Notice2023-00876
Pendency for Request for Approval of Special Withdrawal Liability Rules: Motion Picture Laboratory Technicians and Film Editors Local 780 Pension Fund
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Published
January 18, 2023
Issuing agencies
Pension Benefit Guaranty Corporation
Abstract
This notice advises interested persons that the Pension Benefit Guaranty Corporation (PBGC) has received a request from the Motion Picture Laboratory Technicians and Film Editors Local 780 Pension Fund (the "Plan") for approval of a plan amendment providing for special withdrawal liability rules. Under PBGC's regulation on Extension of Special Withdrawal Liability Rules, a multiemployer pension plan may, with PBGC approval, be amended to provide for special withdrawal liability rules similar to those that apply to the construction and entertainment industries. Such approval is granted only if PBGC determines that the rules apply to an industry with characteristics that make use of the special rules appropriate and that the rules will not pose a significant risk to the pension insurance system. Before granting an approval, PBGC's regulations require PBGC to give interested persons an opportunity to comment on the request. The purpose of this notice is to advise interested persons of the request and to solicit their views on it.
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<title>Federal Register, Volume 88 Issue 11 (Wednesday, January 18, 2023)</title>
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[Federal Register Volume 88, Number 11 (Wednesday, January 18, 2023)]
[Notices]
[Pages 2974-2976]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-00876]
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PENSION BENEFIT GUARANTY CORPORATION
Pendency for Request for Approval of Special Withdrawal Liability
Rules: Motion Picture Laboratory Technicians and Film Editors Local 780
Pension Fund
AGENCY: Pension Benefit Guaranty Corporation.
ACTION: Notice of pendency of request.
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SUMMARY: This notice advises interested persons that the Pension
Benefit Guaranty Corporation (PBGC) has received a request from the
Motion Picture Laboratory Technicians and Film Editors Local 780
Pension Fund (the ``Plan'') for approval of a plan amendment providing
for special withdrawal liability rules. Under PBGC's regulation on
Extension of Special Withdrawal Liability Rules, a multiemployer
pension plan may, with PBGC approval, be amended to provide for special
withdrawal liability rules similar to those that apply to the
construction and entertainment industries. Such approval is granted
only if PBGC determines that the rules apply to an industry with
characteristics that make use of the special rules appropriate and that
the rules will not pose a significant risk to the pension insurance
system. Before granting an approval, PBGC's regulations require PBGC to
give interested persons an opportunity to comment on the request. The
purpose of this notice is to advise interested persons of the request
and to solicit their views on it.
DATES: Comments must be submitted on or before March 6, 2023.
ADDRESSES: Comments may be submitted by any of the following methods:
<bullet> Federal eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
Follow the instructions for submitting comments.
<bullet> Email: <a href="/cdn-cgi/l/email-protection#a4d6c1c38ac7cbc9c9c1cad0d7e4d4c6c3c78ac3cbd2"><span class="__cf_email__" data-cfemail="d6a4b3b1f8b5b9bbbbb3b8a2a596a6b4b1b5f8b1b9a0">[email protected]</span></a>. Refer to the Motion Picture
Local 780 Plan in the subject line.
<bullet> Mail or Hand Delivery: Regulatory Affairs Division, Office
of the General Counsel, Pension Benefit Guaranty Corporation, 445 12th
Street SW, Washington, DC 20024-2101.
Commenters are strongly encouraged to submit public comments
electronically. PBGC expects to have limited personnel available to
process public comments that are submitted on paper through mail. Until
further notice, any comments submitted on paper will be considered to
the extent practicable.
All submissions must include the agency's name (Pension Benefit
Guaranty Corporation, or PBGC) and refer to the Motion Picture Local
780 Plan. Comments received will be posted without change to PBGC's
website, <a href="http://www.pbgc.gov">www.pbgc.gov</a>, including any personal information provided. Do
not submit comments that include any personally identifiable
information or confidential business information.
Copies of comments may also be obtained by writing to Disclosure
Division, Office of the General Counsel, Pension Benefit Guaranty
Corporation, 445 12th Street SW, Washington, DC 20024-2101 or calling
202-326-4040 during normal business hours. If you are deaf, hard of
hearing, or have a speech disability, please dial 7-1-1 to access
telecommunications relay services.
FOR FURTHER INFORMATION CONTACT: Daniel Liebman, Deputy General
Counsel, Program Law and Policy Department (<a href="/cdn-cgi/l/email-protection#0c6065696e616d6222686d626569604c7c6e6b6f226b637a"><span class="__cf_email__" data-cfemail="65090c000708040b4b01040b0c000925150702064b020a13">[email protected]</span></a>;
202-229-6510), Benjamin Kelly, Deputy Assistant General Counsel,
Multiemployer Law Division (<a href="/cdn-cgi/l/email-protection#1d7678717164337f7873777c7074735d6d7f7a7e337a726b"><span class="__cf_email__" data-cfemail="8ce7e9e0e0f5a2eee9e2e6ede1e5e2ccfceeebefa2ebe3fa">[email protected]</span></a>; 202-229-4097),
Office of the General Counsel, 445 12th Street SW, Washington, DC
20024-2101. If you are deaf, hard of hearing, or have a speech
disability, please dial 7-1-1 to access telecommunications relay
services.
SUPPLEMENTARY INFORMATION:
Background
Section 4203(a) of the Employee Retirement Income Security Act of
1974, as amended by the Multiemployer Pension Plan Amendments Act of
1980 (ERISA), provides that a complete withdrawal from a multiemployer
plan generally occurs when an employer permanently ceases to have an
obligation to contribute under the plan or permanently ceases all
covered operations under the plan. Under section 4205 of ERISA, a
partial withdrawal generally occurs when an employer: (1) Reduces its
contribution base units by seventy percent in each of three consecutive
years; or (2) permanently ceases to have an obligation under one or
more but fewer than all collective bargaining agreements under which
the employer has been obligated to contribute under the plan, while
continuing to perform work in the jurisdiction of the collective
bargaining agreement of the type for which contributions were
previously
[[Page 2975]]
required or transfers such work to another location or to an entity or
entities owned or controlled by the employer; or (3) permanently ceases
to have an obligation to contribute under the plan for work performed
at one or more but fewer than all of its facilities, while continuing
to perform work at the facility of the type for which the obligation to
contribute ceased.
Although the general rules on complete and partial withdrawal
identify events that normally result in a diminution of the plan's
contribution base, Congress recognized that, in certain industries and
under certain circumstances, a complete or partial cessation of the
obligation to contribute normally does not weaken the plan's
contribution base. For that reason, Congress established special
withdrawal rules for the construction and entertainment industries. For
construction industry plans and employers, section 4203(b)(2) of ERISA
provides that a complete withdrawal occurs only if an employer ceases
to have an obligation to contribute under a plan and the employer
either continues to perform previously covered work in the jurisdiction
of the collective bargaining agreement or resumes such work within 5
five years without renewing the obligation to contribute at the time of
resumption. In the case of a plan terminated by mass withdrawal (within
the meaning of section 4041(A)(2) of ERISA), section 4203(b)(3)
provides that the 5-year restriction on an employer's resuming covered
work is reduced to 3 years. Section 4203(c)(1) of ERISA applies the
same special definition of complete withdrawal to the entertainment
industry, except that the pertinent jurisdiction is the jurisdiction of
the plan rather than the jurisdiction of the collective bargaining
agreement. In contrast, the general definition of complete withdrawal
in section 4203(a) of ERISA includes the permanent cessation of the
obligation to contribute regardless of the continued activities of the
withdrawn employer.
Congress also established special partial withdrawal liability
rules for the construction and entertainment industries. Under section
4208(d)(1) of ERISA, ``[a]n employer to whom section 4203(b) (relating
to the building and construction industry) applies is liable for a
partial withdrawal only if the employer's obligation to contribute
under the plan is continued for no more than an insubstantial portion
of its work in the craft and area jurisdiction of the collective
bargaining agreement of the type for which contributions are
required.'' Under section 4208(d)(2) of ERISA, ``[a]n employer to whom
section 4203(c) (relating to the entertainment industry) applies shall
have no liability for a partial withdrawal except under the conditions
and to the extent prescribed by the [PBGC] by regulation.''
Section 4203(f)(1) of ERISA provides that PBGC may prescribe
regulations under which plans in other industries may be amended to
provide for special withdrawal liability rules similar to the rules
prescribed in section 4203(b) and (c) of ERISA. Section 4203(f)(2) of
ERISA provides that such regulations shall permit the use of special
withdrawal liability rules only in industries (or portions thereof) in
which PBGC determines that the characteristics that would make use of
such rules appropriate are clearly shown, and that the use of such
rules will not pose a significant risk to the insurance system under
title IV of ERISA. Section 4208(e)(3) of ERISA provides that PBGC shall
prescribe by regulation a procedure by which plans may be amended to
adopt special partial withdrawal liability rules upon a finding by PBGC
that the adoption of such rules is consistent with the purposes of
title IV of ERISA.
PBGC's regulations on Extension of Special Withdrawal Liability
Rules (29 CFR part 4203) prescribe procedures for a multiemployer plan
to ask PBGC to approve a plan amendment that establishes special
complete or partial withdrawal liability rules. Section 4203.5(b) of
the regulation requires PBGC to publish a notice of the pendency of a
request for approval of special withdrawal liability rules in the
Federal Register, and to provide interested parties with an opportunity
to comment on the request.
The Request
PBGC received a request from the Plan, dated November 30, 2021, for
approval of a plan amendment providing for special withdrawal liability
rules. On May 26, 2022, the Plan provided supplemental information in
response to a request from PBGC. PBGC's summary of the actuarial
reports provided by the Plan may be accessed on PBGC's website (<a href="https://www.pbgc.gov/prac/pg/other/guidance/multiemployer-notices.html">https://www.pbgc.gov/prac/pg/other/guidance/multiemployer-notices.html</a>). A
copy of the Plan's submission can be requested from the PBGC Disclosure
Officer. The fax number is 202-229-4042. It may also be obtained by
writing to the Disclosure Officer, PBGC, 445 12th Street SW,
Washington, DC 20024.
The Plan is a multiemployer pension plan jointly maintained by
Local Union No. 780 of the International Alliance of Theatrical Stage
Employees (the ``Union'') and employers that are signatory to
collective bargaining agreements with the Union. The Plan covers
approximately 2,000 participants. Most of the employers that contribute
to the Plan have been awarded contracts or subcontracts to provide non-
military support services at military bases and other federal
facilities.
The proposed amendment would create special withdrawal liability
rules for employers (``Federal Contractor Employers'') that have an
obligation to contribute to the Plan for work performed under a
contract or subcontract to provide services to a federal government
agency (a ``Federal Contract''). The Proposed Amendment would create
special withdrawal liability rules for a Federal Contractor Employer
that loses one or more Federal Contracts to an unrelated employer (a
``Successor Employer''). The Plan asserts that Federal Contracts are
periodically re-bid, and that ``the employees and the facility
generally remain the same'' after a Federal Contractor Employer loses a
Federal Contract to a Successor Employer.
The Plan asserts that the industry covered by the Plan is ``[n]ot
unlike the construction industry'' in that Federal Contractor Employees
use the same ``pool'' of workers at the facility regardless of which
Employer currently is awarded the contract. Contributions supporting
future benefit accruals and satisfying any unfunded past liabilities
are made on behalf of the same pool of employees and the same number of
[CBUs]. Consequently, the change in the signatory Employer under a new
contract has little or no effect on the funded position of the Pension
Fund.
The Plan asserts that the proposed amendment may induce new Federal
Employer Contractors to bid on covered work. That, in turn, will
``continue the improvement in the health of the Pension Fund and reduce
the potential risk and exposure to the PBGC.''
The Plan's request includes the actuarial data on which the Plan
relies to support its contention that the amendment will not pose a
significant risk to the insurance system under title IV of ERISA.
Special Withdrawal Liability Rules
The proposed amendment would be effective for (i) complete
withdrawals under section 4203(a) of ERISA on or after January 1, 2021;
(ii) partial withdrawals under section 4205(a)(1) of ERISA during any
three-year testing period beginning on or after January 1, 2019; and
(iii) partial withdrawals
[[Page 2976]]
under section 4205(a)(2) of ERISA on or after January 1, 2021.
Complete Withdrawals
A complete withdrawal under section 4203(a) of ERISA will not occur
if a Federal Contractor Employer ceases to have an obligation to
contribute to the Plan because it loses all Federal Contracts that
required contributions to the Plan to a Successor Employer, and is
performing no other work under a collective bargaining agreement that
requires contributions to the Plan, provided that:
(1) Substantially all the employees for whom the Federal Contractor
Employer was obligated to contribute to the Plan continue to perform
work under one or more Federal Contracts with a Successor Employer
(including any Successor Employer subsequent to the initial Successor
Employer); and
(2) For the five Plan Years following the Plan Year in which the
Federal Contractor Employer lost all of its Federal Contracts to a
Successor Employer, the Successor Employer has an obligation to
contribute to the Plan for work performed under the Federal Contractor
Employer's Federal Contract:
(a) At the same or a higher contribution rate as the highest
contribution rate of the Federal Contractor Employer; and
(b) For substantially the same number of contribution base units as
those for which the Federal Contractor Employer had an obligation to
contribute in the final Plan Year preceding the Plan Year in which the
Federal contractor lost all of its Federal Contracts.
Notwithstanding these rules, the Federal Contractor Employer will
experience a complete withdrawal as of the date it ceased to have an
obligation to contribute to the Plan or ceased all covered operations
under the Plan if, within the five Plan Years following the Plan Year
in which the Federal Contractor Employer lost all of its Federal
Contracts, either:
(1) The Federal Contract of the Successor Employer is terminated,
and no subsequent Successor Employer is obligated to contribute to the
Plan under the conditions described in paragraphs 2(a) and (b); or
(2) The Successor Employer ceases contributions to the Plan or
fails to contribute to the Plan under the conditions described in
paragraphs 2(a) and (b).
Partial Withdrawals
If a Federal Contractor Employer loses one or more, but less than
all, of its Federal Contracts to a Successor Employer, or if the
Federal Contractor Employer loses all of its Federal Contracts to a
Successor Employer but continues to have an obligation to contribute to
the Plan for other operations pursuant to a collective bargaining
agreement, the following rules shall apply.
The contribution base units attributable to the work performed
under the Federal Contract shall be excluded in determining whether the
Federal Contractor has experienced a partial withdrawal under section
4205(a)(1) of ERISA, and the loss of the Contract shall not be
considered a facility closing, provided that:
(1) For the five Plan Years following the Plan Year in which the
Federal Contractor Employer lost the applicable Federal Contract to a
Successor Employer, the Successor Employer has an obligation to
contribute to the Plan for work performed under the Federal Contractor
Employer's Federal Contract:
(a) At the same or a higher contribution rate as the highest
contribution rate of the Federal Contractor Employer; and
(b) For substantially the same number of contribution base units as
those for which the Federal Contractor Employer had an obligation to
contribute in the final Plan Year preceding the Plan Year in which the
Federal contractor lost the Federal Contract.
Notwithstanding these rules, the Federal Contractor Employer will
experience a partial withdrawal if:
(1) Within the 5 Plan Years following the Plan Year in which the
Federal Contractor Employer lost one or more but less than all of its
Federal Contracts, the Successor Employer's Federal Contract is
terminated, and no subsequent Successor Employer is obligated to
contribute to the Plan under the conditions described in paragraphs
1(a) and (b);
(2) Within the 5 Plan Years following the Plan Year in which then
Federal Contractor Employer lost one or more but less than all of its
Federal Contracts, the Successor Employer ceases contributions to the
Plan or fails to contribute to the Plan under the conditions described
in paragraphs 1(a) and (b); or
(3) The Federal Contractor Employer either loses a Federal Contract
to a Successor Employer or bargains out of a Federal Contract and there
is not any Successor Employer with an obligation to contribute to the
Plan under the conditions described in paragraphs 1(a) and (b).
The date of a partial withdrawal assessed under these rules shall
be:
(1) In the event of a 70 percent contribution decline under section
4205(a)(1) of ERISA, the last day of the third year in the applicable
three-year testing period beginning on or after January 1, 2019; and
(2) In the event of a partial cessation of such Federal Contractor
Employer's contribution obligation under section 4205(a)(2) of ERISA,
the year in which the facility closed or the Federal Employer
Contractor bargained out of the Federal Contract.
Bona Fide Sale of Assets
If the Federal Contractor Employer engages in a bona fide, arm's-
length sale of assets to an unrelated purchaser (``Buyer''), the Buyer
will be treated as a Successor Employer.
Comments
All interested persons are invited to submit written comments on
the pending exemption request. All comments will be made part of the
administrative record.
Issued in Washington, DC.
Gordon Hartogensis,
Director, Pension Benefit Guaranty Corporation.
[FR Doc. 2023-00876 Filed 1-17-23; 8:45 am]
BILLING CODE 7709-02-P
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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.