Rules and Regulations. Grant of Individual Exemptions

Agency: Employee Benefits Security Administration, Labor
Action: Grant of Individual Exemptions
Citation: FR Doc. 03-15929 · Exemption Application No. D-11111, 11112, and 11113

Summary

This document contains exemptions issued by the Department of Labor (the Department) from certain of the prohibited transaction restrictions of the Employee Retirement Income Security Act of 1974 (the Act) and/or the Internal Revenue Code of 1986 (the Code). A notice was published in the Federal Register of the pendency before the Department of a proposal to grant such exemption. The notice set forth a summary of facts and representations contained in the application for exemption and referred interested persons to the application for a complete statement of the facts and representations. The application has been available for public inspection at the Department in Washington, DC. The notice also invited interested persons to submit comments on the requested exemption to the Department. In addition the notice stated that any interested person might submit a written request that a public hearing be held (where appropriate). The applicant has represented that it has complied with the requirements of the notification to interested persons. No requests for a hearing were received by the Department. Public comments were received by the Department as described in the granted exemption. The notice of proposed exemption was issued and the exemption is being granted solely by the Department because, effective December 31, 1978, section 102 of Reorganization Plan No. 4 of 1978, 5 U.S.C. App. 1 (1996), transferred the authority of the Secretary of the Treasury to issue exemptions of the type proposed to the Secretary of Labor. Statutory Findings In accordance with section 408(a) of the Act and/or section 4975(c)(2) of the Code and the procedures set forth in 29 CFR part 2570, subpart B (55 FR 32836, 32847, August 10, 1990) and based upon the entire record, the Department makes the following findings: (a) The exemption is administratively feasible; (b) The exemption is in the interests of the plan and its participants and beneficiaries; and (c) The exemption is protective of the rights of the participants and beneficiaries of the plan. DuPont Capital Management Corporation, (DCMC) Located in Wilmington, DE [Prohibited Transaction Exemption 2003-15; Exemption Application Nos. D-11111, 11112, and 11113] Exemption The restrictions of section 406(a) of the Act and the sanctions resulting from the application of section 4975(a) and (b) of the Code, by reason of section 4975(c)(1)(A) through (D) of the Code, shall not apply to the past extension of credit from the DuPont Pension and Retirement Plan, the Pioneer Hi-Bred International, Inc. Retirement Plan, and the Protein Technologies International Retirement Plan (collectively, the Plans) 1 to the Dow Chemical Company (Dow), a party in interest with respect to the Plans, as a result of the holding by the Plans of certain corporate debt securities (the Bonds) issued by Dow, for the period from October 25, 2000 until July 10, 2001; provided the following conditions were satisfied: 1 Because the Plans are funded through the same trust and each has an undivided interest in the assets of such trust, this exemption treats the purchase of the Bonds by the Plans as a single transaction and information concerning such purchase is referred to on an aggregate basis. (a) The purchase of the Bonds by the Plans was a one-time transaction for cash; (b) The Plans paid no more than the current fair market value for the Bonds at the time of the transaction, as determined by a reputable, independent, third party market source; (c) The Bonds were sold on July 10, 2001 for $2,101,900 at a profit of $126,580 for the Plans; (d) The purchase of the Bonds was not part of an agreement, arrangement or understanding designed to benefit Dow or any other party in interest with respect to the Plans; and (e) The transaction represented less than .02% of each Plan's total assets. Effective Date of Exemption The exemption is effective for the period from October 25, 2000 (the date of the acquisition of the Bonds by the Plans) until July 10, 2001 (the date the Bonds were sold). For a more complete statement of the facts and representations supporting the Department's decision to grant this exemption, refer to the notice of proposed exemption published on January 22, 2003, at 68 FR 3047. Written Comments: The applicant ( i.e. , DCMC) submitted a written comment with respect to the notice of proposed exemption (the Proposal). The comment is summarized below. The applicant noted that in the operative language section of the Proposal, paragraph (c), it was erroneously indicated that the Bonds were sold for $1,975,320 (rather than for $2,101,900, as correctly stated in Item 5 of the Summary of Facts and Representations in the Proposal). Therefore, the Department has modified the language in paragraph (c) of the exemption to state that the Bonds were sold for $2,101,900. The Department also received over one hundred telephone calls from interested persons concerning the Proposal. In addition, the Department received seven written inquiries from interested persons. All of the telephone calls and written inquiries requested additional information regarding the transactions and their possible affect on benefits payable to the appropriate Plan participants. The Department responded to each inquiry by telephone and attempted to address the concerns that were raised. None of the additional comments made to the Department offered any suggestions for changes to the Proposal. No other comments were received by the Department. Accordingly, the Department has determined to grant the exemption, as clarified above.