80 FR 50339 - Pendency for Request for Approval of Special Withdrawal Liability Rules: The Service Employees International Union Local 1 Cleveland Pension Plan

PENSION BENEFIT GUARANTY CORPORATION

Federal Register Volume 80, Issue 160 (August 19, 2015)

This notice advises interested persons that the Pension Benefit Guaranty Corporation (``PBGC'') has received a request from the Service Employees International Union Local 1 Cleveland Pension Plan for approval of a plan amendment providing for special withdrawal liability rules. Under section 4203(f) of the Employee Retirement Income Security Act of 1974 and 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 for it.

[Federal Register Volume 80, Number 160 (Wednesday, August 19, 2015)]
[Notices]
[Pages 50339-50341]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-20505]


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PENSION BENEFIT GUARANTY CORPORATION


Pendency for Request for Approval of Special Withdrawal Liability 
Rules: The Service Employees International Union Local 1 Cleveland 
Pension Plan

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 
Service Employees International Union Local 1 Cleveland Pension Plan 
for approval of a plan amendment providing for special withdrawal 
liability rules. Under section 4203(f) of the Employee Retirement 
Income Security Act of 1974 and 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 for it.

DATES: Comments must be received on or before October 5, 2015.

ADDRESSES: Comments may be submitted by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the Web site instructions for submitting comments.
     Email: [email protected].
     Fax: 202-326-4224.
     Mail or Hand Delivery: Regulatory Affairs Group, Office of 
the General Counsel, Pension Benefit Guaranty Corporation, 1200 K 
Street NW., Washington, DC 20005-4026.
    Comments received, including personal information provided, will be 
posted to www.pbgc.gov. Copies of comments may also be obtained by 
writing to Disclosure Division, Office of the General Counsel, Pension 
Benefit Guaranty Corporation, 1200 K Street NW., Washington, DC 20005-
4026 or calling 202-326-4040 during normal business hours. (TTY and TDD 
users may call the Federal relay service toll-free at 1-800-877-8339 
and ask to be connected to 202-326-4040.)

FOR FURTHER INFORMATION CONTACT: Bruce Perlin ([email protected]), 
202-326-4020, ext. 6818 or Jon Chatalian ([email protected]), ext. 
6757, Office of the Chief Counsel, Suite 340, 1200 K Street NW., 
Washington, DC 20005-4026; (TTY/TDD users may call the Federal relay

[[Page 50340]]

service toll-free at 1-800-877-8339 and ask to be connected to 202-326-
4020.)

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 Sec.  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 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, Sec.  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 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 ERISA Sec.  4041(A)(2)), Sec.  
4203(b)(3) provides that the five year restriction on an employer 
resuming covered work is reduced to three 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 Sec.  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 Sec.  
4208(d)(1) of ERISA, ``[a]n employer to whom Sec.  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 
Sec.  4208(d)(2) of ERISA, ``[a]n employer to whom Sec.  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 Sec.  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. The regulation may be 
accessed on PBGC's Web site (http://www.pbgc.gov). 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, dated September 16, 2011, from the Service 
Employees International Union Local 1 Cleveland Pension Plan (the 
``Plan''), for approval of a plan amendment providing for special 
withdrawal liability rules. Subsequently, the Plan requested that PBGC 
suspend review of the amendment. On January 24, 2014, the Plan 
requested that PBGC again consider the amendment and provided updated 
actuarial information. PBGC's summary of the actuarial reports provided 
by the Plan may be accessed on PBGC's Web site (http://www.pbgc.gov). A 
copy of the complete filing may be requested from the PBGC Disclosure 
Officer. The fax number is 202-326-4042. It may also be obtained by 
writing the Disclosure Officer, PBGC, 1200 K Street NW., Suite 11101, 
Washington, DC 20005.
    In summary, the Plan is a multiemployer pension plan currently 
covering employees who work in the commercial building cleaning and 
security industries in the greater Cleveland, Ohio area. The Plan 
represents in its submission that the industry for which the rule is 
requested--the commercial building cleaning industry--has 
characteristics similar to those of the construction industry. 
According to the Plan's submission, the principal similarity is that 
when a contributing employer's contract to clean a building expires, 
the cleaning work will generally continue to be performed by employees 
covered by the Plan, irrespective of the employer retained to perform 
the cleaning services. Under the proposed amendment, a complete 
withdrawal of an employer whose employees substantially all work in the 
commercial building cleaning industry shall occur only when: (a) The 
employer ceases to have an obligation to contribute under the Plan and 
(b) the employer continues to perform work in the jurisdiction of the 
Plan of the type for which contributions were previously required or 
resumes such work within five (5) years after the date on which the 
obligation to contribute under the plan ceases and does not renew the 
obligation at the time of the resumption. In the case of termination by 
mass withdrawal (within the meaning of ERISA Sec.  4041A(a)(2)), the 
proposed amendment provides that Sec.  4203(b)(3),

[[Page 50341]]

the provision that allows a construction employer to resume covered 
work after three years of withdrawal opposed to the standard five year 
restriction, is not applicable to withdrawing commercial building 
cleaning industry employers. Therefore, in the event of a mass 
withdrawal, there is still a five year restriction on resuming covered 
work in the jurisdiction of the Plan. The 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.

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, on this 12th day of August, 2015.
Alice C. Maroni,
Acting Director, Pension Benefit Guaranty Corporation.
[FR Doc. 2015-20505 Filed 8-18-15; 8:45 am]
 BILLING CODE 7709-02-P