[Federal Register Volume 88, Number 11 (Wednesday, January 18, 2023)]
[Notices]
[Pages 2974-2976]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-00876]


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PENSION BENEFIT GUARANTY CORPORATION


Pendency for Request for Approval of Special Withdrawal Liability 
Rules: Motion Picture Laboratory Technicians and Film Editors Local 780 
Pension Fund

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 (PBGC) has received a request from the 
Motion Picture Laboratory Technicians and Film Editors Local 780 
Pension Fund (the ``Plan'') for approval of a plan amendment providing 
for special withdrawal liability rules. Under PBGC's regulation on 
Extension of Special Withdrawal Liability Rules, a multiemployer 
pension plan may, with PBGC approval, be amended to provide for special 
withdrawal liability rules similar to those that apply to the 
construction and entertainment industries. Such approval is granted 
only if PBGC determines that the rules apply to an industry with 
characteristics that make use of the special rules appropriate and that 
the rules will not pose a significant risk to the pension insurance 
system. Before granting an approval, PBGC's regulations require PBGC to 
give interested persons an opportunity to comment on the request. The 
purpose of this notice is to advise interested persons of the request 
and to solicit their views on it.

DATES: Comments must be submitted on or before March 6, 2023.

ADDRESSES: Comments may be submitted by any of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Email: [email protected]. Refer to the Motion Picture 
Local 780 Plan in the subject line.
     Mail or Hand Delivery: Regulatory Affairs Division, Office 
of the General Counsel, Pension Benefit Guaranty Corporation, 445 12th 
Street SW, Washington, DC 20024-2101.
    Commenters are strongly encouraged to submit public comments 
electronically. PBGC expects to have limited personnel available to 
process public comments that are submitted on paper through mail. Until 
further notice, any comments submitted on paper will be considered to 
the extent practicable.
    All submissions must include the agency's name (Pension Benefit 
Guaranty Corporation, or PBGC) and refer to the Motion Picture Local 
780 Plan. Comments received will be posted without change to PBGC's 
website, www.pbgc.gov, including any personal information provided. Do 
not submit comments that include any personally identifiable 
information or confidential business information.
    Copies of comments may also be obtained by writing to Disclosure 
Division, Office of the General Counsel, Pension Benefit Guaranty 
Corporation, 445 12th Street SW, Washington, DC 20024-2101 or calling 
202-326-4040 during normal business hours. If you are deaf, hard of 
hearing, or have a speech disability, please dial 7-1-1 to access 
telecommunications relay services.

FOR FURTHER INFORMATION CONTACT: Daniel Liebman, Deputy General 
Counsel, Program Law and Policy Department ([email protected]; 
202-229-6510), Benjamin Kelly, Deputy Assistant General Counsel, 
Multiemployer Law Division ([email protected]; 202-229-4097), 
Office of the General Counsel, 445 12th Street SW, Washington, DC 
20024-2101. If you are deaf, hard of hearing, or have a speech 
disability, please dial 7-1-1 to access telecommunications relay 
services.

SUPPLEMENTARY INFORMATION:

Background

    Section 4203(a) of the Employee Retirement Income Security Act of 
1974, as amended by the Multiemployer Pension Plan Amendments Act of 
1980 (ERISA), provides that a complete withdrawal from a multiemployer 
plan generally occurs when an employer permanently ceases to have an 
obligation to contribute under the plan or permanently ceases all 
covered operations under the plan. Under section 4205 of ERISA, a 
partial withdrawal generally occurs when an employer: (1) Reduces its 
contribution base units by seventy percent in each of three consecutive 
years; or (2) permanently ceases to have an obligation under one or 
more but fewer than all collective bargaining agreements under which 
the employer has been obligated to contribute under the plan, while 
continuing to perform work in the jurisdiction of the collective 
bargaining agreement of the type for which contributions were 
previously

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required or transfers such work to another location or to an entity or 
entities owned or controlled by the employer; or (3) permanently ceases 
to have an obligation to contribute under the plan for work performed 
at one or more but fewer than all of its facilities, while continuing 
to perform work at the facility of the type for which the obligation to 
contribute ceased.
    Although the general rules on complete and partial withdrawal 
identify events that normally result in a diminution of the plan's 
contribution base, Congress recognized that, in certain industries and 
under certain circumstances, a complete or partial cessation of the 
obligation to contribute normally does not weaken the plan's 
contribution base. For that reason, Congress established special 
withdrawal rules for the construction and entertainment industries. For 
construction industry plans and employers, section 4203(b)(2) of ERISA 
provides that a complete withdrawal occurs only if an employer ceases 
to have an obligation to contribute under a plan and the employer 
either continues to perform previously covered work in the jurisdiction 
of the collective bargaining agreement or resumes such work within 5 
five years without renewing the obligation to contribute at the time of 
resumption. In the case of a plan terminated by mass withdrawal (within 
the meaning of section 4041(A)(2) of ERISA), section 4203(b)(3) 
provides that the 5-year restriction on an employer's resuming covered 
work is reduced to 3 years. Section 4203(c)(1) of ERISA applies the 
same special definition of complete withdrawal to the entertainment 
industry, except that the pertinent jurisdiction is the jurisdiction of 
the plan rather than the jurisdiction of the collective bargaining 
agreement. In contrast, the general definition of complete withdrawal 
in section 4203(a) of ERISA includes the permanent cessation of the 
obligation to contribute regardless of the continued activities of the 
withdrawn employer.
    Congress also established special partial withdrawal liability 
rules for the construction and entertainment industries. Under section 
4208(d)(1) of ERISA, ``[a]n employer to whom section 4203(b) (relating 
to the building and construction industry) applies is liable for a 
partial withdrawal only if the employer's obligation to contribute 
under the plan is continued for no more than an insubstantial portion 
of its work in the craft and area jurisdiction of the collective 
bargaining agreement of the type for which contributions are 
required.'' Under section 4208(d)(2) of ERISA, ``[a]n employer to whom 
section 4203(c) (relating to the entertainment industry) applies shall 
have no liability for a partial withdrawal except under the conditions 
and to the extent prescribed by the [PBGC] by regulation.''
    Section 4203(f)(1) of ERISA provides that PBGC may prescribe 
regulations under which plans in other industries may be amended to 
provide for special withdrawal liability rules similar to the rules 
prescribed in section 4203(b) and (c) of ERISA. Section 4203(f)(2) of 
ERISA provides that such regulations shall permit the use of special 
withdrawal liability rules only in industries (or portions thereof) in 
which PBGC determines that the characteristics that would make use of 
such rules appropriate are clearly shown, and that the use of such 
rules will not pose a significant risk to the insurance system under 
title IV of ERISA. Section 4208(e)(3) of ERISA provides that PBGC shall 
prescribe by regulation a procedure by which plans may be amended to 
adopt special partial withdrawal liability rules upon a finding by PBGC 
that the adoption of such rules is consistent with the purposes of 
title IV of ERISA.
    PBGC's regulations on Extension of Special Withdrawal Liability 
Rules (29 CFR part 4203) prescribe procedures for a multiemployer plan 
to ask PBGC to approve a plan amendment that establishes special 
complete or partial withdrawal liability rules. Section 4203.5(b) of 
the regulation requires PBGC to publish a notice of the pendency of a 
request for approval of special withdrawal liability rules in the 
Federal Register, and to provide interested parties with an opportunity 
to comment on the request.

The Request

    PBGC received a request from the Plan, dated November 30, 2021, for 
approval of a plan amendment providing for special withdrawal liability 
rules. On May 26, 2022, the Plan provided supplemental information in 
response to a request from PBGC. PBGC's summary of the actuarial 
reports provided by the Plan may be accessed on PBGC's website (https://www.pbgc.gov/prac/pg/other/guidance/multiemployer-notices.html). A 
copy of the Plan's submission can be requested from the PBGC Disclosure 
Officer. The fax number is 202-229-4042. It may also be obtained by 
writing to the Disclosure Officer, PBGC, 445 12th Street SW, 
Washington, DC 20024.
    The Plan is a multiemployer pension plan jointly maintained by 
Local Union No. 780 of the International Alliance of Theatrical Stage 
Employees (the ``Union'') and employers that are signatory to 
collective bargaining agreements with the Union. The Plan covers 
approximately 2,000 participants. Most of the employers that contribute 
to the Plan have been awarded contracts or subcontracts to provide non-
military support services at military bases and other federal 
facilities.
    The proposed amendment would create special withdrawal liability 
rules for employers (``Federal Contractor Employers'') that have an 
obligation to contribute to the Plan for work performed under a 
contract or subcontract to provide services to a federal government 
agency (a ``Federal Contract''). The Proposed Amendment would create 
special withdrawal liability rules for a Federal Contractor Employer 
that loses one or more Federal Contracts to an unrelated employer (a 
``Successor Employer''). The Plan asserts that Federal Contracts are 
periodically re-bid, and that ``the employees and the facility 
generally remain the same'' after a Federal Contractor Employer loses a 
Federal Contract to a Successor Employer.
    The Plan asserts that the industry covered by the Plan is ``[n]ot 
unlike the construction industry'' in that Federal Contractor Employees 
use the same ``pool'' of workers at the facility regardless of which 
Employer currently is awarded the contract. Contributions supporting 
future benefit accruals and satisfying any unfunded past liabilities 
are made on behalf of the same pool of employees and the same number of 
[CBUs]. Consequently, the change in the signatory Employer under a new 
contract has little or no effect on the funded position of the Pension 
Fund.
    The Plan asserts that the proposed amendment may induce new Federal 
Employer Contractors to bid on covered work. That, in turn, will 
``continue the improvement in the health of the Pension Fund and reduce 
the potential risk and exposure to the PBGC.''
    The Plan's request includes the actuarial data on which the Plan 
relies to support its contention that the amendment will not pose a 
significant risk to the insurance system under title IV of ERISA.

Special Withdrawal Liability Rules

    The proposed amendment would be effective for (i) complete 
withdrawals under section 4203(a) of ERISA on or after January 1, 2021; 
(ii) partial withdrawals under section 4205(a)(1) of ERISA during any 
three-year testing period beginning on or after January 1, 2019; and 
(iii) partial withdrawals

[[Page 2976]]

under section 4205(a)(2) of ERISA on or after January 1, 2021.

Complete Withdrawals

    A complete withdrawal under section 4203(a) of ERISA will not occur 
if a Federal Contractor Employer ceases to have an obligation to 
contribute to the Plan because it loses all Federal Contracts that 
required contributions to the Plan to a Successor Employer, and is 
performing no other work under a collective bargaining agreement that 
requires contributions to the Plan, provided that:
    (1) Substantially all the employees for whom the Federal Contractor 
Employer was obligated to contribute to the Plan continue to perform 
work under one or more Federal Contracts with a Successor Employer 
(including any Successor Employer subsequent to the initial Successor 
Employer); and
    (2) For the five Plan Years following the Plan Year in which the 
Federal Contractor Employer lost all of its Federal Contracts to a 
Successor Employer, the Successor Employer has an obligation to 
contribute to the Plan for work performed under the Federal Contractor 
Employer's Federal Contract:
    (a) At the same or a higher contribution rate as the highest 
contribution rate of the Federal Contractor Employer; and
    (b) For substantially the same number of contribution base units as 
those for which the Federal Contractor Employer had an obligation to 
contribute in the final Plan Year preceding the Plan Year in which the 
Federal contractor lost all of its Federal Contracts.
    Notwithstanding these rules, the Federal Contractor Employer will 
experience a complete withdrawal as of the date it ceased to have an 
obligation to contribute to the Plan or ceased all covered operations 
under the Plan if, within the five Plan Years following the Plan Year 
in which the Federal Contractor Employer lost all of its Federal 
Contracts, either:
    (1) The Federal Contract of the Successor Employer is terminated, 
and no subsequent Successor Employer is obligated to contribute to the 
Plan under the conditions described in paragraphs 2(a) and (b); or
    (2) The Successor Employer ceases contributions to the Plan or 
fails to contribute to the Plan under the conditions described in 
paragraphs 2(a) and (b).

Partial Withdrawals

    If a Federal Contractor Employer loses one or more, but less than 
all, of its Federal Contracts to a Successor Employer, or if the 
Federal Contractor Employer loses all of its Federal Contracts to a 
Successor Employer but continues to have an obligation to contribute to 
the Plan for other operations pursuant to a collective bargaining 
agreement, the following rules shall apply.
    The contribution base units attributable to the work performed 
under the Federal Contract shall be excluded in determining whether the 
Federal Contractor has experienced a partial withdrawal under section 
4205(a)(1) of ERISA, and the loss of the Contract shall not be 
considered a facility closing, provided that:
    (1) For the five Plan Years following the Plan Year in which the 
Federal Contractor Employer lost the applicable Federal Contract to a 
Successor Employer, the Successor Employer has an obligation to 
contribute to the Plan for work performed under the Federal Contractor 
Employer's Federal Contract:
    (a) At the same or a higher contribution rate as the highest 
contribution rate of the Federal Contractor Employer; and
    (b) For substantially the same number of contribution base units as 
those for which the Federal Contractor Employer had an obligation to 
contribute in the final Plan Year preceding the Plan Year in which the 
Federal contractor lost the Federal Contract.
    Notwithstanding these rules, the Federal Contractor Employer will 
experience a partial withdrawal if:
    (1) Within the 5 Plan Years following the Plan Year in which the 
Federal Contractor Employer lost one or more but less than all of its 
Federal Contracts, the Successor Employer's Federal Contract is 
terminated, and no subsequent Successor Employer is obligated to 
contribute to the Plan under the conditions described in paragraphs 
1(a) and (b);
    (2) Within the 5 Plan Years following the Plan Year in which then 
Federal Contractor Employer lost one or more but less than all of its 
Federal Contracts, the Successor Employer ceases contributions to the 
Plan or fails to contribute to the Plan under the conditions described 
in paragraphs 1(a) and (b); or
    (3) The Federal Contractor Employer either loses a Federal Contract 
to a Successor Employer or bargains out of a Federal Contract and there 
is not any Successor Employer with an obligation to contribute to the 
Plan under the conditions described in paragraphs 1(a) and (b).
    The date of a partial withdrawal assessed under these rules shall 
be:
    (1) In the event of a 70 percent contribution decline under section 
4205(a)(1) of ERISA, the last day of the third year in the applicable 
three-year testing period beginning on or after January 1, 2019; and
    (2) In the event of a partial cessation of such Federal Contractor 
Employer's contribution obligation under section 4205(a)(2) of ERISA, 
the year in which the facility closed or the Federal Employer 
Contractor bargained out of the Federal Contract.

Bona Fide Sale of Assets

    If the Federal Contractor Employer engages in a bona fide, arm's-
length sale of assets to an unrelated purchaser (``Buyer''), the Buyer 
will be treated as a Successor Employer.

Comments

    All interested persons are invited to submit written comments on 
the pending exemption request. All comments will be made part of the 
administrative record.

    Issued in Washington, DC.
Gordon Hartogensis,
Director, Pension Benefit Guaranty Corporation.
[FR Doc. 2023-00876 Filed 1-17-23; 8:45 am]
BILLING CODE 7709-02-P