[Federal Register Volume 72, Number 149 (Friday, August 3, 2007)]
[Notices]
[Pages 43297-43298]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-15060]


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PENSION BENEFIT GUARANTY CORPORATION


Pendency of Request for Variance from the Bond/Escrow Requirement 
Relating to the Sale of Assets by an Employer Who Contributes to a 
Multiemployer Plan; P&O Ports Florida, Inc.

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 P&O Ports 
Florida, Inc. for a variance 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 Tampa Maritime Association-
International Longshoremen's Association Pension Plan (the ``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 variances or exemptions from this requirement. Before 
granting a variance or exemption, the statute and PBGC regulations 
require PBGC to give interested persons an opportunity to comment on 
the variance or exemption request. The purpose of this notice is to 
advise interested persons of the variance or exemption request and 
solicit their views on it.

DATES: Comments must be submitted on or before September 17, 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

[[Page 43298]]

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 
(sections 4204.12 & 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 sections 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. section 552(b)(4) (Freedom of 
Information Act).
    Under section 4204.22(a) 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 P&O Ports Florida, Inc., (the 
``Purchaser'') for a variance from the bond/escrow requirement of 
section 4204(a)(1)(B) with respect to its purchase of SSA Gulf, Inc., 
d/b/a Harborside Refrigeration and Garrison on May 26, 2006. In the 
request, the Purchaser represents among other things that:
    1. The Seller was obligated to contribute to the Tampa Maritime 
Association-International Longshoremen's Association Pension Plan (the 
``Plan'') for the purchased operations.
    2. The Purchaser has agreed to assume the obligation to contribute 
to the Plan for substantially the same 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 Purchaser 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 $1,191,462.
    5. The amount of the bond/escrow established under section 
4204(a)(1)(B) is $421,864.
    6. On April 9, 2007, the Purchaser established an escrow account 
for $421,864 on behalf of the Plan through Bank of America. Although 
the escrow account was established after the date required by section 
4204(a)(1)(B), the Plan has agreed to accept the escrow while the 
variance request is pending with the PBGC.
    7. In support of its request for a variance, the Purchaser has 
submitted a copy of its consolidated financial statements for 2005 and 
2006, but has asserted that the information therein is privileged and 
confidential within the meaning of 552(b)(4) of the Freedom of 
Information Act.
    8. A complete copy of the request was sent to the Plan and the 
collective bargaining representative of the Seller's employees by 
certified mail, return receipt requested.

Comments

    All interested persons are invited to submit written comments on 
the pending variance 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 26th of July, 2007.
Charles E. F. Millard,
 Interim Director.
[FR Doc. E7-15060 Filed 8-2-07; 8:45 a.m.]
BILLING CODE 7708-01-P