[Federal Register Volume 59, Number 72 (Thursday, April 14, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8994]


[[Page Unknown]]

[Federal Register: April 14, 1994]


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PENSION BENEFIT GUARANTY CORPORATION
 

Pendency of Request for Exemption From the Bond/Escrow 
Requirement Relating to the Sale of Assets by an Employer That 
Contributes to a Multiemployer Plan; San Francisco Baseball Associates, 
L.P.

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 has received a request from the San 
Francisco Baseball Associates, L.P. for an exemption from the bond/
escrow requirement of section 4204(a)(1)(B) of the Employee Retirement 
Income Security Act of 1974, as amended, with respect to the Major 
League Baseball Players Benefit Plan. Section 4204(a)(1) provides that 
the sale of assets by an employer that contributes to a multiemployer 
pension plan will not constitute a complete or partial withdrawal from 
the plan if certain conditions are met. One of these conditions is that 
the purchaser post a bond or deposit money in escrow for the five-plan-
year period beginning after the sale. The PBGC is authorized to grant 
individual and class exemptions from this requirement. Before granting 
an exemption the PBGC is required to give interested persons an 
opportunity to comment on the exemption request. The purpose of this 
notice is to advise interested persons of the exemption request and 
solicit their views on it.

DATES: Comments must be submitted on or before May 31, 1994.

ADDRESSES: All written comments (at least three copies) should be 
addressed to: Pension Benefit Guaranty Corporation, Office of the 
General Counsel, 1200 K Street, NW., Washington, DC 20005-4026, or 
hand-delivered to suite 340 at the above address between 9 a.m. and 4 
p.m., Monday through Friday. The non-confidential portions of the 
request for an exemption and the comments received will be available 
for public inspection at the PBGC Communications and Public Affairs 
Department, suite 240, at the above address, between the hours of 9 
a.m. and 4 p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT: D. Bruce Campbell, Office of the 
General Counsel, Pension Benefit Guaranty Corporation, 1200 K Street, 
NW., Washington, DC 20005-4026; telephone 202-326-4125 (202-326-4179 
for TTY and TDD). These are not toll-free numbers.

SUPPLEMENTARY INFORMATION: 

 Background

    Section 4204 of the Employee Retirement Income Security Act of 
1974, as amended by the Multiemployer Pension Plan Amendments Act of 
1980 (``ERISA'' or ``the Act''), provides that a bona fide arm's-length 
sale of assets of a contributing employer to an unrelated party will 
not be considered a withdrawal if three conditions are met. These 
conditions, enumerated in section 4204(a)(1)(A)-(C), are that--
    (A) The purchaser has an obligation to contribute to the plan with 
respect to the operations for substantially the same number of 
contribution base units for which the seller was obligated to 
contribute;
    (B) The purchaser obtains a bond or places an amount in escrow, for 
a period of five plan years after the sale, in an amount equal to the 
greater of the seller's average required annual contribution to the 
plan for the three plan years preceding the year in which the sale 
occurred or the seller's required annual contribution for the plan year 
preceding the year in which the sale occurred (the amount of the bond 
or escrow is doubled if the plan is in reorganization in the year in 
which the sale occurred); and
    (C) The contract of sale provides that if the purchaser withdraws 
from the plan within the first five plan years beginning after the sale 
and fails to pay any of its liability to the plan, the seller shall be 
secondarily liable for the liability it (the seller) would have had but 
for section 4204.
    The bond or escrow described above would be paid to the plan if the 
purchaser withdraws from the plan or fails to make any required 
contributions to the plan within the first five plan years beginning 
after the sale.
    Additionally, section 4204(b)(1) provides that if a sale of assets 
is covered by section 4204, the purchaser assumes by operation of law 
the contribution record of the seller for the plan year in which the 
sale occurred and the preceding four plan years.
    Section 4204(c) of ERISA authorizes the Pension Benefit Guaranty 
Corporation (``PBGC'') to grant individual or class variances or 
exemptions from the purchaser's bond/escrow requirement of section 
4204(a)(1)(B) when warranted. The legislative history of section 4204 
indicates a Congressional intent that the sales rules be administered 
in a manner that assures protection of the plan with the least 
practicable intrusion into normal business transactions. Senate 
Committee on Labor and Human Resources, 96th Cong., 2nd Sess.,   S. 
1076, The Multiemployer Pension Plan Amendments Act of 1980: Summary 
and Analysis of Considerations 16 (Comm. Print, April 1980); 128 Cong. 
Rec. S10117 (July 29, 1980). The granting of an exemption or variance 
from the bond/escrow requirement does not constitute a finding by the 
PBGC that a particular transaction satisfies the other requirements of 
section 4204(a)(1).
    Under the PBGC's regulation on variances for sales of assets (29 
CFR part 2643), a request for a variance or waiver of the bond/escrow 
requirement under any of the tests established in the regulation 
(Secs. 2643.12-2643.14) is to be made to the plan in question. The PBGC 
will consider waiver requests only when the request is not based on 
satisfaction of one of the four regulatory tests or when the parties 
assert that the financial information necessary to show satisfaction of 
one of the regulatory tests is privileged or confidential financial 
information within the meaning of 5 U.S.C. 552(b)(4) (the Freedom of 
Information Act).
    Under Sec. 2643.3 of the regulation, the PBGC shall approve a 
request for a variance or exemption if it determines that approval of 
the request is warranted, in that it--
    (1) Would more effectively or equitably carry out the purposes of 
Title IV of the Act; and
    (2) Would not significantly increase the risk of financial loss to 
the plan.
    Section 4204(c) of ERISA and Sec. 2643.3(b) of the regulation 
require the PBGC to publish a notice of the pendency of a request for a 
variance or exemption in the Federal Register, and to provide 
interested parties with an opportunity to comment on the proposed 
variance or exemption.

The Request

    The PBGC has received a request from the San Francisco Baseball 
Associates, L.P. (the ``Buyer'') for an exemption from the bond/escrow 
requirement of section 4204(a)(1)(B) with respect to its purchase of 
the San Francisco Giants (the ``Seller'') on November 20, 1992. In the 
request, the Buyer represents among other things that:
    1. The Major League Baseball Players Benefit Plan (the ``Plan'') 
was established and is maintained pursuant to a collective bargaining 
agreement between professional major league baseball teams and the 
Major League Baseball Players Association.
    2. The Seller was a participating employer in the Plan.
    3. The major league clubs have established the Major Leagues 
Central Fund (the ``Central Fund'') pursuant to the ``Major League 
Agreement in re Major Leagues Central Fund.'' Under this agreement, 
contributions to the Plan for all participating employers are paid by 
the Office of the Commissioner of Baseball from the Central Fund on 
behalf of each participating employer in satisfaction of the employer's 
pension liability under the Plan's funding agreement. The monies in the 
Central Fund are derived directly from (i) gate receipts from All-Star 
games, (ii) radio and television revenues from World Series, League 
Championships, intradivision play-offs and All-Star games, and (iii) 
certain other radio and television revenues, including revenues from 
foreign broadcasts, of regular and exhibition games.
    4. During the 1992 Plan year, approximately $34.1 million was paid 
into the Plan on behalf of all major league clubs. In that year 
revenues to the Central Fund exceeded expenses, including contributions 
to the Plan, by approximately $354 million.
    5. The amount of the bond/escrow required under section 4204 
(a)(1)(B) of ERISA is $1,412,077, and the estimated amount of the 
withdrawal liability that the Seller would incur if not for section 
4204 is $4,796,483.
    6. The contract of sale between the Buyer and the Seller was 
effective November 20, 1992, and the final closing occurred on January 
14, 1993.
    7. The contract of sale provides that the Buyer agrees ``to 
contribute to the Plan substantially the same number of contribution 
base units which the Seller had an obligation to contribute to the 
Plan.''
    8. The contract of sale further provides that ``[i]f the Buyer 
thereafter, but prior to the end of the fifth plan year commencing 
after the closing, partially or completely withdraws from the Plan, the 
Seller will be secondarily liable for any withdrawal liability it would 
have had to the Plan * * *.''
    9. In support of the waiver request, the requestor asserts that:
    ``[B]ecause the Plan is funded directly from the Revenues which are 
paid from the Central Fund directly to the [Plan's] Trust without first 
passing through the hands of any of the Employers, the Plan enjoys 
adequate security * * *. A change in ownership of an Employer does not 
in any way affect the obligation to fund the Plan * * * nor create the 
possibility that there will be difficulty in collecting Plan 
contributions due from any new owner * * *.''
    10. A complete copy of the non-confidential portions of the request 
has been sent to the Plan and the Union by certified mail, return 
receipt requested.

Comments

    All interested persons are invited to submit written comments on 
the pending exemption request to the above address. All comments will 
be made a part of the record. Comments received, as well as the 
relevant non-confidential information submitted in support of the 
request, will be available for public inspection at the address set 
forth above.

    Issued at Washington, DC, on this 7th day of April 1994.
Martin Slate,
Executive Director.
[FR Doc. 94-8994 Filed 4-13-94; 8:45 am]
BILLING CODE 7708-01-M