[Federal Register Volume 68, Number 131 (Wednesday, July 9, 2003)]
[Notices]
[Pages 41025-41026]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-17350]


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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 Who 
Contributes to a Multiemployer Plan; Florida Marlins, 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 Florida 
Marlins, 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 August 25, 2003.

ADDRESSES: Comments may be mailed to the Office of the General Counsel, 
Pension Benefit Guaranty Corporation, 1200 K Street, NW., Washington, 
DC 20005-4026, or delivered to Suite 340 at the same address. Comments 
also may be sent by Internet e-mail to [email protected]. The PBGC 
will make the comments received available on its Web site, http://www.pbgc.gov. Copies of the comments and the non-confidential portions 
of the request may be obtained by writing the PBGC's Communications and 
Public Affairs Department (CPAD) at Suite 240 at the above address or 
by visiting or calling CPAD during normal business hours (202-325-
4040).

FOR FURTHER INFORMATION CONTACT: Jason E. Wolf, Office of the General 
Counsel, Pension Benefit Guaranty Corporation, 1200 K Street, NW., 
Washington, DC 20005-4026; 202-326-4020. (For TTY/TDD users, call the 
Federal Relay Service toll-free at 1-800-877-8339 and ask to be 
connected to 202-326-4020).

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

[[Page 41026]]

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 4204), a request for a variance or waiver of the bond/escrow 
requirement under any of the tests established in the regulation 
(sections 4204.12 & 4204.13) 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) (Freedom of 
Information Act).
    Under section 4204.22 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 section 4204.22(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 Florida Marlins, L.P. 
(formerly known as Montreal Expos, 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 Florida Marlins Baseball Team from 
the F.M.B.C. II, L.L.C. (the ``Seller'') on February 15, 2002. In the 
request, the Buyer represents among other things that:
    1. The Seller was obligated to contribute to the Major League 
Baseball Players Benefit Benefit Plan (the ``Plan'') for certain 
employees of the sold operations.
    2. The Buyer has ageed to assume the obligation to contribute to 
the Plan for substantially the same number of contribution base units 
as the seller.
    3. The Seller has agreed to be secondarily liable for any 
withdrawal liability it would have had with respect to the sold 
operations (if not for section 4204) should the Buyer withdraw from the 
Fund within the five plan years following the sale and fail to pay its 
withdrawal liability.
    4. The estimated amount of the unfunded vested benefits allocated 
to the seller with respect to the operations subject to the sale could 
be as high as $11,200,000.
    5. The amount of the bond/escrow established under section 
4204(a)(1)(B) is $1,254,904.
    6. The major league clubs have established the Major League Central 
Fund (the ``Central Fund'') pursuant to the Major League Constitution. 
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 
revenue from World Series, League Championship Series, Division Series, 
All-Star Games, and (iii) certain other radio and television revenue, 
including revenues foreign broadcasts from regular, spring training and 
exhibition games.
    7. In support of the waiver request, the requester asserts that:
    ``The Plan is funded directly from Revenues which are paid from the 
Central Fund directly to the Plan without passing through the hands of 
any of the clubs. Therefore, the Plan enjoys a substantial degree of 
security with respect to contributions on behalf of the clubs. A change 
in ownership of a club does not affect the obligation of the Central 
Fund to fund the Plan out of the Revenue. As such, approval of this 
exemption request would not significantly increase the risk of 
financial loss to the Plan.''
    8. During the 2000 Plan year, approximately $29.3 million was paid 
into the Plan on behalf of all major league clubs.
    9. A complete copy of the request was sent to the Plan and to the 
Major League Baseball Players Association 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. The PBGC will make the comments received 
available on its Web site, http://www.pbgc.gov. Copies of the comments 
and the non-confidential portions of the request may be obtained by 
writing the PBGC's Communications and Public Affairs Department (CPAD) 
at Suite 240 at the above address or by visiting or calling CPAD during 
normal business hours (202-325-4040).

    Issued at Washington, DC, on this 2nd day of July, 2003.
Steven A. Kandarian,
Executive Director, Pension Benefit Guaranty Corporation.
[FR Doc. 03-17350 Filed 7-8-03; 8:45 am]
BILLING CODE 7708-01-P