[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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