[Federal Register Volume 63, Number 183 (Tuesday, September 22, 1998)]
[Proposed Rules]
[Pages 50542-50544]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-25265]


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DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

29 CFR Part 2510

RIN 1210-AA48


Plans Established or Maintained Pursuant to Collective Bargaining 
Agreements Under Section 3(40)(A) of ERISA

AGENCY: Pension and Welfare Benefits Administration, Department of 
Labor.

ACTION: Notice of establishment of the ERISA Section 3(40) Negotiated 
Rulemaking Advisory Committee, and notice of first meeting.

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SUMMARY: The Department of Labor (Department) is establishing the ERISA 
Section 3(40) Negotiated Rulemaking Advisory Committee (Committee) 
under the Negotiated Rulemaking Act of 1990 and the Federal Advisory 
Committee Act (the FACA). The Committee will meet for the first time on 
Monday, October 26 through Tuesday, October 27, 1998. The Committee 
will develop a proposed rule implementing the Employee Retirement 
Income Security Act of 1974, as amended, 29 U.S.C. 1001-1461 (ERISA). 
The purpose of the proposed rule is to establish a process and criteria 
for a finding by the Secretary of Labor that an agreement is a 
collective bargaining agreement for purposes of section 3(40) of ERISA. 
The proposed rule will also provide guidance for determining when an 
employee benefit plan is established or maintained under or pursuant to 
such an agreement. Employee benefit plans that are established or 
maintained for the purpose of providing benefits to the employees of 
more than one employer are ``multiple employer welfare arrangements'' 
under section 3(40) of ERISA, and therefore are subject to certain 
state regulations, unless they meet one of the exceptions set forth in 
section 3(40)(A). At issue in this regulation is the exception for 
plans or

[[Page 50543]]

arrangements that are established or maintained under one or more 
agreements which the Secretary finds to be collective bargaining 
agreements. Arrangements that are sponsored by an entity that adopts 
the guise of a labor organization and purports to enter into collective 
bargaining for the purpose of offering or providing health coverage 
only, with no current or prospective intention of dealing with other 
subjects of collective bargaining, are outside the scope of this 
rulemaking. It is the view of the Department that it is necessary to 
distinguish organizations that provide benefits through collectively 
bargained employee representation from organizations that are primarily 
in the business of marketing commercial insurance products.
    If adopted, the proposed rule would affect employee welfare benefit 
plans, their sponsors, participants and beneficiaries, as well as 
service providers to plans, plan fiduciaries, unions, employer 
organizations, the insurance industry, and state insurance regulators.

DATES: The first meeting of the Committee will be held on Monday, 
October 26 through Tuesday, October 27, 1998 from 9:00 a.m. to 
approximately 5:00 p.m. on each day. The date, location and time for 
subsequent Committee meetings will be announced in the Federal 
Register.

ADDRESSES: The first Committee meeting will be held in Room C-5320, 
Seminar Room 6, at the U.S. Department of Labor, 200 Constitution 
Avenue, NW., Washington, DC 20210. All interested parties are invited 
to attend this public meeting. Seating is limited and will be available 
on a first-come, first-serve basis. Individuals with disabilities 
wishing to attend should contact, at least 4 business days in advance 
of the meeting, Patricia Arzuaga, Office of the Solicitor, Plan 
Benefits Security Division, U.S. Department of Labor, Room N-4611, 200 
Constitution Avenue, NW., Washington, DC 20210 (telephone (202) 219-
4600; fax (202) 219-7346), if special accommodations are needed. These 
are not toll-free numbers. The date, location and time for subsequent 
Committee meetings will be announced in advance in the Federal 
Register.
    Minutes of all public meetings and other documents made available 
to the Committee will be available for public inspection and copying in 
the Public Documents Room, Pension and Welfare Benefits Administration, 
U.S. Department of Labor, Room N-5638, 200 Constitution Avenue, NW., 
Washington, DC from 8:30 a.m. to 5:30 p.m. Any written comments should 
be directed to the ERISA 3(40) Negotiated Rulemaking Advisory 
Committee, and sent to the Public Documents Room, Pension and Welfare 
Benefits Administration, U.S. Department of Labor, Room N-5638, 200 
Constitution Avenue, NW., Washington, DC, Telephone (202) 219-8771. 
This is not a toll-free number.

FOR FURTHER INFORMATION CONTACT:
Patricia Arzuaga, Office of the Solicitor, Plan Benefits Security 
Division, U.S. Department of Labor, Room N-4611, 200 Constitution 
Avenue, NW., Washington, DC 20210 (telephone (202) 219-4600; fax (202) 
219-7346). This is not a toll-free number.

SUPPLEMENTARY INFORMATION:

I. Background

    On April 15, 1998, PWBA published a notice of intent to establish a 
negotiated rulemaking advisory committee to develop a proposed rule 
implementing section 3(40) of ERISA. (63 FR 18345) (Notice of Intent). 
Further information on the role of the Committee and the scope of the 
proposed rule can be found in the Notice of Intent.
    In the Notice of Intent, PWBA requested comments on the 
appropriateness of negotiated rulemaking for the proposed rules. The 
Department received twelve comments, all supporting the Department's 
planned use of negotiated rulemaking for developing this rule. These 
twelve comments included 6 applications for membership and 3 
nominations for membership on the Committee. Based on this response, 
and for the reasons stated in the Notice of Intent, the Department has 
determined that establishing this Committee is necessary and in the 
public interest.
    In accordance with the FACA, PWBA prepared a Charter for the 
establishment of the ERISA 3(40) Negotiated Rulemaking Advisory 
Committee, and the Secretary approved the Charter.

II. Committee Membership

1. Applications and Nominations

    In the Notice of Intent, the Department proposed the AFL-CIO to 
represent the interests of labor organizations and participants and 
beneficiaries covered by collectively bargained plans. It nominated the 
National Coordinating Committee for Multiemployer Plans (NCCMP) to 
represent the interests of plans covering the employees of more than 
one employer that are subject to collective bargaining, and the 
National Association of Insurance Commissioners (NAIC) to represent 
states that regulate multiple employer welfare arrangements. The 
Department also included the Entertainment Industry Multiemployer 
Health Plans because according to its comment on the Department's 1995 
Notice of Proposed Rulemaking, entertainment industry multiemployer 
plans are structured differently than other multiemployer welfare plans 
because of the special nature of the entertainment industry.
    In response to the Notice of Intent, ten additional groups applied 
for membership on the Committee. The National Railway Labor Conference 
(NRLC) nominated a representative for membership on the Committee. 
Because collective bargaining for MEWAs for the railway industry is 
covered by the Railway Labor Act, and not the National Labor Relations 
Act, the Department believes that the interests of the NRLC are 
sufficiently different from those of the existing Committee members, 
and so accepts the NRLC for membership on the Committee. In addition, 
the Department accepts the application of the National Association of 
Health Underwriters (NAHU), which represents the interests of 
independent agents, brokers and advisors providing health care products 
and services to plans and individuals, for Committee membership, 
because these interests are not already directly represented by the 
organizations proposed by the Department. The Department also accepts 
the application of the Health Insurance Association of America (HIAA), 
which represents the interests of insurance carriers and managed care 
companies that finance and deliver health care, because the perspective 
of insurance carriers and managed care companies within the American 
private health care system is not already represented by the other 
organizations proposed by the Department.
    The Department received an application for membership from The 
International Corporation (TIC), a third-party administrator of 
multiemployer plans; this application for membership was supported by a 
nomination of TIC by the Society of Professional Benefits 
Administrators. Because the interests of third-party administrators who 
may be responsible for implementing the requirements of any regulation 
resulting from the negotiated rulemaking process are not already 
represented, the Department accepts TIC for membership on the 
Committee. Likewise, because the interests of employers participating 
in the collective bargaining process for multiemployer welfare plans 
are not already represented, the Department accepts the Associated 
General

[[Page 50544]]

Contractors of America (AGC) for membership on the Committee to 
represent the interests of employers involved in the collective 
bargaining process.
    The Department does not accept for membership five applicants whose 
interests are already adequately represented. The United Association of 
Journeymen and Apprentices of the Plumbing and Pipefitting Industry of 
the United States and Canada have interests similar to those 
represented by the AFL-CIO and the NCCMP. Similarly, because the 
distinct interests of maritime supervisory officers are already 
represented by the AFL-CIO, which includes maritime unions in its 
membership, the Department does not accept the application of the 
American Maritime Officers Plans. Likewise, the Department does not 
accept the application for membership of the National Conference of 
Unions and Employee Benefit Funds (NCUEBF). In its application for 
membership, the NCUEBF indicated that it represents self-insured, self-
administered and self-funded employee benefit plans, and has an 
interest in any definition of ``associate member'' that may be included 
in the regulation. The AFL-CIO's and NCCMP's interests subsume the 
interests of the types of plans identified by NCUEBF. The comments 
received by these three organizations in response to the Department's 
1995 Notice of Proposed Rulemaking identified the same concerns, and 
the AFL-CIO and NCCMP represent a broader range of interests than does 
NCUEBF.
    Finally, the Department does not accept the applications of the 
National Rural Electric Cooperative Association (NRECA) and the Legal 
Defense Fund of the Peace Officers' Research Association of California 
(PORAC). Section 3(40)(A)(ii) of ERISA, 29 U.S.C. Sec. 1002(40)(A)(ii) 
provides a separate statutory exception for multiple employer plans 
established by rural electric cooperatives. The issues regarding 
whether a plan is ``established or maintained under or pursuant to a 
collective bargaining agreement'' do not apply to whether a plan is 
established by a rural electric cooperative. The PORAC legal defense 
fund represents funds that are established only by employee 
organizations, and does not represent collectively bargained plans or 
any other entities that have an interest in this rulemaking. Because 
the provisions of section 3(40) do not apply to PORAC or to the 
interests it represents, the Department does not accept its application 
for membership.

2. Committee Membership

    Accordingly, the members of the Committee are PWBA, the NAIC, the 
AFL-CIO, the NCCMP, the Entertainment Industry Multiemployer Health 
Plans, the NLRC, TIC, NAHU, the HIAA and the AGC. These Committee 
members include representatives from interests that are likely to be 
affected by the proposed rule, including employee welfare benefit 
plans, their sponsors, participants and beneficiaries, service 
providers to plans, plan fiduciaries, unions, employer organizations, 
the insurance industry, and state insurance regulators. The following 
is the list of individual Committee members, and the interests they 
represent:

Labor Unions

Kathy Krieger, American Federation of Labor and Congress of 
Industrial Organizations (AFL-CIO)

Multiemployer Plans

Gerald Feder (James Ray--alternate), National Coordinating Committee 
for Multiemployer Plans (NCCMP)
Judith Mazo, Entertainment Industry Multiemployer Health Plans

Railway Labor Organization Plans

Benjamin W. Boley, National Railway Labor Conference

Third-Party Administrators

David Livingston, Ph.D., The International Corporation

Employers/Management

James Kernan, The Associated General Contractors of America (AGC)

Independent Agents, Brokers and Advisors Providing Health Care 
Products and Services to Plans and Individuals

Nancy Trenti, National Association of Health Underwriters

Insurance Carriers and Managed Care Companies That Finance and 
Deliver Health Care

R. Lucia Riddle, Health Insurance Association of America

Federal Government

Elizabeth A. Goodman, Pension and Welfare Benefits Administration

State Governments

National Association of Insurance Commissioners

III. First Meeting of Committee

    The first meeting of the Committee will be held on Monday, October 
26 through Tuesday, October 27, 1998 from 9:00 a.m. to approximately 
5:00 p.m. on each day in Room C-5320, Seminar Room 6, at the U.S. 
Department of Labor, 200 Constitution Avenue, NW., Washington, DC 
20210. The primary purpose of the first meeting will be to establish 
Committee procedures. This meeting is open to the public. Seating is 
limited and will be available on a first-come, first-serve basis. 
Individuals with disabilities wishing to attend should contact, at 
least 4 business days in advance of the meeting, Patricia Arzuaga, 
Office of the Solicitor, Plan Benefits Security Division, U.S. 
Department of Labor, Room N-4611, 200 Constitution Avenue, NW., 
Washington, DC 20210 (telephone (202) 219-4600; fax (202) 219-7346), if 
special accommodations are needed. These are not toll-free numbers.
    Minutes of the public meetings and materials prepared for the 
Committee will be available for public inspection at the Public 
Documents Room, Pension and Welfare Benefits Administration, U.S. 
Department of Labor, Room N-5638, 200 Constitution Avenue, NW., 
Washington, DC from 8:30 a.m. to 5:30 p.m. Any written comments should 
be directed to the ERISA Section 3(40) Negotiated Rulemaking Advisory 
Committee, and sent to the Public Documents Room, Pension and Welfare 
Benefits Administration, U.S. Department of Labor, Room N-5638, 200 
Constitution Avenue, NW., Washington, DC, Telephone (202) 219-8771.

IV. Authority

    This document was prepared under the direction of Meredith Miller, 
Deputy Assistant Secretary for Policy, Pension and Welfare Benefits 
Administration, U.S. Department of Labor, 200 Constitution Avenue, NW., 
Washington, DC 20210, pursuant to Section 3 of the Negotiated 
Rulemaking Act of 1990, 104 Stat. 4969, Title 5 U.S.C. 561 et seq.; 
Section 9 of the Federal Advisory Committee Act, 5 U.S.C. App. 2; and 
section 3(40) of ERISA (Pub. L. 97-473, 96 Stat. 2611. 2612, 29 U.S.C. 
1002(40)) and section 505 (Pub. L. 93-406, 88 Stat. 892, 894, 29 U.S.C. 
1135) of ERISA, and under Secretary of Labor's Order No. 1-87, 52 FR 
13139, April 21, 1987.

    Signed at Washington, DC, this 16th day of September, 1998.
Meredith Miller,
Deputy Assistant Secretary for Policy, Pension and Welfare Benefits 
Administration.
[FR Doc. 98-25265 Filed 9-21-98; 8:45 am]
BILLING CODE 4510-29-M