[Federal Register Volume 72, Number 20 (Wednesday, January 31, 2007)]
[Notices]
[Pages 4538-4540]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-1505]


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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; Washington Nationals Baseball 
Club, LLC

AGENCY: Pension Benefit Guaranty Corporation.

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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 Washington 
Nationals Baseball Club, LLC 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 the transaction meets certain conditions. 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 statute and PBGC 
regulations require PBGC 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 March 19, 2007.

ADDRESSES: Comments may be mailed to the Office of the Chief Counsel, 
Pension Benefit Guaranty Corporation, 1200 K Street, NW., Washington, 
DC 20005-4026, or delivered to Suite 340 at the above address. Comments 
also may be submitted electronically through the PBGC's Web site at 
[email protected] or by fax to 202-326-4112. The PBGC will make all 
comments 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 to the PBGC's Communications and Public Affairs 
Department at Suite 1200 at the above address or by visiting that 
office or calling 202-326-4040 during normal business hours. (TTY and 
TDD users may call the Federal relay service toll-free at 1-800-877-
8339 and ask to be connected to 202-326-4040.)

FOR FURTHER INFORMATION CONTACT: Eric Field, Attorney, Office of the 
Chief Counsel, Suite 340, 1200 K Street, NW., Washington, DC 20005-
4026, 202-326-4020. (For TTY/TTD 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 covered 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, 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 statute 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 a variance or exemption 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 exemption from the bond/
escrow requirement under any of the tests established in the regulation 
(Sec. Sec.  4204.12 and 4204.13) is to be made to the plan in question. 
The PBGC will consider variance or exemption requests only when the 
request is not based on satisfaction of one of the four regulatory 
tests under regulation Sec. Sec.  4204.12 and 4204.13 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 Sec.  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 Washington Nationals 
Baseball Club, LLC (the ``Buyer'') for an exemption from the bond/
escrow requirement of section 4204(a)(1)(B) with respect to its 
purchase of the Washington Nationals from Baseball Expos, L.P. (the 
``Seller'') on April 24, 2006. In the request, the Buyer represents 
among other things that:
    1. The Seller was obligated to contribute to the Major League 
Baseball Players Benefit Plan (the ``Plan'') for certain employees of 
the sold operations.
    2. The Buyer has agreed 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

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liability it would have had with respect to the sold operations (if not 
for section 4204) should the Buyer withdraw from the Plan and fail to 
pay its withdrawal liability.
    4. The estimated amount of the withdrawal liability of the Seller 
with respect to the operations subject to the sale is $14,454,124.
    5. The amount of the bond/escrow established under section 
4204(a)(1)(B) is $2,803,040.
    6. The Major League Baseball Clubs (the ``Clubs'') have established 
the Major League Central Fund (the ``Central Fund'') pursuant to the 
Major League Baseball 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 from foreign 
broadcasts, regular, spring training and exhibition games 
(``Revenues'').
    7. In support of the exemption 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 Revenues. As such, approval of this 
exemption request would not increase the risk of financial loss to the 
Plan.''
    8. 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, www.pbgc.gov. Copies of the comments and the 
non-confidential portions of the request may be obtained by writing or 
visiting the PBGC's Communications and Public Affairs Department (CPAD) 
at the above address or by visiting that office or calling 202-326-4040 
during normal business hours.

    Issued at Washington, DC, on this 24th of January, 2007.
Vincent K. Snowbarger,
Interim Director.
[FR Doc. E7-1505 Filed 1-30-07; 8:45 am]
BILLING CODE 7708-01-P