[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[S. 2511 Reported in Senate (RS)]

                                                       Calendar No. 552
113th CONGRESS
  2d Session
                                S. 2511

To amend the Employee Retirement Income Security Act of 1974 to clarify 
         the definition of substantial cessation of operations.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 19, 2014

  Mr. Harkin (for himself and Mr. Alexander) introduced the following 
  bill; which was read twice and referred to the Committee on Health, 
                     Education, Labor, and Pensions

                           September 8, 2014

               Reported by Mr. Harkin, with an amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

_______________________________________________________________________

                                 A BILL


 
To amend the Employee Retirement Income Security Act of 1974 to clarify 
         the definition of substantial cessation of operations.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

<DELETED>SECTION 1. SUBSTANTIAL CESSATION OF OPERATIONS.</DELETED>

<DELETED>    (a) In General.--Subsection (e) of section 4062 of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1362) is 
amended--</DELETED>
        <DELETED>    (1) by striking ``Operations.--If an employer'' 
        and inserting ``Operations.--</DELETED>
        <DELETED>    ``(1) In general.--If an employer''; and</DELETED>
        <DELETED>    (2) by adding at the end the following:</DELETED>
        <DELETED>    ``(2) Substantial cessation of operations.--An 
        employer shall not be treated as having a cessation described 
        in paragraph (1) unless--</DELETED>
                <DELETED>    ``(A) all operations at a facility in a 
                location are ceased, and--</DELETED>
                        <DELETED>    ``(i) such cessation is reasonably 
                        expected to be permanent;</DELETED>
                        <DELETED>    ``(ii) no portion of such 
                        operations is moved to another facility at a 
                        different location;</DELETED>
                        <DELETED>    ``(iii) no portion of such 
                        operations is assumed by or otherwise 
                        transferred to another employer; and</DELETED>
                        <DELETED>    ``(iv) no other operations are 
                        reasonably expected to be maintained at such 
                        facility; and</DELETED>
                <DELETED>    ``(B) as a result of the cessation 
                described in subparagraph (A), more than 20 percent of 
                the employees of the employer have a termination of 
                employment that is reasonably expected to be 
                permanent.</DELETED>
        <DELETED>For purposes of subparagraph (B), all employees 
        treated as employed by a single employer under sections 210 (c) 
        and (d) shall be treated as employees of the 
        employer.''.</DELETED>
<DELETED>    (b) Direction to the Corporation.--The Pension Benefit 
Guaranty Corporation shall not take any enforcement, administrative, or 
other action pursuant to section 4062(e) of the Employee Retirement 
Income Security Act of 1974 that is inconsistent with subparagraph (A) 
of section 4062(e)(2) of such Act, as added by subsection (a), without 
regard to whether the action relates to a cessation or other event that 
occurs before or after the date of enactment of this Act, unless such 
action is in connection with a settlement agreement in place before 
June 1, 2014.</DELETED>

SECTION 1. SUBSTANTIAL CESSATION OF OPERATIONS.

    (a) In General.--Subsection (e) of section 4062 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1362) is amended to 
read as follows:
    ``(e) Treatment of Substantial Cessation of Operations.--
            ``(1) General rule.--Except as provided in paragraphs (3) 
        and (4), if there is a substantial cessation of operations at a 
        facility in any location, the employer shall be treated with 
        respect to any single employer plan established and maintained 
        by the employer covering participants at such facility as if 
        the employer were a substantial employer under a plan under 
        which more than one employer makes contributions and the 
        provisions of sections 4063, 4064, and 4065 shall apply.
            ``(2) Substantial cessation of operations.--For purposes of 
        this subsection:
                    ``(A) In general.--The term `substantial cessation 
                of operations' means a permanent cessation of 
                operations at a facility which results in a workforce 
                reduction of a number of eligible employees at the 
                facility equivalent to more than 15 percent of the 
                number of all eligible employees of the employer, 
                determined immediately before the earlier of--
                            ``(i) the date of the employer's decision 
                        to implement such cessation, or
                            ``(ii) in the case of a workforce reduction 
                        which includes 1 or more eligible employees 
                        described in paragraph (6)(B), the earliest 
                        date on which any such eligible employee was 
                        separated from employment.
                    ``(B) Workforce reduction.--Subject to 
                subparagraphs (C) and (D), the term `workforce 
                reduction' means the number of eligible employees at a 
                facility who are separated from employment by reason of 
                the permanent cessation of operations of the employer 
                at the facility.
                    ``(C) Relocation of workforce.--An eligible 
                employee separated from employment at a facility shall 
                not be taken into account in computing a workforce 
                reduction if, within a reasonable period of time, the 
                employee is replaced by the employer, at the same or 
                another facility located in the United States, by an 
                employee who is a citizen or resident of the United 
                States.
                    ``(D) Dispositions.--If, whether by reason of a 
                sale or other disposition of the assets or stock of a 
                contributing sponsor (or any member of the same 
                controlled group as such a sponsor) of the plan 
                relating to operations at a facility or otherwise, an 
                employer (the `transferee employer') other than the 
                employer which experiences the substantial cessation of 
                operations ( the `transferor employer') conducts any 
                portion of such operations, then--
                            ``(i) an eligible employee separated from 
                        employment with the transferor employer at the 
                        facility shall not be taken into account in 
                        computing a workforce reduction if--
                                    ``(I) within a reasonable period of 
                                time, the employee is replaced by the 
                                transferee employer by an employee who 
                                is a citizen or resident of the United 
                                States; and
                                    ``(II) in the case of an eligible 
                                employee who is a participant in a 
                                single employer plan maintained by the 
                                transferor employer, the transferee 
                                employer, within a reasonable period of 
                                time, maintains a single employer plan 
                                which includes the assets and 
                                liabilities attributable to the accrued 
                                benefit of the eligible employee at the 
                                time of separation from employment with 
                                the transferor employer; and
                            ``(ii) an eligible employee who continues 
                        to be employed at the facility by the 
                        transferee employer shall not be taken into 
                        account in computing a workforce reduction if--
                                    ``(I) the eligible employee is not 
                                a participant in a single employer plan 
                                maintained by the transferor employer, 
                                or
                                    ``(II) in any other case, the 
                                transferee employer, within a 
                                reasonable period of time, maintains a 
                                single employer plan which includes the 
                                assets and liabilities attributable to 
                                the accrued benefit of the eligible 
                                employee at the time of separation from 
                                employment with the transferor 
                                employer.
            ``(3) Exemption for plans with limited underfunding.--
        Paragraph (1) shall not apply with respect to a single employer 
        plan if, for the plan year preceding the plan year in which the 
        cessation occurred--
                    ``(A) there were fewer than 100 participants with 
                accrued benefits under the plan as of the valuation 
                date of the plan for the plan year (as determined under 
                section 303(g)(2)); or
                    ``(B) the ratio of the market value of the assets 
                of the plan to the funding target of the plan for the 
                plan year was 90 percent or greater.
            ``(4) Election to make additional contributions to satisfy 
        liability.--
                    ``(A) In general.--An employer may elect to satisfy 
                the employer's liability with respect to a plan by 
                reason of paragraph (1) by making additional 
                contributions to the plan in the amount determined 
                under subparagraph (B) for each plan year in the 7-
                plan-year period beginning with the plan year in which 
                the cessation occurred. Any such additional 
                contribution for a plan year shall be in addition to 
                any minimum required contribution under section 303 for 
                such plan year and shall be paid not later than the 
                earlier of--
                            ``(i) the due date for the minimum required 
                        contribution for such year under section 
                        303(j); or
                            ``(ii) in the case of the first such 
                        contribution, the date that is 1 year after the 
                        date on which the employer notifies the 
                        Corporation of the substantial cessation of 
                        operations or the date the Corporation 
                        determines a substantial cessation of 
                        operations has occurred, and in the case of 
                        subsequent contributions, the same date in each 
                        succeeding year.
                    ``(B) Amount determined.--
                            ``(i) In general.--Except as provided in 
                        clause (iii), the amount determined under this 
                        subparagraph with respect to each plan year in 
                        the 7-plan-year period is the product of--
                                    ``(I) \1/7\ of the unfunded vested 
                                benefits determined under section 
                                4006(a)(3)(E) as of the valuation date 
                                of the plan (as determined under 
                                section 303(g)(2)) for the plan year 
                                preceding the plan year in which the 
                                cessation occurred; and
                                    ``(II) the reduction fraction.
                            ``(ii) Reduction fraction.--For purposes of 
                        clause (i), the reduction fraction of a single 
                        employer plan is equal to--
                                    ``(I) the number of participants 
                                with accrued benefits in the plan who 
                                were included in computing the 
                                workforce reduction under paragraph 
                                (2)(B) as a result of the cessation of 
                                operations at the facility; divided by
                                    ``(II) the number of eligible 
                                employees of the employer who are 
                                participants with accrued benefits in 
                                the plan, determined as of the same 
                                date the determination under paragraph 
                                (2)(A) is made.
                            ``(iii) Limitation.--The additional 
                        contribution under this subparagraph for any 
                        plan year shall not exceed the excess, if any, 
                        of--
                                    ``(I) 25 percent of the difference 
                                between the market value of the assets 
                                of the plan and the funding target of 
                                the plan for the preceding plan year; 
                                over
                                    ``(II) the minimum required 
                                contribution under section 303 for the 
                                plan year.
                    ``(C) Permitted cessation of annual installments 
                when plan becomes sufficiently funded.--An employer's 
                obligation to make additional contributions under this 
                paragraph shall not apply to--
                            ``(i) the first plan year (beginning on or 
                        after the first day of the plan year in which 
                        the cessation occurs) for which the ratio of 
                        the market value of the assets of the plan to 
                        the funding target of the plan for the plan 
                        year is 90 percent or greater, or
                            ``(ii) any plan year following such first 
                        plan year.
                    ``(D) Coordination with funding waivers.--
                            ``(i) In general.--If the Secretary of the 
                        Treasury issues a funding waiver under section 
                        302(c) with respect to the plan for a plan year 
                        in the 7-plan-year period under subparagraph 
                        (A), the additional contribution with respect 
                        to such plan year shall be permanently waived.
                            ``(ii) Notice.--An employer maintaining a 
                        plan with respect to which such a funding 
                        waiver has been issued or a request for such a 
                        funding waiver is pending shall provide notice 
                        to the Secretary of the Treasury, in such form 
                        and at such time as the Secretary of the 
                        Treasury shall provide, of a cessation of 
                        operations to which paragraph (1) applies.
                    ``(E) Enforcement.--
                            ``(i) Notice.--An employer making the 
                        election under this paragraph shall provide 
                        notice to the Corporation, in accordance with 
                        rules prescribed by the Corporation, of--
                                    ``(I) such election, not later than 
                                30 days after the earlier of the date 
                                the employer notifies the Corporation 
                                of the substantial cessation of 
                                operations or the date the Corporation 
                                determines a substantial cessation of 
                                operations has occurred;
                                    ``(II) the payment of each 
                                additional contribution, not later than 
                                10 days after such payment;
                                    ``(III) any failure to pay the 
                                additional contribution in the full 
                                amount for any year in the 7-plan-year 
                                period, not later than 10 days after 
                                the due date for such payment;
                                    ``(IV) the waiver under 
                                subparagraph (D)(i) of the obligation 
                                to make an additional contribution for 
                                any year, not later than 30 days after 
                                the funding waiver described in such 
                                subparagraph is granted; and
                                    ``(V) the cessation of any 
                                obligation to make additional 
                                contributions under subparagraph (C), 
                                not later than 10 days after the due 
                                date for payment of the additional 
                                contribution for the first plan year to 
                                which such cessation applies.
                            ``(ii) Acceleration of liability to the 
                        plan for failure to pay.--If an employer fails 
                        to pay the additional contribution in the full 
                        amount for any year in the 7-plan-year period 
                        by the due date for such payment, the employer 
                        shall, as of such date, be liable to the plan 
                        in an amount equal to the balance which remains 
                        unpaid as of such date of the aggregate amount 
                        of additional contributions required to be paid 
                        by the employer during such 7-year-plan period. 
                        The Corporation may waive or settle the 
                        liability described in the preceding sentence, 
                        at the discretion of the Corporation.
                            ``(iii) Civil action.--The Corporation may 
                        bring a civil action in the district courts of 
                        the United States in accordance with section 
                        4003(e) to compel an employer making such 
                        election to pay the additional contributions 
                        required under this paragraph.
            ``(5) Definitions.--For purposes of this subsection:
                    ``(A) Eligible employee.--The term `eligible 
                employee' means an employee who is eligible to 
                participate in an employee pension benefit plan (as 
                defined in section 3(2)) established and maintained by 
                the employer.
                    ``(B) Funding target.--The term `funding target' 
                means, with respect to any plan year, the funding 
                target as determined under section 
                4006(a)(3)(E)(iii)(I) for purposes of determining the 
                premium paid to the Corporation under section 4007 for 
                the plan year.
                    ``(C) Market value.--The market value of the assets 
                of a plan shall be determined in the same manner as for 
                purposes of section 4006(a)(3)(E).
            ``(6) Special rules.--
                    ``(A) Change in operation of certain facilities and 
                property.--For purposes of paragraphs (1) and (2), an 
                employer shall not be treated as ceasing operations at 
                a qualified lodging facility (as defined in section 
                856(d)(9)(D) of the Internal Revenue Code of 1986) if 
                such operations are continued by an eligible 
                independent contractor (as defined in section 
                856(d)(9)(A) of such Code) pursuant to an agreement 
                with the employer.
                    ``(B) Aggregation of prior separations.--The 
                workforce reduction under paragraph (2) with respect to 
                any cessation of operations shall be determined by 
                taking into account any separation from employment of 
                any eligible employee at the facility (other than a 
                separation which is not taken into account as workforce 
                reduction by reason of subparagraph (C) or (D) of 
                paragraph (2)) which--
                            ``(i) is related to the permanent cessation 
                        of operations of the employer at the facility, 
                        and
                            ``(ii) occurs during the 3-year period 
                        preceding such cessation.
                    ``(C) No addition to prefunding balance.--For 
                purposes of section 303(f)(6)(B) and section 
                430(f)(6)(B) of the Internal Revenue Code of 1986, any 
                additional contribution made under paragraph (4) shall 
                be treated in the same manner as a contribution an 
                employer is required to make in order to avoid a 
                benefit reduction under paragraph (1), (2), or (4) of 
                section 206(g) or subsection (b), (c), or (e) of 
                section 436 of the Internal Revenue Code of 1986 for 
                the plan year.''.
    (b) Effective Date.--
            (1) In general.--The amendment made by this section shall 
        apply to a cessation of operations or other event at a facility 
        occurring on or after the date of enactment of this Act.
            (2) Transition rule.--An employer that had a cessation of 
        operations before the date of enactment of this Act (as 
        determined under subsection 4062(e) of the Employee Retirement 
        Income Security Act of 1974 as in effect before the amendment 
        made by this section), but did not enter into an arrangement 
        with the Pension Benefit Guaranty Corporation to satisfy the 
        requirements of such subsection (as so in effect) before such 
        date of enactment, shall be permitted to make the election 
        under section 4062(e)(4) of such Act (as in effect after the 
        amendment made by this section) as if such cessation had 
        occurred on such date of enactment. Such election shall be made 
        not later than 30 days after such Corporation issues, on or 
        after such date of the enactment, a final administrative 
        determination that a substantial cessation of operations has 
        occurred.
    (c) Direction to the Corporation.--The Pension Benefit Guaranty 
Corporation shall not take any enforcement, administrative, or other 
action pursuant to section 4062(e) of the Employee Retirement Income 
Security Act of 1974, or in connection with an agreement settling 
liability arising under such section, that is inconsistent with the 
amendment made by this section, without regard to whether the action 
relates to a cessation or other event that occurs before, on, or after 
the date of the enactment of this Act, unless such action is in 
connection with a settlement agreement that is in place before June 1, 
2014. The Pension Benefit Guaranty Corporation shall not initiate a new 
enforcement action with respect to section 4062(e) of such Act that is 
inconsistent with its enforcement policy in effect on June 1, 2014.
                                                       Calendar No. 552

113th CONGRESS

  2d Session

                                S. 2511

_______________________________________________________________________

                                 A BILL

To amend the Employee Retirement Income Security Act of 1974 to clarify 
         the definition of substantial cessation of operations.

_______________________________________________________________________

                           September 8, 2014

                       Reported with an amendment