[Congressional Record Volume 160, Number 132 (Tuesday, September 16, 2014)]
[Senate]
[Pages S5647-S5649]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
AMENDING THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
Ms. HEITKAMP. Mr. President, I ask unanimous consent that the Senate
proceed to the immediate consideration of Calendar No. 552, S. 2511.
The ACTING PRESIDENT pro tempore. The clerk will report the bill by
title.
The assistant legislative clerk read as follows:
A bill (S. 2511) to amend the Employee Retirement Income
Security Act of 1974 to clarify the definition of substantial
cessation of operations.
There being no objection, the Senate proceeded to consider the bill,
which had been reported from the Committee on Health, Education, Labor,
and Pensions, with an amendment to strike all after the enacting clause
and insert in lieu thereof the following:
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
[[Page S5648]]
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.
Ms. HEITKAMP. Mr. President, I further ask unanimous consent that the
committee-reported substitute amendment be agreed to, the bill, as
amended, be read a third time and passed, and the motion to reconsider
be considered made and laid upon the table, with no intervening action
or debate.
The ACTING PRESIDENT pro tempore. Without objection, it is so
ordered.
[[Page S5649]]
The committee-reported amendment in the nature of a substitute was
agreed to.
The bill (S. 2511), as amended, was ordered to be engrossed for a
third reading, was read the third time, and passed.
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