Pension Benefit Guaranty Corporation 95-2 Augus t 18, 1995 RE FE RE NC E: [*1] 4203(b) Co mplete W ithdrawal. Building & Construction Industry Exemption 4205(a)(1) Parti al Withdrawal s. Cont ribut ion Decli ne 4205(a)(2) P artial W ithdrawals. Partial Cessati on >4205( b)( 2)( A)> >4208( d)( 1)> OP INI ON : Th is is in res pons e t o you r l ett er r eque st in g t he opi ni on of th e Pens ion Benef it Guar ant y Cor pora ti on ( "PBGC" ) regarding the interp retation of the sp ecial ru le for part ial withdrawals f or certain employers and plans i n the building and const ruct ion i ndust ry u nder s ecti on 4208(d) (1) of the Employe e Reti rement Income Secur it y Act of 1974 ("ERISA "), as am end ed b y the M ultiemp loyer P ensio n Pla n Am end men ts Act o f 198 0, 29 U.S .C. § 1 388 (d)(1 ) (19 88) . A parti al wit hdrawa l occ urs when a n empl oyer has a 70-per cent cont ribu ti on decl ine in e ach of three consecutive plan years. ERISA § 420 5(a)(1), 29 U.S.C. § 138 5. A partial wit hdrawal also will occur if an emp loyer p erma nently ceases to hav e an o bligatio n to co ntribute to a pla n und er on e or m ore b ut fewer than all o f the em ploye r's coll ecti ve bargaining agree men ts , but continues to perform covered work within the juri sdiction of t he collective bargai ning agree men t, or tra nsf ers such work t o anot her l ocati on. ERISA § § 4205( a)( 2) [ *2] and 4 205(b) (2) (A)( i) , 29 U.S. C § § 138 5(a) (2), 1 385 (b)(2 )(A)( i). Further , a parti al wi thdrawal occurs i f th e employer per manentl y ceases to have an obli gati on to contribute t o a plan for work performed at one or more but f ewer t han al l of its facilities, and contin ues to perfo rm tha t cove red w ork a t the facility. ER ISA § 42 05( b)(2 )(A)( ii), 29 U .S.C. § 138 5 (b )(2)(A )(ii). For employers and plans in t he buil ding and cons truct ion i ndu stry (as de fined in E RIS A § 4 203 (b), 2 9 U .S.C. § 1383(b )), secti on 4208 (d)( 1) m akes a n emp loyer liab le for a p artial withd rawa l only if the em ploye r's obligatio n to con tribute to th e plan i s conti nued for "no more t han an i nsubst anti al port ion of i ts work in t he craf t and are a juri sdic ti on of t he col lect ive bargai nin g agr eement of t he t ype f or whi ch cont ribu ti ons ar e requ ire d." In your hyp othetic al, one member of the controlled group ceases to have an obligation t o contribute to the plan, but conti nues perf ormin g work of the type f or which contributi ons had previously been required withi n the craft and area juri sdic ti on of th e bargain ing agr eement. n1 You ask wheth er certai n contri bution t hreshol ds const itu te an "insubs tant ial portion" within the meaning [ *3] of sect ion 4208(d)(1). Speci fica lly , you as k whethe r ther e is l iabil ity for a par tial withdrawal where ther e is a 45- percent or 60-percent declin e in cont ribut ion base un its of a cont roll ed group of t rades or b usinesse s within the b uilding a nd co nstructio n indu stry. n1 For p urpo ses of T itle IV of ERISA , all trades or businesses under common control constitut e a single employer. ER ISA § 40 01( b)(1 ), 29 U .S.C. § 130 1(b )(1). Your let ter does not i ndica te wh ethe r both members of t he cont roll ed grou p operat e in the craf t an d area juri sdic ti on of the sam e colle ctive b argain ing agre eme nt. If they do not, the e mplo yer wo uld incur li abilit y for a partial w ithdraw al. This occurs because t he contr olled gr oup member conti nues t o work in t he craf t and are a jurisdict ion of the coll ective bargaining agreement for which contri butions were previously requir ed but has no obligation to contri bute for such work. Th us, the em ploye r's contrib ution o bligatio n is nece ssarily for a n "insu bstan tial por tion" of that wo rk. In contras t, f urther analy sis is ne cessar y to det ermine wh ether a parti al withdrawal occurs where t he two cont roll ed group members ope rate withi n the same craf t an d area jur isdi ction [*4] an d only one member c eases t o have an obli gati on to co ntr ibut e to t he pla n. In suc h case s, a dete rmina tion m ust be m ade as to wh ether the obliga tion to con tribute is fo r mo re than an "in substa ntial po rtion" of the em ploye r's work. PBG C offers no opinion a s to wh ethe r any giv en per cent age of work constitut es an "insubstanti al portion." Many provisions of ERISA contai n specif ic numeri cal thres holds and t ests governi ng wit hdrawal l iabil ity determi nati ons. See,

e.g., ERISA § 4209(a) , 29 U.S.C. § 1389 (a) (allowing in cer tain multi employer pl ans a reduc tion of unfun ded vested ben efits alloca ble to a par ticular em ploye r by the le sser of 3 /4 of 1 -perc ent of the unfu nded vested obligati ons or $ 50,000); ERISA § 4208(a )(1 ), 29 U.S. C. § 1308(a)(1) (re ducing par tial with drawal l iabil ity for an e mployer who has been obligat ed to contr ibute at l east 90- percent of the t otal co ntribut ion base un its for t he high base year for t wo consecutive plan ye a rs follow in g parti al wi thdrawal ); ERISA § 4208(b), 29 U.S.C. § 1308(b) ( reducing parti al with drawal lia bili ty f or an employer who has been obl igat ed for two consecutive plan ye ars f ollowi ng parti al wi thdrawal to contrib ute at l east 30 -percent of th e [*5] t otal cont ribut ion base un its for t he high base year , where the t otal obligations to contribute for tho se two plan years are at least 90-percent of t he contribution b ase units for the high base year). Con gres s di d not sp ecify a co mpa rable nume rical test in se ction 4 208 (d)(1 ). Acc ord ingly, such fact-spe cific determinations are t he re spons ibi li ty of the plan sponsor. ERISA § 42 02, 29 U .S.C. § 1382. Any dispute between the plan sponsor and the employer over the validit y of that determination are t o be resolved first through arbi tra ti on and then by distric t court re view. E RIS A § 4 221 , 29 U .S.C. § 140 1. As thi s off ice has consistently noted, P BG C will not interject itself into these procedures by issuing opinions on t he appli cati on of t he l aw to part icul ar f acts . PBGC Opinion Lett er 94- 3, 2 (1994); PB GC O pinion Letter 89-2, 2 (1989); PBGC Opinion Letter 88-8, 2 (1988); PB GC O pinion Letter 82-9, 1 (1982). W e will, however, conti nue our pract ice of answ ering q uestion s of gen eral inter preta tion und er T itle IV o f ER ISA . I hope that this has been of assist ance to you. If y ou have a ny f urt her qu es t i on s , pl ea s e c on t ac t [ * 6] St an l ey M. He cht at (2 02) 326 -412 5. Jam es J. K eightley Ge neral C ouns el