83 FR 26119 - Pendency for Request for Approval of Special Withdrawal Liability Rules: Alaska Electrical Pension Plan of the Alaska Electrical Pension Fund

PENSION BENEFIT GUARANTY CORPORATION

Federal Register Volume 83, Issue 108 (June 5, 2018)

This notice advises interested persons that the Pension Benefit Guaranty Corporation (PBGC) has received a request from the Alaska Electrical Pension Plan of the Alaska Electrical Pension Fund 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.

[Federal Register Volume 83, Number 108 (Tuesday, June 5, 2018)]
[Notices]
[Pages 26119-26121]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-12035]


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PENSION BENEFIT GUARANTY CORPORATION


Pendency for Request for Approval of Special Withdrawal Liability 
Rules: Alaska Electrical Pension Plan of the Alaska Electrical 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 
Alaska Electrical Pension Plan of the Alaska Electrical Pension Fund 
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 July 20, 2018.

ADDRESSES: Comments may be submitted by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Email: [email protected]. Refer to the Alaska Plan in 
the subject line.
     Mail or Hand Delivery: Regulatory Affairs Division, Office 
of the General Counsel, Pension Benefit Guaranty Corporation, 1200 K 
Street NW, Washington, DC 20005-4026.
    All submissions received must include the agency's name (Pension 
Benefit Guaranty Corporation, or PBGC) and refer to the Alaska Plan. 
All comments received will be posted without change to PBGC's website, 
http://www.pbgc.gov, including any personal information provided. 
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 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: Jon Chatalian, ext. 6757, Acting 
Assistant General Counsel ([email protected]), 202-326-4020, ext. 
6757, Office of the Chief Counsel, Suite 340, 1200 K Street NW, 
Washington, DC 20005-4026. (TTY users may call the Federal relay 
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 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 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

[[Page 26120]]

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 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, dated June 15, 2016, from the Alaska 
Electrical Pension Plan of the Alaska Electrical Pension Fund (the 
``Plan''), for approval of a plan amendment providing for special 
withdrawal liability rules. On August 28, 2017, 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 (https://www.pbgc.gov/prac/pg/other/guidance/multiemployer-notices.html). A copy of the Plan's submission can 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 maintained 
pursuant to a collective bargaining agreement between the Alaska 
Chapter National Electrical Contractors and the I.B.E.W. 1547 
(``Union''), collective bargaining agreements between individual 
employers and the Union, and ``special agreements'' between various 
employers and the Board to provide for participation by certain non-
bargained employees. The Plan covers unionized employees who 
predominantly work in the electrical industry in Alaska. Approximately 
one-third of the participants are employed in the building and 
construction industry and the remaining two-thirds are employed in the 
utilities and telecommunications industry.
    The Plan's proposed amendment would be effective for withdrawals 
occurring on or after January 1, 2017, and would create special 
withdrawal liability rules for employers contributing to the Plan whose 
employees work under a contract or subcontract with federal government 
agencies governed by the Service Contract Act (``SCA''), 41 U.S.C. 351 
et seq.; provided that substantially all of the employees for whom the 
employer is required to make a contribution work under a service 
contract (``SCA Employers''). The Plan's submission represents that the 
industry for which the rule is requested has characteristics similar to 
those of the construction industry. According to the Plan, the 
principal similarity is that when a contributing SCA Employer loses a 
contract, the applicable federal government agency typically contracts 
with a new SCA Employer to contribute at the same or substantially the 
same rate, because the SCA provides that employees must not be paid 
less than the minimum monetary wages and fringe benefits found 
prevailing in a particular locality in accordance with the applicable 
collective bargaining agreement.
    Under the following circumstances relating to SCA Employers, the 
Plan's proposed amendment defines a complete withdrawal as follows:
    (1) If an SCA Employer ceases to have an obligation to contribute 
to the Plan because it loses all its Service Contracts and the 
successor SCA Employer has an obligation to contribute to the Plan for 
work performed under the Service Contract at the same or a higher 
contribution rate and for at least 85% as many contribution base units 
as such SCA Employer had the obligation to contribute during the plan 
year ending before such SCA Employer lost the contract, a complete 
withdrawal only occurs if the SCA Employer:
    (A) Continues to perform work in the jurisdiction of the collective 
bargaining agreement of the type for which contributions were 
previously required; or
    (B) Within 5 years after the date on which the SCA Employer loses 
the Service Contract(s),
    (i) Such SCA Employer resumes such work and does not renew the 
obligation at the time of resumption; or
    (ii) The federal government decides to close the facility, have the 
work performed by government employees, or transfer the work covered by 
the Service Contract to another location that is not covered by a 
collective bargaining unit; or
    (iii) The successor SCA Employer ceases contributions to the Plan 
for work performed pursuant to the Service Contract.
    Under the following circumstances relating to SCA Employers, the 
Plan's proposed amendment defines a partial withdrawal as follows:

[[Page 26121]]

    (1) If an SCA Employer loses a contract to a successor SCA 
Employer, and if the successor has an obligation to contribute to the 
Plan for work performed under the Service Contract at the same or a 
higher contribution rate and for at least 85% as many contribution base 
units as such SCA Employer had the obligation to contribute during the 
plan year ending before such SCA Employer lost the contract, a partial 
withdrawal only occurs if the SCA Employer has an obligation to 
contribute for no more than an insubstantial portion of its work in the 
jurisdiction of a collective bargaining agreement for which 
contributions are or were required to the Plan, and either,
    (A) The SCA Employer continues to perform work in the jurisdiction 
of a collective bargaining agreement of the type for which 
contributions were previously required; or
    (B) Within 5 years after the date on which the SCA Employer loses 
the Service Contract,
    (i) The federal government decides to close the facility, have the 
work performed by government employees, or transfer the work covered by 
the service contract to another location that is not covered by a 
collective bargaining unit; or
    (ii) The successor SCA Employer ceases contributions to the Plan 
for work performed under the Service Contract.
    In the case of termination by mass withdrawal (within the meaning 
of section 4041A(a)(2) of ERISA), the proposed amendment provides that 
section 4203(b)(3) of ERISA, the provision that allows a construction 
employer to resume covered work after 3 years of withdrawal, rather 
than the standard 5-year restriction, is not applicable. Therefore, in 
the event of a mass withdrawal, there is still a 5-year restriction on 
resuming covered work in the jurisdiction of the Plan. 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.

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, by:
William Reeder,
Director, Pension Benefit Guaranty Corporation.
[FR Doc. 2018-12035 Filed 6-4-18; 8:45 am]
 BILLING CODE 7709-02-P