meaning 
of ERISA section 3(4), and it is therefore a party in interest 
within the meaning of ERISA section 3(14)(D) with respect to the 
Fund.
    \2\ The value of the Parcel will be updated by an independent 
appraiser on the date of the sale, and the Fund will receive the 
greater of such price or $220,000.
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    Benefits of the Exemption: The Sale will permit the Fund to earn 
$220,000 for the Parcel, which is at least $50,000 more in net value 
(approximately) than originally offered by the MACRC. Furthermore, the 
Fund and the MACRC entered into a lease agreement (the Lease Agreement) 
on January 31, 2023, pursuant to which the MACRC leases the Parcel 
(including the wellness center and any other buildings on the Parcel) 
from the Fund in exchange for: (1) a one-time payment of past-due rent 
plus interest and penalties in an amount equal to $50,666; and (2) the 
payment of $252,125 per year subject to annual escalations of two 
percent per year. By the time the Sale occurs, the Fund will have 
received $640,225.62 to $705,803.34 in rent plus interest and 
penalties.\3\
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    \3\ The potential payments to be received assumes the Sale will 
occur as soon as August 2026 or as late as November 2026.
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Comments Received

    On August 22, 2025, the Department published a notice of proposed 
exemption in the Federal Register at 90 FR 41125, August 22, 2025 
(Proposed Exemption). In the Proposed Exemption, the Department invited 
all interested persons to submit written comments and requests for a 
public hearing with respect to the Proposed Exemption by October 6, 
2025. The Department received two written comments and a request for a 
public hearing from one individual (the Commenter).\4\
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    \4\ All information submitted by the Applicant to the Department 
in connection with this exemption is available through the 
Department's Public Disclosure Room, by referencing Application No. 
L-12103.
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    The Department declines to hold a hearing because the Commenter did 
not raise any factual issues that cannot be fully explored through the 
submission of written evidence, nor did the Commenter provide a 
statement of how the person would be materially affected by the 
exemption or a general description of the evidence to be presented at 
the hearing.\5\ The issues raised by the Commenter and the Applicant's 
responses are described below.\6\
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    \5\ See 29 CFR 2570.46(a), (b)(3). 89 FR 4703 (January 24, 
2024).
    \6\ The Commenter also raised a number of issues that are 
outside the scope of the exemption, including questions about MACRC 
members' pension benefits; unspecified concerns about MACRC members' 
health care coverage; and the general manner by which MACRC business 
is conducted.
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    Structure and Purpose of the Fund. The Commenter questioned whether 
the Fund is a training and apprenticeship fund that operates 
independently for that purpose, or whether it is comprised of a 
combination of other sources of income and contributions that pays 
other types of benefits to MACRC members. The Commenter also questioned 
whether MACRC members' pensions would be affected by the Sale of any 
assets held by the Fund.
    The Applicant states that the ``Fund'' refers to the Mid-America 
Carpenters Regional Council Apprentice and Training Fund. The Fund is a 
trust established pursuant to collective bargaining that is jointly 
trusteed by representatives of both the MACRC and employers of MACRC 
members. The Fund's purpose is to provide training to carpentry 
apprentices and trainees.
    The Department notes that the Sale will not have any impact on 
amount of the pension benefits due MACRC members.
    Valuation of the Property, Independence of the Appraiser and the 
Independent Fiduciary. The Commenter raised concerns about the 
valuation of the Parcel and questioned how the independent appraiser, 
Newmark Valuation & Advisory (Newmark), and the independent fiduciary, 
Gallagher Fiduciary Advisors, LLC (Gallagher), were hired to provide 
services in the covered transactions. The Commenter also questioned 
whether anyone was compensated for a referral to Newmark or Gallagher 
or any of their affiliates and the independence of Gallagher, whether 
any parties involved in the Sale are related to Gallagher, the nature 
of their fees/compensation, and how such fees are paid. Finally, the 
Commenter asked whether the work product of Gallagher and Newmark is 
available to review.
    The Applicant responded that the Fund engaged Gallagher after a 
review of materials submitted by prospective qualified independent 
fiduciaries in

[[Page 54381]]

response to a request for proposal, and that Gallagher meets the 
definition of a ``qualified independent fiduciary'' under the 
Department's exemption procedure. The Applicant states that Gallagher's 
independent fiduciary fee is less than 2% of its annual revenue for its 
prior income tax year, which meets applicable thresholds under the 
Department's exemption procedure regulation, and that there are no 
other fees paid to Gallagher in connection with this transaction. The 
Applicant states that Newmark was engaged by Gallagher to serve as the 
qualified independent appraiser in connection with the Settlement and 
the Sale, and Newmark is not related to any of the parties involved in 
the transactions described in the exemption. The Applicant explains 
that Newmark qualifies as a ``qualified independent appraiser'' as 
defined under the Department's exemption procedure regulations. The 
Applicant states that there was no compensation paid to any individual 
or entity for referrals for these services.
    The Applicant states further that Gallagher, in its role as the 
independent fiduciary for the Fund, reviewed and approved of the 
methodology used by Newmark in determining the values of the Property 
and the Parcel, and that these determinations are explained in the 
Proposed Exemption and in Gallagher's report that was reviewed by the 
Department.
    Purpose of the Sale. The Commenter raised questions about the 
MACRC's motivations in purchasing the Property and appears to allege 
members of the MACRC may receive compensation in connection with the 
Sale.
    The Applicant states that no member of the MACRC will receive 
compensation in connection with the Sale. The Applicant states that the 
Fund, which was established exclusively to facilitate training for 
apprentices and trainees, is selling the Property to the MACRC in 
exchange for revenue to conduct the Fund's training activities. 
Further, the MACRC intends to maintain a Wellness Center on the 
Property to be used to provide more affordable and accessible 
healthcare services to MACRC members.
    Availability of Documentation. The Commenter asked about the 
availability of the following documents: the Lease Agreement, the Sale 
Agreement, the Settlement Agreement, and the independent fiduciary's 
``Closing Report'' required by Section II(j) of the exemption.
    The Applicant states that relevant documentation supporting the 
exemption transaction was provided as part of the application file and 
is publicly available upon request from the Department.
    The Department also notes that the ``Closing Report,'' which must 
be delivered by the independent fiduciary to the Employer Trustees of 
the Fund and the Department within 60 days of the closing of the Sale, 
must be provided by the Applicant upon request to any participant or 
beneficiary of the Fund, in accordance with the terms of the exemption, 
and that interested persons also have the right to request the public 
record supporting the exemption from the Department's Public Disclosure 
Room, in accordance with the information provided below.
    Terms of the Lease. The Commenter asked about the terms of the 
Lease Agreement, the consequences for a violation of the lease, and 
whether the parties maintained rental insurance or any other insurance 
on the Property.
    The Applicant states that the Lease Agreement is a part of the 
application file and is publicly available. According to the Applicant, 
the Lease refers to the leasing arrangement required by Gallagher, the 
independent fiduciary, between the Fund and the MACRC regarding the 
Property for the payment of ground rent, beginning when the MACRC began 
construction of the Wellness Center on the property in October 2020. 
The Applicant states that if the tenant defaults on the Lease, the Fund 
may avail itself of any remedies available to it in the Lease Agreement 
and under applicable law. Further, the Applicant states that any 
insurance policies maintained by the Fund on the Property are not a 
part of the public record and are not relevant to the Sale or the 
Settlement. The intention of the parties is that the lease will 
terminate upon the closing of the transaction, when the Fund's interest 
in the property will be completely transferred to the MACRC.
    Trustee Recusal. The Commenter questioned whether the MACRC 
Trustees were recused along with the MACRC Council from all matters 
pertaining to workers' pay, health, well-being, safety and retirement, 
in addition to their roles as fiduciaries of the Fund.
    The Applicant responded that the MACRC Trustees on the Fund's Board 
of Trustees recused themselves from all discussions and voting with 
respect to the Fund's decision to enter into the Sale, in accordance 
with their fiduciary duties as trustees of the Fund. The Applicant 
states further that whether the MACRC Trustees recused themselves from 
other matters described by the Commenter not involving the Sale is 
outside the scope of the exemption.
    Based on the record and representations made by the Applicant, the 
Department has determined to grant the Proposed Exemption.\7\ The 
operative language contains certain minor, non-substantive edits that 
clarify terms or modify formatting.
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    \7\ The Representations stated herein are based on the 
Applicant's representations provided in its exemption application 
and do not reflect factual findings or opinions of the Department 
unless indicated otherwise. The Department notes that the 
availability of this exemption is subject to the express condition 
that the material facts and representations contained in application 
L-12103 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 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 Fund and its participants and 
beneficiaries, and (3) protective of the rights of both the Fund and 
the participants and beneficiaries of the Fund, based on the 
Applicants' 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, 
taken individually and as a whole, are necessary for the Department to 
grant the relief requested by the Applicant. 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.
    The complete application file (L-12103) 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 
(866) 444-3272. 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.

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

[[Page 54382]]

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 accordance with 
ERISA section 404(a)(1) 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 the plan and of their participants 
and beneficiaries, and (3) protective of the rights of participants and 
beneficiaries of the plan;
    (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.
    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 regulation.\8\
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    \8\ 29 CFR part 2570, subpart B (89 FR 4662 (January 24, 2024)).
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Exemption

Section I. Covered Transactions

    The restrictions of ERISA Sections 406(a)(1)(A), 406(b)(1), and 
(b)(2), do not apply with respect to the sale of the 1.13 acre Parcel 
by the Fund to the MACRC, provided the following conditions are 
satisfied at all times:

Section II. Conditions

    (a) The MACRC complied with all applicable obligations under the 
``Settlement and Agreement to Pay ERISA Section 502(i) Amount Involved 
and Penalty Amount'' entered into between the MACRC and the Department, 
effective January 31, 2024 (the Settlement); and the MACRC paid all 
back rent, penalties, and interest due to the Fund under the terms of 
the Lease Agreement dated January 31, 2024 between the MACRC and the 
Fund (the Lease) for the period of time that the MACRC improperly 
accessed the Parcel and commenced construction of the building on the 
Parcel, from November 15, 2020 through January 31, 2024, the date of 
the Settlement Agreement.
    (b) The MACRC complies with all terms of the Lease, and any 
violation of or failure to comply with any term of the Lease is 
corrected as soon as reasonably possible upon discovery.
    (c) The Sale is a one-time transaction for cash that must close 
within ninety (90) days of the issuance of the final exemption.
    (d) At the time of the Sale, the Fund receives the greater of (1) 
$220,000; or (2) the fair market value of the Parcel as established by 
an independent appraiser in an updated appraisal of such Parcel on the 
date of the Sale. The independent appraiser must meet the Department's 
definition of a ``qualified independent appraiser'' under the 
Department's Exemption Procedure in 29 CFR 2570.31(i) and, at all 
times: 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 Fund, the MACRC, 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 Fund or its participants and beneficiaries 
under ERISA or other Federal and state laws against the qualified 
independent appraiser with respect to the Sale.
    (e) The Fund pays no fees, commissions, or other expenses 
associated with the Sale.
    (f) The terms and conditions of the Sale are at least as favorable 
to the Fund as those obtainable in an arm's length transaction with an 
unrelated third party.
    (g) The trustees appointed by the MACRC (the MACRC Trustees) 
recused themselves, and continue to recuse themselves, from any 
involvement in the decision-making process with respect to the Fund's 
decision to enter into the Sale, since September 23, 2020.
    (h) Gallagher Advisory Services, LLC (Gallagher), or another 
``qualified independent fiduciary'' as defined under 29 CFR 2570.31(j) 
(the Independent Fiduciary) is retained to act as the Independent 
Fiduciary on behalf of the Fund for all purposes in connection with the 
Sale and the Lease, and at all times: the 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 such 
Independent Fiduciary by the Fund, the MACRC, 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; or that waives any 
rights, claims, or remedies of the Fund under ERISA, state, or Federal 
law against the Independent Fiduciary with respect to the Sale.
    (i) The Independent Fiduciary must represent the Fund and its 
participants and beneficiaries for all purposes in connection with the 
Sale and the Lease in accordance with its fiduciary duties under ERISA 
section 404, including taking the following actions:
    (1) review relevant materials to evaluate the Sale and determine 
whether it is in the best interest of the Fund to proceed with the 
Sale;
    (2) determine whether to rely upon the appraisal report used to 
determine the fair market value of the Parcel for all purposes in 
connection with the Sale, and review and approve the methodology used 
in such appraisal in order to determine that the appropriate 
methodology is applied by the independent appraiser in determining the 
fair market value of the Parcel on the date of the Sale;
    (3) review, negotiate, and modify (as needed) the Sale agreement 
and related documents;
    (4) prepare a report in connection with the application of the 
exemption request describing the Independent Fiduciary's review and 
determinations with respect to the Sale, including whether the Sale is 
in the best interest of the Fund and its participants and 
beneficiaries;
    (5) make a final determination on behalf of the Fund whether to 
approve the Sale;
    (6) ensure that the Fund receives the fair market value of the 
Parcel as agreed upon under the terms of the purchase and sale 
agreement; and that the remaining terms of the purchase and sale 
agreement and any related instruments are complied with; and
    (7) ensure that the MACRC has complied with and continues to comply 
with all applicable terms of the Lease, including that the Fund 
receives all rent due to it under the terms of the Lease.
    (j) The Independent Fiduciary must prepare an ``After Closing 
Report'' for the Employer Trustees of the Fund and the Department, 
which must be delivered to both parties within 60 days

[[Page 54383]]

of the closing of the sale of the Parcel. The report must describe the 
extent to which the conditions of the exemption have been complied with 
by the parties, the reasons for any non-compliance, and the steps that 
the Independent Fiduciary took on behalf of the Fund to enforce the 
rights of the Fund in respect to such non-compliance. The report should 
describe the documents reviewed or other steps taken in order for the 
Independent Fiduciary to make its determinations.
    (k) The Fund's Trustees and the Independent Fiduciary maintain for 
a period of six (6) years from the date of any transaction related to 
the Sale, in a manner that is convenient and accessible for audit and 
examination, the records necessary to enable the persons described in 
paragraph (l)(1) below to determine whether conditions of this 
exemption, if granted, 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 Fund's trustees and/or the 
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 Fund's trustees or the 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.
    (l)(1) Notwithstanding any provisions of sections (a)(2) and (b) of 
ERISA Section 504, the records referred to in paragraph (k) 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 Fund's 
trustees or any duly authorized representative of the Fund's trustees; 
(iii) the Independent Fiduciary or any duly authorized representative 
of the Independent Fiduciary; (iv) any participant or beneficiary of 
the Fund, or any duly authorized representative of such participant or 
beneficiary; and (2) should the MACRC 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.
    (m) All the material facts and representations made by the 
Applicant that are set forth in the Proposed Exemption's Summary of 
Facts and Representations are true and accurate at all times. If there 
is any material change in a transaction covered by the exemption, or in 
a material fact or representation described by the Applicant in the 
application, the exemption will cease to apply as of the date of the 
change.
    Exemption Date: This exemption will be in effect as of the date of 
publication of the final exemption in the Federal Register.

    Signed at Washington, DC, this 28th day of July 2026.
Christopher Motta,
Acting Director, Office of Exemption Determinations, Employee Benefits 
Security Administration, U.S. Department of Labor.
[FR Doc. 2026-17144 Filed 8-20-26; 8:45 am]
BILLING CODE 4510-29-P


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