81_FR_25514 81 FR 25432 - Proposed Exemptions From Certain Prohibited Transaction Restrictions

81 FR 25432 - Proposed Exemptions From Certain Prohibited Transaction Restrictions

DEPARTMENT OF LABOR
Employee Benefits Security Administration

Federal Register Volume 81, Issue 82 (April 28, 2016)

Page Range25432-25446
FR Document2016-09946

This document contains notices of pendency before the Department of Labor (the Department) of proposed exemptions from certain of the prohibited transaction restrictions of the Employee Retirement Income Security Act of 1974 (ERISA or the Act) and/or the Internal Revenue Code of 1986 (the Code). This notice includes the following proposed exemptions: D-11813, The Michael T. Sewell, M.D., P.S.C. Profit Sharing Plan (the Plan); D-11822, Plumbers' Pension Fund, Local 130, U.A. (the Plan or the Applicant); D-11858, Liberty Media 401(k) Savings Plan (the Plan); and, D-11866, Baxter International Inc. (Baxter or the Applicant).

Federal Register, Volume 81 Issue 82 (Thursday, April 28, 2016)
[Federal Register Volume 81, Number 82 (Thursday, April 28, 2016)]
[Notices]
[Pages 25432-25446]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-09946]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration


Proposed Exemptions From Certain Prohibited Transaction 
Restrictions

AGENCY: Employee Benefits Security Administration, Labor.

ACTION: Notice of proposed exemptions.

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SUMMARY: This document contains notices of pendency before the 
Department of Labor (the Department) of proposed exemptions from 
certain of the prohibited transaction restrictions of the Employee 
Retirement Income Security Act of 1974 (ERISA or the Act) and/or the 
Internal Revenue Code of 1986 (the Code). This notice includes the 
following proposed exemptions: D-11813, The Michael T. Sewell, M.D., 
P.S.C. Profit Sharing Plan (the Plan); D-11822, Plumbers' Pension Fund, 
Local 130, U.A. (the Plan or the Applicant); D-11858, Liberty Media 
401(k) Savings Plan (the Plan); and, D-11866, Baxter International Inc. 
(Baxter or the Applicant).

DATES: All interested persons are invited to submit written comments or 
requests for a hearing on the pending exemptions, unless otherwise 
stated in the Notice of Proposed Exemption, within 45 days from the 
date of publication of this Federal Register Notice.

ADDRESSES: Comments and requests for a hearing should state: (1) The 
name, address, and telephone number of the person making the comment or 
request, and (2) the nature of the person's interest in the exemption 
and the manner in which the person would be adversely affected by the 
exemption. A request for a hearing must also state the issues to be 
addressed and include a general description of the evidence to be 
presented at the hearing.
    All written comments and requests for a hearing (at least three 
copies) should be sent to the Employee Benefits

[[Page 25433]]

Security Administration (EBSA), Office of Exemption Determinations, 
Room N-5700, U.S. Department of Labor, 200 Constitution Avenue NW., 
Washington, DC 20210. Attention: Application No.__, stated in each 
Notice of Proposed Exemption. Interested persons are also invited to 
submit comments and/or hearing requests to EBSA via email or FAX. Any 
such comments or requests should be sent either by email to: 
[email protected], or by FAX to (202) 219-0204 by the end of the 
scheduled comment period. The applications for exemption and the 
comments received will be available for public inspection in the Public 
Documents Room of the Employee Benefits Security Administration, U.S. 
Department of Labor, Room N-1515, 200 Constitution Avenue NW., 
Washington, DC 20210.
    Warning: All comments will be made available to the public. Do not 
include any personally identifiable information (such as Social 
Security number, name, address, or other contact information) or 
confidential business information that you do not want publicly 
disclosed. All comments may be posted on the Internet and can be 
retrieved by most Internet search engines.

SUPPLEMENTARY INFORMATION:

Notice to Interested Persons

    Notice of the proposed exemptions will be provided to all 
interested persons in the manner agreed upon by the applicant and the 
Department within 15 days of the date of publication in the Federal 
Register. Such notice shall include a copy of the notice of proposed 
exemption as published in the Federal Register and shall inform 
interested persons of their right to comment and to request a hearing 
(where appropriate).
    The proposed exemptions were requested in applications filed 
pursuant to section 408(a) of the Act and/or section 4975(c)(2) of the 
Code, and in accordance with procedures set forth in 29 CFR part 2570, 
subpart B (76 FR 66637, 66644, October 27, 2011).\1\ 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 requested to the Secretary of 
Labor. Therefore, these notices of proposed exemption are issued solely 
by the Department.
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    \1\ The Department has considered exemption applications 
received prior to December 27, 2011 under the exemption procedures 
set forth in 29 CFR part 2570, subpart B (55 FR 32836, 32847, August 
10, 1990).
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    The applications contain representations with regard to the 
proposed exemptions which are summarized below. Interested persons are 
referred to the applications on file with the Department for a complete 
statement of the facts and representations.

The Michael T. Sewell, M.D., P.S.C. Profit Sharing Plan (the Plan) 
Located in Bardstown, Kentucky

[Application No. D-11813]

Proposed Exemption

    The Department is considering granting an exemption under the 
authority of section 408(a) of the Act and section 4975(c)(2) of the 
Code and in accordance with the procedures set forth in 29 CFR part 
2570, subpart B (76 FR 66637, 66644, October 27, 2011). If the 
exemption is granted, the restrictions of section 406(a)(1)(A) and (D) 
and section 406(b)(1) and (b)(2) of the Act and the sanctions resulting 
from the application of section 4975, by reason of section 
4975(c)(1)(A), (D) and (E) of the Code,\2\ shall not apply to the cash 
sale (the Sale) by the individually-directed account (the Account) in 
the Plan of Michael T. Sewell, M.D. (Dr. Sewell or the Applicant) of a 
parcel of unimproved real property (the Property), to Dr. Sewell, a 
party in interest with respect to the Plan; provided that:
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    \2\ For purposes of this proposed exemption, references to 
specific provisions of Title I of the Act, unless otherwise 
specified, refer also to the corresponding provisions of the Code.
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    (a) The Sale is a one-time transaction for cash;
    (b) The sales price for the Property is the greater of: $916,501; 
or the sum of the fair market value of the Property, as established by 
a qualified independent appraiser (the Appraiser), and the fair market 
value of timber on the Property, as determined by a qualified 
independent timber appraiser (the Forester), in separate, updated 
appraisal reports (the Appraisal Reports) on the date of the Sale;
    (c) The Account pays no real estate fees or commissions in 
connection with the Sale;
    (d) The terms of the Sale are no less favorable to the Account than 
the terms the Account would receive under similar circumstances in an 
arm's length transaction with an unrelated party; and
    (e) Michael T. Sewell, M.D., P.S.C. (the Employer) bears 100% of 
the costs of obtaining this exemption, if granted.

Summary of Facts and Representations \3\
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    \3\ The Summary of Facts and Representations is based on the 
Applicant's representations and does not reflect the views of the 
Department, unless indicated otherwise.
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    1. The Employer is an orthopedic medical practice that was formed 
by Dr. Sewell under Kentucky law on December 23, 1990. The Employer is 
located at 875 Pennsylvania Avenue in Bardstown, Kentucky.
    2. The Plan is a defined contribution plan that allows participants 
to self-direct the investments of their individual accounts. Dr. Sewell 
is a 65 year old participant in the Plan and he is also the Plan 
trustee. As of June 17, 2015, Dr. Sewell's Account in the Plan had 
total assets of approximately $916,501. Nearly all of the Account's 
assets is comprised of Property described herein.
    3. In addressing the Account's lack of diversification, the 
Applicant represents that in November 2012, Dr. Sewell completed a 
partial distribution of his Account by rolling over $704,599.09 to an 
individual retirement account (the IRA). At that time, the Account 
still contained an illiquid investment in a real estate investment 
trust (REIT), in addition to the subject Property. Subsequently, the 
REIT was liquidated, and proceeds of $17,011.20 were rolled over into 
the IRA.
    Prior to the rollover, the Applicant represents that Dr. Sewell's 
Account was diversified. Over time, due to the substantial increase in 
the value of the Property and the timber situated thereon, Dr. Sewell's 
Account became heavily concentrated in the Property.
    4. On February 27, 1996, the Account purchased the Property, 
consisting of 277.15 acres of rural farmland, from Mr. Edgar M. Deats 
and Mrs. Frances E. Deats, who are unrelated parties, for a total cash 
purchase price of $279,997.80, that includes $4,997.80 in closing 
expenses. The Property, is located on Deatsville Road in Coxs Creek, 
Kentucky, and is legally described as ``DB 327 PG 678 PC 2 SLOT 265 
Nelson Co.'' The Property was purchased by Dr. Sewell's Account for 
capital appreciation and it adjoins a farm that is owned by Dr. Sewell. 
Approximately 19% of the Property is grassland and 81% timberland.
    5. Since the time of acquisition by the Account, the Property has 
not been used by or leased to anyone. Aside from the Property's total 
acquisition price of $279,997.80, the Account has paid property taxes 
totaling $9,093.66 (or approximately $454 per year); appraisal fees of 
$5,950; $802.11 for liability

[[Page 25434]]

insurance; and $4,207.50 for legal and related fees. Thus, the 
aggregate cost of acquiring and holding the Property by the Account was 
$300,051.07 ($279,997.80 + $20,053.27), as of November 10, 2015.
    6. The Applicant is requesting an individual exemption from the 
Department to allow Dr. Sewell to purchase the Property from his 
Account. In this regard, the Applicant states that: (a) It would be 
difficult for Dr. Sewell to make distributions from his Account upon 
reaching age 70\1/2\ if the Account continues to hold the Property; (b) 
if Dr. Sewell decides to terminate the Plan, the tax laws would not 
permit the rollover of the Property into an individual retirement 
account; and (c) the value of the grassland portion of the Property, 
some of which could be used to grow corn, soybeans, and wheat, has 
stagnated.
    The proposed Sale will be a one-time transaction for cash, for the 
greater of: $916,501; or the sum of the fair market value of the 
Property, as established by the Appraiser, and the fair market value of 
the merchantable timber located on the Property, as determined by the 
Forester, in separate, updated Appraisal Reports on the date of the 
Sale. In addition, the terms of the proposed Sale will be at least as 
favorable to the Account as those obtainable in an arm's length 
transaction with an unrelated party. Further, the Account will pay no 
real estate commission, costs, or other expenses in connection with the 
proposed Sale, and the Employer will pay 100% of the costs of obtaining 
this exemption, if granted. Finally, the Sale will not be part of an 
agreement, arrangement or understanding designed to benefit Dr. Sewell 
or the Employer.
    7. Section 406(a)(1)(A) and (D) of the Act states that a fiduciary 
with respect to a plan shall not cause a plan to engage in a 
transaction if he knows or should know that such transaction 
constitutes a direct or indirect sale or exchange of any property 
between the Plan and a party in interest, or a transfer to, or use by 
or for the benefit of, a party in interest, of any assets of the Plan 
is also a prohibited transaction. The term party in interest is defined 
by section 3(14) of the Act to include any fiduciary. Dr. Sewell is a 
party in interest under section 3(14)(A) of the Act as a fiduciary with 
respect to the Plan because he is the Plan trustee. Therefore, the Sale 
of the Property by the Account to Dr. Sewell would violate section 
406(a)(1)(A) and (D) of the Act.
    In addition, section 406(b)(1) of the Act prohibits a plan 
fiduciary from dealing with the assets of the plan in his own interest 
or for his own account. Moreover, section 406(b)(2) of the Act 
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 
whose interests are adverse to the interests of the plan or the 
interests of its participants or beneficiaries.
    The sale represents a violation of section 406(b)(1) of the Act 
since Dr. Sewell would be causing his Account to sell the Property to 
himself. In addition, the sale represents a violation of section 
406(b)(2) of the Act since Dr. Sewell would be acting on both sides of 
the transaction.
    8. Mr. Roger F. Leggett of Bardstown, Kentucky, has been appointed 
by Dr. Sewell to serve as the Appraiser and, in such capacity, to 
prepare the Appraisal Report of the Property. The Appraiser, a 
Certified General Appraiser, has been licensed in the State of Kentucky 
since 1994. The Appraiser represents that he has performed appraisal 
work in Kentucky for more than 45 years, of which he spent more than 25 
years working for the U.S. Department of Agriculture where he completed 
in-house appraisals of farms, rural residences and chattels. The 
Appraiser states that the gross revenues he received from parties in 
interest with respect to the Plan, including the preparation of the 
Appraisal Report, represented approximately 1.8% of his actual gross 
revenues in 2014.
    9. In an Appraisal Report dated October 22, 2014, the Appraiser 
describes the Property as a 277.15 acre tract of rural farmland with a 
barn situated thereon, located in the northwest section of Nelson 
County, Kentucky. The Appraiser notes that the Property has level to 
moderately sloping terrain, consisting of grassland and woodland, with 
little marketable timber.
    The Appraiser has used the Sales Comparison Approach to value the 
Property. The Appraiser states that he could not use the Income 
Approach to valuation because there are no crops or income produced by 
the Property. The Appraiser also explains that the Cost Approach could 
not be used to value the Property because there are no improvements to 
the site.
    The Appraiser represents that the Sales Comparison Approach is the 
most reliable because there were real estate sales available for 
comparison. In this regard, the Appraiser states that he reviewed 
public records, Multiple Listing Service data, and obtained information 
from other real estate agents and land owners. Based on the Sales 
Comparison Approach, the Appraiser has placed the fair market value of 
the Property at $831,450, as of October 22, 2014.
    The Appraiser is also of the view that the Property does not have 
any assemblage value. The Appraiser explains that assemblage value is 
where an adjoining property is purchased to enhance the value of the 
present property. According to the Appraiser, this factor works mainly 
in commercial or industrial property where one may need to adjoin land 
for a parking lot or to be able to make the building larger. The 
Appraiser represents that it has been his experience that assemblage 
value is not typically the case with farmland because, generally, as a 
tract of farmland increases in size, the per acre value decreases. The 
Appraiser also states that this has been demonstrated repeatedly in 
local auctions, where land almost always sells for more per acre in 
smaller tracts, as opposed to larger tracts, and there usually are more 
buyers for smaller tracts than for larger tracts.
    In an addendum to the Appraisal Report dated November 11, 2015, the 
Appraiser states that fair market value of the Property has not changed 
since the 2014 valuation.
    10. Mr. Steve Gray of Radcliff, Kentucky has been retained by Dr. 
Sewell, on behalf of the Account, to prepare a report of the estimated 
value of the timber that is located on the Property because the 
Appraiser disclaimed having knowledge of timber values. The Forester is 
a Certified Natural Resource Conservation Service-Technical Service 
Provider, and is licensed in the State of Kentucky. The Forester, who 
is a member of the Association of Consulting Foresters and the Society 
of American Foresters, represents that he has over thirty years' 
experience as a Service Forester and Forestry Supervisor with the 
Kentucky Division of Forestry. The Forester further represents that he 
has no pre-existing relationship with Dr. Sewell.
    The Forester represents that he conducted a forest inventory of the 
Property on September 22, 2015, using ``78 ten factor prism plots'' 
systematically placed throughout the forested parts of the Property. At 
each plot location, the Forester explains that trees 12 inches in 
diameter at breast height (dbh) were recorded by species, dbh, and 
merchantable height. The Forester also represents that plot data 
indicated an average of 33 merchantable trees per acre, yielding an 
average volume per acre of 3,316 board feet (bd. ft.). The Forester 
further explains that 232 acres of the Property would be classified as 
forest, which when considering the 3,616 bd. ft. per acre,

[[Page 25435]]

would yield a total estimated value of 739,480 bd. ft.
    The Forester notes that the Property lies in an area with little 
forest industry. The Forester explains that harvested forest products 
must be transported at least 50 miles to saw mills that offer 
competitive prices for these products. The Forester states that 
transportation distance not only affects the value of the standing 
timber, but also the amount of timber per acre required to make a 
timber harvest economically feasible.
    The Forester represents that based on his experience, approximately 
1,700 bd. ft. per acre is required to make a timber harvest 
economically feasible in the area of the Property. Moreover, the 
Forester explains, comparable properties in the area would likely have 
up to 1,700 bd. ft. per acre without any additional timber value being 
considered in the Property sale. Subtracting 1,700 bd. ft. per acre 
from the average of 3,316 bd. ft. per acre on the Property, the 
Forester states that this leaves 1,616 bd. ft. to be considered as 
additional value that is above the valuation in the Property Appraisal 
Report.
    According to the Forester, the Property contains 232 acres of 
forest with an estimated 1,616 bd. ft. acre, for a total volume of 
374,912 bd. ft. The Forester explains that the total volume was 
apportioned to various species of trees, resulting in a fair market 
value for the timber of $85,051 as of October 3, 2015.
    Thus, based on the $831,450 fair market value of the Property, as 
determined by the Appraiser, and the $85,051 fair market value of the 
timber, as determined by the Forester, the aggregate fair market value 
of the Property is $916,501. Both the Appraiser and the Forester will 
update their respective Appraisal Reports on the date of the Sale.
    11. The Applicant represents that the proposed transaction is 
administratively feasible because the Sale will be a one-time 
transaction for cash. The Applicant also represents that the proposed 
transaction is in the interest of the Account because the Sale will not 
cause the Account to incur any expenses, real estate commissions, or 
other fees. Further, the Applicant explains that the Sale will yield a 
profit to the Account that is attributable to the Property's 
appreciation.
    In addition, the Applicant represents that the proposed transaction 
is protective of the rights of Dr. Sewell, as a Plan participant, 
because the Sale will allow him to reinvest the proceeds from the Sale 
in other investments that are more liquid and have a greater chance of 
capital appreciation, without recurring expenses.
    The Applicant also represents that if the proposed exemption is not 
granted, the Account will experience a hardship or economic loss 
because Dr. Sewell is approaching retirement age, and his Account will 
not be able to satisfy the Internal Revenue Service's required minimum 
distribution requirements due to the lack of divisibility of the 
Property. Finally, the Applicant represents that the Sale is not part 
of an agreement, arrangement or understanding designed to benefit Dr. 
Sewell.
    12. In summary, the Applicant represents that the proposed 
transaction will satisfy the statutory criteria for an exemption as set 
forth in section 408(a) of the Act for the following reasons:
    (a) The Sale will be a one-time transaction for cash;
    (b) The sales price for the Property will be the greater of: 
$916,501; or the sum of the fair market value of the Property, as 
established by the Appraiser, and the fair market value of the timber, 
as determined by the Forester, in separate, updated Appraisal Reports 
on the date of the Sale;
    (c) The Account will pay no real estate fees or commissions in 
connection with the Sale;
    (d) The terms of the Sale will be no less favorable to the Account 
than the terms the Account would receive under similar circumstances in 
an arm's length transaction with an unrelated party; and
    (e) The Employer will bear 100% of the costs of obtaining this 
exemption, if granted.

Notice to Interested Persons

    Because Dr. Sewell is the sole person in the Plan whose Account is 
affected by the proposed transaction, it has been determined that there 
is no need to distribute the notice of proposed exemption (the Notice) 
to interested persons. Therefore, comments and requests for a hearing 
are due thirty (30) days after publication of the Notice in the Federal 
Register.
    All comments will be made available to the public.
    Warning: Do not include any personally identifiable information 
(such as name, address, or other contact information) or confidential 
business information that you do not want publicly disclosed. All 
comments may be posted on the Internet and can be retrieved by most 
Internet search engines.

FOR FURTHER INFORMATION CONTACT: Mrs. Blessed Chuksorji-Keefe of the 
Department, telephone (202) 693-8567. (This is not a toll-free number.)

Plumbers' Pension Fund, Local 130, U.A. (the Plan, or the Applicant) 
Located in Chicago, IL

[Application No. D-11822]

Proposed Exemption

    The Department is considering granting an exemption under the 
authority of section 408(a) of the Act and section 4975(c)(2) of the 
Code, and in accordance with the procedures set forth in 29 CFR part 
2570, subpart B (76 FR 46637, 66644, October 27, 2011).\4\ If the 
exemption is granted, the restrictions of sections 406(a)(1)(A) and 
406(a)(1)(D) of the Act and the sanctions resulting from the 
application of section 4975 of the Code, by reason of section 
4975(c)(1)(A) and (D) of the Code, shall not apply to the sale (the 
Sale) of two commercial buildings (the Properties), by the Plan to the 
Plumbers' Pension Fund, Local 130, U.A. (the Union), a party in 
interest with respect to the Plan, provided that the following 
conditions are satisfied:
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    \4\ For purposes of this proposed exemption, references to 
specific provisions of Title I of the Act, unless otherwise 
specified, refer also to the corresponding provisions of the Code.
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    (a) The Sale is a one-time transaction for cash;
    (b) The price paid by the Union to the Plan is equal to the greater 
of: (1) $1,640,000, or (2) the fair market value of the Properties, as 
determined by a qualified independent appraiser (the Independent 
Appraiser) as of the date of the Sale;
    (c) The Plan does not pay any appraisal fees, real estate fees, 
commissions, costs or other expenses in connection with the Sale;
    (d) The Plan trustees appointed by the Union (the Union Trustees) 
recuse themselves from: (1) Discussions and voting with respect to the 
Plan's decision to enter into the Sale; and (2) all aspects of the 
selection and engagement of the Independent Appraiser for the purposes 
of determining the fair market value of the Properties on the date of 
the Sale;
    (e) The Plan trustees appointed by the employer associations (the 
Employer Trustees), who have no interest in the Sale: (1) Determine, 
among other things, whether it is in the interest of the Plan to 
proceed with the Sale; (2) review and approve the methodology used by 
the Independent Appraiser in the independent appraisal report (the 
Appraisal Report) that is being relied upon; and (3) ensure that such 
methodology is applied by the Independent Appraiser in determining the 
fair market value of the Properties on the date of the Sale; and

[[Page 25436]]

    (f) The Sale is not part of an agreement, arrangement, or 
understanding designed to benefit the Union.

Summary of Facts and Representations \5\
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    \5\ The Summary of Facts and Representations is based on the 
Applicant's representations and does not reflect the views of the 
Department, unless indicated otherwise.
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    1. The Plan. The Plan is a multi-employer defined benefit plan 
which was established on June 1, 1953, pursuant to a collective 
bargaining agreement between various contractor associations (the 
Employer Associations) and the Union (the CBA). Pursuant to the CBA, 
the Employer Associations are required to make monthly contributions to 
the Plan on behalf of their members at a specified amount based upon 
hours worked. As of September 30, 2015, the Plan covered 9,169 
participants and held $931,622,990 in total assets.
    The Plan is administered by a ten member Board of Trustees (the 
Trustees), consisting of five Employer Trustees and five Union 
Trustees. The Trustees have ultimate fiduciary, operational, and 
investment discretion over the Plan's assets, and have entered into an 
agreement for The Northern Trust Company to act as Master Trustee and 
Custodian for the Plan.
    2. The Properties. Included among the assets of the Plan are the 
Properties, which are located at 1330-1332 and 1336 West Washington 
Boulevard, Chicago, Illinois. The Properties were originally purchased 
by the Plan on November 30, 2000, from an unrelated party for a total 
purchase price of $1,365,000. The Plan did not finance the purchase of 
either Property and neither is currently encumbered by a mortgage.
    The building located at 1330-1332 West Washington Boulevard (the 
1330-1332 Building) was constructed in 1939 and consists of a single 
warehouse and industrial space that covers 9,600 square feet. As 
represented by the Applicant, the 1330-1332 Building is specifically 
suited to accommodate printing operations and, as constructed, is 
unsuitable for use as an office space. Since its acquisition by the 
Plan, the 1330-1332 Building has not been leased to, or used by, a 
party in interest to the Plan. The 1330-1332 Building, which is 
currently vacant, was formerly leased by the Plan to an unrelated 
party. The Building located at 1336 West Washington Boulevard (the 1336 
Building) was constructed in 1926 and consists of 6,500 square feet of 
office and storage space.
    3. Lease of the 1336 Building. Effective October 1, 2002, the 
Trustees entered into an agreement to lease office space in the 1336 
Building to the Union for a term of eight years (the 1336 Building 
Lease). Pursuant to its terms, the 1336 Building Lease requires the 
Union to pay to the Plan an annual base rental amount of $51,620, 
payable in equal monthly installments of $4,301.67. As represented by 
the Applicant, and as reflected in the relevant Trustee meeting 
minutes, the Union Trustees recused themselves from the decision-making 
process regarding the 1336 Building Lease.
    Since the initial execution, the Plan and Union have agreed to two 
amendments to the 1336 Building Lease. First, on December 11, 2002, the 
Plan and Union executed an amendment to provide for semi-annual rent 
adjustments based upon the Consumer Price Index (CPI). Second, on 
October 1, 2010, the Plan and Union executed a Lease Modification and 
Extension Agreement (the 1336 Building Lease Extension) which: (a) 
Extended the term of the 1336 Building Lease for an additional 8 years, 
expiring September 30, 2018; and (b) raised the base monthly rent 
amount to $5,192, with provisions for future CPI adjustments to the 
rent. As documented in the relevant Trustee meeting minutes, the Union 
Trustees recused themselves from the decision-making process regarding 
the 1336 Building Lease Extension. Current monthly rent under the 1336 
Building Lease is $5,492.
    With respect to the 1336 Building Lease, the Applicant is relying 
upon Prohibited Transaction Exemption (PTE) 76-1 (41 FR 12740, March 
26, 1976, as corrected by 41 FR 16620, April 20, 1976), and PTE 77-10 
(42 FR 33918, July 1, 1977). Part C of PTE 76-1 provides conditional 
exemptive relief from the prohibited transaction provisions of sections 
406(a) and 407(a) of the Act for the leasing of office space by a 
multiple employer plan to a participating employee organization, 
participating employer, or another multiemployer plan. PTE 77-10, which 
complements PTE 76-1, provides conditional exemptive relief from the 
prohibited transaction provisions of section 406(b)(2) of the Act with 
respect to the leasing of office space by a multiple employer plan to a 
participating employee organization, participating employer, or another 
multiemployer plan. The Applicant represents that the 1336 Building 
Lease meets all of the required conditions under PTEs 76-1 and 77-10. 
The Department, however, expresses no opinion herein on whether the 
requirements of PTEs 76-1 and 77-10 have been met by the Applicant.
    4. Property-Related Expenses. In connection with its ownership of 
the Properties, the Plan currently generates approximately $65,784 in 
rental income on an annual basis from the 1336 Building Lease. This 
income, however, is offset by recurring expenses on the Properties, 
which include real estate taxes, general maintenance costs, and utility 
costs. For the Plan year ending May 31, 2015, the Plan incurred 
expenses totaling $34,389.24 in connection with its ownership of the 
Properties. These incurred expenses included $13,780.75 in real estate 
taxes, $11,112.00 in insurance costs, and $9,505.49 in utility and 
maintenance costs.
    5. Attempt to Sell the 1330-1332 Building. In August 2012, the 
Trustees agreed to pursue a sale of the 1330-1332 Building to an 
unrelated buyer. At the time, the Trustees had determined that the 
1330-1332 Building had become a non-performing asset for the Plan. On 
August 1, 2012, the Trustees entered into an Exclusive Sale and Lease 
Agreement (the Sale and Lease Agreement) with Jameson Real Estate, LLC 
(Jameson), of Chicago, Illinois, an unrelated party with respect to the 
Plan. Pursuant to the Sale and Lease Agreement, the Trustees granted to 
Jameson the exclusive right to either: (a) Sell the 1330-1332 Building 
for an amount within the range of $75.00-$95.00 per square foot; or (b) 
lease the 1330-1332 Building to an unrelated party for a monthly amount 
within the range of $8.50-$10.00 per square foot. The Plan received no 
offers in connection with its efforts to sell or rent the 1330-1332 
Building.
    6. Union's Offer to Purchase the Properties. During the Trustees' 
March 14, 2013 meeting, Union Trustee, Ken Turnquist, informed the 
Trustees that the Union was interested in purchasing both of the 
Properties from the Plan, and that he was in the early stages of 
putting together a Letter of Intent to do so. The Union subsequently 
assessed an inspection report (the Inspection Report), which revealed 
that the Properties were in need of certain remedial masonry and 
environmental work. Specifically, the Inspection Report concluded that 
the 1336 Building required complete tuck-pointing of its North and West 
facing elevations and a rebuild of the six inch exterior veneer of its 
chimneys (the Masonry Repairs). Additionally, the Inspection Report 
concluded that environmental considerations warranted the removal of an 
obsolete underground

[[Page 25437]]

oil tank from beneath the 1330-1332 Building (the Environmental 
Repairs).
    Following receipt of the Inspection Report, the Union solicited and 
received multiple bids to complete the above-cited masonry and 
environmental repairs. With regard to the Masonry Repairs, the Union 
received a low bid of $174,421.00 (the Masonry Bid) from Grove Masonry 
Maintenance, Inc. of Alsip, Illinois, an unrelated party with respect 
to the Plan. With regard to the Environmental Repairs, the Union 
received a low bid of $39,500.00 (the Water Tank Removal Bid) from WM. 
J. Scown Building Company of Wheeling, Illinois, also an unrelated 
party with respect to the Plan.
    7. During the Trustees' March 6, 2014 meeting, Mr. Turnquist 
presented the Trustees with three documents: (a) An offer from the 
Union to purchase the Properties for $1,416,000.00 (the March 2014 
Offer); (b) an appraisal report completed by Charles G. Argianas and 
Robert S. Huth of the Industrial Appraisal Company, of Pittsburgh, 
Pennsylvania (the Independent Appraiser), valuing the Properties at 
$1,630,000.00 as of January 23, 2014 (the January 2014 Appraisal 
Report); and (c) the above-noted Masonry and Water Tank Removal Bids. 
Following recusal by the Union Trustees, the Employer Trustees 
proceeded to review and discuss the March 2014 Offer.
    The Employer Trustees determined that it was in the best interest 
of the Plan and its participants and beneficiaries to sell the 
Properties at their fair market value. In this regard, the Employer 
Trustees determined that the Plan would not assume the Remediation 
Costs as an offset to the purchase price. On September 15, 2015, the 
Employer Trustees communicated to the Union that the Plan was seeking 
full fair market value of $1,640,000.00 for the Properties with no 
offset. The Union thereafter accepted the Employer Trustees' amended 
offer.
    8. Relevant Terms of the Sale. As stated in the Purchase Agreement, 
the Union will deposit $50,000 into an escrow account held for the 
benefit of the Plan with an unrelated escrow agent. The remaining 
balance of $1,590,000 will be paid by the Union to the Plan at closing 
by cash, certified or cashier's check, or wire transfer. As also stated 
in the Purchase Agreement, the Plan will pay no real estate fees or 
commissions, or incur any other expenses or costs as a result of the 
Sale. In this regard, the Union will assume all closing costs 
associated with the Sale, including the city, county, and state 
transfer taxes that are associated with the transaction. Finally, the 
Plan will pay no fees to the Independent Appraiser in connection with 
the Sale.
    9. Legal Analysis. The Applicant has requested an administrative 
exemption from the Department because the proposed Sale violates 
several provisions of the Act. Section 406(a)(1)(A) of the Act provides 
that a fiduciary with respect to a plan shall not cause a plan to 
engage in a transaction if the fiduciary knows or should know that such 
transaction constitutes a direct or indirect sale or exchange, or 
leasing, of any property between a plan and a party in interest. 
Further, section 406(a)(1)(D) of the Act provides that a fiduciary with 
respect to a plan shall not cause a plan to engage in a transaction if 
the fiduciary knows or should know that such transaction constitutes a 
direct or indirect transfer to, or use by or for the benefit of, a 
party in interest, of any assets of the plan.
    Section 3(14)(D) of the Act defines the term ``party in interest'' 
to include an employee organization any of whose members are covered by 
such plan. Section 3(14)(A) of the Act defines the term ``party in 
interest'' to include any fiduciary of such plan. Thus, the Union, as 
an employee organization whose members are covered by the Plan, and the 
Trustees, as fiduciaries to the Plan, are parties in interest with 
respect to the Plan, pursuant to sections 3(14)(A) and 3(14)(D) of the 
Act, respectively. Accordingly, the Sale would constitute a violation 
of section 406(a)(1)(A) and (D) of the Act.
    10. The Qualified Independent Appraiser. On November 2, 2012, Terry 
Musto, Fund Administrator to the Plan, engaged the Industrial Appraisal 
Company to render an opinion as to the fair market value of the 
Properties. As represented by the Applicant, Mr. Musto is neither a 
Union official nor a Union member. The Applicant further represents 
that Mr. Musto has been delegated the power and authority to engage 
service providers on behalf of the Plan.
    As mentioned above, Charles C. Argianas and Robert S. Huth of the 
Industrial Appraisal Company completed the January 2014 Appraisal 
Report. Subsequently, on January 9, 2015, Mr. Argianas and Maksym 
Smolyak completed an updated appraisal report of the Properties, as of 
December 22, 2014 (the January 2015 Appraisal Report).\6\
---------------------------------------------------------------------------

    \6\ The January 2014 and the January 2015 Appraisal Reports are 
together referred to herein as the ``Appraisal Reports.''
---------------------------------------------------------------------------

    Mr. Argianas is a Certified General Real Estate Appraiser in the 
State of Illinois (License #553.000164). He is also a member of the 
Appraisal Institute. Mr. Smolyak is an Associate Real Estate Trainee 
Appraiser, and has performed and assisted in real estate consulting and 
appraisal assignments involving various properties throughout Illinois, 
Indiana, and Wisconsin.
    Messrs. Argianas and Smolyak have certified that they have ``no 
present or prospective interest in the [P]roperty that is the subject 
of this report and no personal interest with respect to the parties 
involved,'' and that the fees derived from parties in interest are 
equal to less than \1/10\th of 1% of Industrial Appraisal Company's 
revenues for 2014, from all sources, and that the Industrial Appraisal 
Company has never been engaged by the Union, or any other party in 
interest to the Plan. Messrs. Argianas and Smolyak have also 
acknowledged that they are aware that the Appraisal Reports are being 
used for the purposes of obtaining an individual exemption from the 
Department.
    As represented in the Appraisal Reports, Messrs. Argianas and 
Smolyak performed the following underlying tasks to determine the 
Properties' value: (a) An analysis of regional, city, market area, 
site, and improvement data; (b) an inspection of the Properties and the 
immediate market area; and (c) a review of data regarding real estate 
taxes, zoning, and utilities.
    In valuing the Properties, Messrs. Argianas and Smolyak considered 
all of the commonly-accepted approaches to property valuation, 
including the Cost Approach, Income Capitalization Approach and Sales 
Comparison Approach. After considering each of the three approaches 
separately, they determined that the Sales Comparison Approach 
warranted primary consideration in establishing market value for the 
Properties. Messrs. Argianas and Smolyak state that the Sales 
Comparison Approach is most reliable when there are a sufficient number 
of veritable sales and offerings that are representative of a subject 
property. In such a case, they explain, fewer adjustments increase the 
reliability of the ultimate valuation. With respect to the other 
valuation approaches, Messrs. Argianas and Smolyak accorded ``due 
consideration'' to the Income Capitalization Approach, and ``little 
consideration'' to the Cost Approach.
    After inspecting the Properties and analyzing all relevant data, 
Messrs. Argianas and Smolyak determined the ``AS-IS'' Fee Simple Market 
Value of the Properties to be $1,430,000, as of December 22, 2014 in 
the January 2015 Appraisal Report. To arrive at their valuation 
conclusion for the Properties,

[[Page 25438]]

Messrs. Argianas and Smolyak first assigned a full fair market value of 
$1,640,000 to the Properties' land, structure, and improvements. They 
then deducted $210,000 from that amount to account for the Remediation 
Costs.
    The Employer Trustees and the Union have agreed to the purchase 
price of $1,640,000, which represents the full fair market value of the 
Properties with no offsets for the Remediation Costs or other costs. As 
a specific condition of this proposed exemption, the Independent 
Appraiser will reassess the fair market value of the Properties on the 
Sale date in an updated appraisal (the Updated Appraisal). With respect 
to the Updated Appraisal, the Employer Trustees will ensure that the 
Independent Appraiser's valuation methodology is properly applied in 
determining the fair market value of the Properties.
    11. Statutory Findings. The Applicant represents that the proposed 
exemption is administratively feasible because it involves a one-time 
sale of the Properties for cash. As such, the proposed exemption will 
not require ongoing oversight by the Department. In addition, the 
Applicant represents that the proposed exemption is in the interest of 
the Plan and its participants and beneficiaries because the Sale will 
facilitate a more productive investment vehicle for the Plan. In this 
regard, the Applicant estimates that the proceeds from the Sale will 
generate annual income in excess of $100,000 for the Plan, going 
forward.
    In addition, the Applicant represents that anticipated income to 
the Plan following the Sale will significantly exceed the income which 
the Plan would realize through a continued ownership of the Properties. 
The Applicant points out that the Plan currently generates 
approximately $65,000 in rental income on an annual basis as the owner 
of the Properties. This income, however, is offset by recurring 
expenses, which include real estate taxes, general upkeep and 
maintenance costs, and utility costs. The Applicant represents that an 
offset of these costs leaves the Plan with approximately $11,000 in 
annual net income as owner of the Properties.
    13. Summary. In summary, it is represented that the proposed 
transaction satisfies or will satisfy the statutory criteria for an 
exemption under section 408(a) of the Act because:
    (a) The Sale will be a one-time transaction for cash.
    (b) The price paid by the Union to the Plan will be equal to the 
greater of: (1) $1,640,000, or (2) the fair market value of the 
Properties, as determined by the Independent Appraiser as of the date 
of the Sale;
    (c) The Plan will not pay any appraisal fees, real estate fees, 
commissions, costs or other expenses in connection with the Sale;
    (d) The Union Trustees will recuse themselves from: (1) Discussions 
and voting with respect to the Plan's decision to enter into the Sale; 
and (2) all aspects of the selection and engagement of the Independent 
Appraiser for the purposes of determining the fair market value of the 
Properties on the date of the Sale;
    (e) The Employer Trustees, who have no interest in the Sale: (1) 
Will determine, among other things, whether it is in the best interest 
of the Plan to proceed with the Sale of the Properties; (2) will review 
and approve the methodology used by the Independent Appraiser in the 
Appraisal Report that is being relied upon; and (3) will ensure that 
such methodology is applied by the Independent Appraiser in determining 
the fair market value of the Properties on the date of the Sale; and
    (f) The Sale will not be part of an agreement, arrangement, or 
understanding designed to benefit the Union.

Notice to Interested Persons

    The persons who may be interested in the publication in the Federal 
Register of the Notice of Proposed Exemption (the Notice) include all 
individuals who are participants in the Plan. It is represented that 
such interested persons will be notified of the publication of the 
Notice by first class mail to such interested person's last known 
address within fifteen (15) days of publication of the Notice in the 
Federal Register. Such mailing will contain a copy of the Notice, as it 
appears in the Federal Register on the date of publication, plus a copy 
of the Supplemental Statement, as required, pursuant to 29 CFR 
2570.43(b)(2), which will advise all interested persons of their right 
to comment on and/or to request a hearing. All written comments or 
hearing requests must be received by the Department from interested 
persons within 45 days of the publication of this proposed exemption in 
the Federal Register.
    All comments will be made available to the public. Warning: Do not 
include any personally identifiable information (such as name, address, 
or other contact information) or confidential business information that 
you do not want publicly disclosed. All comments may be posted on the 
Internet and can be retrieved by most Internet search engines.

FOR FURTHER INFORMATION CONTACT: Mr. Joseph Brennan of the Department 
at (202) 693-8456. (This is not a toll-free number.)

Liberty Media 401(k) Savings Plan (the Plan)

    Located in Englewood, CO
[Application No. D-11858]

Proposed Exemption

    The Department is considering granting an exemption under the 
authority of section 408(a) of the Employee Retirement Income Security 
Act of 1974, as amended (ERISA or the Act) and section 4975(c)(2) of 
the Internal Revenue Code of 1986, as amended (the Code) and in 
accordance with the procedures set forth in 29 CFR part 2570, subpart B 
(76 FR 66637, 66644, October 27, 2011).\7\
---------------------------------------------------------------------------

    \7\ For purposes of this proposed exemption, references to the 
provisions of Title I of the Act, unless otherwise specified, refer 
also to the corresponding provisions of the Code.
---------------------------------------------------------------------------

Section I. Covered Transactions

    If the proposed exemption is granted, the restrictions of sections 
406(a)(1)(E), 406(a)(2), and 407(a)(1)(A) of the Act shall not apply 
to: (1) The acquisition by the Plan of certain stock subscription 
rights (the Rights) to purchase shares of Liberty Broadband Series C 
common stock (LB Series C Stock), in connection with a rights offering 
(the Rights Offering) held by Liberty Broadband Corporation (Liberty 
Broadband), a party in interest with respect to the Plan; and (2) the 
holding of the Rights by the Plan during the subscription period of the 
Rights Offering, provided that the conditions described in Section II 
below have been met.

Section II. Conditions for Relief

    (a) The Plan's acquisition of the Rights resulted solely from an 
independent corporate act of Liberty Broadband;
    (b) All holders of Liberty Broadband Series A common stock and 
Liberty Broadband Series C common stock (collectively, the LB Stock), 
including the Plan, were issued the same proportionate number of Rights 
based on the number of shares of LB Stock held by each such 
shareholder;
    (c) For purposes of the Rights Offering, all holders of LB Stock, 
including the Plan, were treated in a like manner;
    (d) The acquisition of the Rights by the Plan was made in a manner 
that was consistent with provisions of the Plan for the individually-
directed investment of participant accounts;
    (e) The Liberty Media 401(k) Savings Plan Administrative Committee 
(the

[[Page 25439]]

Committee) directed the Plan trustee to sell the Rights on the NASDAQ 
Global Select Market, in accordance with Plan provisions that precluded 
the Plan from acquiring additional shares of LB Stock;
    (f) The Committee did not exercise any discretion with respect to 
the acquisition and holding of the Rights; and
    (g) The Plan did not pay any fees or commissions in connection with 
the acquisition or holding of the Rights, and did not pay any 
commissions to Liberty Broadband, Liberty Media Corporation, 
TruePosition, Inc., or any affiliates of the foregoing in connection 
with the sale of the Rights.
    Effective Date: The proposed exemption, if granted, will be 
effective from December 15, 2014, the date that the Plan received the 
Rights, until December 17, 2014, the date the Rights were sold by the 
Plan on the NASDAQ Global Select Market.

Summary of Facts and Representations \8\
---------------------------------------------------------------------------

    \8\ The Summary of Facts and Representations is based on Liberty 
Media's representations and does not reflect the views of the 
Department, unless indicated otherwise.
---------------------------------------------------------------------------

Background
    1. Liberty Media Corporation (Liberty Media) is a Delaware 
corporation with its principal place of business in Englewood, 
Colorado. Liberty Media is a publicly traded corporation primarily 
engaged in media, communications and entertainment operating businesses 
through several subsidiaries, including Liberty Broadband Corporation 
(Liberty Broadband). Liberty Broadband holds ownership interests in 
Charter Communications, Inc. (Charter Communications), TruePosition, 
Inc. (TruePosition), and a minority equity investment in Time Warner 
Cable, among other debt and equity assets.
    2. Liberty Media sponsors and maintains the Liberty Media 401(k) 
Savings Plan (the Plan). The assets of the Plan are held in the Liberty 
Media 401(k) Savings Plan Trust (the Trust). The Plan and Trust were 
created for the exclusive benefit of employee-participants and their 
beneficiaries. Liberty Media represents that the Plan is intended to 
qualify under sections 401(a) and 401(k) of the Code, and the Trust is 
intended to be exempt under Section 501(a) of the Code.
    The Plan allows participants to direct the investment of their 
entire Plan accounts into any of 22 investment alternatives, including 
certain employer securities issued by Liberty Media such as Liberty 
Media's Series A and Series C common stock, as well as employer 
securities issued by other participating employers in the Plan. The 
Liberty Media 401(k) Savings Plan Administrative Committee (the 
Committee) is appointed by the board of directors of Liberty Media and 
has investment discretion over the Plan's investments, except to the 
extent that the participants can direct the investment of their Plan 
accounts. The trustee of the Plan (the Trustee) is Fidelity Management 
Trust Company (Fidelity). The Trustee acts as custodian of Plan assets, 
holding legal title to Plan assets, and executing investment directions 
in accordance with the participants' written instructions.
The Spin-Off of Liberty Broadband
    3. On November 4, 2014, Liberty Media engaged in a spin-off (the 
Spin-Off) of its subsidiary, Liberty Broadband. Liberty Media notes 
that, at the time of the Spin-Off, Liberty Broadband owned a 100% 
ownership interest in TruePosition, and certain other equity and debt 
interests.
    4. According to Liberty Media, for every share of Liberty Media's 
Series A common stock held by a shareholder, including the Plan, as of 
5:00 p.m., New York City time, on October 29, 2014, the shareholder 
received one quarter (1/4) of a share of Liberty Broadband's Series A 
common stock (LB Series A Stock), with cash issued in lieu of 
fractional shares. Furthermore, for every share of Liberty Media's 
Series C common stock held by a shareholder, including the Plan, as of 
5:00 p.m., New York City time, on October 29, 2014, the shareholder 
received one quarter (1/4) of a share of Liberty Broadband's Series C 
common stock (LB Series C Stock), with cash issued in lieu of 
fractional shares. Liberty Media explains that the shares of LB Series 
A Stock and LB Series C Stock (collectively, the LB Stock) were 
distributed as of 5:00 p.m., New York City time, on November 4, 2014 
(the Spin-Off Date). Liberty Media notes that Liberty Broadband 
continued to own its interests in TruePosition, among its other 
interests, following the Spin-Off Date.
    5. According to Liberty Media, the LB Stock received by the Plan as 
a result of the Spin-Off was allocated to the Plan participants' 
accounts in the same proportion as the shares were distributed in the 
Spin-Off. However, Liberty Media explains that, effective as of the 
Spin-Off Date, both the Plan and Trust were amended so as to preclude 
additional investments in LB Stock. As such, Liberty Media explains, 
the Plan was frozen to additional investments in LB Stock as of the 
Spin-Off Date. Plan participants holding the LB Stock received in the 
Spin-Off in their accounts could then elect to sell or transfer out the 
LB Stock held in their Plan accounts at any time.
    6. Liberty Media explains that TruePosition, a participating 
employer with respect to the Plan prior to the Spin-Off, had considered 
establishing a new 401(k) plan for its employees that would be 
available for those employees immediately upon the Spin-Off. However, 
it was unable to do so within the ten-day timeframe prior to the Spin-
Off Date. At the same time, TruePosition did not want its employees to 
be without a 401(k) plan to contribute to during this period. As such, 
Liberty Media allowed TruePosition to continue to participate in the 
Plan for the remainder of 2014. Liberty Media represents that 
TruePosition employees no longer participate in the Plan.
The Rights Offering
    7. Liberty Media represents that, on December 10, 2014, Liberty 
Broadband initiated a rights offering (the Rights Offering) and issued 
subscription rights (individually, a Right, and collectively, the 
Rights) to purchase shares of LB Series C Stock to holders of the LB 
Stock, including the Plan, as of 5:00 p.m., New York City time, on 
December 4, 2014 (the Record Date). In a Form S-1 filed with the SEC on 
October 16, 2014, Liberty Broadband stated that it conducted the Rights 
Offering to raise capital for general corporate purposes. According to 
Liberty Media, under the terms of the Rights Offering, one Right was 
issued for every five shares of LB Stock held by the shareholder, 
including the Plan. Once received, each Right gave the respective 
shareholder the right to purchase one share of LB Series C Stock at a 
20% discount to the 20-trading day volume weighted average price of the 
LB Series C Stock following the Spin-Off Date.
    According to Liberty Media, the Rights could be exercised or sold 
during the period of the Rights Offering, which ran from December 11, 
2014 through January 9, 2015. Liberty Media notes that the Rights began 
trading on the Nasdaq Global Select Market (the NASDAQ) on a when-
issued basis on December 10, 2014, and began fully trading on December 
11, 2014, under the symbol ``LBRKR.'' During the Rights Offering 
period, the Rights traded at an average daily volume of 254,232 Rights/
day and at a total cumulative trading volume of 5,338,866 Rights.
    According to Liberty Media, the Plan held 287,143.473 shares of LB 
Stock as of the Record Date. As such, Liberty Media states that the 
Plan received 57,428.641 Rights in connection with the Rights Offering.

[[Page 25440]]

    8. Liberty Media represents that, because of the restrictions 
placed on the Plan's ability to invest in LB Stock described above, 
Plan participants could not exercise Rights for their Plan accounts. 
Liberty Media states that, because the exercise of the Rights received 
in the Rights Offering was not permitted, the Committee directed the 
Trustee to sell the Rights received by the Plan, in accordance with its 
instructions.
    9. According to Liberty Media, the Trustee received the Rights on 
behalf of the Plan on December 15, 2014. Liberty Media represents that 
the Plan established a separate temporary investment fund to receive 
and hold the Rights (the Rights Fund) pending the disposition of the 
Rights by the Trustee. Liberty Media notes that the Trustee acted as 
custodian of the Rights held in the Rights Fund. Liberty Media explains 
that the Rights were credited to participants' Plan accounts based on 
their respective holdings of LB Stock.
    10. Liberty Media represents that the Trustee sold the Plan's 
Rights on the NASDAQ at market value on December 17, 2014, and the 
settlement from the sale of such Rights was completed by December 22, 
2014. Liberty Media explains that, during the period that the Rights 
were traded on the NASDAQ from December 10, 2014 through January 9, 
2015), the Rights sold for prices between $6.64 and $11.82 per Right. 
Liberty Media represents that the Plan received an average price of 
$7.6323 per Right for the sale of the Rights on the NASDAQ, for a total 
of $438,312.65.
    11. According to Liberty Media, the Committee did not exercise any 
discretion with respect to the acquisition and holding of the Rights, 
because the Rights were unilaterally issued by Liberty Broadband to all 
holders of the LB Stock, including the Plan, without any action on the 
part of any stockholder. Liberty Media explains that, because the 
exercise of the Rights to purchase additional LB Series C Stock was not 
permitted, due to the fact that new investments in the Shares were not 
permitted under the Plan, the Committee directed the Trustee to sell 
the Rights.
    12. Liberty Media represents that the Plan did not pay any fees or 
commissions in connection with the acquisition and holding of the 
Rights. Liberty Media notes that the Plan paid a commission rate of 2.9 
cents per Right to Fidelity Brokerage Services LLC (Fidelity 
Brokerage), an affiliate of Fidelity, the Trustee, in connection with 
the sale of the Rights.\9\ Liberty Media explains that the commissions 
were paid out of the Plan's forfeiture accounts.
---------------------------------------------------------------------------

    \9\ Liberty Media explains that the parties are relying on the 
exemptive relief provided by section 408(b)(2) of the Act, relating 
to the provision by a party-in-interest to the Plan, and the payment 
therefor, of services necessary for the administration of the Plan, 
if no more than reasonable compensation is paid for such service. 
Liberty Media represents that the Plan Committee determined that 
Fidelity Brokerage was an appropriate provider of brokerage services 
in connection with the sale of the Rights on the NASDAQ and that the 
fees charged by Fidelity Brokerage for those services was 
reasonable. The Department is expressing no opinion herein as to 
whether the provision of services by Fidelity Brokerage to the Plan 
and the payment of commissions by the Plan to Fidelity Brokerage 
satisfy the requirements of section 408(b)(2) of the Act.
---------------------------------------------------------------------------

Exemptive Relief Requested
    13. Liberty Media represents that the acquisition and holding by 
the Plan of the Rights constitute prohibited transactions in violation 
of sections 406(a)(1)(E), 406(a)(2), and 407(a)(1)(A) of the Act. 
Section 406(a)(1)(E) of the Act provides that a fiduciary with respect 
to a plan shall not cause the plan to engage in a transaction if he or 
she knows or should know that such transaction constitutes the 
acquisition, on behalf of the plan, of any employer security in 
violation of section 407(a) of the Act. Section 406(a)(2) of the Act 
provides that a fiduciary of a plan shall not permit the plan to hold 
any employer security if he or she knows or should know that holding 
such security violates section 407(a) of the Act. Under section 
407(a)(1)(A) of the Act, a plan may not acquire or hold any ``employer 
security'' which is not a ``qualifying employer security.'' Under 
section 407(d)(1) of the Act, ``employer securities'' are defined, in 
relevant part, as securities issued by an employer of employees covered 
by the plan, or by an affiliate of such employer. Section 407(d)(5) of 
the Act provides, in relevant part, that ``qualifying employer 
securities'' are stock or marketable debt obligations.
    Liberty Media states that the Rights constitute ``employer 
securities'' under section 407(d)(1) of the Act because the employees 
of TruePosition, an affiliate of Liberty Broadband, participated in the 
Plan at the time of the Rights Offering. Therefore, because the Rights 
were issued by an affiliate of TruePosition, which was an employer of 
employees covered by the Plan at the time of the Rights Offering, the 
Rights constituted employer securities. Liberty Media states further 
that, since the Rights did not constitute stock or marketable debt 
securities, they were not qualifying employer securities. Therefore, 
Liberty Media requests a retroactive exemption from sections 
406(a)(1)(E), 406(a)(2), and 407(a)(1)(A) of the Act for the 
acquisition and holding of the Rights in connection with the Rights 
Offering.
    14. As explained above, Liberty Media represents that the 
acquisition of the Rights has been completed. Liberty Media represents 
that no Plan accounts currently hold any Rights. Liberty Media notes 
that the Rights were sold by the Plan on the NASDAQ and that no Rights 
were exercised while in the Plan accounts. Liberty Media seeks 
retroactive relief effective from December 15, 2014, the date that the 
Plan received the Rights, until December 17, 2014, the date the Rights 
were sold on the NASDAQ.
Statutory Findings
    15. Liberty Media represents that the proposed exemption is 
administratively feasible. Liberty Media represents that all 
shareholders, including the Plan, were treated in a like manner with 
respect to the acquisition and holding of the Rights. Furthermore, 
Liberty Media notes that the Rights were distributed to all 
shareholders of LB Stock, and upon receipt of the Rights by the Plan, 
they were placed in the Rights Fund. Thereafter, because the Plan was 
not permitted to acquire additional LB Stock, the Committee directed 
the Trustee to sell all of the Rights on the NASDAQ in accordance with 
their instructions. As such, Liberty Media represents that there is no 
reason for any continuing Departmental oversight.
    16. Liberty Media represents that an exemption for the Plan's 
acquisition and holding of the Rights through its participation in the 
Rights Offering is in the interests of the Plan and its participants 
and beneficiaries because it allowed participants and beneficiaries to 
benefit from the sale of the Rights at no cost to the Plan, with the 
exception of a commission paid in connection with the sale of the 
Rights.
    In this regard, the Rights were credited to participants' Plan 
accounts based on their respective holdings of Shares, and the 
proportionate cash proceeds from the sale of the Rights were placed in 
each respective account.
    17. Liberty Media represents that an exemption for the acquisition 
and holding of the Rights in the Rights Offering is protective of the 
rights of participants and beneficiaries because the Rights were sold 
on the NASDAQ by the Trustee for their market value, in arms'-length 
transactions between unrelated parties. Furthermore, Liberty

[[Page 25441]]

Media represents that the Plan did not pay any fees or commissions with 
respect to the acquisition or holding of the Rights, and it did not pay 
any commissions to any affiliate of Liberty Broadband, Liberty Media, 
or TruePosition with respect to the sale of the Rights.
Summary
    18. In summary, Liberty Media represents that the proposed 
exemption satisfies the statutory criteria for an exemption under 
section 408(a) of the Act for the reasons stated above and for the 
following reasons:
    a. The Plan's acquisition of the Rights resulted solely from an 
independent corporate act of Liberty Broadband;
    b. All holders of LB Stock, including the Plan, were issued the 
same proportionate number of Rights based on the number of shares of LB 
Stock held by each such shareholder;
    c. For purposes of the Rights Offering, all holders of LB stock, 
including the Plan, were treated in a like manner;
    d. The acquisition of the Rights by the Plan was made in a manner 
that was consistent with provisions of the Plan for the individually-
directed investment of participant accounts;
    e. The Committee directed the Plan trustee to sell the Rights on 
the NASDAQ, in accordance with Plan provisions that precluded the Plan 
from acquiring additional shares of LB Stock;
    f. The Committee did not exercise any discretion with respect to 
the acquisition and holding of the Rights; and
    g. The Plan did not pay any fees or commissions in connection with 
the acquisition or holding of the Rights, and did not pay any 
commissions to Liberty Broadband, Liberty Media, TruePosition, or any 
affiliates of the foregoing in connection with the sale of the Rights.

Notice to Interested Persons

    Notice of the proposed exemption will be given to all Interested 
Persons within 7 days of the publication of the notice of proposed 
exemption in the Federal Register, by first class U.S. mail to the last 
known address of all such individuals. Such notice will contain a copy 
of the notice of proposed exemption, as published in the Federal 
Register, and a supplemental statement, as required pursuant to 29 CFR 
2570.43(a)(2). The supplemental statement will inform interested 
persons of their right to comment on the pending exemption. Written 
comments are due within 37 days of the publication of the notice of 
proposed exemption in the Federal Register.
    All comments will be made available to the public.
    Warning: If you submit a comment, EBSA recommends that you include 
your name and other contact information in the body of your comment, 
but DO NOT submit information that you consider to be confidential, or 
otherwise protected (such as Social Security number or an unlisted 
phone number) or confidential business information that you do not want 
publicly disclosed. All comments may be posted on the Internet and can 
be retrieved by most Internet search engines.

FOR FURTHER INFORMATION CONTACT: Scott Ness of the Department, 
telephone (202) 693-8561. (This is not a toll-free number.)

Baxter International Inc. (Baxter or the Applicant) Located in 
Deerfield, IL

[Application No. D-11866]

Proposed Exemption

    The Department is considering granting an exemption under the 
authority of section 408(a) of the Employee Retirement Income Security 
Act of 1974, as amended, (ERISA) and section 4975(c)(2) of the Internal 
Revenue Code of 1986, as amended (the Code), and in accordance with the 
procedures set forth in 29 CFR part 2570, subpart B (76 FR 66637, 
66644, October 27, 2011).

Section I. Transaction

    If the proposed exemption is granted, the restrictions of sections 
406(a)(1)(A) and (D) and sections 406(b)(1) and (2) of ERISA and 
sections 4975(c)(1)(A), (D), and (E) of the Code shall not apply to the 
contribution of publicly traded common stock of Baxalta (the 
Contributed Stock) by Baxter (the Contribution) to the Baxter 
International Inc. and Subsidiaries Pension Plan (the Plan), provided:
    (a) Fiduciary Counselors Inc. (the Independent Fiduciary) will 
represent the interests of the Plan, the participants, and 
beneficiaries with respect to the Contribution, including but not 
limited to, taking the following actions:
    (i) Determining whether the Contribution is in the interests of the 
Plan and of its participants and beneficiaries, and is protective of 
the rights of participants and beneficiaries of the Plan;
    (ii) Determining whether and on what terms the Contribution should 
be accepted by the Plan;
    (iii) If the Contribution is accepted by the Plan, establishing and 
administering the process (subject to such modifications as the 
Independent Fiduciary may make from time to time) for liquidating the 
Contributed Stock, as is prudent under the circumstances;
    (iv) Determining the fair market value of the Contributed Stock as 
of the date of the Contribution;
    (v) Monitoring the Contribution and holding of Contributed Stock on 
a continuing basis and taking all appropriate actions necessary to 
safeguard the interests of the Plan; and
    (vi) If the Contribution is accepted by the Plan, voting proxies 
and responding to tender offers with respect to the Contributed Stock 
held by the Plan;
    (b) Solely for purposes of determining the Plan's minimum funding 
requirements (as determined under section 412 of the Code), adjusted 
funding target attainment percentage (AFTAP) (as determined under 
Treas. Reg. section 1.436-1(j)(1)), and funding target attainment 
percentage (as determined under section 430(d)(2) of the Code), the 
Plan's actuary (the Actuary) will not count as a contribution to the 
Plan any shares of Contributed Stock that have not been liquidated;
    (c) For purposes of determining the amount of any Contribution, the 
Contributed Stock shall be deemed contributed only at the time it is 
sold, equal to the lesser of: (1) The proceeds from the sale of such 
Contributed Stock; or (2) the value of such Contributed Stock on the 
date of the initial contribution as determined by the Independent 
Fiduciary;
    (d) The Contributed Stock represents no more than 20% of the fair 
market value of the total assets of the Plan at the time it is 
contributed to the Plan;
    (e) The Plan pays no commissions, costs, or other expenses in 
connection with the Contribution, holding, or subsequent sale of the 
Contributed Stock, and any such expenses paid by Baxter will not be 
treated as a contribution to the Plan;
    (f) Baxter makes cash contributions to the Plan to the extent that 
the cumulative proceeds from the sale of the Contributed Stock at each 
contribution due date (determined under section 303(j) of ERISA) are 
less than the cumulative cash contributions Baxter would have been 
required to make to the Plan, in the absence of the Contribution. Such 
cash contributions shall be made until all of the Contributed Stock is 
sold by the Plan; and
    (g) Baxter contributes to the Plan cash amounts needed for the Plan 
to attain an AFTAP (determined under Treas. Reg. section 1.436-1(j)(1)) 
of at least 80% as of the first day of each plan year during

[[Page 25442]]

which the Plan holds Contributed Stock, as determined by the Actuary, 
without taking into account any unsold Contributed Stock as of April 1 
of the plan year.

Summary of Facts and Representations 10
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    \10\ The Summary of Facts and Representations is based on the 
Applicant's representations and does not reflect the views of the 
Department, unless indicated otherwise.
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Background
    1. Baxter International, Inc. (Baxter or the Applicant) is a 
Delaware corporation headquartered in Deerfield, Illinois, and does 
business throughout the world. Baxter was originally founded in 1931 as 
a manufacturer of intravenous (IV) solutions. Baxter's shares are 
publicly traded on the New York Stock Exchange (the NYSE). Prior to the 
spin-off transaction described below, Baxter had approximately 60,000 
employees worldwide and two principal lines of business with 
manufacturing and research facilities in the United States, Belgium, 
Czech Republic, France, Germany, Ireland, Italy, Malta, Poland, Spain, 
Sweden, Switzerland, and the United Kingdom. The first business line 
involved the manufacture and sale of medical devices, primarily 
products used in the delivery of fluids and drugs to patients (the 
Medical Products Business). The second business line involved the 
manufacture and sale of products derived from blood plasma and other 
natural substances and used to treat bleeding disorders, immune 
deficiencies, and other conditions (the BioScience Business). In 2014, 
Baxter had net income of approximately $2.5 billion on net sales of 
approximately $16.7 billion, and as of December 31, 2014, its total 
shareholder's equity was in excess of $8.1 billion. Additionally, its 
debt is rated ``investment grade'' by the Standard & Poor's, Moody's, 
and Fitch rating services.
    2. Baxalta Incorporated (Baxalta) is a Delaware corporation that 
was incorporated on September 8, 2014, as a wholly-owned subsidiary of 
Baxter. Baxter transferred the BioScience Business to Baxalta as part 
of the spin-off described below. For 2014, Baxalta's net sales were 
approximately $6.109 billion, and its net operating income was 
approximately $1.114 billion. As of March 31, 2015, Baxalta had total 
assets of approximately $11 billion. Baxalta has approximately 16,000 
employees worldwide, with plants located in six countries.
    3. The Plan is a defined benefit pension plan qualified under 
section 401(a) of the United States Internal Revenue Code of 1986, as 
amended (the Code) and sponsored and maintained by Baxter for the 
benefit of its employees located within the United States. As of May 1, 
2015, there were a total of 30,836 participants and beneficiaries in 
the Plan. Baxter froze the Plan to new participants on December 31, 
2006, and no person hired or re-hired, or transferred to a Baxter 
company in the United States after such date is eligible to participate 
in the Plan. Persons who were participants in the Plan on December 31, 
2006, continue to accrue benefits under the Plan, except that Baxter 
gave participants who had fewer than five years of vesting service on 
December 31, 2006, an election between: (1) Continuing to accrue 
benefits under the Plan; or (2) receiving enhanced contributions to 
Baxter's defined contribution plan (i.e., its 401(k) plan).
    4. The Plan is funded by the Baxter International Inc. and 
Subsidiaries Pension Trust (the Trust), which was established pursuant 
to a trust agreement originally entered into July 1, 1986. The Plan's 
assets are invested under the direction of independent investment 
advisers, who are selected and overseen by Baxter's Investment 
Committee. As of June 30, 2015, the Plan had approximately $3.0 billion 
in total assets.\11\
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    \11\ The number of participants and beneficiaries and the total 
Plan assets noted in this proposal represent totals after giving 
effect to the spin-off described below.
---------------------------------------------------------------------------

    5. Baxter's Administrative Committee is a committee comprised of 
employees of Baxter, which is appointed by the Compensation Committee 
of Baxter's Board of Directors. The Administrative Committee is 
responsible for the administration of Baxter's employee benefit plans, 
including the Plan, and is the designated ``plan administrator'' of the 
Plan for purposes of ERISA. The Investment Committee is also a 
committee comprised of employees of Baxter, but is appointed by 
Baxter's Board of Directors. The Investment Committee is responsible 
for directing the investment of the Plan's assets, including the 
selection and oversight of all investment managers and advisers for the 
Plan. The members of both the Administrative Committee and Investment 
Committee (together, the Committees) are named fiduciaries for purposes 
of ERISA with respect to the Plan. Both committees approved the 
proposed transaction of Contributed Stock and retention of Fiduciary 
Counselors, Inc. to act as the independent fiduciary for the Plan (the 
Independent Fiduciary).
    6. The Plan's independent actuary, Towers Watson (the Actuary), 
determined that the Plan's adjusted funding target attainment 
percentage (AFTAP) as of January 1, 2014, was 104.3%, and the AFTAP as 
of January 1, 2015, was 107.16%. Baxter elected to apply its credit 
balance under the Plan to satisfy its minimum funding obligation for 
the 2014 plan year and was not required to make any cash contribution 
for that year. Baxter's minimum contribution obligation for 2015 was 
reduced to zero by the application of funding balances from prior 
years, and accordingly Baxter was not obligated to make (and did not 
make) any 2015 contribution. Under current projections, and excluding 
the proposed Contribution, Baxter states that it will not be required 
to make any cash contributions to the Plan until the 2019 plan year.
The Spin-Off
    7. Baxter distributed approximately 80.5 percent of the common 
stock of Baxalta (the Baxalta Stock) to the shareholders of Baxter as a 
stock dividend (the Spin-Off) on July 1, 2015 (the Spin-Off Date). Each 
shareholder of Baxter received one share of Baxalta Stock for each 
share of Baxter stock owned on the record date for the Spin-Off. 
Furthermore, pursuant to a Separation and Distribution Agreement, dated 
June 30, 2015, between Baxter and Baxalta, Baxter transferred to 
Baxalta all of the assets that made up the BioScience Business, and 
Baxalta assumed the liabilities relating to the BioScience Business.
    8. In connection with the Spin-Off, effective May 1, 2015, Baxalta 
established the Baxalata Incorporated and Subsidiaries Pension Plan 
(the Baxalta Plan), and the accrued benefits of all active participants 
in the Plan whose employment was transferred to Baxalta pursuant to the 
spin-off were transferred to the Baxalta Plan. The benefits of all 
terminated and retired participants were retained by the Plan, 
regardless of whether the participant was employed in the Medical 
Products Business or the BioScience Business.
    9. In connection with the Spin-Off, but prior to the Spin-Off Date, 
Baxter caused a registration of the Baxalta Stock to be filed with the 
Securities and Exchange Commission, and caused the Baxalta Stock to be 
listed on the NYSE, so that immediately following the Spin-Off, Baxalta 
became a publicly traded stock, freely tradable on the NYSE. Baxter 
received a private letter ruling (the Private Letter Ruling) from the 
Internal Revenue Service covering certain federal income tax 
consequences

[[Page 25443]]

of the Spin-Off. According to the Applicant, the Private Letter Ruling 
provides that Baxter's use of the Baxalta Stock retained by Baxter (the 
Retained Stock) to satisfy such debts and obligations, including the 
proposed contribution of a portion of the Retained Stock to the Plan, 
will not result in the recognition by Baxter of taxable income, 
provided that the Retained Stock is used for such purpose within 
eighteen months following the Spin-Off Date.
The Contribution
    10. Baxter states that the total value of all outstanding shares of 
Baxalta Stock (including the Retained Stock) as of July 2015 was 
approximately $20.3 billion, and the total value of the Retained Stock 
was approximately $4.0 billion, based upon a value of $30 per share. On 
the Spin-Off Date, the Retained Stock constituted approximately 19.5 
percent of the total shares of Baxalta Stock. Baxter proposes to make 
an in-kind contribution (i.e., a contribution other than cash) to the 
Plan of a portion of the Retained Stock (the Contributed Stock). Baxter 
represents that the Contributed Stock will have a market value, after 
any applicable liquidity discount, of not more than $750 million. The 
Applicant states further that based upon an assumed value of $30 per 
share, the number of shares of Contributed Stock will not be more than 
25 million, which would represent approximately 18.95 percent of the 
Retained Stock and 4.4 percent of the total number of outstanding 
shares of Baxalta Stock (including the shares originally distributed as 
part of the Spin-Off and the Contributed Stock, but not the remaining 
shares of Retained Stock). The Applicant notes that, however, in no 
event will the value of the Contributed Stock exceed 20 percent of the 
total value of the Plan's assets immediately after Baxter contributes 
the Contributed Shares (the Contribution).
    11. The Applicant represents that the Private Letter Ruling from 
the IRS specifically sanctions the contribution of the Contributed 
Stock on a tax-free basis, as long as the Contribution is completed 
within 18 months after the Spin-Off Date. As a result of the Private 
Letter Ruling, Baxter would save approximately $260 million in taxes if 
the Contributed Stock is contributed to the Plan. Baxter intends to 
pass this tax savings to the Plan in order to fund future benefits. 
Thus, Baxter states that an exemption for the in-kind contribution of 
the Contributed Stock will increase the assets available to the Plan by 
approximately $262.5 million.
    12. Baxter states that the Baxalta Stock is listed on the NYSE, so 
that the Plan will be able to sell shares in open market transactions 
on the NYSE. Furthermore, according to Baxter, the shares of 
Contributed Stock will be considered ``restricted shares'' so that they 
can only be sold by the Plan in accordance with Rule 144 of the 
Securities and Exchange Commission.\12\ However Baxter states that Rule 
144's limitation on the maximum number of shares that may be sold by an 
affiliate within any three month period will not apply to the Plan. The 
Rule 144 requirement that the Plan hold the Contributed Stock for at 
least six months will apply, but Baxter expects to be able to consider 
its own holding time of the shares towards the Plan's six-month period, 
which was satisfied as of November 10, 2015. The Plan, however, would 
not be able to sell all of the Contributed Stock at one time without 
potentially depressing the market. Accordingly, the Independent 
Fiduciary has been tasked with selling the Contributed Stock on behalf 
of the Plan as quickly as is prudent and consistent with applicable 
laws.
---------------------------------------------------------------------------

    \12\ See 17 CFR 230.144.
---------------------------------------------------------------------------

Reasons the Proposed Transaction is Prohibited Under ERISA and the Code
    13. Baxter represents that it is the employer--or the ultimate 
shareholder of the employer--of all of the employees covered by the 
Plan, and therefore a ``party in interest'' with respect to the Plan as 
defined in section 3(14)(C) and (E) of ERISA.\13\ Section 406(a)(1)(A) 
of ERISA provides that a fiduciary with respect to a plan shall not 
cause the plan to engage in a transaction, if he knows or should know 
that such transaction constitutes a direct or indirect sale or 
exchange, or leasing, of any property between the plan and a party in 
interest. The Applicant notes that in Commissioner of Internal Revenue 
v. Keystone Consolidated Industries, Inc., 508 US 152 (1993), the 
United States Supreme Court held that a contribution of property to a 
plan, in satisfaction of the employer's minimum funding obligation, was 
a ``sale or exchange'' for purposes of section 406(a)(1)(A) of ERISA. 
The Applicant also notes that in Interpretive Bulletin 94-3(b), 29 CFR 
2509.94-3(b), the Department concluded that any contribution of 
property to a defined benefit pension plan is a sale or exchange for 
purposes of section 406(a)(1)(A) of ERISA, even if the contribution is 
not used to satisfy a minimum funding obligation. Thus, the Applicant 
states that the Contribution will constitute a sale or exchange of the 
Contributed Stock between the Plan and a party in interest, and is 
prohibited under section 406(a)(1)(A) of ERISA.
---------------------------------------------------------------------------

    \13\ For purposes of this proposed exemption, references to 
Title I of ERISA, unless otherwise specified, refer also to the 
corresponding provisions of the Code.
---------------------------------------------------------------------------

    14. In addition, section 406(a)(1)(D) of ERISA provides that a 
fiduciary with respect to a plan shall not cause the plan to engage in 
a transaction, if he knows or should know that such transaction 
constitutes a direct or indirect transfer to, or use by or for the 
benefit of a party in interest, of any assets of the plan. The 
Applicant states that the use of the Contributed Stock to potentially 
reduce Baxter's funding obligation could be considered a use of the 
Contributed Stock after it has become a plan asset for Baxter's 
benefit.
    15. Section 406(b)(1) of ERISA provides that a fiduciary with 
respect to a plan shall not deal with the assets of the plan in his own 
interest or for his own account, and section 406(b)(2) of ERISA 
provides that a fiduciary with respect to a plan shall not in his 
individual or in any other capacity act 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. By causing the Plan to receive the 
Contribution, the members of the Committees and Baxter could be viewed 
as either dealing with the Plan's assets in their own interest or for 
their own account in violation of section 406(b)(1) of ERISA or as 
acting on behalf of Baxter in the Contribution, where Baxter's 
interests are adverse to those of the Plan, in violation of section 
406(b)(2) of ERISA.
Independent Fiduciary
    16. As described in more detail below, the Committees have retained 
Fiduciary Counselors Inc., the Independent Fiduciary, to represent the 
interests of the Plan with respect to the proposed transaction pursuant 
to an agreement dated May 11, 2015 (and which was subsequently updated 
on January 22, 2016). The Independent Fiduciary is an investment 
adviser registered under the Investment Advisers Act of 1940 that 
primarily acts as an independent fiduciary for employee benefit plans. 
Furthermore, Fiduciary Counselors states that it has served as an 
independent fiduciary for employee benefit plans since 2001. Fiduciary 
Counselors represents that they are highly qualified to serve as 
independent fiduciary in connection with the proposed transactions. The 
Independent Fiduciary was selected by the Committees based upon 
proposals

[[Page 25444]]

submitted by the Independent Fiduciary and other candidates.
    17. The Independent Fiduciary states that it is not related to or 
affiliated with any of the other parties to the transaction, and has 
not previously been retained to perform services with respect to the 
Plan or any other employee benefit plan sponsored by Baxter. Fiduciary 
Counselors represents and warrants that it is independent of and 
unrelated to Baxter and Baxalta, and that: (a) It does not directly or 
indirectly control, is not controlled by, and is not under common 
control with Baxter or Baxalta; (b) neither it, nor any of its 
officers, directors, or employees is an officer, director, partner, or 
employee of Baxter or Baxalta (or is a relative of such persons); (c) 
it does not directly or indirectly receive any consideration for its 
own account in connection with the Contribution or its services 
described hereunder, except that it may receive compensation from 
Baxter for performing the services described in this proposed exemption 
as long as the amount of such payment is not contingent upon or in any 
way affected by Fiduciary Counselor's ultimate decision; and (d) the 
percentage of Fiduciary Counselor's revenue that is derived from the 
Plan, any party in interest, or its affiliates involved in the proposed 
transactions is less than 5% of its previous year's annual revenue from 
all sources. Fiduciary Counselors represents that it understands and 
acknowledges its duties and responsibilities under ERISA in acting as 
an independent fiduciary on behalf of the Plan in connection with the 
covered transactions.
    18. Fiduciary Counselors provided a preliminary report dated July 
22, 2015 (the IF Report), that analyzed the proposed Contribution and 
described its responsibilities in connection therewith. In connection 
with the IF Report, the Independent Fiduciary considered the following 
key elements:
    (a) Whether the Plan's Investment Policy would permit the Plan to 
hold the Contributed Stock as an acceptable investment. According to 
the IF Report, the Investment Committee approved the acceptance of the 
Contributed Stock as an employer contribution in the Plan, to be 
subsequently liquidated for cash. Therefore, the Independent Fiduciary 
determined that the Contributed Stock is an acceptable investment for 
the Plan and would be liquidated as soon as practicable and consistent 
with ERISA.
    (b) Whether any liquidity discount would be applicable to the 
valuation of the Contributed Stock. The Independent Fiduciary retained 
Murray, Devine & Co., Inc. (Murray Devine) as an independent valuation 
adviser in order to assist with this determination.\14\ The IF Report 
provides that the Contributed Stock could be liquidated in as few as 42 
trading days, depending on the particular circumstances, assuming (i) 
Baxter contributes 25 million shares of Baxalta stock to the Plan, (ii) 
the Contributed Stock trading volumes remain around 6 million shares 
per day, and (iii) Fiduciary Counselors limits the disposition of 
Contributed Stock to 10% or less of daily volume (provided that such 
limitation is appropriate and consistent with ERISA). Therefore, 
Fiduciary Counselors expects the liquidity discount computed by Murray 
Devine will be very small.
---------------------------------------------------------------------------

    \14\ According to Fiduciary Counselors, Murray Devine is well 
qualified for this engagement in that it is a nationally recognized 
valuation advisory firm and has provided valuation advisory services 
to private equity, corporate, venture capital, and commercial 
banking institutions since its inception in 1989. Fiduciary 
Counselors represents that it has utilized their services in other 
engagements. Furthermore, Murray Devine represents and warrants that 
it is independent of and unrelated to Baxter, Baxalta, and Fiduciary 
Counselors, and that:
     It does not directly or indirectly control, is not 
controlled by, and is not under common control with Baxter, Baxalta, 
or Fiduciary Counselors;
     Murray Devine, nor any of its officers, directors, or 
employees is an officer, director, partner or employee of Baxter, 
Baxalta or Fiduciary Counselors (or is a relative of such persons);
     The amount of compensation received by Murray Devine is 
not contingent of the valuation; and
    The percentage of Murray Devine's revenue that is derived from 
any party in interest or its affiliates involved in the stock 
contribution is less than 5% of its previous year's annual revenue 
from all sources.
---------------------------------------------------------------------------

    (c) What impact, if any, the Contribution will have on the 
diversification of the Plan's portfolio. The IF Report provides that, 
while the Plan's acceptance of the Contributed Stock will skew the 
Plan's asset class allocations above the targeted amount for Large Cap 
stock of 24% of plan assets, this will be a temporary deviation and 
Fiduciary Counselors expects the allocation will return to pre-
Contribution levels as the Contributed Stock is sold. Thus, the 
Independent Fiduciary does not believe that the Contribution will cause 
any significant disruption to the Plan's asset allocation.
    (d) Whether the Plan will have sufficient liquidity to meet 
benefits payments. The IF Report indicates that, as of June 30, 2015, 
the Plan held approximately $120 million of its assets in cash or cash 
equivalents. According to the IF Report, since the Plan does not 
currently have a minimum funding obligation, its assets will increase 
by investment income, which is currently estimated to yield a 7.25% 
annual rate of return or approximately $218 million. Further, the 
largest Plan outflow is benefit payments of $160 million a year. 
Because the majority of the Plan's assets are in investments that can 
be liquidated on a daily basis, and the Contributed Stock will be 
converted to cash as it is liquidated, the IF Report concludes that the 
Plan will have sufficient liquidity to meet its needs over the time 
period while the Contributed Stock is held by the Plan.
    (e) Whether the Contribution will sufficiently improve the Plan's 
funded status. According to the IF Report, the Contribution will 
increase the funded status of the plan by between $600 million and $750 
million, thereby significantly improving the funded status of the 
Plan.\15\ The IF Report also notes that the Actuary estimated no 
minimum funding requirement for the 2016, 2017, and 2018 plan years, 
indicating that the Plan will continue to be well-funded.
---------------------------------------------------------------------------

    \15\ For purposes of the IF Report, Fiduciary Counselors 
estimated a range for the value of the Contribution that takes into 
account the requirement that, for purposes of determining minimum 
funding, the amount of the Contribution will be deemed to be the 
lesser of the proceeds from the sale of the Contributed Stock or the 
value of the Contributed Stock at the time it is contributed to the 
Plan.
---------------------------------------------------------------------------

    (f) The ability of the Contributed Stock to be readily liquidated 
given its publicly traded nature. The IF Report notes that the 
Contributed Stock is publicly traded, can be partially sold daily at 
market prices, and can be completely liquidated in as few as 42 trading 
days (nine weeks) at current trading volume without depressing the 
stock price,\16\ the Contributed Stock can be readily converted into 
cash and is considered a highly liquid investment.
---------------------------------------------------------------------------

    \16\ The IF Report indicates that Baxalta anticipates receiving 
an opinion from its securities counsel that the Plan will not be 
considered an ``affiliate'' of Baxalta within the meaning of Rule 
144. Accordingly, the limitation on the maximum number of shares 
that may be sold by an affiliate within any three month period (the 
Volume Limitation) will not apply to the sales of Contributed Stock 
by the Plan.
---------------------------------------------------------------------------

    19. The IF Report also describes the Independent Fiduciary's other 
responsibilities in connection with the Contribution. In this regard, 
the Independent Fiduciary will monitor the covered transactions on a 
continuing basis and take all appropriate actions to safeguard the 
interests of the Plan to ensure that the transactions remain in the 
interests of the Plan, and, if not, take appropriate action available 
under the circumstances. Additionally, the Independent Fiduciary will 
determine whether and on what terms the Contribution should be accepted 
by the Plan, and if the Contribution is accepted by the Plan, vote 
proxies and respond to

[[Page 25445]]

tender offers with respect to the Contributed Stock held by the Plan.
    20. After Baxter makes the Contribution, the Independent Fiduciary 
will act as an investment manager to establish and administer the 
process (subject to such modifications as the Independent Fiduciary may 
make from time to time) for liquidation of the Contributed Stock as 
quickly as is prudent and consistent with market conditions and 
applicable laws. If, following the acceptance of the Contributed Stock 
and in the course of liquidating such stock, the Independent Fiduciary 
determines that continuing the liquidation of the Contributed Stock is 
imprudent, and is likely to remain imprudent for an indefinite period 
of time, the Independent Fiduciary shall notify the Committees, who 
shall arrange for the remaining Contributed Stock to be transferred to 
the portfolio of one or more of the Plan's independent investment 
managers, and the agreement with the Independent Fiduciary shall 
terminate.
Statutory Findings--Administratively Feasible
    21. The Applicant represents that a proposed exemption is 
administratively feasible because the Independent Fiduciary, rather 
than the Department, will monitor the covered transactions for 
compliance with the terms of the proposed exemption and enforce the 
rights of the Plan in connection with the covered transactions. 
Furthermore, Baxter's proposed Contribution will be a single event, and 
the Contributed Stock will be sold by the Plan over a relatively short 
time period. Baxter states further that since Baxalta Stock is publicly 
traded and readily saleable, the sales will occur through open market 
transactions on a nationally recognized exchange, obviating the need 
for further monitoring.
Statutory Findings--In the Interest of the Plan and Its Participants 
and Beneficiaries
    22. The Applicant states that a proposed exemption is in the 
interest of the Plan and its participants and beneficiaries. According 
to Baxter, the Contributed Stock will increase the assets of the Plan 
by as much as 20 percent, which will significantly improve the funded 
status of the Plan. Since the Contributed Stock will only be counted 
towards Baxter's minimum funding requirement as the shares are sold by 
the Plan and converted into more diversified investments, Baxter will 
still be obligated to make its minimum required contributions as if the 
Contributed Stock had never been received until and unless the shares 
are sold. Thus, the Applicant states that the Plan gets the benefit of 
the additional value of the Contributed Stock without giving up the 
benefit of minimum required cash contributions from Baxter.
Statutory Findings--Protective of the Rights of the Plan and Its 
Participants and Beneficiaries
    23. The Applicant states that the requested exemption is protective 
of the rights of the Plan and its participants and beneficiaries. The 
Applicant reiterates that the principal protection for participants and 
beneficiaries is the fact that the Independent Fiduciary, acting solely 
in the interest of the participants and beneficiaries, will review the 
transaction to ensure that it is fair to the participants and 
beneficiaries, will monitor compliance with the exemption, and will 
oversee the Plan's sale of the Contributed Stock.
    24. Additionally, the requested exemption would require Baxter to 
make cash contributions to the Plan to the extent that the cumulative 
proceeds from the sale of the Contributed Stock at each contribution 
due date (determined under section 303(j) of ERISA) are less than the 
cumulative cash contributions Baxter would have been required to make 
to the Plan in the absence of the Contribution. Such cash contributions 
must be made until all of the shares of Contributed Stock are sold. 
These conditions should mitigate the risk of the Plan holding too much 
of its assets in one security. Solely for purposes of determining the 
Plan's minimum funding requirements, AFTAP, and funding target 
attainment percentage, the Actuary will not count as a contribution to 
the Plan any Contributed Stock that has not been sold. The Applicant 
states that this protection is intended to ensure that Baxter does not 
receive a credit for minimum funding purposes under section 302 of 
ERISA for the Contributed Stock prior to the time the stock is sold, 
when it could still decrease in value. If the Independent Fiduciary 
determines that the Plan should retain shares of the Contributed Stock 
on an indefinite basis, such a decision will be communicated to the 
Committees.
    25. The Applicant also states that Baxter must contribute to the 
Plan such cash amounts as are needed for the Plan to maintain an AFTAP 
of at least 80 percent as of the first day of each plan year during 
which the Plan holds shares of the Contributed Stock, as determined by 
the Actuary, without taking into account any Contributed Stock that has 
not been sold by April 1 of the plan year.
    26. The Applicant also states that the value of the Contributed 
Stock cannot be more than 20 percent of the fair market value of the 
total assets of the Plan at the time Baxter makes the Contribution to 
the Plan. Additionally, the Plan may not pay any commissions, costs, or 
other expenses in connection with the contribution, holding, or 
subsequent sale of the Contributed Stock, and any such expenses paid by 
Baxter must not be treated as a contribution to the Plan.
Summary
    27. In summary, the Applicant represents that the proposed 
Contribution will meet the criteria of section 408(a) of ERISA and 
section 4975(c)(2) of the Code for the above and the following reasons:
    (a) The Independent Fiduciary will represent the interests of the 
Plan, the participants, and beneficiaries with respect to the 
Contribution;
    (b) Solely for purposes of determining the Plan's minimum funding 
requirements, AFTAP, and funding target attainment percentage, the 
Actuary will not count as a contribution to the Plan any shares of 
Contributed Stock that have not been liquidated;
    (c) For purposes of determining the amount of any Contribution, the 
Contributed Stock shall be deemed contributed only at the time it is 
sold, equal to the lesser of: (1) The proceeds from the sale of such 
Contributed Stock; or (2) the value of such Contributed Stock on the 
date of the initial contribution as determined by the Independent 
Fiduciary;
    (d) The Contributed Stock represents no more than 20% of the fair 
market value of the total assets of the Plan at the time it is 
contributed to the Plan;
    (e) The Plan pays no commissions, costs, or other expenses in 
connection with the Contribution, holding, or subsequent sale of the 
Contributed Stock, and any such expenses paid by Baxter will not be 
treated as a contribution to the Plan;
    (f) Baxter makes cash contributions to the Plan to the extent that 
the cumulative proceeds from the sale of the Contributed Stock at each 
contribution due date are less than the cumulative cash contributions 
Baxter would have been required to make to the Plan, in the absence of 
the Contribution. Such cash contributions shall be made until all of 
the Contributed Stock is sold by the Plan; and
    (g) Baxter contributes to the Plan cash amounts needed for the Plan 
to attain an AFTAP of at least 80% as of the first day

[[Page 25446]]

of each plan year during which the Plan holds Contributed Stock, as 
determined by the Actuary, without taking into account any unsold 
Contributed Stock as of April 1 of the plan year.

Notice to Interested Persons

    Baxter will provide notice of the proposed exemption to all persons 
with accrued benefits under the Plan, all beneficiaries of deceased 
participants, and all alternate payees pursuant to qualified domestic 
relations orders within five (5) calendar days of publication of the 
proposed exemption in the Federal Register. For all persons for whom 
disclosure by electronic media is permitted by 29 CFR 2520.104b-1(c), 
notice will be posted on Baxter's internal Web site and such persons 
will be notified of the posting by email in accordance with 29 CFR 
2520.104b-1(c). Baxter will provide the notice to all other interested 
persons via first-class mail. In addition to the proposed exemption, as 
published in the Federal Register, Baxter will provide interested 
persons with a supplemental statement, as required, under 29 CFR 
2570.43(a)(2). The supplemental statement will inform such employees of 
their right to comment on and to request a hearing with respect to this 
proposed exemption. The Department must receive all written comments 
and/or requests for a hearing within 35 days of the publication of this 
proposed exemption in the Federal Register. The Department will make 
all comments available to the public.
    Warning: If you submit a comment, EBSA recommends that you include 
your name and other contact information in the body of your comment, 
but DO NOT submit information that you consider to be confidential, or 
otherwise protected (such as Social Security number or an unlisted 
phone number) or confidential business information that you do not want 
publicly disclosed. All comments may be posted on the Internet and can 
be retrieved by most Internet search engines.

FOR FURTHER INFORMATION CONTACT: Mr. Erin S. Hesse of the Department, 
telephone (202) 693-8546 (This is not a toll-free number.)

General Information

    The attention of interested persons is directed to the following:
    (1) The fact that a transaction is the subject of an exemption 
under section 408(a) of the Act and/or section 4975(c)(2) of the Code 
does not relieve a fiduciary or other party in interest or disqualified 
person from certain other provisions of the Act and/or the Code, 
including any prohibited transaction provisions to which the exemption 
does not apply and the general fiduciary responsibility provisions of 
section 404 of the Act, which, among other things, require a fiduciary 
to discharge his duties respecting the plan solely in the interest of 
the participants and beneficiaries of the plan and in a prudent fashion 
in accordance with section 404(a)(1)(b) of the Act; nor does it affect 
the requirement of section 401(a) of the Code that the plan must 
operate for the exclusive benefit of the employees of the employer 
maintaining the plan and their beneficiaries;
    (2) Before an exemption may be granted under section 408(a) of the 
Act and/or section 4975(c)(2) of the Code, the Department must find 
that the exemption is administratively feasible, in the interests of 
the plan and of its participants and beneficiaries, and protective of 
the rights of participants and beneficiaries of the plan;
    (3) The proposed exemptions, if granted, will be supplemental to, 
and not in derogation of, any other provisions of the Act and/or the 
Code, including statutory or administrative exemptions and transitional 
rules. Furthermore, the fact that a transaction is subject to an 
administrative or statutory exemption is not dispositive of whether the 
transaction is in fact a prohibited transaction; and
    (4) The proposed exemptions, if granted, will be subject to the 
express condition that the material facts and representations contained 
in each application are true and complete, and that each application 
accurately describes all material terms of the transaction which is the 
subject of the exemption.

    Signed at Washington, DC, this 25th day of April, 2016.
Lyssa E. Hall,
Director, Office of Exemption Determinations, Employee Benefits 
Security Administration, U.S. Department of Labor.
[FR Doc. 2016-09946 Filed 4-27-16; 8:45 am]
 BILLING CODE 4510-29-P



                                                  25432                         Federal Register / Vol. 81, No. 82 / Thursday, April 28, 2016 / Notices

                                                        requirements (e.g., FCC approved)                       audio data recorded by the BWCs                 f. Hours and type of training provided
                                                        and/or any potential NIJ                             ii. Types of reports that are built into                (e.g., on-site, web-based, pre-
                                                        Technology Standards, if applicable                     the software                                         recorded, play environment etc.)
                                                     ii. Radiation safety standards (e.g.,                   1. Standard reports (e.g., distribution
                                                                                                                                                                5. Installation
                                                        ANSI, ICRP, NCRP, EURATOM,                              of number of hours of recording per
                                                        etc.), if applicable                                    officer in a given period)                      a. Average time to install the complete
                                                  j. Warranty and Maintenance Plans                          2. Daily reports, historical reports, etc.              BWC system and activate the first
                                                     i. Length of warranty (in months) that                  3. Audit reports that support chain-of-                 BWC device (in minutes, hours, or
                                                        comes standard with the system/                         custody requirements                                 days)
                                                        device and the components that are                   4. Customization of reports                        Nancy Rodriguez,
                                                        covered                                              iii. Facial recognition capabilities               Director, National Institute of Justice.
                                                     ii. Optional extended warranties                        iv. Weapons detection capabilities                 [FR Doc. 2016–09958 Filed 4–27–16; 8:45 am]
                                                        available                                            v. Other analytical capabilities not
                                                     1. Duration and cost of extended                           mentioned above
                                                                                                                                                                BILLING CODE 4410–18–P

                                                        warranties                                        c. Video Security and Authentication
                                                     iii. Availability of extended                           i. Compatibility of the BWC video
                                                        maintenance plans                                                                                       DEPARTMENT OF LABOR
                                                                                                                outputs with existing video
                                                     1. Duration and cost of extended                           management software for viewing
                                                        maintenance plans                                                                                       Employee Benefits Security
                                                                                                                and recording                                   Administration
                                                     iv. Service contract costs                              ii. File integrity checks to ensure
                                                  k. Auxiliary equipment (e.g., car
                                                                                                                authenticity                                    Proposed Exemptions From Certain
                                                        chargers, emergency chargers, etc.)
                                                                                                             iii. Data protection mechanism while               Prohibited Transaction Restrictions
                                                     i. Manufacturer suggested retail price
                                                                                                                in transit and during storage (e.g.,
                                                        (MSRP) for each piece of auxiliary                                                                      AGENCY: Employee Benefits Security
                                                                                                                SSL, encryption, password strength,
                                                        equipment                                                                                               Administration, Labor.
                                                                                                                etc.)
                                                  l. MSRP without optional features,                                                                            ACTION: Notice of proposed exemptions.
                                                                                                             iv. Routine software updates,
                                                        accessories or service plans
                                                                                                                approximate frequency, and how it               SUMMARY:   This document contains
                                                  m. Manufacturer’s estimated lifetime of
                                                                                                                is updated (e.g., manual or                     notices of pendency before the
                                                        the device
                                                  n. Other information or notes that are                        automatic)                                      Department of Labor (the Department) of
                                                        relevant to the system/device                        v. Cost of software updates                        proposed exemptions from certain of the
                                                                                                          4. Usability/Training                                 prohibited transaction restrictions of the
                                                  3. Product Information—Software for                                                                           Employee Retirement Income Security
                                                  Video Data Storage and Management                       a. Types of processes used to ensure
                                                                                                                                                                Act of 1974 (ERISA or the Act) and/or
                                                  a. Data Management                                           usability of hardware and software
                                                                                                                                                                the Internal Revenue Code of 1986 (the
                                                     i. Searching capabilities                                 products (e.g., requirements
                                                                                                                                                                Code). This notice includes the
                                                     ii. Categorizing capabilities (e.g., by                   gathering, observation, task
                                                                                                                                                                following proposed exemptions: D–
                                                        law enforcement officer, location,                     analysis, interaction design,
                                                                                                                                                                11813, The Michael T. Sewell, M.D.,
                                                        incident, etc.)                                        usability testing, ergonomics,
                                                                                                                                                                P.S.C. Profit Sharing Plan (the Plan); D–
                                                     iii. Tagging capabilities (i.e., a feature                interoperability, etc.)
                                                                                                                                                                11822, Plumbers’ Pension Fund, Local
                                                        that allows users to add additional               b. Types of data gathered from the user
                                                                                                                                                                130, U.A. (the Plan or the Applicant);
                                                        metadata, such as case number and                      community (e.g., interviews,
                                                                                                                                                                D–11858, Liberty Media 401(k) Savings
                                                        case notes)                                            observations during hands-on
                                                                                                                                                                Plan (the Plan); and, D–11866, Baxter
                                                     iv. Archiving and file retention                          training, survey, satisfaction
                                                                                                                                                                International Inc. (Baxter or the
                                                        capacity                                               surveys, repeat customers, etc.) to
                                                                                                                                                                Applicant).
                                                     v. Data saved on or offsite (e.g., cloud                  evaluate your products, and how
                                                                                                               often it is collected                            DATES: All interested persons are invited
                                                        storage)
                                                                                                          c. Types of user-group meetings and                   to submit written comments or requests
                                                     1. If saved offsite, specify data
                                                                                                               frequency of their occurrence (e.g.,             for a hearing on the pending
                                                        accessibility and storage costs
                                                                                                               dedicated face-to-face hosted                    exemptions, unless otherwise stated in
                                                     2. Video data storage capacity local
                                                                                                               meetings, in conjunction with                    the Notice of Proposed Exemption,
                                                        vs. cloud
                                                     3. Capability to accommodate                              established meetings such as those               within 45 days from the date of
                                                        multiple site installations                            of the Body Work Video Steering                  publication of this Federal Register
                                                     vi. Export capabilities                                   Group and the Metropolitan                       Notice.
                                                     1. If yes, whether there is a                             Washington Council of                            ADDRESSES: Comments and requests for
                                                        traceability feature that shows                        Governments Police Technology                    a hearing should state: (1) The name,
                                                        which user exported the data                           Subcommittee, etc., interactive                  address, and telephone number of the
                                                     vii. Redacting/editing capabilities                       webinars).                                       person making the comment or request,
                                                     1. If redacted/edited, specify whether               d. Categories of problems reported to the             and (2) the nature of the person’s
                                                        changes are permanent                                  vendor and estimated percentage of               interest in the exemption and the
                                                     viii. Support provided for chain-of-                      user community that experienced                  manner in which the person would be
                                                        custody requirements                                   them within the last three (3) years             adversely affected by the exemption. A
mstockstill on DSK3G9T082PROD with NOTICES




                                                     ix. Scalability for different                        i. Resolution(s) to the problems                      request for a hearing must also state the
                                                        organization size                                      identified above                                 issues to be addressed and include a
                                                     x. User management and role-based                    e. Hours of technology support provided               general description of the evidence to be
                                                        access levels                                          and location (e.g., telephone, web-              presented at the hearing.
                                                  b. Video Analytics                                           based, or on site at agency),                       All written comments and requests for
                                                     i. Whether there is companion                             including any additional costs                   a hearing (at least three copies) should
                                                        software to analyze the video and                      beyond the license/purchase                      be sent to the Employee Benefits


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                                                                                Federal Register / Vol. 81, No. 82 / Thursday, April 28, 2016 / Notices                                                  25433

                                                  Security Administration (EBSA), Office                    The applications contain                            Summary of Facts and
                                                  of Exemption Determinations, Room N–                    representations with regard to the                    Representations 3
                                                  5700, U.S. Department of Labor, 200                     proposed exemptions which are                            1. The Employer is an orthopedic
                                                  Constitution Avenue NW., Washington,                    summarized below. Interested persons                  medical practice that was formed by Dr.
                                                  DC 20210. Attention: Application                        are referred to the applications on file              Sewell under Kentucky law on
                                                  No.ll, stated in each Notice of                         with the Department for a complete                    December 23, 1990. The Employer is
                                                  Proposed Exemption. Interested persons                  statement of the facts and                            located at 875 Pennsylvania Avenue in
                                                  are also invited to submit comments                     representations.                                      Bardstown, Kentucky.
                                                  and/or hearing requests to EBSA via                                                                              2. The Plan is a defined contribution
                                                  email or FAX. Any such comments or                      The Michael T. Sewell, M.D., P.S.C. Profit
                                                                                                          Sharing Plan (the Plan) Located in                    plan that allows participants to self-
                                                  requests should be sent either by email                                                                       direct the investments of their
                                                                                                          Bardstown, Kentucky
                                                  to: moffitt.betty@dol.gov, or by FAX to                                                                       individual accounts. Dr. Sewell is a 65
                                                  (202) 219–0204 by the end of the                        [Application No. D–11813]
                                                                                                                                                                year old participant in the Plan and he
                                                  scheduled comment period. The                                                                                 is also the Plan trustee. As of June 17,
                                                  applications for exemption and the                      Proposed Exemption                                    2015, Dr. Sewell’s Account in the Plan
                                                  comments received will be available for                    The Department is considering                      had total assets of approximately
                                                  public inspection in the Public                                                                               $916,501. Nearly all of the Account’s
                                                                                                          granting an exemption under the
                                                  Documents Room of the Employee                                                                                assets is comprised of Property
                                                                                                          authority of section 408(a) of the Act
                                                  Benefits Security Administration, U.S.                                                                        described herein.
                                                                                                          and section 4975(c)(2) of the Code and
                                                  Department of Labor, Room N–1515,                                                                                3. In addressing the Account’s lack of
                                                                                                          in accordance with the procedures set
                                                  200 Constitution Avenue NW.,                                                                                  diversification, the Applicant represents
                                                                                                          forth in 29 CFR part 2570, subpart B (76
                                                  Washington, DC 20210.                                                                                         that in November 2012, Dr. Sewell
                                                    Warning: All comments will be made                    FR 66637, 66644, October 27, 2011). If
                                                                                                                                                                completed a partial distribution of his
                                                  available to the public. Do not include                 the exemption is granted, the
                                                                                                                                                                Account by rolling over $704,599.09 to
                                                  any personally identifiable information                 restrictions of section 406(a)(1)(A) and
                                                                                                                                                                an individual retirement account (the
                                                  (such as Social Security number, name,                  (D) and section 406(b)(1) and (b)(2) of
                                                                                                                                                                IRA). At that time, the Account still
                                                  address, or other contact information) or               the Act and the sanctions resulting from
                                                                                                                                                                contained an illiquid investment in a
                                                  confidential business information that                  the application of section 4975, by                   real estate investment trust (REIT), in
                                                  you do not want publicly disclosed. All                 reason of section 4975(c)(1)(A), (D) and              addition to the subject Property.
                                                  comments may be posted on the Internet                  (E) of the Code,2 shall not apply to the              Subsequently, the REIT was liquidated,
                                                  and can be retrieved by most Internet                   cash sale (the Sale) by the individually-             and proceeds of $17,011.20 were rolled
                                                  search engines.                                         directed account (the Account) in the                 over into the IRA.
                                                  SUPPLEMENTARY INFORMATION:
                                                                                                          Plan of Michael T. Sewell, M.D. (Dr.                     Prior to the rollover, the Applicant
                                                                                                          Sewell or the Applicant) of a parcel of               represents that Dr. Sewell’s Account
                                                  Notice to Interested Persons                            unimproved real property (the                         was diversified. Over time, due to the
                                                    Notice of the proposed exemptions                     Property), to Dr. Sewell, a party in                  substantial increase in the value of the
                                                  will be provided to all interested                      interest with respect to the Plan;                    Property and the timber situated
                                                  persons in the manner agreed upon by                    provided that:                                        thereon, Dr. Sewell’s Account became
                                                  the applicant and the Department                           (a) The Sale is a one-time transaction             heavily concentrated in the Property.
                                                  within 15 days of the date of publication               for cash;                                                4. On February 27, 1996, the Account
                                                  in the Federal Register. Such notice                                                                          purchased the Property, consisting of
                                                                                                             (b) The sales price for the Property is            277.15 acres of rural farmland, from Mr.
                                                  shall include a copy of the notice of                   the greater of: $916,501; or the sum of
                                                  proposed exemption as published in the                                                                        Edgar M. Deats and Mrs. Frances E.
                                                                                                          the fair market value of the Property, as             Deats, who are unrelated parties, for a
                                                  Federal Register and shall inform
                                                                                                          established by a qualified independent                total cash purchase price of
                                                  interested persons of their right to
                                                                                                          appraiser (the Appraiser), and the fair               $279,997.80, that includes $4,997.80 in
                                                  comment and to request a hearing
                                                                                                          market value of timber on the Property,               closing expenses. The Property, is
                                                  (where appropriate).
                                                                                                          as determined by a qualified                          located on Deatsville Road in Coxs
                                                    The proposed exemptions were
                                                                                                          independent timber appraiser (the                     Creek, Kentucky, and is legally
                                                  requested in applications filed pursuant
                                                                                                          Forester), in separate, updated appraisal             described as ‘‘DB 327 PG 678 PC 2
                                                  to section 408(a) of the Act and/or
                                                                                                          reports (the Appraisal Reports) on the                SLOT 265 Nelson Co.’’ The Property
                                                  section 4975(c)(2) of the Code, and in
                                                  accordance with procedures set forth in                 date of the Sale;                                     was purchased by Dr. Sewell’s Account
                                                  29 CFR part 2570, subpart B (76 FR                         (c) The Account pays no real estate                for capital appreciation and it adjoins a
                                                  66637, 66644, October 27, 2011).1                       fees or commissions in connection with                farm that is owned by Dr. Sewell.
                                                  Effective December 31, 1978, section                    the Sale;                                             Approximately 19% of the Property is
                                                  102 of Reorganization Plan No. 4 of                        (d) The terms of the Sale are no less              grassland and 81% timberland.
                                                  1978, 5 U.S.C. App. 1 (1996), transferred                                                                        5. Since the time of acquisition by the
                                                                                                          favorable to the Account than the terms
                                                  the authority of the Secretary of the                                                                         Account, the Property has not been used
                                                                                                          the Account would receive under
                                                  Treasury to issue exemptions of the type                                                                      by or leased to anyone. Aside from the
                                                                                                          similar circumstances in an arm’s length
                                                  requested to the Secretary of Labor.                                                                          Property’s total acquisition price of
                                                                                                          transaction with an unrelated party; and
                                                  Therefore, these notices of proposed                                                                          $279,997.80, the Account has paid
mstockstill on DSK3G9T082PROD with NOTICES




                                                  exemption are issued solely by the                         (e) Michael T. Sewell, M.D., P.S.C.                property taxes totaling $9,093.66 (or
                                                  Department.                                             (the Employer) bears 100% of the costs                approximately $454 per year); appraisal
                                                                                                          of obtaining this exemption, if granted.              fees of $5,950; $802.11 for liability
                                                    1 The Department has considered exemption

                                                  applications received prior to December 27, 2011          2 For purposes of this proposed exemption,            3 The Summary of Facts and Representations is

                                                  under the exemption procedures set forth in 29 CFR      references to specific provisions of Title I of the   based on the Applicant’s representations and does
                                                  part 2570, subpart B (55 FR 32836, 32847, August        Act, unless otherwise specified, refer also to the    not reflect the views of the Department, unless
                                                  10, 1990).                                              corresponding provisions of the Code.                 indicated otherwise.



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                                                  25434                         Federal Register / Vol. 81, No. 82 / Thursday, April 28, 2016 / Notices

                                                  insurance; and $4,207.50 for legal and                  Moreover, section 406(b)(2) of the Act                Property at $831,450, as of October 22,
                                                  related fees. Thus, the aggregate cost of               prohibits a plan fiduciary, in his                    2014.
                                                  acquiring and holding the Property by                   individual or in any other capacity,                     The Appraiser is also of the view that
                                                  the Account was $300,051.07                             from acting in any transaction involving              the Property does not have any
                                                  ($279,997.80 + $20,053.27), as of                       the plan on behalf of a party whose                   assemblage value. The Appraiser
                                                  November 10, 2015.                                      interests are adverse to the interests of             explains that assemblage value is where
                                                     6. The Applicant is requesting an                    the plan or the interests of its                      an adjoining property is purchased to
                                                  individual exemption from the                           participants or beneficiaries.                        enhance the value of the present
                                                  Department to allow Dr. Sewell to                          The sale represents a violation of                 property. According to the Appraiser,
                                                  purchase the Property from his Account.                 section 406(b)(1) of the Act since Dr.                this factor works mainly in commercial
                                                  In this regard, the Applicant states that:              Sewell would be causing his Account to                or industrial property where one may
                                                  (a) It would be difficult for Dr. Sewell                sell the Property to himself. In addition,            need to adjoin land for a parking lot or
                                                  to make distributions from his Account                  the sale represents a violation of section            to be able to make the building larger.
                                                  upon reaching age 701⁄2 if the Account                  406(b)(2) of the Act since Dr. Sewell                 The Appraiser represents that it has
                                                  continues to hold the Property; (b) if Dr.              would be acting on both sides of the                  been his experience that assemblage
                                                  Sewell decides to terminate the Plan,                   transaction.                                          value is not typically the case with
                                                  the tax laws would not permit the                          8. Mr. Roger F. Leggett of Bardstown,              farmland because, generally, as a tract of
                                                  rollover of the Property into an                        Kentucky, has been appointed by Dr.                   farmland increases in size, the per acre
                                                  individual retirement account; and (c)                  Sewell to serve as the Appraiser and, in              value decreases. The Appraiser also
                                                  the value of the grassland portion of the               such capacity, to prepare the Appraisal               states that this has been demonstrated
                                                  Property, some of which could be used                   Report of the Property. The Appraiser,                repeatedly in local auctions, where land
                                                  to grow corn, soybeans, and wheat, has                  a Certified General Appraiser, has been               almost always sells for more per acre in
                                                  stagnated.                                              licensed in the State of Kentucky since               smaller tracts, as opposed to larger
                                                     The proposed Sale will be a one-time                 1994. The Appraiser represents that he                tracts, and there usually are more buyers
                                                  transaction for cash, for the greater of:                                                                     for smaller tracts than for larger tracts.
                                                                                                          has performed appraisal work in
                                                  $916,501; or the sum of the fair market
                                                                                                          Kentucky for more than 45 years, of                      In an addendum to the Appraisal
                                                  value of the Property, as established by
                                                                                                          which he spent more than 25 years                     Report dated November 11, 2015, the
                                                  the Appraiser, and the fair market value
                                                                                                          working for the U.S. Department of                    Appraiser states that fair market value of
                                                  of the merchantable timber located on
                                                                                                          Agriculture where he completed in-                    the Property has not changed since the
                                                  the Property, as determined by the
                                                                                                          house appraisals of farms, rural                      2014 valuation.
                                                  Forester, in separate, updated Appraisal
                                                                                                          residences and chattels. The Appraiser                   10. Mr. Steve Gray of Radcliff,
                                                  Reports on the date of the Sale. In
                                                                                                          states that the gross revenues he                     Kentucky has been retained by Dr.
                                                  addition, the terms of the proposed Sale
                                                                                                          received from parties in interest with                Sewell, on behalf of the Account, to
                                                  will be at least as favorable to the
                                                  Account as those obtainable in an arm’s                 respect to the Plan, including the                    prepare a report of the estimated value
                                                  length transaction with an unrelated                    preparation of the Appraisal Report,                  of the timber that is located on the
                                                  party. Further, the Account will pay no                 represented approximately 1.8% of his                 Property because the Appraiser
                                                  real estate commission, costs, or other                 actual gross revenues in 2014.                        disclaimed having knowledge of timber
                                                  expenses in connection with the                            9. In an Appraisal Report dated                    values. The Forester is a Certified
                                                  proposed Sale, and the Employer will                    October 22, 2014, the Appraiser                       Natural Resource Conservation Service-
                                                  pay 100% of the costs of obtaining this                 describes the Property as a 277.15 acre               Technical Service Provider, and is
                                                  exemption, if granted. Finally, the Sale                tract of rural farmland with a barn                   licensed in the State of Kentucky. The
                                                  will not be part of an agreement,                       situated thereon, located in the                      Forester, who is a member of the
                                                  arrangement or understanding designed                   northwest section of Nelson County,                   Association of Consulting Foresters and
                                                  to benefit Dr. Sewell or the Employer.                  Kentucky. The Appraiser notes that the                the Society of American Foresters,
                                                     7. Section 406(a)(1)(A) and (D) of the               Property has level to moderately sloping              represents that he has over thirty years’
                                                  Act states that a fiduciary with respect                terrain, consisting of grassland and                  experience as a Service Forester and
                                                  to a plan shall not cause a plan to                     woodland, with little marketable timber.              Forestry Supervisor with the Kentucky
                                                  engage in a transaction if he knows or                     The Appraiser has used the Sales                   Division of Forestry. The Forester
                                                  should know that such transaction                       Comparison Approach to value the                      further represents that he has no pre-
                                                  constitutes a direct or indirect sale or                Property. The Appraiser states that he                existing relationship with Dr. Sewell.
                                                  exchange of any property between the                    could not use the Income Approach to                     The Forester represents that he
                                                  Plan and a party in interest, or a transfer             valuation because there are no crops or               conducted a forest inventory of the
                                                  to, or use by or for the benefit of, a party            income produced by the Property. The                  Property on September 22, 2015, using
                                                  in interest, of any assets of the Plan is               Appraiser also explains that the Cost                 ‘‘78 ten factor prism plots’’
                                                  also a prohibited transaction. The term                 Approach could not be used to value the               systematically placed throughout the
                                                  party in interest is defined by section                 Property because there are no                         forested parts of the Property. At each
                                                  3(14) of the Act to include any                         improvements to the site.                             plot location, the Forester explains that
                                                  fiduciary. Dr. Sewell is a party in                        The Appraiser represents that the                  trees 12 inches in diameter at breast
                                                  interest under section 3(14)(A) of the                  Sales Comparison Approach is the most                 height (dbh) were recorded by species,
                                                  Act as a fiduciary with respect to the                  reliable because there were real estate               dbh, and merchantable height. The
                                                  Plan because he is the Plan trustee.                    sales available for comparison. In this               Forester also represents that plot data
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                                                  Therefore, the Sale of the Property by                  regard, the Appraiser states that he                  indicated an average of 33 merchantable
                                                  the Account to Dr. Sewell would violate                 reviewed public records, Multiple                     trees per acre, yielding an average
                                                  section 406(a)(1)(A) and (D) of the Act.                Listing Service data, and obtained                    volume per acre of 3,316 board feet (bd.
                                                     In addition, section 406(b)(1) of the                information from other real estate agents             ft.). The Forester further explains that
                                                  Act prohibits a plan fiduciary from                     and land owners. Based on the Sales                   232 acres of the Property would be
                                                  dealing with the assets of the plan in his              Comparison Approach, the Appraiser                    classified as forest, which when
                                                  own interest or for his own account.                    has placed the fair market value of the               considering the 3,616 bd. ft. per acre,


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                                                                                Federal Register / Vol. 81, No. 82 / Thursday, April 28, 2016 / Notices                                                      25435

                                                  would yield a total estimated value of                  of capital appreciation, without                      Plumbers’ Pension Fund, Local 130, U.A.
                                                  739,480 bd. ft.                                         recurring expenses.                                   (the Plan, or the Applicant) Located in
                                                     The Forester notes that the Property                    The Applicant also represents that if              Chicago, IL
                                                  lies in an area with little forest industry.            the proposed exemption is not granted,                [Application No. D–11822]
                                                  The Forester explains that harvested                    the Account will experience a hardship                Proposed Exemption
                                                  forest products must be transported at                  or economic loss because Dr. Sewell is
                                                  least 50 miles to saw mills that offer                  approaching retirement age, and his                      The Department is considering
                                                  competitive prices for these products.                  Account will not be able to satisfy the               granting an exemption under the
                                                  The Forester states that transportation                 Internal Revenue Service’s required                   authority of section 408(a) of the Act
                                                  distance not only affects the value of the              minimum distribution requirements due                 and section 4975(c)(2) of the Code, and
                                                  standing timber, but also the amount of                 to the lack of divisibility of the Property.          in accordance with the procedures set
                                                  timber per acre required to make a                      Finally, the Applicant represents that                forth in 29 CFR part 2570, subpart B (76
                                                  timber harvest economically feasible.                   the Sale is not part of an agreement,                 FR 46637, 66644, October 27, 2011).4 If
                                                     The Forester represents that based on                arrangement or understanding designed                 the exemption is granted, the
                                                  his experience, approximately 1,700 bd.                 to benefit Dr. Sewell.                                restrictions of sections 406(a)(1)(A) and
                                                  ft. per acre is required to make a timber                  12. In summary, the Applicant                      406(a)(1)(D) of the Act and the sanctions
                                                  harvest economically feasible in the area               represents that the proposed transaction              resulting from the application of section
                                                  of the Property. Moreover, the Forester                 will satisfy the statutory criteria for an            4975 of the Code, by reason of section
                                                  explains, comparable properties in the                  exemption as set forth in section 408(a)              4975(c)(1)(A) and (D) of the Code, shall
                                                  area would likely have up to 1,700 bd.                  of the Act for the following reasons:                 not apply to the sale (the Sale) of two
                                                  ft. per acre without any additional                        (a) The Sale will be a one-time                    commercial buildings (the Properties),
                                                  timber value being considered in the                    transaction for cash;                                 by the Plan to the Plumbers’ Pension
                                                  Property sale. Subtracting 1,700 bd. ft.                   (b) The sales price for the Property               Fund, Local 130, U.A. (the Union), a
                                                  per acre from the average of 3,316 bd.                  will be the greater of: $916,501; or the              party in interest with respect to the
                                                  ft. per acre on the Property, the Forester              sum of the fair market value of the                   Plan, provided that the following
                                                  states that this leaves 1,616 bd. ft. to be             Property, as established by the                       conditions are satisfied:
                                                  considered as additional value that is                  Appraiser, and the fair market value of                  (a) The Sale is a one-time transaction
                                                  above the valuation in the Property                     the timber, as determined by the                      for cash;
                                                  Appraisal Report.                                       Forester, in separate, updated Appraisal                 (b) The price paid by the Union to the
                                                     According to the Forester, the                       Reports on the date of the Sale;                      Plan is equal to the greater of: (1)
                                                  Property contains 232 acres of forest                      (c) The Account will pay no real                   $1,640,000, or (2) the fair market value
                                                  with an estimated 1,616 bd. ft. acre, for               estate fees or commissions in                         of the Properties, as determined by a
                                                  a total volume of 374,912 bd. ft. The                   connection with the Sale;                             qualified independent appraiser (the
                                                  Forester explains that the total volume                    (d) The terms of the Sale will be no               Independent Appraiser) as of the date of
                                                  was apportioned to various species of                   less favorable to the Account than the                the Sale;
                                                  trees, resulting in a fair market value for             terms the Account would receive under                    (c) The Plan does not pay any
                                                  the timber of $85,051 as of October 3,                  similar circumstances in an arm’s length              appraisal fees, real estate fees,
                                                  2015.                                                   transaction with an unrelated party; and              commissions, costs or other expenses in
                                                     Thus, based on the $831,450 fair                        (e) The Employer will bear 100% of                 connection with the Sale;
                                                  market value of the Property, as                        the costs of obtaining this exemption, if                (d) The Plan trustees appointed by the
                                                  determined by the Appraiser, and the                    granted.                                              Union (the Union Trustees) recuse
                                                  $85,051 fair market value of the timber,                                                                      themselves from: (1) Discussions and
                                                                                                          Notice to Interested Persons                          voting with respect to the Plan’s
                                                  as determined by the Forester, the
                                                  aggregate fair market value of the                        Because Dr. Sewell is the sole person               decision to enter into the Sale; and (2)
                                                  Property is $916,501. Both the                          in the Plan whose Account is affected                 all aspects of the selection and
                                                  Appraiser and the Forester will update                  by the proposed transaction, it has been              engagement of the Independent
                                                  their respective Appraisal Reports on                   determined that there is no need to                   Appraiser for the purposes of
                                                  the date of the Sale.                                   distribute the notice of proposed                     determining the fair market value of the
                                                     11. The Applicant represents that the                exemption (the Notice) to interested                  Properties on the date of the Sale;
                                                  proposed transaction is administratively                persons. Therefore, comments and                         (e) The Plan trustees appointed by the
                                                  feasible because the Sale will be a one-                requests for a hearing are due thirty (30)            employer associations (the Employer
                                                  time transaction for cash. The Applicant                days after publication of the Notice in               Trustees), who have no interest in the
                                                  also represents that the proposed                       the Federal Register.                                 Sale: (1) Determine, among other things,
                                                  transaction is in the interest of the                     All comments will be made available                 whether it is in the interest of the Plan
                                                  Account because the Sale will not cause                 to the public.                                        to proceed with the Sale; (2) review and
                                                  the Account to incur any expenses, real                   Warning: Do not include any                         approve the methodology used by the
                                                  estate commissions, or other fees.                      personally identifiable information                   Independent Appraiser in the
                                                  Further, the Applicant explains that the                (such as name, address, or other contact              independent appraisal report (the
                                                  Sale will yield a profit to the Account                 information) or confidential business                 Appraisal Report) that is being relied
                                                  that is attributable to the Property’s                  information that you do not want                      upon; and (3) ensure that such
                                                  appreciation.                                           publicly disclosed. All comments may                  methodology is applied by the
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                                                     In addition, the Applicant represents                be posted on the Internet and can be                  Independent Appraiser in determining
                                                  that the proposed transaction is                        retrieved by most Internet search                     the fair market value of the Properties
                                                  protective of the rights of Dr. Sewell, as              engines.                                              on the date of the Sale; and
                                                  a Plan participant, because the Sale will               FOR FURTHER INFORMATION CONTACT:  Mrs.                  4 For purposes of this proposed exemption,
                                                  allow him to reinvest the proceeds from                 Blessed Chuksorji-Keefe of the                        references to specific provisions of Title I of the
                                                  the Sale in other investments that are                  Department, telephone (202) 693–8567.                 Act, unless otherwise specified, refer also to the
                                                  more liquid and have a greater chance                   (This is not a toll-free number.)                     corresponding provisions of the Code.



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                                                  25436                         Federal Register / Vol. 81, No. 82 / Thursday, April 28, 2016 / Notices

                                                    (f) The Sale is not part of an                           3. Lease of the 1336 Building.                     requirements of PTEs 76–1 and 77–10
                                                  agreement, arrangement, or                              Effective October 1, 2002, the Trustees               have been met by the Applicant.
                                                  understanding designed to benefit the                   entered into an agreement to lease office                4. Property-Related Expenses. In
                                                  Union.                                                  space in the 1336 Building to the Union               connection with its ownership of the
                                                                                                          for a term of eight years (the 1336                   Properties, the Plan currently generates
                                                  Summary of Facts and                                    Building Lease). Pursuant to its terms,
                                                  Representations 5                                                                                             approximately $65,784 in rental income
                                                                                                          the 1336 Building Lease requires the                  on an annual basis from the 1336
                                                     1. The Plan. The Plan is a multi-                    Union to pay to the Plan an annual base               Building Lease. This income, however,
                                                  employer defined benefit plan which                     rental amount of $51,620, payable in                  is offset by recurring expenses on the
                                                  was established on June 1, 1953,                        equal monthly installments of                         Properties, which include real estate
                                                  pursuant to a collective bargaining                     $4,301.67. As represented by the                      taxes, general maintenance costs, and
                                                  agreement between various contractor                    Applicant, and as reflected in the                    utility costs. For the Plan year ending
                                                  associations (the Employer                              relevant Trustee meeting minutes, the                 May 31, 2015, the Plan incurred
                                                  Associations) and the Union (the CBA).                  Union Trustees recused themselves                     expenses totaling $34,389.24 in
                                                  Pursuant to the CBA, the Employer                       from the decision-making process                      connection with its ownership of the
                                                  Associations are required to make                       regarding the 1336 Building Lease.                    Properties. These incurred expenses
                                                  monthly contributions to the Plan on                       Since the initial execution, the Plan              included $13,780.75 in real estate taxes,
                                                  behalf of their members at a specified                  and Union have agreed to two                          $11,112.00 in insurance costs, and
                                                  amount based upon hours worked. As of                   amendments to the 1336 Building Lease.                $9,505.49 in utility and maintenance
                                                  September 30, 2015, the Plan covered                    First, on December 11, 2002, the Plan                 costs.
                                                  9,169 participants and held                             and Union executed an amendment to                       5. Attempt to Sell the 1330–1332
                                                  $931,622,990 in total assets.                           provide for semi-annual rent                          Building. In August 2012, the Trustees
                                                     The Plan is administered by a ten                    adjustments based upon the Consumer                   agreed to pursue a sale of the 1330–1332
                                                  member Board of Trustees (the                           Price Index (CPI). Second, on October 1,              Building to an unrelated buyer. At the
                                                  Trustees), consisting of five Employer                  2010, the Plan and Union executed a                   time, the Trustees had determined that
                                                  Trustees and five Union Trustees. The                   Lease Modification and Extension
                                                                                                                                                                the 1330–1332 Building had become a
                                                  Trustees have ultimate fiduciary,                       Agreement (the 1336 Building Lease
                                                                                                                                                                non-performing asset for the Plan. On
                                                  operational, and investment discretion                  Extension) which: (a) Extended the term
                                                                                                                                                                August 1, 2012, the Trustees entered
                                                  over the Plan’s assets, and have entered                of the 1336 Building Lease for an
                                                                                                                                                                into an Exclusive Sale and Lease
                                                  into an agreement for The Northern                      additional 8 years, expiring September
                                                                                                                                                                Agreement (the Sale and Lease
                                                  Trust Company to act as Master Trustee                  30, 2018; and (b) raised the base
                                                                                                                                                                Agreement) with Jameson Real Estate,
                                                  and Custodian for the Plan.                             monthly rent amount to $5,192, with
                                                                                                                                                                LLC (Jameson), of Chicago, Illinois, an
                                                     2. The Properties. Included among the                provisions for future CPI adjustments to
                                                                                                                                                                unrelated party with respect to the Plan.
                                                  assets of the Plan are the Properties,                  the rent. As documented in the relevant
                                                                                                                                                                Pursuant to the Sale and Lease
                                                  which are located at 1330–1332 and                      Trustee meeting minutes, the Union
                                                                                                          Trustees recused themselves from the                  Agreement, the Trustees granted to
                                                  1336 West Washington Boulevard,                                                                               Jameson the exclusive right to either: (a)
                                                  Chicago, Illinois. The Properties were                  decision-making process regarding the
                                                                                                          1336 Building Lease Extension. Current                Sell the 1330–1332 Building for an
                                                  originally purchased by the Plan on                                                                           amount within the range of $75.00–
                                                  November 30, 2000, from an unrelated                    monthly rent under the 1336 Building
                                                                                                          Lease is $5,492.                                      $95.00 per square foot; or (b) lease the
                                                  party for a total purchase price of                                                                           1330–1332 Building to an unrelated
                                                  $1,365,000. The Plan did not finance the                   With respect to the 1336 Building
                                                                                                          Lease, the Applicant is relying upon                  party for a monthly amount within the
                                                  purchase of either Property and neither                                                                       range of $8.50–$10.00 per square foot.
                                                                                                          Prohibited Transaction Exemption (PTE)
                                                  is currently encumbered by a mortgage.                                                                        The Plan received no offers in
                                                                                                          76–1 (41 FR 12740, March 26, 1976, as
                                                     The building located at 1330–1332                                                                          connection with its efforts to sell or rent
                                                                                                          corrected by 41 FR 16620, April 20,
                                                  West Washington Boulevard (the 1330–                                                                          the 1330–1332 Building.
                                                                                                          1976), and PTE 77–10 (42 FR 33918,
                                                  1332 Building) was constructed in 1939                                                                           6. Union’s Offer to Purchase the
                                                                                                          July 1, 1977). Part C of PTE 76–1
                                                  and consists of a single warehouse and                                                                        Properties. During the Trustees’ March
                                                                                                          provides conditional exemptive relief
                                                  industrial space that covers 9,600 square                                                                     14, 2013 meeting, Union Trustee, Ken
                                                                                                          from the prohibited transaction
                                                  feet. As represented by the Applicant,                                                                        Turnquist, informed the Trustees that
                                                                                                          provisions of sections 406(a) and 407(a)
                                                  the 1330–1332 Building is specifically                                                                        the Union was interested in purchasing
                                                                                                          of the Act for the leasing of office space
                                                  suited to accommodate printing                          by a multiple employer plan to a                      both of the Properties from the Plan, and
                                                  operations and, as constructed, is                      participating employee organization,                  that he was in the early stages of putting
                                                  unsuitable for use as an office space.                  participating employer, or another                    together a Letter of Intent to do so. The
                                                  Since its acquisition by the Plan, the                  multiemployer plan. PTE 77–10, which                  Union subsequently assessed an
                                                  1330–1332 Building has not been leased                  complements PTE 76–1, provides                        inspection report (the Inspection
                                                  to, or used by, a party in interest to the              conditional exemptive relief from the                 Report), which revealed that the
                                                  Plan. The 1330–1332 Building, which is                  prohibited transaction provisions of                  Properties were in need of certain
                                                  currently vacant, was formerly leased by                section 406(b)(2) of the Act with respect             remedial masonry and environmental
                                                  the Plan to an unrelated party. The                     to the leasing of office space by a                   work. Specifically, the Inspection
                                                  Building located at 1336 West                           multiple employer plan to a                           Report concluded that the 1336
                                                  Washington Boulevard (the 1336                          participating employee organization,                  Building required complete tuck-
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                                                  Building) was constructed in 1926 and                   participating employer, or another                    pointing of its North and West facing
                                                  consists of 6,500 square feet of office                 multiemployer plan. The Applicant                     elevations and a rebuild of the six inch
                                                  and storage space.                                      represents that the 1336 Building Lease               exterior veneer of its chimneys (the
                                                    5 The Summary of Facts and Representations is
                                                                                                          meets all of the required conditions                  Masonry Repairs). Additionally, the
                                                  based on the Applicant’s representations and does
                                                                                                          under PTEs 76–1 and 77–10. The                        Inspection Report concluded that
                                                  not reflect the views of the Department, unless         Department, however, expresses no                     environmental considerations warranted
                                                  indicated otherwise.                                    opinion herein on whether the                         the removal of an obsolete underground


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                                                                                Federal Register / Vol. 81, No. 82 / Thursday, April 28, 2016 / Notices                                             25437

                                                  oil tank from beneath the 1330–1332                     pay no fees to the Independent                         also a member of the Appraisal Institute.
                                                  Building (the Environmental Repairs).                   Appraiser in connection with the Sale.                 Mr. Smolyak is an Associate Real Estate
                                                     Following receipt of the Inspection                     9. Legal Analysis. The Applicant has                Trainee Appraiser, and has performed
                                                  Report, the Union solicited and received                requested an administrative exemption                  and assisted in real estate consulting
                                                  multiple bids to complete the above-                    from the Department because the                        and appraisal assignments involving
                                                  cited masonry and environmental                         proposed Sale violates several                         various properties throughout Illinois,
                                                  repairs. With regard to the Masonry                     provisions of the Act. Section                         Indiana, and Wisconsin.
                                                  Repairs, the Union received a low bid of                406(a)(1)(A) of the Act provides that a                   Messrs. Argianas and Smolyak have
                                                  $174,421.00 (the Masonry Bid) from                      fiduciary with respect to a plan shall not             certified that they have ‘‘no present or
                                                  Grove Masonry Maintenance, Inc. of                      cause a plan to engage in a transaction                prospective interest in the [P]roperty
                                                  Alsip, Illinois, an unrelated party with                if the fiduciary knows or should know                  that is the subject of this report and no
                                                  respect to the Plan. With regard to the                 that such transaction constitutes a direct             personal interest with respect to the
                                                  Environmental Repairs, the Union                        or indirect sale or exchange, or leasing,              parties involved,’’ and that the fees
                                                  received a low bid of $39,500.00 (the                   of any property between a plan and a                   derived from parties in interest are
                                                  Water Tank Removal Bid) from WM. J.                     party in interest. Further, section                    equal to less than 1⁄10th of 1% of
                                                  Scown Building Company of Wheeling,                     406(a)(1)(D) of the Act provides that a                Industrial Appraisal Company’s
                                                  Illinois, also an unrelated party with                  fiduciary with respect to a plan shall not             revenues for 2014, from all sources, and
                                                  respect to the Plan.                                    cause a plan to engage in a transaction                that the Industrial Appraisal Company
                                                     7. During the Trustees’ March 6, 2014                if the fiduciary knows or should know                  has never been engaged by the Union,
                                                  meeting, Mr. Turnquist presented the                    that such transaction constitutes a direct             or any other party in interest to the Plan.
                                                  Trustees with three documents: (a) An                   or indirect transfer to, or use by or for              Messrs. Argianas and Smolyak have also
                                                  offer from the Union to purchase the                    the benefit of, a party in interest, of any            acknowledged that they are aware that
                                                  Properties for $1,416,000.00 (the March                 assets of the plan.                                    the Appraisal Reports are being used for
                                                  2014 Offer); (b) an appraisal report                       Section 3(14)(D) of the Act defines the             the purposes of obtaining an individual
                                                  completed by Charles G. Argianas and                    term ‘‘party in interest’’ to include an               exemption from the Department.
                                                  Robert S. Huth of the Industrial                        employee organization any of whose                        As represented in the Appraisal
                                                  Appraisal Company, of Pittsburgh,                       members are covered by such plan.                      Reports, Messrs. Argianas and Smolyak
                                                  Pennsylvania (the Independent                           Section 3(14)(A) of the Act defines the                performed the following underlying
                                                  Appraiser), valuing the Properties at                   term ‘‘party in interest’’ to include any              tasks to determine the Properties’ value:
                                                  $1,630,000.00 as of January 23, 2014                    fiduciary of such plan. Thus, the Union,               (a) An analysis of regional, city, market
                                                  (the January 2014 Appraisal Report);                    as an employee organization whose                      area, site, and improvement data; (b) an
                                                  and (c) the above-noted Masonry and                     members are covered by the Plan, and                   inspection of the Properties and the
                                                  Water Tank Removal Bids. Following                      the Trustees, as fiduciaries to the Plan,              immediate market area; and (c) a review
                                                  recusal by the Union Trustees, the                      are parties in interest with respect to the            of data regarding real estate taxes,
                                                  Employer Trustees proceeded to review                   Plan, pursuant to sections 3(14)(A) and                zoning, and utilities.
                                                  and discuss the March 2014 Offer.                       3(14)(D) of the Act, respectively.                        In valuing the Properties, Messrs.
                                                     The Employer Trustees determined                     Accordingly, the Sale would constitute                 Argianas and Smolyak considered all of
                                                  that it was in the best interest of the                 a violation of section 406(a)(1)(A) and                the commonly-accepted approaches to
                                                  Plan and its participants and                           (D) of the Act.                                        property valuation, including the Cost
                                                  beneficiaries to sell the Properties at                    10. The Qualified Independent                       Approach, Income Capitalization
                                                  their fair market value. In this regard,                Appraiser. On November 2, 2012, Terry                  Approach and Sales Comparison
                                                  the Employer Trustees determined that                   Musto, Fund Administrator to the Plan,                 Approach. After considering each of the
                                                  the Plan would not assume the                           engaged the Industrial Appraisal                       three approaches separately, they
                                                  Remediation Costs as an offset to the                   Company to render an opinion as to the                 determined that the Sales Comparison
                                                  purchase price. On September 15, 2015,                  fair market value of the Properties. As                Approach warranted primary
                                                  the Employer Trustees communicated to                   represented by the Applicant, Mr.                      consideration in establishing market
                                                  the Union that the Plan was seeking full                                                                       value for the Properties. Messrs.
                                                                                                          Musto is neither a Union official nor a
                                                  fair market value of $1,640,000.00 for                                                                         Argianas and Smolyak state that the
                                                                                                          Union member. The Applicant further
                                                  the Properties with no offset. The Union                                                                       Sales Comparison Approach is most
                                                                                                          represents that Mr. Musto has been
                                                  thereafter accepted the Employer                                                                               reliable when there are a sufficient
                                                                                                          delegated the power and authority to
                                                  Trustees’ amended offer.                                                                                       number of veritable sales and offerings
                                                     8. Relevant Terms of the Sale. As                    engage service providers on behalf of
                                                                                                                                                                 that are representative of a subject
                                                  stated in the Purchase Agreement, the                   the Plan.
                                                                                                             As mentioned above, Charles C.                      property. In such a case, they explain,
                                                  Union will deposit $50,000 into an                                                                             fewer adjustments increase the
                                                                                                          Argianas and Robert S. Huth of the
                                                  escrow account held for the benefit of                                                                         reliability of the ultimate valuation.
                                                                                                          Industrial Appraisal Company
                                                  the Plan with an unrelated escrow                                                                              With respect to the other valuation
                                                                                                          completed the January 2014 Appraisal
                                                  agent. The remaining balance of                                                                                approaches, Messrs. Argianas and
                                                                                                          Report. Subsequently, on January 9,
                                                  $1,590,000 will be paid by the Union to                                                                        Smolyak accorded ‘‘due consideration’’
                                                                                                          2015, Mr. Argianas and Maksym
                                                  the Plan at closing by cash, certified or                                                                      to the Income Capitalization Approach,
                                                                                                          Smolyak completed an updated
                                                  cashier’s check, or wire transfer. As also                                                                     and ‘‘little consideration’’ to the Cost
                                                                                                          appraisal report of the Properties, as of
                                                  stated in the Purchase Agreement, the                                                                          Approach.
                                                                                                          December 22, 2014 (the January 2015
                                                  Plan will pay no real estate fees or                                                                              After inspecting the Properties and
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                                                                                                          Appraisal Report).6
                                                  commissions, or incur any other                                                                                analyzing all relevant data, Messrs.
                                                                                                             Mr. Argianas is a Certified General
                                                  expenses or costs as a result of the Sale.                                                                     Argianas and Smolyak determined the
                                                                                                          Real Estate Appraiser in the State of
                                                  In this regard, the Union will assume all                                                                      ‘‘AS–IS’’ Fee Simple Market Value of
                                                                                                          Illinois (License #553.000164). He is
                                                  closing costs associated with the Sale,                                                                        the Properties to be $1,430,000, as of
                                                  including the city, county, and state                     6 The January 2014 and the January 2015              December 22, 2014 in the January 2015
                                                  transfer taxes that are associated with                 Appraisal Reports are together referred to herein as   Appraisal Report. To arrive at their
                                                  the transaction. Finally, the Plan will                 the ‘‘Appraisal Reports.’’                             valuation conclusion for the Properties,


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                                                  25438                         Federal Register / Vol. 81, No. 82 / Thursday, April 28, 2016 / Notices

                                                  Messrs. Argianas and Smolyak first                      Independent Appraiser as of the date of               FOR FURTHER INFORMATION CONTACT:      Mr.
                                                  assigned a full fair market value of                    the Sale;                                             Joseph Brennan of the Department at
                                                  $1,640,000 to the Properties’ land,                        (c) The Plan will not pay any                      (202) 693–8456. (This is not a toll-free
                                                  structure, and improvements. They then                  appraisal fees, real estate fees,                     number.)
                                                  deducted $210,000 from that amount to                   commissions, costs or other expenses in
                                                                                                                                                                Liberty Media 401(k) Savings Plan (the Plan)
                                                  account for the Remediation Costs.                      connection with the Sale;
                                                     The Employer Trustees and the Union                     (d) The Union Trustees will recuse                   Located in Englewood, CO
                                                  have agreed to the purchase price of                    themselves from: (1) Discussions and                  [Application No. D–11858]
                                                  $1,640,000, which represents the full                   voting with respect to the Plan’s
                                                  fair market value of the Properties with                decision to enter into the Sale; and (2)              Proposed Exemption
                                                  no offsets for the Remediation Costs or                 all aspects of the selection and                        The Department is considering
                                                  other costs. As a specific condition of                 engagement of the Independent                         granting an exemption under the
                                                  this proposed exemption, the                            Appraiser for the purposes of                         authority of section 408(a) of the
                                                  Independent Appraiser will reassess the                 determining the fair market value of the              Employee Retirement Income Security
                                                  fair market value of the Properties on                  Properties on the date of the Sale;                   Act of 1974, as amended (ERISA or the
                                                  the Sale date in an updated appraisal                      (e) The Employer Trustees, who have                Act) and section 4975(c)(2) of the
                                                  (the Updated Appraisal). With respect to                no interest in the Sale: (1) Will                     Internal Revenue Code of 1986, as
                                                  the Updated Appraisal, the Employer                     determine, among other things, whether                amended (the Code) and in accordance
                                                  Trustees will ensure that the                           it is in the best interest of the Plan to             with the procedures set forth in 29 CFR
                                                  Independent Appraiser’s valuation                       proceed with the Sale of the Properties;              part 2570, subpart B (76 FR 66637,
                                                  methodology is properly applied in                      (2) will review and approve the                       66644, October 27, 2011).7
                                                  determining the fair market value of the                methodology used by the Independent
                                                  Properties.                                             Appraiser in the Appraisal Report that                Section I. Covered Transactions
                                                     11. Statutory Findings. The Applicant                is being relied upon; and (3) will ensure                If the proposed exemption is granted,
                                                  represents that the proposed exemption                  that such methodology is applied by the               the restrictions of sections 406(a)(1)(E),
                                                  is administratively feasible because it                 Independent Appraiser in determining                  406(a)(2), and 407(a)(1)(A) of the Act
                                                  involves a one-time sale of the                         the fair market value of the Properties               shall not apply to: (1) The acquisition by
                                                  Properties for cash. As such, the                       on the date of the Sale; and                          the Plan of certain stock subscription
                                                  proposed exemption will not require                        (f) The Sale will not be part of an                rights (the Rights) to purchase shares of
                                                  ongoing oversight by the Department. In                 agreement, arrangement, or                            Liberty Broadband Series C common
                                                  addition, the Applicant represents that                 understanding designed to benefit the                 stock (LB Series C Stock), in connection
                                                  the proposed exemption is in the                        Union.                                                with a rights offering (the Rights
                                                  interest of the Plan and its participants               Notice to Interested Persons                          Offering) held by Liberty Broadband
                                                  and beneficiaries because the Sale will                                                                       Corporation (Liberty Broadband), a
                                                  facilitate a more productive investment                    The persons who may be interested in               party in interest with respect to the
                                                  vehicle for the Plan. In this regard, the               the publication in the Federal Register               Plan; and (2) the holding of the Rights
                                                  Applicant estimates that the proceeds                   of the Notice of Proposed Exemption                   by the Plan during the subscription
                                                  from the Sale will generate annual                      (the Notice) include all individuals who              period of the Rights Offering, provided
                                                  income in excess of $100,000 for the                    are participants in the Plan. It is                   that the conditions described in Section
                                                  Plan, going forward.                                    represented that such interested persons              II below have been met.
                                                     In addition, the Applicant represents                will be notified of the publication of the
                                                  that anticipated income to the Plan                     Notice by first class mail to such                    Section II. Conditions for Relief
                                                  following the Sale will significantly                   interested person’s last known address                   (a) The Plan’s acquisition of the
                                                  exceed the income which the Plan                        within fifteen (15) days of publication of            Rights resulted solely from an
                                                  would realize through a continued                       the Notice in the Federal Register. Such              independent corporate act of Liberty
                                                  ownership of the Properties. The                        mailing will contain a copy of the                    Broadband;
                                                  Applicant points out that the Plan                      Notice, as it appears in the Federal                     (b) All holders of Liberty Broadband
                                                  currently generates approximately                       Register on the date of publication, plus             Series A common stock and Liberty
                                                  $65,000 in rental income on an annual                   a copy of the Supplemental Statement,                 Broadband Series C common stock
                                                  basis as the owner of the Properties.                   as required, pursuant to 29 CFR                       (collectively, the LB Stock), including
                                                  This income, however, is offset by                      2570.43(b)(2), which will advise all                  the Plan, were issued the same
                                                  recurring expenses, which include real                  interested persons of their right to                  proportionate number of Rights based
                                                  estate taxes, general upkeep and                        comment on and/or to request a hearing.               on the number of shares of LB Stock
                                                  maintenance costs, and utility costs.                   All written comments or hearing                       held by each such shareholder;
                                                  The Applicant represents that an offset                 requests must be received by the                         (c) For purposes of the Rights
                                                  of these costs leaves the Plan with                     Department from interested persons                    Offering, all holders of LB Stock,
                                                  approximately $11,000 in annual net                     within 45 days of the publication of this             including the Plan, were treated in a
                                                  income as owner of the Properties.                      proposed exemption in the Federal                     like manner;
                                                     13. Summary. In summary, it is                       Register.                                                (d) The acquisition of the Rights by
                                                  represented that the proposed                              All comments will be made available                the Plan was made in a manner that was
                                                  transaction satisfies or will satisfy the               to the public. Warning: Do not include                consistent with provisions of the Plan
                                                                                                          any personally identifiable information               for the individually-directed investment
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                                                  statutory criteria for an exemption
                                                  under section 408(a) of the Act because:                (such as name, address, or other contact              of participant accounts;
                                                     (a) The Sale will be a one-time                      information) or confidential business                    (e) The Liberty Media 401(k) Savings
                                                  transaction for cash.                                   information that you do not want                      Plan Administrative Committee (the
                                                     (b) The price paid by the Union to the               publicly disclosed. All comments may                    7 For purposes of this proposed exemption,
                                                  Plan will be equal to the greater of: (1)               be posted on the Internet and can be                  references to the provisions of Title I of the Act,
                                                  $1,640,000, or (2) the fair market value                retrieved by most Internet search                     unless otherwise specified, refer also to the
                                                  of the Properties, as determined by the                 engines.                                              corresponding provisions of the Code.



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                                                                                Federal Register / Vol. 81, No. 82 / Thursday, April 28, 2016 / Notices                                          25439

                                                  Committee) directed the Plan trustee to                 employers in the Plan. The Liberty                    accounts could then elect to sell or
                                                  sell the Rights on the NASDAQ Global                    Media 401(k) Savings Plan                             transfer out the LB Stock held in their
                                                  Select Market, in accordance with Plan                  Administrative Committee (the                         Plan accounts at any time.
                                                  provisions that precluded the Plan from                 Committee) is appointed by the board of                  6. Liberty Media explains that
                                                  acquiring additional shares of LB Stock;                directors of Liberty Media and has                    TruePosition, a participating employer
                                                     (f) The Committee did not exercise                   investment discretion over the Plan’s                 with respect to the Plan prior to the
                                                  any discretion with respect to the                      investments, except to the extent that                Spin-Off, had considered establishing a
                                                  acquisition and holding of the Rights;                  the participants can direct the                       new 401(k) plan for its employees that
                                                  and                                                     investment of their Plan accounts. The                would be available for those employees
                                                     (g) The Plan did not pay any fees or                 trustee of the Plan (the Trustee) is                  immediately upon the Spin-Off.
                                                  commissions in connection with the                      Fidelity Management Trust Company                     However, it was unable to do so within
                                                  acquisition or holding of the Rights, and               (Fidelity). The Trustee acts as custodian             the ten-day timeframe prior to the Spin-
                                                  did not pay any commissions to Liberty                  of Plan assets, holding legal title to Plan           Off Date. At the same time, TruePosition
                                                  Broadband, Liberty Media Corporation,                   assets, and executing investment                      did not want its employees to be
                                                  TruePosition, Inc., or any affiliates of                directions in accordance with the                     without a 401(k) plan to contribute to
                                                  the foregoing in connection with the                    participants’ written instructions.                   during this period. As such, Liberty
                                                  sale of the Rights.                                                                                           Media allowed TruePosition to continue
                                                     Effective Date: The proposed                         The Spin-Off of Liberty Broadband                     to participate in the Plan for the
                                                  exemption, if granted, will be effective                  3. On November 4, 2014, Liberty                     remainder of 2014. Liberty Media
                                                  from December 15, 2014, the date that                   Media engaged in a spin-off (the Spin-                represents that TruePosition employees
                                                  the Plan received the Rights, until                     Off) of its subsidiary, Liberty                       no longer participate in the Plan.
                                                  December 17, 2014, the date the Rights                  Broadband. Liberty Media notes that, at
                                                                                                          the time of the Spin-Off, Liberty                     The Rights Offering
                                                  were sold by the Plan on the NASDAQ
                                                  Global Select Market.                                   Broadband owned a 100% ownership                         7. Liberty Media represents that, on
                                                                                                          interest in TruePosition, and certain                 December 10, 2014, Liberty Broadband
                                                  Summary of Facts and Representations 8                  other equity and debt interests.                      initiated a rights offering (the Rights
                                                  Background                                                4. According to Liberty Media, for                  Offering) and issued subscription rights
                                                                                                          every share of Liberty Media’s Series A               (individually, a Right, and collectively,
                                                     1. Liberty Media Corporation (Liberty
                                                                                                          common stock held by a shareholder,                   the Rights) to purchase shares of LB
                                                  Media) is a Delaware corporation with
                                                                                                          including the Plan, as of 5:00 p.m., New              Series C Stock to holders of the LB
                                                  its principal place of business in                      York City time, on October 29, 2014, the              Stock, including the Plan, as of 5:00
                                                  Englewood, Colorado. Liberty Media is                   shareholder received one quarter (1/4)                p.m., New York City time, on December
                                                  a publicly traded corporation primarily                 of a share of Liberty Broadband’s Series              4, 2014 (the Record Date). In a Form S–
                                                  engaged in media, communications and                    A common stock (LB Series A Stock),                   1 filed with the SEC on October 16,
                                                  entertainment operating businesses                      with cash issued in lieu of fractional                2014, Liberty Broadband stated that it
                                                  through several subsidiaries, including                 shares. Furthermore, for every share of               conducted the Rights Offering to raise
                                                  Liberty Broadband Corporation (Liberty                  Liberty Media’s Series C common stock                 capital for general corporate purposes.
                                                  Broadband). Liberty Broadband holds                     held by a shareholder, including the                  According to Liberty Media, under the
                                                  ownership interests in Charter                          Plan, as of 5:00 p.m., New York City                  terms of the Rights Offering, one Right
                                                  Communications, Inc. (Charter                           time, on October 29, 2014, the                        was issued for every five shares of LB
                                                  Communications), TruePosition, Inc.                     shareholder received one quarter (1/4)                Stock held by the shareholder,
                                                  (TruePosition), and a minority equity                   of a share of Liberty Broadband’s Series              including the Plan. Once received, each
                                                  investment in Time Warner Cable,                        C common stock (LB Series C Stock),                   Right gave the respective shareholder
                                                  among other debt and equity assets.                     with cash issued in lieu of fractional                the right to purchase one share of LB
                                                     2. Liberty Media sponsors and                        shares. Liberty Media explains that the               Series C Stock at a 20% discount to the
                                                  maintains the Liberty Media 401(k)                      shares of LB Series A Stock and LB                    20-trading day volume weighted average
                                                  Savings Plan (the Plan). The assets of                  Series C Stock (collectively, the LB                  price of the LB Series C Stock following
                                                  the Plan are held in the Liberty Media                  Stock) were distributed as of 5:00 p.m.,              the Spin-Off Date.
                                                  401(k) Savings Plan Trust (the Trust).                  New York City time, on November 4,                       According to Liberty Media, the
                                                  The Plan and Trust were created for the                 2014 (the Spin-Off Date). Liberty Media               Rights could be exercised or sold during
                                                  exclusive benefit of employee-                          notes that Liberty Broadband continued                the period of the Rights Offering, which
                                                  participants and their beneficiaries.                   to own its interests in TruePosition,                 ran from December 11, 2014 through
                                                  Liberty Media represents that the Plan is               among its other interests, following the              January 9, 2015. Liberty Media notes
                                                  intended to qualify under sections                      Spin-Off Date.                                        that the Rights began trading on the
                                                  401(a) and 401(k) of the Code, and the                    5. According to Liberty Media, the LB               Nasdaq Global Select Market (the
                                                  Trust is intended to be exempt under                    Stock received by the Plan as a result of             NASDAQ) on a when-issued basis on
                                                  Section 501(a) of the Code.                             the Spin-Off was allocated to the Plan                December 10, 2014, and began fully
                                                     The Plan allows participants to direct               participants’ accounts in the same                    trading on December 11, 2014, under
                                                  the investment of their entire Plan                     proportion as the shares were                         the symbol ‘‘LBRKR.’’ During the Rights
                                                  accounts into any of 22 investment                      distributed in the Spin-Off. However,                 Offering period, the Rights traded at an
                                                  alternatives, including certain employer                Liberty Media explains that, effective as             average daily volume of 254,232 Rights/
                                                  securities issued by Liberty Media such                 of the Spin-Off Date, both the Plan and               day and at a total cumulative trading
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                                                  as Liberty Media’s Series A and Series                  Trust were amended so as to preclude                  volume of 5,338,866 Rights.
                                                  C common stock, as well as employer                     additional investments in LB Stock. As                   According to Liberty Media, the Plan
                                                  securities issued by other participating                such, Liberty Media explains, the Plan                held 287,143.473 shares of LB Stock as
                                                    8 The Summary of Facts and Representations is
                                                                                                          was frozen to additional investments in               of the Record Date. As such, Liberty
                                                  based on Liberty Media’s representations and does
                                                                                                          LB Stock as of the Spin-Off Date. Plan                Media states that the Plan received
                                                  not reflect the views of the Department, unless         participants holding the LB Stock                     57,428.641 Rights in connection with
                                                  indicated otherwise.                                    received in the Spin-Off in their                     the Rights Offering.


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                                                  25440                         Federal Register / Vol. 81, No. 82 / Thursday, April 28, 2016 / Notices

                                                     8. Liberty Media represents that,                    the sale of the Rights.9 Liberty Media                 marketable debt securities, they were
                                                  because of the restrictions placed on the               explains that the commissions were                     not qualifying employer securities.
                                                  Plan’s ability to invest in LB Stock                    paid out of the Plan’s forfeiture                      Therefore, Liberty Media requests a
                                                  described above, Plan participants could                accounts.                                              retroactive exemption from sections
                                                  not exercise Rights for their Plan                                                                             406(a)(1)(E), 406(a)(2), and 407(a)(1)(A)
                                                                                                          Exemptive Relief Requested                             of the Act for the acquisition and
                                                  accounts. Liberty Media states that,
                                                  because the exercise of the Rights                         13. Liberty Media represents that the               holding of the Rights in connection with
                                                  received in the Rights Offering was not                 acquisition and holding by the Plan of                 the Rights Offering.
                                                  permitted, the Committee directed the                   the Rights constitute prohibited                         14. As explained above, Liberty Media
                                                  Trustee to sell the Rights received by the              transactions in violation of sections                  represents that the acquisition of the
                                                  Plan, in accordance with its                            406(a)(1)(E), 406(a)(2), and 407(a)(1)(A)              Rights has been completed. Liberty
                                                  instructions.                                           of the Act. Section 406(a)(1)(E) of the                Media represents that no Plan accounts
                                                     9. According to Liberty Media, the                   Act provides that a fiduciary with                     currently hold any Rights. Liberty
                                                                                                          respect to a plan shall not cause the                  Media notes that the Rights were sold by
                                                  Trustee received the Rights on behalf of
                                                                                                          plan to engage in a transaction if he or               the Plan on the NASDAQ and that no
                                                  the Plan on December 15, 2014. Liberty
                                                                                                          she knows or should know that such                     Rights were exercised while in the Plan
                                                  Media represents that the Plan
                                                                                                          transaction constitutes the acquisition,               accounts. Liberty Media seeks
                                                  established a separate temporary
                                                                                                          on behalf of the plan, of any employer                 retroactive relief effective from
                                                  investment fund to receive and hold the
                                                                                                          security in violation of section 407(a) of             December 15, 2014, the date that the
                                                  Rights (the Rights Fund) pending the
                                                                                                          the Act. Section 406(a)(2) of the Act                  Plan received the Rights, until
                                                  disposition of the Rights by the Trustee.
                                                                                                          provides that a fiduciary of a plan shall              December 17, 2014, the date the Rights
                                                  Liberty Media notes that the Trustee
                                                                                                          not permit the plan to hold any                        were sold on the NASDAQ.
                                                  acted as custodian of the Rights held in
                                                  the Rights Fund. Liberty Media explains                 employer security if he or she knows or                Statutory Findings
                                                  that the Rights were credited to                        should know that holding such security
                                                                                                          violates section 407(a) of the Act. Under                 15. Liberty Media represents that the
                                                  participants’ Plan accounts based on                                                                           proposed exemption is administratively
                                                  their respective holdings of LB Stock.                  section 407(a)(1)(A) of the Act, a plan
                                                                                                          may not acquire or hold any ‘‘employer                 feasible. Liberty Media represents that
                                                     10. Liberty Media represents that the                security’’ which is not a ‘‘qualifying                 all shareholders, including the Plan,
                                                  Trustee sold the Plan’s Rights on the                   employer security.’’ Under section                     were treated in a like manner with
                                                  NASDAQ at market value on December                      407(d)(1) of the Act, ‘‘employer                       respect to the acquisition and holding of
                                                  17, 2014, and the settlement from the                   securities’’ are defined, in relevant part,            the Rights. Furthermore, Liberty Media
                                                  sale of such Rights was completed by                                                                           notes that the Rights were distributed to
                                                                                                          as securities issued by an employer of
                                                  December 22, 2014. Liberty Media                                                                               all shareholders of LB Stock, and upon
                                                                                                          employees covered by the plan, or by an
                                                  explains that, during the period that the                                                                      receipt of the Rights by the Plan, they
                                                                                                          affiliate of such employer. Section
                                                  Rights were traded on the NASDAQ                                                                               were placed in the Rights Fund.
                                                                                                          407(d)(5) of the Act provides, in
                                                  from December 10, 2014 through                                                                                 Thereafter, because the Plan was not
                                                                                                          relevant part, that ‘‘qualifying employer
                                                  January 9, 2015), the Rights sold for                                                                          permitted to acquire additional LB
                                                                                                          securities’’ are stock or marketable debt
                                                  prices between $6.64 and $11.82 per                                                                            Stock, the Committee directed the
                                                                                                          obligations.
                                                  Right. Liberty Media represents that the                                                                       Trustee to sell all of the Rights on the
                                                                                                             Liberty Media states that the Rights
                                                  Plan received an average price of                                                                              NASDAQ in accordance with their
                                                                                                          constitute ‘‘employer securities’’ under
                                                  $7.6323 per Right for the sale of the                                                                          instructions. As such, Liberty Media
                                                                                                          section 407(d)(1) of the Act because the
                                                  Rights on the NASDAQ, for a total of                                                                           represents that there is no reason for any
                                                                                                          employees of TruePosition, an affiliate
                                                  $438,312.65.                                                                                                   continuing Departmental oversight.
                                                                                                          of Liberty Broadband, participated in
                                                     11. According to Liberty Media, the                                                                            16. Liberty Media represents that an
                                                                                                          the Plan at the time of the Rights
                                                  Committee did not exercise any                                                                                 exemption for the Plan’s acquisition and
                                                                                                          Offering. Therefore, because the Rights
                                                  discretion with respect to the                                                                                 holding of the Rights through its
                                                                                                          were issued by an affiliate of
                                                  acquisition and holding of the Rights,                                                                         participation in the Rights Offering is in
                                                                                                          TruePosition, which was an employer of
                                                  because the Rights were unilaterally                                                                           the interests of the Plan and its
                                                                                                          employees covered by the Plan at the
                                                  issued by Liberty Broadband to all                                                                             participants and beneficiaries because it
                                                                                                          time of the Rights Offering, the Rights
                                                  holders of the LB Stock, including the                                                                         allowed participants and beneficiaries
                                                                                                          constituted employer securities. Liberty
                                                  Plan, without any action on the part of                                                                        to benefit from the sale of the Rights at
                                                                                                          Media states further that, since the
                                                  any stockholder. Liberty Media explains                                                                        no cost to the Plan, with the exception
                                                                                                          Rights did not constitute stock or
                                                  that, because the exercise of the Rights                                                                       of a commission paid in connection
                                                  to purchase additional LB Series C                        9 Liberty Media explains that the parties are
                                                                                                                                                                 with the sale of the Rights.
                                                                                                          relying on the exemptive relief provided by section       In this regard, the Rights were
                                                  Stock was not permitted, due to the fact
                                                                                                          408(b)(2) of the Act, relating to the provision by a   credited to participants’ Plan accounts
                                                  that new investments in the Shares were                 party-in-interest to the Plan, and the payment         based on their respective holdings of
                                                  not permitted under the Plan, the                       therefor, of services necessary for the                Shares, and the proportionate cash
                                                  Committee directed the Trustee to sell                  administration of the Plan, if no more than
                                                                                                          reasonable compensation is paid for such service.      proceeds from the sale of the Rights
                                                  the Rights.
                                                                                                          Liberty Media represents that the Plan Committee       were placed in each respective account.
                                                     12. Liberty Media represents that the                determined that Fidelity Brokerage was an                 17. Liberty Media represents that an
                                                  Plan did not pay any fees or                            appropriate provider of brokerage services in          exemption for the acquisition and
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                                                  commissions in connection with the                      connection with the sale of the Rights on the
                                                                                                          NASDAQ and that the fees charged by Fidelity
                                                                                                                                                                 holding of the Rights in the Rights
                                                  acquisition and holding of the Rights.                  Brokerage for those services was reasonable. The       Offering is protective of the rights of
                                                  Liberty Media notes that the Plan paid                  Department is expressing no opinion herein as to       participants and beneficiaries because
                                                  a commission rate of 2.9 cents per Right                whether the provision of services by Fidelity          the Rights were sold on the NASDAQ by
                                                  to Fidelity Brokerage Services LLC                      Brokerage to the Plan and the payment of
                                                                                                          commissions by the Plan to Fidelity Brokerage
                                                                                                                                                                 the Trustee for their market value, in
                                                  (Fidelity Brokerage), an affiliate of                   satisfy the requirements of section 408(b)(2) of the   arms’-length transactions between
                                                  Fidelity, the Trustee, in connection with               Act.                                                   unrelated parties. Furthermore, Liberty


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                                                                                Federal Register / Vol. 81, No. 82 / Thursday, April 28, 2016 / Notices                                           25441

                                                  Media represents that the Plan did not                    All comments will be made available                 modifications as the Independent
                                                  pay any fees or commissions with                        to the public.                                        Fiduciary may make from time to time)
                                                  respect to the acquisition or holding of                  Warning: If you submit a comment,                   for liquidating the Contributed Stock, as
                                                  the Rights, and it did not pay any                      EBSA recommends that you include                      is prudent under the circumstances;
                                                  commissions to any affiliate of Liberty                 your name and other contact                              (iv) Determining the fair market value
                                                  Broadband, Liberty Media, or                            information in the body of your                       of the Contributed Stock as of the date
                                                  TruePosition with respect to the sale of                comment, but DO NOT submit                            of the Contribution;
                                                  the Rights.                                             information that you consider to be                      (v) Monitoring the Contribution and
                                                                                                          confidential, or otherwise protected                  holding of Contributed Stock on a
                                                  Summary                                                 (such as Social Security number or an                 continuing basis and taking all
                                                     18. In summary, Liberty Media                        unlisted phone number) or confidential                appropriate actions necessary to
                                                  represents that the proposed exemption                  business information that you do not                  safeguard the interests of the Plan; and
                                                  satisfies the statutory criteria for an                 want publicly disclosed. All comments                    (vi) If the Contribution is accepted by
                                                  exemption under section 408(a) of the                   may be posted on the Internet and can                 the Plan, voting proxies and responding
                                                  Act for the reasons stated above and for                be retrieved by most Internet search                  to tender offers with respect to the
                                                  the following reasons:                                  engines.                                              Contributed Stock held by the Plan;
                                                     a. The Plan’s acquisition of the Rights                                                                       (b) Solely for purposes of determining
                                                                                                          FOR FURTHER INFORMATION CONTACT:                      the Plan’s minimum funding
                                                  resulted solely from an independent
                                                                                                          Scott Ness of the Department, telephone               requirements (as determined under
                                                  corporate act of Liberty Broadband;
                                                     b. All holders of LB Stock, including                (202) 693–8561. (This is not a toll-free              section 412 of the Code), adjusted
                                                  the Plan, were issued the same                          number.)                                              funding target attainment percentage
                                                  proportionate number of Rights based                    Baxter International Inc. (Baxter or the              (AFTAP) (as determined under Treas.
                                                  on the number of shares of LB Stock                     Applicant) Located in Deerfield, IL                   Reg. section 1.436–1(j)(1)), and funding
                                                  held by each such shareholder;                          [Application No. D–11866]                             target attainment percentage (as
                                                     c. For purposes of the Rights Offering,                                                                    determined under section 430(d)(2) of
                                                  all holders of LB stock, including the                  Proposed Exemption                                    the Code), the Plan’s actuary (the
                                                  Plan, were treated in a like manner;                      The Department is considering                       Actuary) will not count as a
                                                     d. The acquisition of the Rights by the              granting an exemption under the                       contribution to the Plan any shares of
                                                  Plan was made in a manner that was                      authority of section 408(a) of the                    Contributed Stock that have not been
                                                  consistent with provisions of the Plan                  Employee Retirement Income Security                   liquidated;
                                                  for the individually-directed investment                Act of 1974, as amended, (ERISA) and                     (c) For purposes of determining the
                                                  of participant accounts;                                section 4975(c)(2) of the Internal                    amount of any Contribution, the
                                                     e. The Committee directed the Plan                   Revenue Code of 1986, as amended (the                 Contributed Stock shall be deemed
                                                  trustee to sell the Rights on the                       Code), and in accordance with the                     contributed only at the time it is sold,
                                                  NASDAQ, in accordance with Plan                         procedures set forth in 29 CFR part                   equal to the lesser of: (1) The proceeds
                                                  provisions that precluded the Plan from                 2570, subpart B (76 FR 66637, 66644,                  from the sale of such Contributed Stock;
                                                  acquiring additional shares of LB Stock;                October 27, 2011).                                    or (2) the value of such Contributed
                                                     f. The Committee did not exercise any                                                                      Stock on the date of the initial
                                                  discretion with respect to the                          Section I. Transaction                                contribution as determined by the
                                                  acquisition and holding of the Rights;                     If the proposed exemption is granted,              Independent Fiduciary;
                                                  and                                                     the restrictions of sections 406(a)(1)(A)                (d) The Contributed Stock represents
                                                     g. The Plan did not pay any fees or                  and (D) and sections 406(b)(1) and (2) of             no more than 20% of the fair market
                                                  commissions in connection with the                      ERISA and sections 4975(c)(1)(A), (D),                value of the total assets of the Plan at
                                                  acquisition or holding of the Rights, and               and (E) of the Code shall not apply to                the time it is contributed to the Plan;
                                                  did not pay any commissions to Liberty                  the contribution of publicly traded                      (e) The Plan pays no commissions,
                                                  Broadband, Liberty Media,                               common stock of Baxalta (the                          costs, or other expenses in connection
                                                  TruePosition, or any affiliates of the                  Contributed Stock) by Baxter (the                     with the Contribution, holding, or
                                                  foregoing in connection with the sale of                Contribution) to the Baxter International             subsequent sale of the Contributed
                                                  the Rights.                                             Inc. and Subsidiaries Pension Plan (the               Stock, and any such expenses paid by
                                                                                                          Plan), provided:                                      Baxter will not be treated as a
                                                  Notice to Interested Persons
                                                                                                             (a) Fiduciary Counselors Inc. (the                 contribution to the Plan;
                                                    Notice of the proposed exemption                      Independent Fiduciary) will represent                    (f) Baxter makes cash contributions to
                                                  will be given to all Interested Persons                 the interests of the Plan, the                        the Plan to the extent that the
                                                  within 7 days of the publication of the                 participants, and beneficiaries with                  cumulative proceeds from the sale of the
                                                  notice of proposed exemption in the                     respect to the Contribution, including                Contributed Stock at each contribution
                                                  Federal Register, by first class U.S. mail              but not limited to, taking the following              due date (determined under section
                                                  to the last known address of all such                   actions:                                              303(j) of ERISA) are less than the
                                                  individuals. Such notice will contain a                    (i) Determining whether the                        cumulative cash contributions Baxter
                                                  copy of the notice of proposed                          Contribution is in the interests of the               would have been required to make to
                                                  exemption, as published in the Federal                  Plan and of its participants and                      the Plan, in the absence of the
                                                  Register, and a supplemental statement,                 beneficiaries, and is protective of the               Contribution. Such cash contributions
                                                  as required pursuant to 29 CFR                                                                                shall be made until all of the
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                                                                                                          rights of participants and beneficiaries
                                                  2570.43(a)(2). The supplemental                         of the Plan;                                          Contributed Stock is sold by the Plan;
                                                  statement will inform interested persons                   (ii) Determining whether and on what               and
                                                  of their right to comment on the                        terms the Contribution should be                         (g) Baxter contributes to the Plan cash
                                                  pending exemption. Written comments                     accepted by the Plan;                                 amounts needed for the Plan to attain an
                                                  are due within 37 days of the                              (iii) If the Contribution is accepted by           AFTAP (determined under Treas. Reg.
                                                  publication of the notice of proposed                   the Plan, establishing and administering              section 1.436–1(j)(1)) of at least 80% as
                                                  exemption in the Federal Register.                      the process (subject to such                          of the first day of each plan year during


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                                                  25442                         Federal Register / Vol. 81, No. 82 / Thursday, April 28, 2016 / Notices

                                                  which the Plan holds Contributed Stock,                 Revenue Code of 1986, as amended (the                     6. The Plan’s independent actuary,
                                                  as determined by the Actuary, without                   Code) and sponsored and maintained by                  Towers Watson (the Actuary),
                                                  taking into account any unsold                          Baxter for the benefit of its employees                determined that the Plan’s adjusted
                                                  Contributed Stock as of April 1 of the                  located within the United States. As of                funding target attainment percentage
                                                  plan year.                                              May 1, 2015, there were a total of 30,836              (AFTAP) as of January 1, 2014, was
                                                                                                          participants and beneficiaries in the                  104.3%, and the AFTAP as of January
                                                  Summary of Facts and
                                                                                                          Plan. Baxter froze the Plan to new                     1, 2015, was 107.16%. Baxter elected to
                                                  Representations 10
                                                                                                          participants on December 31, 2006, and                 apply its credit balance under the Plan
                                                  Background                                              no person hired or re-hired, or                        to satisfy its minimum funding
                                                     1. Baxter International, Inc. (Baxter or             transferred to a Baxter company in the                 obligation for the 2014 plan year and
                                                  the Applicant) is a Delaware corporation                United States after such date is eligible              was not required to make any cash
                                                  headquartered in Deerfield, Illinois, and               to participate in the Plan. Persons who                contribution for that year. Baxter’s
                                                  does business throughout the world.                     were participants in the Plan on                       minimum contribution obligation for
                                                  Baxter was originally founded in 1931                   December 31, 2006, continue to accrue                  2015 was reduced to zero by the
                                                  as a manufacturer of intravenous (IV)                   benefits under the Plan, except that                   application of funding balances from
                                                  solutions. Baxter’s shares are publicly                 Baxter gave participants who had fewer                 prior years, and accordingly Baxter was
                                                  traded on the New York Stock Exchange                   than five years of vesting service on                  not obligated to make (and did not
                                                  (the NYSE). Prior to the spin-off                       December 31, 2006, an election                         make) any 2015 contribution. Under
                                                  transaction described below, Baxter had                 between: (1) Continuing to accrue                      current projections, and excluding the
                                                  approximately 60,000 employees                          benefits under the Plan; or (2) receiving              proposed Contribution, Baxter states
                                                  worldwide and two principal lines of                    enhanced contributions to Baxter’s                     that it will not be required to make any
                                                  business with manufacturing and                         defined contribution plan (i.e., its 401(k)            cash contributions to the Plan until the
                                                  research facilities in the United States,               plan).                                                 2019 plan year.
                                                  Belgium, Czech Republic, France,                           4. The Plan is funded by the Baxter                 The Spin-Off
                                                  Germany, Ireland, Italy, Malta, Poland,                 International Inc. and Subsidiaries
                                                                                                          Pension Trust (the Trust), which was                      7. Baxter distributed approximately
                                                  Spain, Sweden, Switzerland, and the
                                                                                                          established pursuant to a trust                        80.5 percent of the common stock of
                                                  United Kingdom. The first business line
                                                                                                          agreement originally entered into July 1,              Baxalta (the Baxalta Stock) to the
                                                  involved the manufacture and sale of
                                                                                                          1986. The Plan’s assets are invested                   shareholders of Baxter as a stock
                                                  medical devices, primarily products
                                                                                                          under the direction of independent                     dividend (the Spin-Off) on July 1, 2015
                                                  used in the delivery of fluids and drugs
                                                                                                          investment advisers, who are selected                  (the Spin-Off Date). Each shareholder of
                                                  to patients (the Medical Products
                                                                                                          and overseen by Baxter’s Investment                    Baxter received one share of Baxalta
                                                  Business). The second business line
                                                                                                          Committee. As of June 30, 2015, the                    Stock for each share of Baxter stock
                                                  involved the manufacture and sale of
                                                                                                          Plan had approximately $3.0 billion in                 owned on the record date for the Spin-
                                                  products derived from blood plasma
                                                                                                          total assets.11                                        Off. Furthermore, pursuant to a
                                                  and other natural substances and used
                                                                                                             5. Baxter’s Administrative Committee                Separation and Distribution Agreement,
                                                  to treat bleeding disorders, immune
                                                                                                          is a committee comprised of employees                  dated June 30, 2015, between Baxter and
                                                  deficiencies, and other conditions (the                                                                        Baxalta, Baxter transferred to Baxalta all
                                                  BioScience Business). In 2014, Baxter                   of Baxter, which is appointed by the
                                                                                                          Compensation Committee of Baxter’s                     of the assets that made up the
                                                  had net income of approximately $2.5                                                                           BioScience Business, and Baxalta
                                                  billion on net sales of approximately                   Board of Directors. The Administrative
                                                                                                          Committee is responsible for the                       assumed the liabilities relating to the
                                                  $16.7 billion, and as of December 31,                                                                          BioScience Business.
                                                  2014, its total shareholder’s equity was                administration of Baxter’s employee
                                                                                                                                                                    8. In connection with the Spin-Off,
                                                  in excess of $8.1 billion. Additionally,                benefit plans, including the Plan, and is
                                                                                                                                                                 effective May 1, 2015, Baxalta
                                                  its debt is rated ‘‘investment grade’’ by               the designated ‘‘plan administrator’’ of
                                                                                                                                                                 established the Baxalata Incorporated
                                                  the Standard & Poor’s, Moody’s, and                     the Plan for purposes of ERISA. The
                                                                                                                                                                 and Subsidiaries Pension Plan (the
                                                  Fitch rating services.                                  Investment Committee is also a                         Baxalta Plan), and the accrued benefits
                                                     2. Baxalta Incorporated (Baxalta) is a               committee comprised of employees of                    of all active participants in the Plan
                                                  Delaware corporation that was                           Baxter, but is appointed by Baxter’s                   whose employment was transferred to
                                                  incorporated on September 8, 2014, as                   Board of Directors. The Investment                     Baxalta pursuant to the spin-off were
                                                  a wholly-owned subsidiary of Baxter.                    Committee is responsible for directing                 transferred to the Baxalta Plan. The
                                                  Baxter transferred the BioScience                       the investment of the Plan’s assets,                   benefits of all terminated and retired
                                                  Business to Baxalta as part of the spin-                including the selection and oversight of               participants were retained by the Plan,
                                                  off described below. For 2014, Baxalta’s                all investment managers and advisers                   regardless of whether the participant
                                                  net sales were approximately $6.109                     for the Plan. The members of both the                  was employed in the Medical Products
                                                  billion, and its net operating income                   Administrative Committee and                           Business or the BioScience Business.
                                                  was approximately $1.114 billion. As of                 Investment Committee (together, the                       9. In connection with the Spin-Off,
                                                  March 31, 2015, Baxalta had total assets                Committees) are named fiduciaries for                  but prior to the Spin-Off Date, Baxter
                                                  of approximately $11 billion. Baxalta                   purposes of ERISA with respect to the                  caused a registration of the Baxalta
                                                  has approximately 16,000 employees                      Plan. Both committees approved the                     Stock to be filed with the Securities and
                                                  worldwide, with plants located in six                   proposed transaction of Contributed                    Exchange Commission, and caused the
                                                  countries.                                              Stock and retention of Fiduciary                       Baxalta Stock to be listed on the NYSE,
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                                                     3. The Plan is a defined benefit                     Counselors, Inc. to act as the                         so that immediately following the Spin-
                                                  pension plan qualified under section                    independent fiduciary for the Plan (the                Off, Baxalta became a publicly traded
                                                  401(a) of the United States Internal                    Independent Fiduciary).                                stock, freely tradable on the NYSE.
                                                    10 The Summary of Facts and Representations is          11 The number of participants and beneficiaries
                                                                                                                                                                 Baxter received a private letter ruling
                                                  based on the Applicant’s representations and does       and the total Plan assets noted in this proposal
                                                                                                                                                                 (the Private Letter Ruling) from the
                                                  not reflect the views of the Department, unless         represent totals after giving effect to the spin-off   Internal Revenue Service covering
                                                  indicated otherwise.                                    described below.                                       certain federal income tax consequences


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                                                                                Federal Register / Vol. 81, No. 82 / Thursday, April 28, 2016 / Notices                                              25443

                                                  of the Spin-Off. According to the                       Plan will be able to sell shares in open                minimum funding obligation. Thus, the
                                                  Applicant, the Private Letter Ruling                    market transactions on the NYSE.                        Applicant states that the Contribution
                                                  provides that Baxter’s use of the Baxalta               Furthermore, according to Baxter, the                   will constitute a sale or exchange of the
                                                  Stock retained by Baxter (the Retained                  shares of Contributed Stock will be                     Contributed Stock between the Plan and
                                                  Stock) to satisfy such debts and                        considered ‘‘restricted shares’’ so that                a party in interest, and is prohibited
                                                  obligations, including the proposed                     they can only be sold by the Plan in                    under section 406(a)(1)(A) of ERISA.
                                                  contribution of a portion of the Retained               accordance with Rule 144 of the                            14. In addition, section 406(a)(1)(D) of
                                                  Stock to the Plan, will not result in the               Securities and Exchange Commission.12                   ERISA provides that a fiduciary with
                                                  recognition by Baxter of taxable income,                However Baxter states that Rule 144’s                   respect to a plan shall not cause the
                                                  provided that the Retained Stock is used                limitation on the maximum number of                     plan to engage in a transaction, if he
                                                  for such purpose within eighteen                        shares that may be sold by an affiliate                 knows or should know that such
                                                  months following the Spin-Off Date.                     within any three month period will not                  transaction constitutes a direct or
                                                                                                          apply to the Plan. The Rule 144                         indirect transfer to, or use by or for the
                                                  The Contribution                                                                                                benefit of a party in interest, of any
                                                                                                          requirement that the Plan hold the
                                                     10. Baxter states that the total value of            Contributed Stock for at least six                      assets of the plan. The Applicant states
                                                  all outstanding shares of Baxalta Stock                 months will apply, but Baxter expects to                that the use of the Contributed Stock to
                                                  (including the Retained Stock) as of July               be able to consider its own holding time                potentially reduce Baxter’s funding
                                                  2015 was approximately $20.3 billion,                   of the shares towards the Plan’s six-                   obligation could be considered a use of
                                                  and the total value of the Retained Stock               month period, which was satisfied as of                 the Contributed Stock after it has
                                                  was approximately $4.0 billion, based                   November 10, 2015. The Plan, however,                   become a plan asset for Baxter’s benefit.
                                                  upon a value of $30 per share. On the                   would not be able to sell all of the                       15. Section 406(b)(1) of ERISA
                                                  Spin-Off Date, the Retained Stock                       Contributed Stock at one time without                   provides that a fiduciary with respect to
                                                  constituted approximately 19.5 percent                  potentially depressing the market.                      a plan shall not deal with the assets of
                                                  of the total shares of Baxalta Stock.                   Accordingly, the Independent Fiduciary                  the plan in his own interest or for his
                                                  Baxter proposes to make an in-kind                      has been tasked with selling the                        own account, and section 406(b)(2) of
                                                  contribution (i.e., a contribution other                Contributed Stock on behalf of the Plan                 ERISA provides that a fiduciary with
                                                  than cash) to the Plan of a portion of the              as quickly as is prudent and consistent                 respect to a plan shall not in his
                                                  Retained Stock (the Contributed Stock).                 with applicable laws.                                   individual or in any other capacity act
                                                  Baxter represents that the Contributed                                                                          in any transaction involving the plan on
                                                  Stock will have a market value, after any               Reasons the Proposed Transaction is                     behalf of a party (or represent a party)
                                                  applicable liquidity discount, of not                   Prohibited Under ERISA and the Code                     whose interests are adverse to the
                                                  more than $750 million. The Applicant                      13. Baxter represents that it is the                 interests of the plan or the interests of
                                                  states further that based upon an                       employer—or the ultimate shareholder                    its participants or beneficiaries. By
                                                  assumed value of $30 per share, the                     of the employer—of all of the employees                 causing the Plan to receive the
                                                  number of shares of Contributed Stock                   covered by the Plan, and therefore a                    Contribution, the members of the
                                                  will not be more than 25 million, which                 ‘‘party in interest’’ with respect to the               Committees and Baxter could be viewed
                                                  would represent approximately 18.95                     Plan as defined in section 3(14)(C) and                 as either dealing with the Plan’s assets
                                                  percent of the Retained Stock and 4.4                   (E) of ERISA.13 Section 406(a)(1)(A) of                 in their own interest or for their own
                                                  percent of the total number of                          ERISA provides that a fiduciary with                    account in violation of section 406(b)(1)
                                                  outstanding shares of Baxalta Stock                                                                             of ERISA or as acting on behalf of Baxter
                                                                                                          respect to a plan shall not cause the
                                                  (including the shares originally                                                                                in the Contribution, where Baxter’s
                                                                                                          plan to engage in a transaction, if he
                                                  distributed as part of the Spin-Off and                                                                         interests are adverse to those of the
                                                                                                          knows or should know that such
                                                  the Contributed Stock, but not the                                                                              Plan, in violation of section 406(b)(2) of
                                                                                                          transaction constitutes a direct or
                                                  remaining shares of Retained Stock).                                                                            ERISA.
                                                                                                          indirect sale or exchange, or leasing, of
                                                  The Applicant notes that, however, in
                                                                                                          any property between the plan and a                     Independent Fiduciary
                                                  no event will the value of the
                                                                                                          party in interest. The Applicant notes                     16. As described in more detail below,
                                                  Contributed Stock exceed 20 percent of
                                                                                                          that in Commissioner of Internal                        the Committees have retained Fiduciary
                                                  the total value of the Plan’s assets
                                                                                                          Revenue v. Keystone Consolidated                        Counselors Inc., the Independent
                                                  immediately after Baxter contributes the
                                                                                                          Industries, Inc., 508 US 152 (1993), the                Fiduciary, to represent the interests of
                                                  Contributed Shares (the Contribution).
                                                     11. The Applicant represents that the                United States Supreme Court held that                   the Plan with respect to the proposed
                                                  Private Letter Ruling from the IRS                      a contribution of property to a plan, in                transaction pursuant to an agreement
                                                  specifically sanctions the contribution                 satisfaction of the employer’s minimum                  dated May 11, 2015 (and which was
                                                  of the Contributed Stock on a tax-free                  funding obligation, was a ‘‘sale or                     subsequently updated on January 22,
                                                  basis, as long as the Contribution is                   exchange’’ for purposes of section                      2016). The Independent Fiduciary is an
                                                  completed within 18 months after the                    406(a)(1)(A) of ERISA. The Applicant                    investment adviser registered under the
                                                  Spin-Off Date. As a result of the Private               also notes that in Interpretive Bulletin                Investment Advisers Act of 1940 that
                                                  Letter Ruling, Baxter would save                        94–3(b), 29 CFR 2509.94–3(b), the                       primarily acts as an independent
                                                  approximately $260 million in taxes if                  Department concluded that any                           fiduciary for employee benefit plans.
                                                  the Contributed Stock is contributed to                 contribution of property to a defined                   Furthermore, Fiduciary Counselors
                                                  the Plan. Baxter intends to pass this tax               benefit pension plan is a sale or                       states that it has served as an
                                                  savings to the Plan in order to fund                    exchange for purposes of section                        independent fiduciary for employee
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                                                  future benefits. Thus, Baxter states that               406(a)(1)(A) of ERISA, even if the                      benefit plans since 2001. Fiduciary
                                                  an exemption for the in-kind                            contribution is not used to satisfy a                   Counselors represents that they are
                                                  contribution of the Contributed Stock                                                                           highly qualified to serve as independent
                                                                                                            12 See 17 CFR 230.144.
                                                  will increase the assets available to the                 13 For
                                                                                                                                                                  fiduciary in connection with the
                                                                                                                   purposes of this proposed exemption,
                                                  Plan by approximately $262.5 million.                   references to Title I of ERISA, unless otherwise
                                                                                                                                                                  proposed transactions. The Independent
                                                     12. Baxter states that the Baxalta                   specified, refer also to the corresponding provisions   Fiduciary was selected by the
                                                  Stock is listed on the NYSE, so that the                of the Code.                                            Committees based upon proposals


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                                                  25444                         Federal Register / Vol. 81, No. 82 / Thursday, April 28, 2016 / Notices

                                                  submitted by the Independent Fiduciary                  independent valuation adviser in order                    Further, the largest Plan outflow is
                                                  and other candidates.                                   to assist with this determination.14 The                  benefit payments of $160 million a year.
                                                     17. The Independent Fiduciary states                 IF Report provides that the Contributed                   Because the majority of the Plan’s assets
                                                  that it is not related to or affiliated with            Stock could be liquidated in as few as                    are in investments that can be
                                                  any of the other parties to the                         42 trading days, depending on the                         liquidated on a daily basis, and the
                                                  transaction, and has not previously been                particular circumstances, assuming (i)                    Contributed Stock will be converted to
                                                  retained to perform services with                       Baxter contributes 25 million shares of                   cash as it is liquidated, the IF Report
                                                  respect to the Plan or any other                        Baxalta stock to the Plan, (ii) the                       concludes that the Plan will have
                                                  employee benefit plan sponsored by                      Contributed Stock trading volumes                         sufficient liquidity to meet its needs
                                                  Baxter. Fiduciary Counselors represents                 remain around 6 million shares per day,                   over the time period while the
                                                  and warrants that it is independent of                  and (iii) Fiduciary Counselors limits the                 Contributed Stock is held by the Plan.
                                                  and unrelated to Baxter and Baxalta,                    disposition of Contributed Stock to 10%                      (e) Whether the Contribution will
                                                  and that: (a) It does not directly or                   or less of daily volume (provided that                    sufficiently improve the Plan’s funded
                                                  indirectly control, is not controlled by,               such limitation is appropriate and                        status. According to the IF Report, the
                                                  and is not under common control with                    consistent with ERISA). Therefore,                        Contribution will increase the funded
                                                  Baxter or Baxalta; (b) neither it, nor any              Fiduciary Counselors expects the                          status of the plan by between $600
                                                  of its officers, directors, or employees is             liquidity discount computed by Murray                     million and $750 million, thereby
                                                  an officer, director, partner, or employee              Devine will be very small.                                significantly improving the funded
                                                  of Baxter or Baxalta (or is a relative of                  (c) What impact, if any, the                           status of the Plan.15 The IF Report also
                                                  such persons); (c) it does not directly or              Contribution will have on the                             notes that the Actuary estimated no
                                                  indirectly receive any consideration for                diversification of the Plan’s portfolio.                  minimum funding requirement for the
                                                  its own account in connection with the                  The IF Report provides that, while the                    2016, 2017, and 2018 plan years,
                                                  Contribution or its services described                  Plan’s acceptance of the Contributed                      indicating that the Plan will continue to
                                                  hereunder, except that it may receive                   Stock will skew the Plan’s asset class                    be well-funded.
                                                  compensation from Baxter for                            allocations above the targeted amount                        (f) The ability of the Contributed
                                                  performing the services described in                    for Large Cap stock of 24% of plan                        Stock to be readily liquidated given its
                                                  this proposed exemption as long as the                  assets, this will be a temporary                          publicly traded nature. The IF Report
                                                  amount of such payment is not                           deviation and Fiduciary Counselors                        notes that the Contributed Stock is
                                                  contingent upon or in any way affected                  expects the allocation will return to pre-                publicly traded, can be partially sold
                                                  by Fiduciary Counselor’s ultimate                       Contribution levels as the Contributed                    daily at market prices, and can be
                                                  decision; and (d) the percentage of                     Stock is sold. Thus, the Independent                      completely liquidated in as few as 42
                                                  Fiduciary Counselor’s revenue that is                   Fiduciary does not believe that the                       trading days (nine weeks) at current
                                                  derived from the Plan, any party in                     Contribution will cause any significant                   trading volume without depressing the
                                                  interest, or its affiliates involved in the             disruption to the Plan’s asset allocation.                stock price,16 the Contributed Stock can
                                                  proposed transactions is less than 5% of                   (d) Whether the Plan will have                         be readily converted into cash and is
                                                  its previous year’s annual revenue from                 sufficient liquidity to meet benefits                     considered a highly liquid investment.
                                                  all sources. Fiduciary Counselors                       payments. The IF Report indicates that,                      19. The IF Report also describes the
                                                  represents that it understands and                      as of June 30, 2015, the Plan held                        Independent Fiduciary’s other
                                                  acknowledges its duties and                             approximately $120 million of its assets                  responsibilities in connection with the
                                                  responsibilities under ERISA in acting                  in cash or cash equivalents. According                    Contribution. In this regard, the
                                                  as an independent fiduciary on behalf of                to the IF Report, since the Plan does not                 Independent Fiduciary will monitor the
                                                  the Plan in connection with the covered                 currently have a minimum funding                          covered transactions on a continuing
                                                  transactions.                                           obligation, its assets will increase by                   basis and take all appropriate actions to
                                                     18. Fiduciary Counselors provided a                  investment income, which is currently                     safeguard the interests of the Plan to
                                                  preliminary report dated July 22, 2015                  estimated to yield a 7.25% annual rate                    ensure that the transactions remain in
                                                  (the IF Report), that analyzed the                      of return or approximately $218 million.                  the interests of the Plan, and, if not, take
                                                  proposed Contribution and described its                                                                           appropriate action available under the
                                                  responsibilities in connection therewith.                  14 According to Fiduciary Counselors, Murray           circumstances. Additionally, the
                                                  In connection with the IF Report, the                   Devine is well qualified for this engagement in that      Independent Fiduciary will determine
                                                  Independent Fiduciary considered the                    it is a nationally recognized valuation advisory firm     whether and on what terms the
                                                  following key elements:                                 and has provided valuation advisory services to
                                                                                                          private equity, corporate, venture capital, and
                                                                                                                                                                    Contribution should be accepted by the
                                                     (a) Whether the Plan’s Investment                                                                              Plan, and if the Contribution is accepted
                                                                                                          commercial banking institutions since its inception
                                                  Policy would permit the Plan to hold                    in 1989. Fiduciary Counselors represents that it has      by the Plan, vote proxies and respond to
                                                  the Contributed Stock as an acceptable                  utilized their services in other engagements.
                                                  investment. According to the IF Report,                 Furthermore, Murray Devine represents and                   15 For purposes of the IF Report, Fiduciary

                                                  the Investment Committee approved the                   warrants that it is independent of and unrelated to       Counselors estimated a range for the value of the
                                                                                                          Baxter, Baxalta, and Fiduciary Counselors, and that:      Contribution that takes into account the
                                                  acceptance of the Contributed Stock as                     • It does not directly or indirectly control, is not   requirement that, for purposes of determining
                                                  an employer contribution in the Plan, to                controlled by, and is not under common control            minimum funding, the amount of the Contribution
                                                  be subsequently liquidated for cash.                    with Baxter, Baxalta, or Fiduciary Counselors;            will be deemed to be the lesser of the proceeds from
                                                  Therefore, the Independent Fiduciary                       • Murray Devine, nor any of its officers,              the sale of the Contributed Stock or the value of the
                                                  determined that the Contributed Stock                   directors, or employees is an officer, director,          Contributed Stock at the time it is contributed to the
                                                                                                          partner or employee of Baxter, Baxalta or Fiduciary       Plan.
                                                  is an acceptable investment for the Plan
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                                                                                                          Counselors (or is a relative of such persons);              16 The IF Report indicates that Baxalta anticipates
                                                  and would be liquidated as soon as                         • The amount of compensation received by               receiving an opinion from its securities counsel that
                                                  practicable and consistent with ERISA.                  Murray Devine is not contingent of the valuation;         the Plan will not be considered an ‘‘affiliate’’ of
                                                     (b) Whether any liquidity discount                   and                                                       Baxalta within the meaning of Rule 144.
                                                  would be applicable to the valuation of                    The percentage of Murray Devine’s revenue that         Accordingly, the limitation on the maximum
                                                                                                          is derived from any party in interest or its affiliates   number of shares that may be sold by an affiliate
                                                  the Contributed Stock. The Independent                  involved in the stock contribution is less than 5%        within any three month period (the Volume
                                                  Fiduciary retained Murray, Devine &                     of its previous year’s annual revenue from all            Limitation) will not apply to the sales of
                                                  Co., Inc. (Murray Devine) as an                         sources.                                                  Contributed Stock by the Plan.



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                                                                                Federal Register / Vol. 81, No. 82 / Thursday, April 28, 2016 / Notices                                           25445

                                                  tender offers with respect to the                       received until and unless the shares are              not been sold by April 1 of the plan
                                                  Contributed Stock held by the Plan.                     sold. Thus, the Applicant states that the             year.
                                                     20. After Baxter makes the                           Plan gets the benefit of the additional                 26. The Applicant also states that the
                                                  Contribution, the Independent                           value of the Contributed Stock without                value of the Contributed Stock cannot
                                                  Fiduciary will act as an investment                     giving up the benefit of minimum                      be more than 20 percent of the fair
                                                  manager to establish and administer the                 required cash contributions from Baxter.              market value of the total assets of the
                                                  process (subject to such modifications                                                                        Plan at the time Baxter makes the
                                                  as the Independent Fiduciary may make                   Statutory Findings—Protective of the                  Contribution to the Plan. Additionally,
                                                  from time to time) for liquidation of the               Rights of the Plan and Its Participants               the Plan may not pay any commissions,
                                                  Contributed Stock as quickly as is                      and Beneficiaries                                     costs, or other expenses in connection
                                                  prudent and consistent with market                         23. The Applicant states that the                  with the contribution, holding, or
                                                  conditions and applicable laws. If,                     requested exemption is protective of the              subsequent sale of the Contributed
                                                  following the acceptance of the                         rights of the Plan and its participants               Stock, and any such expenses paid by
                                                  Contributed Stock and in the course of                  and beneficiaries. The Applicant                      Baxter must not be treated as a
                                                  liquidating such stock, the Independent                 reiterates that the principal protection              contribution to the Plan.
                                                  Fiduciary determines that continuing                    for participants and beneficiaries is the
                                                  the liquidation of the Contributed Stock                                                                      Summary
                                                                                                          fact that the Independent Fiduciary,
                                                  is imprudent, and is likely to remain                   acting solely in the interest of the                     27. In summary, the Applicant
                                                  imprudent for an indefinite period of                   participants and beneficiaries, will                  represents that the proposed
                                                  time, the Independent Fiduciary shall                   review the transaction to ensure that it              Contribution will meet the criteria of
                                                  notify the Committees, who shall                        is fair to the participants and                       section 408(a) of ERISA and section
                                                  arrange for the remaining Contributed                   beneficiaries, will monitor compliance                4975(c)(2) of the Code for the above and
                                                  Stock to be transferred to the portfolio                with the exemption, and will oversee                  the following reasons:
                                                  of one or more of the Plan’s                            the Plan’s sale of the Contributed Stock.                (a) The Independent Fiduciary will
                                                  independent investment managers, and                       24. Additionally, the requested                    represent the interests of the Plan, the
                                                  the agreement with the Independent                      exemption would require Baxter to                     participants, and beneficiaries with
                                                  Fiduciary shall terminate.                              make cash contributions to the Plan to                respect to the Contribution;
                                                                                                                                                                   (b) Solely for purposes of determining
                                                  Statutory Findings—Administratively                     the extent that the cumulative proceeds
                                                                                                                                                                the Plan’s minimum funding
                                                  Feasible                                                from the sale of the Contributed Stock
                                                                                                                                                                requirements, AFTAP, and funding
                                                     21. The Applicant represents that a                  at each contribution due date
                                                                                                                                                                target attainment percentage, the
                                                  proposed exemption is administratively                  (determined under section 303(j) of
                                                                                                                                                                Actuary will not count as a contribution
                                                  feasible because the Independent                        ERISA) are less than the cumulative
                                                                                                                                                                to the Plan any shares of Contributed
                                                  Fiduciary, rather than the Department,                  cash contributions Baxter would have
                                                                                                                                                                Stock that have not been liquidated;
                                                  will monitor the covered transactions                   been required to make to the Plan in the                 (c) For purposes of determining the
                                                  for compliance with the terms of the                    absence of the Contribution. Such cash                amount of any Contribution, the
                                                  proposed exemption and enforce the                      contributions must be made until all of               Contributed Stock shall be deemed
                                                  rights of the Plan in connection with the               the shares of Contributed Stock are sold.             contributed only at the time it is sold,
                                                  covered transactions. Furthermore,                      These conditions should mitigate the                  equal to the lesser of: (1) The proceeds
                                                  Baxter’s proposed Contribution will be                  risk of the Plan holding too much of its              from the sale of such Contributed Stock;
                                                  a single event, and the Contributed                     assets in one security. Solely for                    or (2) the value of such Contributed
                                                  Stock will be sold by the Plan over a                   purposes of determining the Plan’s                    Stock on the date of the initial
                                                  relatively short time period. Baxter                    minimum funding requirements,                         contribution as determined by the
                                                  states further that since Baxalta Stock is              AFTAP, and funding target attainment                  Independent Fiduciary;
                                                  publicly traded and readily saleable, the               percentage, the Actuary will not count                   (d) The Contributed Stock represents
                                                  sales will occur through open market                    as a contribution to the Plan any                     no more than 20% of the fair market
                                                  transactions on a nationally recognized                 Contributed Stock that has not been                   value of the total assets of the Plan at
                                                  exchange, obviating the need for further                sold. The Applicant states that this                  the time it is contributed to the Plan;
                                                  monitoring.                                             protection is intended to ensure that                    (e) The Plan pays no commissions,
                                                                                                          Baxter does not receive a credit for                  costs, or other expenses in connection
                                                  Statutory Findings—In the Interest of                   minimum funding purposes under                        with the Contribution, holding, or
                                                  the Plan and Its Participants and                       section 302 of ERISA for the                          subsequent sale of the Contributed
                                                  Beneficiaries                                           Contributed Stock prior to the time the               Stock, and any such expenses paid by
                                                    22. The Applicant states that a                       stock is sold, when it could still                    Baxter will not be treated as a
                                                  proposed exemption is in the interest of                decrease in value. If the Independent                 contribution to the Plan;
                                                  the Plan and its participants and                       Fiduciary determines that the Plan                       (f) Baxter makes cash contributions to
                                                  beneficiaries. According to Baxter, the                 should retain shares of the Contributed               the Plan to the extent that the
                                                  Contributed Stock will increase the                     Stock on an indefinite basis, such a                  cumulative proceeds from the sale of the
                                                  assets of the Plan by as much as 20                     decision will be communicated to the                  Contributed Stock at each contribution
                                                  percent, which will significantly                       Committees.                                           due date are less than the cumulative
                                                  improve the funded status of the Plan.                     25. The Applicant also states that                 cash contributions Baxter would have
                                                  Since the Contributed Stock will only be                Baxter must contribute to the Plan such               been required to make to the Plan, in the
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                                                  counted towards Baxter’s minimum                        cash amounts as are needed for the Plan               absence of the Contribution. Such cash
                                                  funding requirement as the shares are                   to maintain an AFTAP of at least 80                   contributions shall be made until all of
                                                  sold by the Plan and converted into                     percent as of the first day of each plan              the Contributed Stock is sold by the
                                                  more diversified investments, Baxter                    year during which the Plan holds shares               Plan; and
                                                  will still be obligated to make its                     of the Contributed Stock, as determined                  (g) Baxter contributes to the Plan cash
                                                  minimum required contributions as if                    by the Actuary, without taking into                   amounts needed for the Plan to attain an
                                                  the Contributed Stock had never been                    account any Contributed Stock that has                AFTAP of at least 80% as of the first day


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                                                  25446                         Federal Register / Vol. 81, No. 82 / Thursday, April 28, 2016 / Notices

                                                  of each plan year during which the Plan                 disqualified person from certain other                ACTION:Notice of advisory committee
                                                  holds Contributed Stock, as determined                  provisions of the Act and/or the Code,                meeting.
                                                  by the Actuary, without taking into                     including any prohibited transaction
                                                  account any unsold Contributed Stock                    provisions to which the exemption does                SUMMARY:  In accordance with the
                                                  as of April 1 of the plan year.                         not apply and the general fiduciary                   Federal Advisory Committee Act (5
                                                                                                          responsibility provisions of section 404              U.S.C. app 2) and implementing
                                                  Notice to Interested Persons                                                                                  regulation 41 CFR 101–6, NARA
                                                                                                          of the Act, which, among other things,
                                                     Baxter will provide notice of the                    require a fiduciary to discharge his                  announces the following committee
                                                  proposed exemption to all persons with                  duties respecting the plan solely in the              meeting.
                                                  accrued benefits under the Plan, all                    interest of the participants and                      DATES:  The meeting will be on June 6,
                                                  beneficiaries of deceased participants,                 beneficiaries of the plan and in a                    2016, from 2 p.m. to 4 p.m. EDT.
                                                  and all alternate payees pursuant to                    prudent fashion in accordance with                    ADDRESSES: Gaylord Opryland Hotel,
                                                  qualified domestic relations orders                     section 404(a)(1)(b) of the Act; nor does             2800 Opryland Drive, Delta Ballroom D,
                                                  within five (5) calendar days of                        it affect the requirement of section                  Nashville, TN 37214.
                                                  publication of the proposed exemption                   401(a) of the Code that the plan must
                                                  in the Federal Register. For all persons                                                                      FOR FURTHER INFORMATION CONTACT:
                                                                                                          operate for the exclusive benefit of the
                                                  for whom disclosure by electronic                                                                             Robert Tringali, Program Analyst, by
                                                                                                          employees of the employer maintaining
                                                  media is permitted by 29 CFR                                                                                  mail at ISOO, National Archives
                                                                                                          the plan and their beneficiaries;
                                                  2520.104b–1(c), notice will be posted on                                                                      Building, 700 Pennsylvania Avenue
                                                                                                             (2) Before an exemption may be
                                                  Baxter’s internal Web site and such                                                                           NW., Washington, DC 20408, by
                                                                                                          granted under section 408(a) of the Act
                                                  persons will be notified of the posting                                                                       telephone at (202) 357–5335, or by
                                                                                                          and/or section 4975(c)(2) of the Code,
                                                  by email in accordance with 29 CFR                                                                            email at robert.tringali@nara.gov.
                                                                                                          the Department must find that the
                                                  2520.104b–1(c). Baxter will provide the                                                                       Contact ISOO at ISOO@nara.gov and the
                                                                                                          exemption is administratively feasible,
                                                  notice to all other interested persons via                                                                    NISPPAC at NISPPAC@nara.gov.
                                                                                                          in the interests of the plan and of its
                                                  first-class mail. In addition to the                    participants and beneficiaries, and                   SUPPLEMENTARY INFORMATION: The
                                                  proposed exemption, as published in                     protective of the rights of participants              purpose of this meeting is to discuss
                                                  the Federal Register, Baxter will                       and beneficiaries of the plan;                        National Industrial Security Program
                                                  provide interested persons with a                          (3) The proposed exemptions, if                    policy matters. The meeting will be
                                                  supplemental statement, as required,                    granted, will be supplemental to, and                 open to the public. However, due to
                                                  under 29 CFR 2570.43(a)(2). The                         not in derogation of, any other                       space limitations and access procedures,
                                                  supplemental statement will inform                      provisions of the Act and/or the Code,                you must submit the name and
                                                  such employees of their right to                        including statutory or administrative                 telephone number of individuals
                                                  comment on and to request a hearing                     exemptions and transitional rules.                    planning to attend to the Information
                                                  with respect to this proposed                           Furthermore, the fact that a transaction              Security Oversight Office (ISOO) no
                                                  exemption. The Department must                          is subject to an administrative or                    later than Wednesday, June 1, 2016.
                                                  receive all written comments and/or                     statutory exemption is not dispositive of               Dated: April 20, 2016.
                                                  requests for a hearing within 35 days of                whether the transaction is in fact a                  Patrice Little Murray,
                                                  the publication of this proposed                        prohibited transaction; and                           Committee Management Officer.
                                                  exemption in the Federal Register. The                     (4) The proposed exemptions, if                    [FR Doc. 2016–09991 Filed 4–27–16; 8:45 am]
                                                  Department will make all comments                       granted, will be subject to the express               BILLING CODE 7515–01–P
                                                  available to the public.                                condition that the material facts and
                                                     Warning: If you submit a comment,                    representations contained in each
                                                  EBSA recommends that you include                        application are true and complete, and
                                                  your name and other contact                             that each application accurately                      NATIONAL CREDIT UNION
                                                  information in the body of your                         describes all material terms of the                   ADMINISTRATION
                                                  comment, but DO NOT submit                              transaction which is the subject of the
                                                  information that you consider to be                                                                           Office of Small Credit Unions (OSCUI)
                                                                                                          exemption.
                                                  confidential, or otherwise protected                                                                          Grant Program Access For Credit
                                                                                                            Signed at Washington, DC, this 25th day of          Unions
                                                  (such as Social Security number or an                   April, 2016.
                                                  unlisted phone number) or confidential                  Lyssa E. Hall,                                          Authority: 12 U.S.C. 1756, 1757(5)(D), and
                                                  business information that you do not
                                                                                                          Director, Office of Exemption Determinations,         (7)(I), 1766, 1782, 1784, 1785 and 1786; 12
                                                  want publicly disclosed. All comments                   Employee Benefits Security Administration,            CFR 705.
                                                  may be posted on the Internet and can                   U.S. Department of Labor.                             AGENCY: National Credit Union
                                                  be retrieved by most Internet search                    [FR Doc. 2016–09946 Filed 4–27–16; 8:45 am]           Administration (NCUA).
                                                  engines.
                                                                                                          BILLING CODE 4510–29–P                                ACTION: Notice of Funding Opportunity.
                                                  FOR FURTHER INFORMATION CONTACT:               Mr.
                                                  Erin S. Hesse of the Department,                                                                              SUMMARY:   The National Credit Union
                                                  telephone (202) 693–8546 (This is not a                 NATIONAL ARCHIVES AND RECORDS                         Administration (NCUA) is issuing a
                                                  toll-free number.)                                      ADMINISTRATION                                        Notice of Funding Opportunity (NOFO)
                                                                                                                                                                to invite eligible credit unions to submit
                                                  General Information                                                                                           applications for participation in the
mstockstill on DSK3G9T082PROD with NOTICES




                                                                                                          Information Security Oversight Office
                                                     The attention of interested persons is                                                                     OSCUI Grant Program (a.k.a.
                                                                                                          [NARA–2016–029]
                                                  directed to the following:                                                                                    Community Development Revolving
                                                     (1) The fact that a transaction is the               National Industrial Security Program                  Loan Fund (CDRLF)), subject to funding
                                                  subject of an exemption under section                   Policy Advisory Committee Meeting                     availability. The OSCUI Grant Program
                                                  408(a) of the Act and/or section                                                                              serves as a source of financial support,
                                                  4975(c)(2) of the Code does not relieve                 AGENCY:National Archives and Records                  in the form of technical assistance
                                                  a fiduciary or other party in interest or               Administration (NARA).                                grants, for credit unions serving


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Document Created: 2016-04-28 01:05:47
Document Modified: 2016-04-28 01:05:47
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
ActionNotice of proposed exemptions.
DatesAll interested persons are invited to submit written comments or requests for a hearing on the pending exemptions, unless otherwise stated in the Notice of Proposed Exemption, within 45 days from the date of publication of this Federal Register Notice.
ContactMrs. Blessed Chuksorji-Keefe of the Department, telephone (202) 693-8567. (This is not a toll-free number.)
FR Citation81 FR 25432 

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