[Federal Register Volume 69, Number 2 (Monday, January 5, 2004)]
[Notices]
[Pages 375-383]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-52]


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DEPARTMENT OF LABOR

Employee Benefits Security Administration

[Prohibited Transaction Exemption 2003-40; Exemption Application No. D-
11191]


United States Steel and Carnegie Pension Fund (UCF or the 
Applicant), Located in Atlanta, GA

AGENCY: Employee Benefits Security Administration, U.S. Department of 
Labor.

ACTION: Grant of individual exemption.

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SUMMARY: This document contains a final exemption issued by the 
Department of Labor (the Department) from certain prohibited 
transaction restrictions of the Employee Retirement Income Security Act 
of 1974 (the Act) and from certain taxes imposed by the Internal 
Revenue Code of 1986 (the Code).
    The exemption permits the in kind contribution of certain timber 
rights (the Timber Rights) under two timber purchase and cutting 
agreements (the Timber Rights Agreements) to The United States Steel 
Corporation Plan for Employee Pension Benefits (the Plan) by the United 
States Steel Corporation (US Steel), the Plan sponsor and a party in 
interest with respect to the Plan. The exemption also permits ancillary 
transactions between the Plan and US Steel arising from certain rights 
retained by US Steel related to the timberland (the Property) on which 
the Timber Rights are based. The exemption affects participants and 
beneficiaries of, and fiduciaries with respect to the Plan.

EFFECTIVE DATE: This exemption is effective as of December 24, 2003.

FOR FURTHER INFORMATION CONTACT: Ms. Silvia M. Quezada of the Office of 
Exemption Determinations, Employee Benefits Security Administration, 
U.S. Department of Labor, telephone (202) 693-8553. (This is not a 
toll-free number.)

SUPPLEMENTARY INFORMATION: On November 14, 2003, the Department 
published a notice of proposed individual exemption (the Notice) in the 
Federal Register at 68 FR 64650. The Notice was requested in an 
application filed on behalf of the Plan pursuant to section 408(a) of 
the Act and section

[[Page 376]]

4975(c)(2) of the Code, and in accordance with the procedures set forth 
in 29 CFR part 2570, subpart B (55 FR 32836, August 10, 1990). 
Effective December 31, 1978, section 102 of Reorganization Plan No. 4 
of 1978 (5 U.S.C. App. 1 1995) transferred the authority of the 
Secretary of the Treasury to issue exemptions of the type requested to 
the Secretary of Labor. Accordingly, this final exemption is being 
issued solely by the Department.
    The Notice set forth a summary of the facts and representations 
(the Summary) contained in the Applicant's June 2, 2003 application for 
exemptive relief and referred interested persons to the application for 
a complete statement of the facts and representations. The application 
has been available for public inspection at the Department in 
Washington, DC.
    The Notice also invited interested persons to submit written or 
faxed comments with respect to the Notice and/or requests for a public 
hearing on or before December 18, 2003. All comments were made a part 
of the record. In response to the solicitation of comments from 
interested persons, the Department received 54 written comments, 
including 2 comment letters submitted by the Applicant. Among these, a 
number of interested persons requested a public hearing. Of the 
comments received, 3 commenters supported the merits of the proposed 
transactions, while 51 commenters opposed the transactions for a 
variety of reasons. The Department also received 39 general telephone 
inquiries concerning the proposed transactions.
    The Department forwarded copies of all of the comment letters to 
the Applicant and requested that the concerns raised by the commenters 
be addressed in writing by either the Applicant or The Campbell Group 
(TCG) of Portland, Oregon, which will serve on behalf of the Plan as 
the independent fiduciary (the Independent Fiduciary) with respect to 
the proposed transactions.
    Following is a discussion of the comments and responses provided by 
the Applicant, the Independent Fiduciary, or the Department.

The Applicant's Comments

    The Department received comment letters from the Applicant dated 
December 2, and December 23, 2003. In these letters, the Applicant 
requested certain changes and clarifications to the conditions of the 
exemption as proposed in the Notice. The Applicant's comments on the 
conditions of the Notice and the Summary are discussed below in the 
order of appearance in the Notice.
    1. Section I(B) and Section I(B)(1) of the Notice. The Applicant 
notes that Section I(B) of the proposal provides relief for ancillary 
transactions arising from certain rights retained by US Steel, but 
limits that relief to four specified types of ancillary transactions 
(See Section I(B)(1) through (4)). By contrast, the Applicant points 
out that on page 64655 of the Summary, in the first full non-bulleted 
paragraph appearing in column 1, Representation 14, in describing these 
transactions, precedes the same list of the four types of transactions 
by stating that the subsequent dealings with US Steel ``include the 
following.'' The Applicant explains that while the list in Section I(B) 
covers the principal examples of ancillary transactions that may arise 
from the Timber Rights contribution, there may be other matters that 
arise during the course of the operation of the Timber Rights 
Agreements that involve dealings between the Plan and US Steel. 
Therefore, the Applicant believes there should be no need to limit 
these types of transactions, which may benefit the Plan, so long as all 
the protections of the exemption apply to them. In the exemption 
request under consideration, all such transactions would be subject to 
the oversight of the Independent Fiduciary, who would represent the 
interests of the Plan. Accordingly, the Applicant requests that Section 
I(B) be amended by adding the phrase ``including the following'' at the 
end of the initial paragraph, before the list of the four types of 
transactions to conform with the Summary.
    The Department does not concur with the Applicant's comment. The 
Department does not believe that it would be appropriate to provide 
broad exemptive relief for ``other transactions'' that have not been 
identified in the Applicant's submission. Therefore, the Department did 
not make the revision as requested by the Applicant. Instead, the 
Department requested that the Applicant provide a listing of additional 
ancillary transactions that could arise between the Plan and US Steel 
following the Timber Rights contribution. The Applicant and the 
Independent Fiduciary identified additional ancillary transactions 
which are referenced in new Sections I(b)(5) and Section III(e) of the 
Notice.
    Section I(b)(5) refers to: ``(5) Any additional ancillary 
transactions defined in Section III(e).'' Section III(e) provides that 
the term ``additional ancillary transactions'' means:

    (1) The allocation and contesting of property taxes, fees, 
licenses, fines and other charges or assessments imposed on the 
Plan, the Timber Rights or (as relevant) the Property; (2) the 
allocation of payments in connection with the granting of easements 
or use permits; (3) the use of timberlands in connection with 
government-mandated environmental cleanup or other construction or 
maintenance activities occurring on US Steel owned adjacent 
properties; (4) the negotiation by the Independent Fiduciary with US 
Steel of a premium price to be paid to the Plan to permit US Steel 
to buy out the Timber Rights on a parcel in order to sell the parcel 
to a third party; (5) the coordination between the Independent 
Fiduciary and US Steel of access to the Property on a continuing 
basis, such as where to place a gate or to whom to permit access; 
(6) the allocation of costs and responsibilities related to 
participation in cooperatives for fire protection, research on land 
use, or other matters relating to the Property and the Timber 
Rights; (7) the representation of the Plan in regulatory matters, 
such as changes in laws or regulations affecting the Property, that 
also would impact US Steel; (8) the allocation of insurance coverage 
for the Property and Timber Rights between the Plan and US Steel; 
(9) the joint hiring by, or the allocation of costs between, the 
Plan and US Steel of contractors to cut or maintain roads for fire 
protection or other joint uses; (10) the joint action by, or 
allocation of costs between, the Plan and US Steel to maintain 
Property boundaries, monitor for violations, and determine damages 
if any from third party trespass or other intrusion onto the 
Property; (11) the joint representation of the Plan and US Steel to 
an agency or other governmental body in the event of any regulatory 
dispute or other regulatory issue involving the Timber Rights and 
the Property; (12) working with government agencies on environmental 
projects, enhancements, conservation easements, or similar matters 
that may affect the value of the Timber Rights and the Property; 
(13) the negotiation of a joint sale of the Timber Rights owned by 
the Plan and the underlying Property owned by US Steel to a third 
party; (14) the enforcement and settlement arising from US Steel's 
obligations under the Timber Rights Agreements; and (15) the joint 
defense and prosecution of lawsuits involving the Timber Rights and/
or the Property.

    The Department notes that the exemption requires that the 
Independent Fiduciary represent the Plan's interest with respect to the 
ancillary transactions and approve of the terms prior to entering into 
any of the transactions.
    The Applicant also notes that, with regard to Section I(B)(1) of 
the Notice, an early termination may not apply to a Timber Rights 
Agreement as a whole, but rather to a portion of the Property covered 
by that Agreement, as described in Representation 7 of the Summary. 
Therefore, the Applicants suggests that the initial clause of 
subparagraph (a) be revised to read as follows:


[[Page 377]]


    US Steel exercises its right to early termination of an 
Agreement or with respect to a portion of the Property covered by an 
Agreement, * * *

    The Department concurs with the Applicant and has modified the 
initial clause of subparagraph (a) of Section I(B)(1) accordingly.
    2. Section II(j) of the Notice. In response to the Department's 
concern over the authority of the Independent Fiduciary with respect to 
the disposition of Timber Rights to third parties, the Applicant agreed 
to amend Section II(j) of the Notice. Section II(j) pertains to the 
disposition of the Timber Rights under the Timber Rights Agreements and 
related instruments. The Applicant proposes that its oversight role in 
approving or directing sales to third parties under the Management 
Agreement with TCG be turned over to a Second Independent Fiduciary 
appointed for that purpose. Section II(j) of the final exemption reads 
as follows:

    The Independent Fiduciary, acting on behalf of the Plan, retains 
the right to sell or assign, in whole or in part, any of the Plan's 
Timber Rights interests to any third party purchaser. 
Notwithstanding the above, UCF retains the authority to appoint a 
second independent fiduciary (the Second Independent Fiduciary) to 
determine whether to approve a proposed disposition, or to determine 
whether to direct the Independent Fiduciary to make a disposition.

    The Department concurs with the Applicant's amendment to Section 
II(j) and has revised the Notice, accordingly.
    3. Section III(a) of the Notice. Under Section III(a) of the 
Notice, the Applicant states that one of the circumstances under which 
a fiduciary will not be deemed independent of and unrelated to US Steel 
is where ``the annual gross revenue received by such fiduciary, during 
any year of its engagement, from US Steel and its affiliates exceeds 5% 
of the Independent Fiduciary's annual gross revenue from all sources 
for its prior tax year.''
    The Applicant interprets this to mean that if, during the course of 
a particular year, the gross revenue received by TCG from US Steel and 
its affiliates were to exceed 5% of its total annual gross revenue for 
the prior year, TCG would, at that point in time, cease to be 
``independent'' for purposes of the exemption. This means that the 
relief provided by the exemption for any transaction entered into under 
TCG's authority as Independent Fiduciary prior to the date on which its 
revenue exceeds the 5% threshold would not be affected. Violation of 
the 5% condition would therefore have only a prospective effect, 
requiring UCF to hire another Independent Fiduciary in order to 
continue using the exemption going forward, and would not retroactively 
invalidate all past transactions that have been entered into pursuant 
to the exemption. The Applicant requests that the Department confirm 
this interpretation.
    In response to this comment, the Department concurs with the 
Applicant's interpretation of the Independent Fiduciary's 5% earnings 
cap and the unavailability of the exemption in the event this 
limitation is exceeded.
    4. Representation 7 of the Summary. The Applicant wishes to clarify 
certain matters relating to a ``temporary'' termination of the Timber 
Rights with respect to Property under the Timber Rights Agreements 
discussed in Representation 7 of the Summary. First, in the second 
sentence of the second full paragraph on page 64653 of the Notice, 
pertaining to the terms of the Timber Rights Agreement for the 135,000 
acre parcel, the phrase which states ``the fair market rental value of 
the affected timberland surface plus'' should be deleted. For purposes 
of clarification, the Applicant requests that the following sentence be 
added at the end of the paragraph: ``In the event of surface or strip 
mining, US Steel must also pay the fair market rental value of the 
affected timberland surface.''
    Second, in Footnote 8 on the same page, the Applicant requests that 
in the 5th line, the phrase stating ``in less than 15 years'' should be 
deleted. The Applicant explains that the reason for these changes is 
that certain mining activities (namely, those described in clauses (i) 
through (xvi) of Section 12.2 of the Timber Rights Agreements, which 
also are listed in Footnote 8 of the Notice) are deemed to be 
``temporary'' even if the use is for longer than 15 years. In 
accordance with prevailing practice in Alabama, the Applicant further 
explains that these mining activities give rise to a requirement to 
reimburse the timber owner only for the value of the standing timber, 
but not for the fair market rental value of the Property, itself. The 
only ``temporary'' mining activity for which the Plan will receive fair 
market rental value during mining use, in addition to timber value, is 
surface or strip mining, because surface or strip mining could involve 
a large amount of land being out of use for an indeterminate period. 
According to the Applicant, activities other than those enumerated in 
Footnote 8 would be characterized as ``temporary'' if (a) they are for 
less than 15 years, (b) they do not pose a material risk of 
contamination or nuisance, and (c) the surface will be substantially 
restored to its prior condition upon cessation of activities.
    Third, the Applicant states that the same comments and changes 
apply to the 4th full paragraph on page 64653 of the Notice, which 
describes the parallel provisions in the Timber Rights Agreement 
covering the 35,000 acre parcel of the Property.
    In response to the foregoing comments, the Department notes these 
clarifications to the Summary and, particularly, the Timber Rights 
Agreements.
    5. Representation 11 of the Summary. The Applicant notes that 
Representation 11 of the Summary describes negotiations that were 
taking place at the time the exemption application was filed to sell 
the mineral rights held by US Steel and its affiliate, US Steel Mining 
Co., with respect to the underlying land. Since that time, the 
Applicant states that US Steel has agreed to sell its mineral rights to 
a third party (the USS Mineral Sale). The Applicant further states that 
the mineral purchaser's interest will be subject to the terms of the 
Timber Rights Agreements with regard to compensation due to the Plan 
for damaged or destroyed timber.
    On June 30, 2003, the Applicant indicates that the Oak Grove Mine, 
owned by US Steel Mining Co., was separately sold. The area affected by 
the sale involved approximately 12,000 acres and related only to 
certain identified coal seams that are expected to be fully mined in 
approximately 10 years (which may be extended if options for any of 
five different option parcels totaling 22,000 acres are exercised). 
Rights to any other minerals on those acres were retained by US Steel 
and are included in the USS Mineral Sale.
    Because the Oak Grove Mine was sold prior to the date on which the 
Timber Rights Agreements were finalized, the Applicant explains that 
the documents associated with its conveyance are to be treated as 
``Current Leases'' that pre-date the Timber Rights Agreements, so that 
their compensation terms will technically supersede the mining use 
provisions of the Timber Rights Agreements. The Applicant further 
explains that these compensation terms, like those in the Timber Rights 
Agreements, provide for compensation at fair market value for any 
timber that might be damaged or destroyed for mining purposes. 
According to the Applicant, the negotiation of those terms was overseen 
by TCG as Independent Fiduciary, and those terms are viewed by TCG as 
fair and reasonable to the Plan. Furthermore, the

[[Page 378]]

Applicant indicates that the terms of the Oak Grove Mine sale were 
taken into account by the independent appraiser and Independent 
Fiduciary in valuing the Timber Rights.
    The Department takes note of the Applicant's clarifications 
regarding the USS Mineral Sale in Representation 11 of the Summary.
    6. Representation 14 of the Summary. The Applicant wishes to 
clarify that the last paragraph of Representation 14 of the Summary 
reflects the Applicant's original statement that TCG's representations 
regarding its independence from U.S. Steel are contained in the 
``Management Agreement.'' Because the Management Agreement had not been 
finalized by the time TCG was required to begin its work, the Applicant 
notes that these representations are contained in a letter agreement 
between UCF and TCG dated August 25, 2003.
    The Department acknowledges the Applicant's clarification of the 
written instrument wherein TCG memorializes its independence from 
either the Applicant and US Steel.
    7. Representation 17 of the Summary. The Applicant wishes to 
clarify that with regard to TCG's incentive fee (the Incentive Fee), 
the Management Agreement provision regarding such fee is being amended. 
As described in the last sentence of Representation 17 of the Summary, 
50% of the Incentive Fee was originally payable every third year for 
the duration of the Management Agreement. The Applicant explains that 
the amendment will permit UCF and TCG, by mutual agreement, to defer 
payment of all or a portion of the Incentive Fee due in a particular 
year to any subsequent year. The Applicant further explains that this 
action may be taken to spread out the Incentive Fee payments more 
evenly from period to period.
    In response to this comment, the Department notes the proposed 
amendment regarding the payment of TCG's Incentive Fee. The Department 
further notes that no exemptive relief is provided herein for the 
payment of incentive compensation to TCG.

The Applicant's Response to Issues Raised by the Commenters

    In a letter dated, December 10, 2003, the Applicant provided the 
Department with a written response to the issues raised by interested 
persons who responded in writing to the Department concerning the 
Notice. Discussed below are the issues raised by the commenters and the 
responses to these comments made by the Applicant and the Independent 
Fiduciary.
    1. Effect of Contribution on Benefits Provided under the Plan. 
Several commenters questioned whether the proposed contribution would 
affect benefits under the Plan. In response, the Applicant states that 
the proposed transaction would not, in itself, have any effect on the 
benefits provided under the Plan. If anything, the Applicant states 
that the proposed transaction would offer greater assurance that the 
benefits will ultimately be paid, by providing the Plan with a larger 
and more diverse asset base.
    In addition, the Applicant points out that several comment letters 
raised questions about increasing benefit levels. Because the Applicant 
considers this matter outside the scope of the proposed transactions 
and the exemption request, it has not chosen to comment.
    2. Plan Merger Questions. Some of the commenters raised questions 
regarding the merger of the US Steel pension plans. Because this merger 
is occurring separately from, and unrelated to, the Timber Rights 
contribution, the Applicant states that US Steel will respond directly 
to the Plan participants on those issues, outside of the exemption 
proceeding.
    3. Persons to Whom Independent Fiduciary Is Responsible. A 
commenter questioned to whom in UCF would TCG be responsible. The 
Applicant states that the Independent Fiduciary would report to the 
officers of Plan LLC, the limited liability company that is created to 
hold the Timber Rights on behalf of the Plan. They would be M. Sharon 
Cassidy, the General Counsel of UCF; William Donovan, the Vice 
President--Investments of UCF; and Katherine Stults, the Staff 
Analyst--Forest Products Industry of UCF.

The Independent Fiduciary's Response to the Commenters

    In a letter to the Department dated December 9, 2003, the 
Independent Fiduciary responded to the following issues raised by a 
number of commenters:
    1. Risk of Short-Term Loss on the Investment, No Returns to the 
Plan, and Transaction Costs Outweighing Benefits. A commenter thought 
the proposed transaction would subject the Plan to a risk of short-term 
loss on the investment and generate no investment return at all to the 
Plan.
    In response to this comment, the Independent Fiduciary states that 
based on the cruise (i.e., inspection with reference to possible timber 
yield) and inventory work and cash flow projections by Larson & 
McGowin, the independent appraiser, it anticipates that there will be 
sufficient timber available for harvest in 2004 and subsequent years so 
as to provide a positive cash flow from the outset of the proposed 
transaction. Consequently, the Independent Fiduciary does not expect a 
loss to the Plan, and in fact, believes there will be a positive 
return, from the first year of the investment forward over the course 
of the first five years. Also, as demonstrated by the appraisal report, 
the Independent Fiduciary anticipates positive cash flows and a 
positive investment return for the Plan over the long term from this 
investment, net of any related costs. Therefore, in its considered 
judgment, and as expressed in its report, the Independent Fiduciary 
believes the proposed transaction would be a prudent investment for the 
Plan.
    The Independent Fiduciary notes that another commenter cited the 
specific risk of adverse affects to the Plan from lawsuits related to 
environmental issues, given the nature of the assets involved. The 
Independent Fiduciary states that the parties have taken several 
precautions to limit any environmental risk, including an 
indemnification obligation in favor of the Plan from US Steel as owner 
of the underlying land. Therefore, the Independent Fiduciary believes 
this risk to be limited and that it will not outweigh the potential 
benefits of the proposed transaction.
    2. Preferability of Selling the Property to a Third Party and 
Donating the Sale Proceeds to the Plan. A commenter suggested the 
preferability of selling the Property outright to an unrelated party 
and then donating the proceeds to the Plan.
    In response to this comment, the Independent Fiduciary states that 
if US Steel were to attempt to sell the Timber Rights, the proceeds 
would be relatively low compared to the their long-term expected cash 
flow, because of the young age of the timber. The Independent Fiduciary 
represents that it would be difficult to invest the proceeds in a 
manner that would achieve the same expected investment return with a 
commensurate level of risk compared to the Timber Rights. In addition, 
the Independent Fiduciary states that the contribution provides an 
opportunity for the Plan to receive Timber Rights without incurring 
transaction costs. For these reasons, and because of the 
diversification benefits of expanding the Plan's investments to include 
timber rights, the Independent Fiduciary believes that it is prudent 
and in the interests of the Plan to receive the Timber Rights as a 
contribution rather than the proceeds of the sale of the Timber Rights.

[[Page 379]]

    3. Risk of Loss from Floods, Fires, Vandalism and Other Causes, 
Natural and Otherwise. A commenter questioned the risk of loss to the 
Plan from the Timber Rights investment caused by floods, fire, 
vandalism and other causes.
    In response to this comment, the Independent Fiduciary states that 
based on its past experience in managing timber property, there would 
be only a small risk of loss from fire or other natural disasters. The 
Independent Fiduciary explains that it would take steps to minimize 
fire and disease risk through active timber management aimed at 
maintaining healthy and vigorous stands. Further, the Independent 
Fiduciary asserts that the nature of the Property, being interspersed 
with other land uses and close to an urban center (Birmingham), would 
lead to quick detection of fire and quick response. The Independent 
Fiduciary notes that although tornado damage to timberlands is 
generally confined to small areas, and hurricane damage tends to occur 
closer to near-coastal areas, flooding and drought are generally not 
significant risks in the area where the Property is located.
    The Independent Fiduciary further explains that consistent with 
every other property it manages, it will have a ``fire plan'' to serve 
as the basis for how it will manage the risk of fire and how it will 
respond to any incidence of fire. It notes that the capacity of the 
state of Alabama to support fire fighting efforts is only one 
consideration that will be accounted for in the fire plan for the 
Property. The Independent Fiduciary states that in its experience one 
of the most effective means to manage the risk of fire is through 
active management that maintains a healthy and vigorous forest, 
including the practice of periodically thinning in overly dense forest 
types. Therefore, the Independent Fiduciary represents that it will 
increase the intensity of its management practices on the Property, 
which will improve the health and vigor of the forest and help mitigate 
the inherent risk of fire, insects, and disease.
    4. Using the Proposed Transaction to Benefit US Steel. Some 
commenters raised the possibility that US Steel would be using the 
proposed in kind contribution transaction to benefit itself in various 
ways.
    In response to the commenters, the Independent Fiduciary states 
that the form of the transaction is a ``contribution,'' and not a 
``sale.'' The Independent Fiduciary explains that US Steel is receiving 
no cash or other consideration from the Plan in exchange for the Timber 
Rights, other than the possibility of decreasing future cash 
contributions. Therefore, it believes the Plan's current assets and 
investments are not being affected or diminished in any way.
    The Independent Fiduciary explains that the exemption does not 
provide any relief from the requirement that the assets accepted 
through the in kind contribution constitute a prudent investment for 
the Plan. In this regard, the Independent Fiduciary explains that its 
role has been to assure that the terms of the transaction are fair and 
reasonable to the Plan. In its view, the Independent Fiduciary believes 
that the terms of the transaction are at least as favorable, if not 
more favorable, to the Plan than the terms it could obtain in an arm's 
length transaction with an unrelated party. The Independent Fiduciary 
states that it will continue to perform that role in connection with 
any future dealings between the Plan and US Steel relating to the 
Timber Rights. Therefore, the Independent Fiduciary concludes that US 
Steel is not obtaining any benefit at the Plan's expense.
    The Independent Fiduciary further states that the Timber Rights, 
once contributed to the Plan, must be used for the exclusive benefit of 
the Plan. Any appreciation in value would belong to the Plan and would 
increase the security of future pension payments. Any benefit to US 
Steel, such as through a tax deduction or decreasing future 
contributions, would be incidental to the principal benefit of 
increasing the Plan's funding level, according to the Independent 
Fiduciary.
    The Independent Fiduciary notes that a commenter suggested that US 
Steel would be using this opportunity to seek an ``exemption'' from or 
otherwise postpone its obligatory annual cash contribution to the Plan. 
In response to this commenter's concern, the Independent Fiduciary 
states that US Steel would not receive any exemption from its 
contribution obligations, which apply regardless of the form of 
contribution. The Independent Fiduciary also states that as noted in 
the exemption application, US Steel anticipates that it will be making 
a cash contribution in 2005.
    5. Risks to the Plan from Becoming a ``Business'' as a Result of 
Owning the Timber Rights. Two commenters suggested that there are risks 
to the Plan from becoming engaged in a ``business,'' with one comment 
describing these risks by comparison to the ``unscrupulous executives'' 
at companies such as Enron.
    In response to these comments, the Independent Fiduciary explains 
that managing approximately 170,000 acres of timberland in Alabama is 
not comparable to those well-publicized problems, where the principal 
issue at the root of the problems at those companies was a lack of 
independent oversight and control. The Independent Fiduciary asserts 
that it will manage the Timber Rights, subject to the oversight of UCF 
as Plan Trustee, so that independent oversight and controls will be in 
place.
    6. Risk to the Plan of Limiting the Make-Whole Contribution Period 
and Its Scope. The Independent Fiduciary notes that US Steel's ``make-
whole'' contribution obligation was limited to five years because there 
is a risk of loss to any prudent investment, and it did not seem 
appropriate to require US Steel to guarantee the long-term prudence of 
the Timber Rights investment to any greater extent than any other Plan 
investment, other than to cover any initial risk relating to the in-
kind contribution. The Independent Fiduciary further explains that the 
make-whole contribution is therefore limited to five years to protect 
the Plan from risks related to the initial contribution transaction.
    A commenter asked if the make-whole contribution would be designed 
to bring the Plan to its ``proper funding level.'' In response to the 
commenter's concern, the Independent Fiduciary states that the 
contribution would be triggered only by changes in the value of the 
Timber Rights, and would not be affected by the Plan's then-current 
funding level. The Independent Fiduciary indicates that the make-whole 
payment would be required even if the Plan were overfunded, although 
the payment would be postponed to the extent that it would not be 
deductible for tax purposes or would result in an excise tax. If the 
Plan were underfunded, the Independent Fiduciary represents that the 
make-whole payment would be limited by the loss in value of the Timber 
Rights and would not necessarily restore the Plan to full funding, a 
matter addressed by the pension funding rules.
    Furthermore, the Independent Fiduciary explains that the make-whole 
contribution obligation would take into account any loss from forest 
fires or other causes for damage to the timber, to the extent that loss 
reduces the appraised value or net cash flow from the Timber Rights 
over the first five years.
    7. Exclusion of Due Diligence Costs from the Make-Whole Obligation. 
Another commenter argued that the make-whole contribution formula 
should be changed to allow the Plan to

[[Page 380]]

recover its due diligence costs, ``unless the Plan initiated the Timber 
Rights contribution activity.''
    In response to this comment, the Independent Fiduciary states that 
the due diligence process undertaken here is necessary for it and for 
UCF to fulfill the prudence obligations in connection with the 
acceptance of the Timber Rights as a Plan investment. If a cash 
contribution were received in place of the in kind contribution, and if 
it were similarly used to acquire private real estate assets, the 
Independent Fiduciary states that the Plan would incur similar costs in 
determining a prudent investment for the cash. Even if the Plan did not 
invest in real estate, the Independent Fiduciary explains that the Plan 
would likely incur costs in determining how to invest the cash through 
researching and performing due diligence on other investment 
opportunities. Therefore, the Independent Fiduciary concludes that it 
is in the interests of the Plan to incur these due diligence fees, 
which are reasonable since similar costs would be incurred even if the 
contribution were made in cash.
    8. Limiting Expenses for Operating the Timber Rights to Earnings 
from the Timber Rights. A commenter suggested limiting expenses for 
operating the Timber Rights to earnings from the Timber Rights because 
the commenter argued that to do otherwise would violate the exclusive 
benefit provision of the Plan.
    In response to this comment, the Independent Fiduciary states that 
the Timber Rights would be considered a Plan asset just like any other 
asset owned by the Plan, so that there is no reason to limit related 
expenses to related earnings. Using other Plan assets to cover Timber 
Rights expenses would be a use of Plan assets for the benefit of the 
Plan, consistent with the exclusive benefit requirement, according to 
the Independent Fiduciary. In any event, the Independent Fiduciary 
states that it anticipates positive cash flow net of expenses 
throughout the term of the Timber Rights, so it does not consider this 
matter to be an issue.
    9. Administrability and Feasibility of the Timber Rights. A 
commenter questioned how the administrability and feasibility of the 
Timber Rights would be determined.
    In response to this comment, the Independent Fiduciary indicated 
that it would make such determinations on behalf of the Plan.
    10. Disposal of the Timber Rights and Distribution of the Proceeds. 
A commenter questioned who would determine whether to dispose of the 
Timber Rights and distribute the sale proceeds.
    In response to this comment, the Independent Fiduciary states that 
it will manage the disposition of the Timber Rights. The Department 
notes that the Independent Fiduciary will manage the disposition of the 
Timber Rights. However, UCF will retain the authority to appoint a 
Second Independent Fiduciary to determine whether to approve a proposed 
disposition disclosed to UCF by the Independent Fiduciary, or to 
determine whether to direct the Independent Fiduciary to make such 
disposition. As for the proceeds of any sale of the Timber Rights, the 
Independent Fiduciary states that they would go into the general assets 
of the Plan.
    11. Alternative Transactions and More ``Stable'' Products.
    A commenter asked whether alternative transactions and more stable 
investment products had been considered for potential investment by the 
Plan.
    In response to this comment, the Independent Fiduciary states that 
the proposed contribution of Timber Rights represents a prudent 
opportunity for the Plan to expand and diversify its investments into 
an established asset class in which it does not currently invest. The 
Independent Fiduciary explains that these assets are available to the 
Plan only as a contribution in the form of Timber Rights, and under 
circumstances that permit the Plan to expend less in transaction costs 
than it otherwise would do in connection with a timber investment. The 
Independent Fiduciary also believes that the Timber Rights are a 
prudent and stable investment.
    12. Ownership of the Underlying Property. A commenter asked whether 
US Steel owns the underlying Property.
    In response to this comment, the Independent Fiduciary notes that 
US Steel owns the underlying Property in fee simple absolute.
    13. Environmental Due Diligence. A commenter queried whether 
appropriate environmental due diligence had been performed on the 
Property underlying the Timber Rights.
    In response to this comment, the Independent Fiduciary wishes to 
clarify that under the proposed transaction, the Plan is acquiring 
title only to the timber and is acquiring a contractual right to grow 
and harvest timber for a 99 year period under two Timber Cutting 
Agreements. In addition, the Independent Fiduciary states that the Plan 
will never be the owner of the surface or subsurface Property. 
Therefore, its practical exposure from the perspective of potential 
environmental liability will be for any releases by the Plan or its 
agents.
    The Independent Fiduciary explains that it engaged an environmental 
consultant, GeoSource, Inc., to perform a Phase I Environmental Site 
Assessment (ESA) of the Property in accordance with ASTM Standard E 
1527-00 (Standard Practice for Environmental Assessments) and E 2247-02 
(Standard Practice for Phase I Environmental Assessments for Forestland 
and Rural Property). In addition, the Independent Fiduciary indicates 
that outside environmental counsel to UCF reviewed the consultant's 
work and directed additional work to further expand the amount of 
information, as a result of which certain areas of environmental 
concern were excluded entirely from the proposed transaction. Based on 
the ESA, the Independent Fiduciary states that it advised the Plan to 
acquire Timber Rights only rather than to own the underlying Property 
or its surface or subsurface. In addition, the Independent Fiduciary 
notes that US Steel will indemnify the Plan against any liability 
arising out of any existing environmental conditions.
    Moreover, the Independent Fiduciary states that it will take steps 
to address any potential exposure to the Plan to environmental 
liability from its timber operations. Based on the Phase I ESA and 
follow up investigation, the Independent Fiduciary indicates that areas 
of historical mining activities have been identified where timber 
harvesting will also take place. Together with environmental counsel, 
the Independent Fiduciary explains that it plans to develop a pollution 
prevention protocol for operations within these areas so that 
environmental concerns will be built into Plan-sponsored timber 
operations. The protocol will also address wetland and endangered 
species concerns, which protocols are customary for timber operators. 
Finally, the Independent Fiduciary notes that Larson & McGowin, the 
independent appraiser, has considered the impact of these requirements 
in valuing the Timber Rights.
    14. Compensation to the Plan for Loss in Timber Value Due to 
Mineral/Mining Activities. A commenter questioned how the Plan would be 
compensated for the loss in timber value due to mineral or mining 
activities.
    In response to this comment, the Independent Fiduciary points out 
that the Timber Agreements provide for compensation to the Plan for the 
loss of any timber to the extent mining operations require the removal 
of the

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timber. In certain instances where the use is for a long term, where 
there is a risk of environmental contamination or where the Property 
will not be restored after the mining use, the Independent Fiduciary 
notes that US Steel or the mineral owner will be required to compensate 
the Plan for the permanent loss of the use of such Property, with the 
exception of surface ponds related to existing mineral operations which 
have been excluded.
    15. Replanting Costs. A commenter asked who would pay the cost of 
replanting the acreage in a pine forest following a harvest anticipated 
in the next 10 years.
    In response to this comment, the Independent Fiduciary states that 
the Plan will pay the cost of replanting, as it will continue to derive 
the economic benefit of such plantings under the 99 year term of the 
Timber Agreements. The Independent Fiduciary asserts that this cost was 
taken into account when Larson & McGowin completed the appraisal of the 
Timber Rights.
    16. Capacity of the Independent Fiduciary to Manage Timberland in 
Alabama. A commenter expressed concern that while the Independent 
Fiduciary was qualified to manage timberland in the western United 
States and Canada, it had little or no experience with forest and land 
types present in Alabama.
    In response to this comment, the Independent Fiduciary states that 
it has considerable experience relevant to the management of Alabama 
timberland. The Independent Fiduciary explains that it has been 
involved in the management of diverse timber types for over twenty 
years as a professional timber investment management organization, and 
that it is very experienced in providing a full range of management and 
fiduciary services. During that time, the Independent Fiduciary states 
that it was engaged by one of the largest industrial timberland owners 
in the Southeast to provide advice and counsel regarding timberland 
investment management strategies in the Southeast. Furthermore, one of 
the principal officers of the Independent Fiduciary assigned to the 
proposed Timber Rights contribution began his career as a forester 
trained in the southeastern United States nearly 25 years ago, 
receiving training specific to the predominant forest type associated 
with the US Steel Property.
    The Independent Fiduciary explains that consistent with a proven 
strategy applied numerous times in the past, it sought out demonstrated 
forestry expertise in the local area for the purposes of assembling a 
team of highly qualified foresters to provide UCF with state of the art 
forestry investment services on the Property. Furthermore, the 
Independent Fiduciary asserts that it has assembled a team of foresters 
that it believes are the most qualified individuals available to be 
part of its management team in Birmingham. For example, two of the 
three foresters on that team have over 20 years of experience managing 
timberland in the Birmingham/Tuscaloosa area.
    17. Litigation Risk. One commenter expressed concern over the 
liability risk of lawsuits stemming from the Timber Rights, in 
particular, suits related to hunting activity associated with the 
Property.
    In response to this comment, the Independent Fiduciary explains 
that according to the information provided by US Steel, there have only 
been two personal liability suits filed against US Steel involving the 
Property over the last ten years. The Independent Fiduciary explains 
that this is not unusual for a ten year period. It also notes that only 
one of those lawsuits was related to hunting.
    The Independent Fiduciary states that the predominant strategy 
implemented by numerous industrial timberland managers and timber 
investment management organizations across the South to deal with 
hunting liability risk has been to lease hunting rights to private 
hunting clubs. The hunting clubs have an interest in utilizing the 
resource in a responsible manner, including assisting the land manager 
in controlling access to the property, responsible utilization of 
forest roads, managing the hunting activity of their members, and 
reporting any incidence of fire, arson, theft, etc. Furthermore, the 
Independent Fiduciary explains that liability insurance is typically 
required on the part of the hunting clubs to help manage the risks 
associated with these leases. As property manager, the Independent 
Fiduciary states that its goal will be to develop a prudent strategy 
for managing these liability risks. It states that it intends to 
examine the options and select the one that best balances the benefits 
to the Plan, such as income from hunting leases with the potential 
risks.

Determination of the Department

    Accordingly, based upon the entire record, including the written 
comments received in response to the Notice, and the responses to the 
comments made by the Applicant and the Independent Fiduciary, the 
Department has determined to grant the exemption. The Department has 
also determined not to hold a public hearing. In the Department's view, 
the comments did not raise any factual issues that were not adequately 
addressed by the Applicant or the Independent Fiduciary. Accordingly, 
the Department believes that no issues were identified by the 
commenters that would need to be further explored by a hearing. The 
Department notes that, in transactions of this nature, it has placed 
emphasis on the need for an Independent Fiduciary and on such 
Independent Fiduciary's considered and objective evaluation of the 
transactions. In its deliberations, which included its analysis of all 
aspects of the transactions, the Independent Fiduciary has consistently 
represented for the record that no contribution of Timber Rights will 
be accepted on behalf of the Plan unless such transactions are found by 
the Independent Fiduciary to be in the interests of the Plan. Finally, 
the Department notes that the Independent Fiduciary's satisfaction of 
its obligations is a critical factor in the Department's decision to 
grant a final exemption.
    The exemption application pertaining to the final exemption, the 
Notice, the comments submitted to the Department and the responses to 
the comments, and all other documents submitted to the Department 
concerning this exemption have been included as part of the public 
record of the application. The complete application file (Exemption 
Application No. D-11191), including all supplemental submissions 
received by the Department, is available for public inspection in the 
Public Disclosure Room of the Employee Benefits Security 
Administration, U.S. Department of Labor, Room N-1513, 200 Constitution 
Avenue, NW., Washington, DC 20210.

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 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 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 require, among other things, a fiduciary to discharge 
his or her 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 
requirements of section 401(a) of the Code that the plan operate for 
the exclusive benefit of the employees of

[[Page 382]]

the employer maintaining the plan and their beneficiaries;
    (2) The exemption does not extend to transactions prohibited under 
section 406(b)(3) of the Act and section 4975(c)(1)(F) of the Code;
    (3) In accordance with section 408(a) of the Act, section 
4975(c)(2) of the Code, and the procedures set forth in 29 CFR part 
2570, subpart B (55 FR 32836, August 10, 1990), the Department finds 
that the exemption is administratively feasible, in the interest of the 
Plan and of its participants and beneficiaries and protective of the 
rights of participants and beneficiaries of the Plan;
    (4) The exemption is supplemental to, and not in derogation of, any 
other provisions of the Act and the Code, including administrative 
exemptions. Furthermore, the fact that a transaction is subject to an 
administrative exemption is not dispositive of whether the transaction 
is in fact a prohibited transaction; and
    (5) The availability of this exemption is subject to the express 
condition that the facts and representations contained in the 
application are true and complete and accurately describe all material 
terms of the transactions, which are the subjects of the exemption.

Exemption

    In accordance with section 408(a) of the Act and section 4975(c)(2) 
of the Code and the procedures set forth in 29 CFR part 2570, subpart B 
(55 FR 32836, August 10, 1990), and based upon the entire record, the 
Department finds that the exemption is:
    (a) Administratively feasible;
    (b) In the interests of the Plan and its participants and 
beneficiaries; and
    (c) Protective of the rights of the participants and beneficiaries 
of the Plan.

Section I. Covered Transactions

    (A) The restrictions of sections 406(a), 406(b)(1) and (b)(2) of 
the Act and the sanctions resulting from the application of section 
4975 of the Code, by reason of section 4975(c)(1)(A) through (E) of the 
Code shall not apply, effective December 24, 2003, to the in kind 
contribution of certain timber rights (the Timber Rights), under two 
timber purchase and cutting agreements (the Timber Rights Agreements) 
to The United States Steel Corporation Plan for Employee Pension 
Benefits (the Plan) by the United Steel Corporation (US Steel), the 
Plan sponsor and a party in interest with respect to the Plan.
    (B) The restrictions of sections 406(a), 406(b)(1) and (b)(2) of 
the Act and the sanctions resulting from the application of section 
4975 of the Code, by reason of section 4975(c)(1)(A) through (E) of the 
Code shall not apply, effective December 24, 2003, to the following 
ancillary transactions between the Plan and US Steel arising from 
certain rights retained by US Steel related to the timberland (the 
Property) on which the Timber Rights are based:
    (1) The receipt of compensation by the Plan from US Steel under the 
Timber Rights Agreements in the event that either (a) US Steel 
exercises its right to early termination of an Agreement, or with 
respect to a portion of the Property covered by an Agreement, which 
requires a termination payment to the Plan at a premium over the fair 
market value of the Timber Rights as determined by a qualified, 
independent appraiser, which has been selected by the independent 
fiduciary (the Independent Fiduciary); or (b) US Steel owes 
compensation to the Plan for mineral activities that interfere with the 
Plan's use of the land for timber purposes;
    (2) The guarantee by US Steel to make the Plan whole in the event 
of a decline in value of the Timber Rights after five years;
    (3) Any ongoing obligation incurred by US Steel to maintain the 
Property in a fashion that does not unreasonably interfere with the 
Plan's use thereof;
    (4) The indemnity given by US Steel to the Plan for any 
environmental claims arising out of activities engaged in prior to the 
execution and closing of the proposed Timber Rights contribution; and
    (5) Any additional ancillary transactions defined in Section 
III(e).

Section II. General Conditions

    This exemption is conditioned upon adherence to the material facts 
and representations described herein and upon satisfaction of the 
following general conditions:
    (a) A qualified, Independent Fiduciary acting on behalf of the 
Plan, represents the Plan's interests for all purposes with respect to 
the Timber Rights contribution, and determines prior to entering into 
any of the transactions described herein, that each such transaction, 
including the Timber Rights contribution, is in the interest of the 
Plan;
    (b) The Independent Fiduciary negotiates and approves the terms of 
any of the transactions between the Plan and US Steel that relate to 
the Timber Rights;
    (c) The Independent Fiduciary manages the holding, disposition, and 
assignment of the Timber Rights and takes whatever actions it deems 
necessary to protect the rights of the Plans with respect to the Timber 
Rights;
    (d) The terms of any transactions between the Plan and US Steel are 
no less favorable to the Plan than terms negotiated at arm's length 
under similar circumstances between unrelated third parties;
    (e) The Independent Fiduciary determines the fair market value of 
the Timber Rights contributed to the Plan on the date of such 
contribution. In determining the fair market value of the Timber Rights 
contribution, the Independent Fiduciary obtains an updated appraisal 
from a qualified, independent appraiser selected by the Independent 
Fiduciary, and ensures that the appraisal is consistent with sound 
principles of valuation;
    (f) The fair market value of the Timber Rights does not exceed 5% 
of the Plan's total assets at the time of such contribution.
    (g) The Plan pays no fees or commissions in connection with the 
Timber Rights contribution. (This condition does not preclude the Plan 
from paying the Independent Fiduciary's ongoing management fees once 
the contribution has been approved and accepted. It also does not 
restrict the Plan from paying the due diligence costs connected with 
the acquisition of the Property, such as the expenses for a title 
search, appraisal and environmental review.)
    (h) Five years from the date of the Timber Rights contribution, US 
Steel contributes, to the Plan, an amount in cash calculated as 
follows:
    (1) The fair market value of the Timber Rights as of the date of 
the contribution, less
    (2) The sum of (i) the fair market value of the Timber Rights held 
by the Plan as of the date five years from the date of the 
contribution, as determined by a qualified, independent appraiser, 
which is selected by the Independent Fiduciary, plus (ii) the net cash 
distributed to the Plan LLC or the Plan relating to all or any part of 
the Timber Rights (and/or the related timber) prior to such date; 
provided, that if a contribution is due and if, for the taxable year of 
US Steel in which the contribution is to be made, such contribution (i) 
is not deductible under section 404(a)(1) of the Code or (ii) results 
in the imposition of an excise tax under section 4972 of the Code, such 
contribution is not made until the next taxable year of US Steel for 
which the contribution is deductible under section 404(a)(1) of the 
Code and does not result in an excise tax under section 4972 of the 
Code.

[[Page 383]]

    (i) US Steel indemnifies the Plan with respect to all liability for 
hazardous substances released on the Property prior to the execution 
and closing of the Timber Rights contribution.
    (j) The Independent Fiduciary, acting on behalf of the Plan, 
retains the right to sell or assign, in whole or in part, any of the 
Plan's Timber Rights interests to any third party purchaser. 
Notwithstanding the above, UCF retains the authority to appoint a 
second independent fiduciary (the Second Independent Fiduciary) to 
determine whether to approve a proposed disposition, or to determine 
whether to direct the Independent Fiduciary to make a disposition.

Section III. Definitions

    (a) The term ``Independent Fiduciary'' means a fiduciary who is: 
(1) Independent of an unrelated to US Steel or its affiliates, and (2) 
appointed to act on behalf of the Plan for purposes related to (i) the 
in kind contribution of the Timber Rights by US Steel to the Plan and 
(ii) other transactions between the Plan and US Steel related to the 
Property on which the Timber Rights are based. For purposes of this 
exemption, a fiduciary will not be deemed to be independent of and 
unrelated to US Steel if: (1) Such fiduciary directly or indirectly 
controls, is controlled by or is under common control with US Steel, 
(2) such fiduciary directly or indirectly receives any compensation or 
other consideration in connection with any transaction described in 
this exemption; except that an Independent Fiduciary may receive 
compensation for acting as an Independent Fiduciary from US Steel in 
connection with the transactions contemplated herein if the amount or 
payment of such compensation is not contingent upon or in any way 
affected by the Independent Fiduciary's ultimate decision, and (3) the 
annual gross revenue received by such fiduciary, during any year of its 
engagement, from US Steel and its affiliates exceeds 5% of the 
Independent Fiduciary's annual gross revenue from all sources for its 
prior tax year.
    (b) The term ``affiliate'' means:
    (1) Any person directly or indirectly through one or more 
intermediaries, controlling, controlled by, or under common control 
with the person;
    (2) Any officer, director, employee, relative, or partner of any 
such person; and
    (3) Any corporation or partnership of which such person is an 
officer, director, partner, or employee.
    (c) The term ``control'' means the power to exercise a controlling 
influence over the management or policies of a person other than an 
individual.
    (d) The term ``Second Independent Fiduciary'' means a fiduciary who 
meets the definition of an ``Independent Fiduciary'' in Section III(a) 
above, except that such fiduciary is appointed solely to oversee a 
disposition transaction as described in Section II(j) hereof.
    (e) The term ``additional ancillary transactions'' refers to other 
transactions which may be entered into by the Plan and US Steel arising 
from rights retained by US Steel related to the Property on which the 
Timber Rights are based. These transactions include the following: (1) 
The allocation and contesting of property taxes, fees, licenses, fines 
and other charges or assessments imposed on the Plan, the Timber Rights 
or (as relevant) the Property; (2) the allocation of payments in 
connection with the granting of easements or use permits; (3) the use 
of timberlands in connection with government-mandated environmental 
cleanup or other construction or maintenance activities occurring on US 
Steel owned adjacent properties; (4) the negotiation by the Independent 
Fiduciary with US Steel of a premium price to be paid to the Plan to 
permit US Steel to buy out the Timber Rights on a parcel in order to 
sell the parcel to a third party; (5) the coordination between the 
Independent Fiduciary and US Steel of access to the Property on a 
continuing basis, such as where to place a gate or to whom to permit 
access; (6) the allocation of costs and responsibilities related to 
participation in cooperatives for fire protection, research on land 
use, or other matters relating to the Property and the Timber Rights; 
(7) the representation of the Plan in regulatory matters, such as 
changes in laws or regulations affecting the Property, that also would 
impact US Steel; (8) the allocation of insurance coverage for the 
Property and Timber Rights between the Plan and US Steel; (9) the joint 
hiring by, or the allocation of costs between, the Plan and US Steel of 
contractors to cut or maintain roads for fire protection or other joint 
uses; (10) the joint action by, or allocation of costs between, the 
Plan and US Steel to maintain Property boundaries, monitor for 
violations, and determine damages if any from third party trespass or 
other intrusion onto the Property; (11) the joint representation of the 
Plan and US Steel to an agency or other governmental body in the event 
of any regulatory dispute or other regulatory issue involving the 
Timber Rights and the Property; (12) working with government agencies 
on environmental projects, enhancements, conservation easements, or 
similar matters that may affect the value of the Timber Rights and the 
Property; (13) the negotiation of a joint sale of the Timber Rights 
owned by the Plan and the underlying Property owned by US Steel to a 
third party; (14) the enforcement and settlement arising from US 
Steel's obligations under the Timber Rights Agreements; and (15) the 
joint defense and prosecution of lawsuits involving the Timber Rights 
and/or the Property.
    Effective Date: This exemption is effective as of December 24, 
2003.
    For a more complete statement of the facts and representations 
supporting the Department's decision to grant this final exemption, 
refer to the proposed exemption which is cited above.

    Signed at Washington, DC, this 30th day of September, 2003.
Ivan L. Strasfeld,
Director of Exemption Determinations, Employee Benefits Security 
Administration, Department of Labor.
[FR Doc. 04-52 Filed 1-2-04; 8:45 am]
BILLING CODE 4510-29-P