Pension Benefit Guaranty Corporation 97-2 December 29, 1997 RE FE RE NC E: [*1] 402 1(b)(1 3) Plans C overed . Professional Se rvice Em ployer P lans OP INI ON : I wri te i n res ponse t o your reque st for a recon side rat ion of the Pensi on Be nefit Gu aranty Corporat ion' s ("PBGC") initial dete rmina tion with re sp ec t t o t he * * * R et ir eme nt Pl an (t he "Pl an ") . On June 19, 1997, y our cl ient reque ste d a deter minat ion that the Plan was excl uded fr om cover age as a pla n est abli shed a nd mai ntai ned by a profes sional servi ce employer under T itle IV of the Em ployee R etirement Inco me Sec urity Act of 197 4, as amen ded (" ERI SA" ). On Au gust 5, 1997, PBG C issue d its i nitial determination that the Plan is covered by the t ermination ins urance provisions of ERISA and not e xclu ded fr om * * * cov erage under ERISA § 4021 (b)(13) as a profes sional servi ce employer. By lett er dated * * * September 4, 1997, on behalf of * * * , you requested * * * reconsiderati on of PB GC's initi al determinati on. After review of the f acts and circumstances, for the reasons discus sed below, t he PBGC has dete rmined t hat t he Plan is exempt fr om cover age un der Tit le I V of ERISA. Thus, the reque st for recons ider ati on is gran ted. Request f or Reconsi derati on In your reque st for recons ider ati on , you have rep rese nted that * * [*2] * i s a Vir gin ia pr ofes sion al c orporat ion pursu ant to t he Code of Virgi nia of 1950, as amended Titl e 13.1, § 543, and t hat the thr ee i ndiv idual s re spons ibl e for controlling the operations of * * * all possess bachelors degrees and all have taken a dvanced courses in thei r respective fields. Add itionally, all thre e indiv iduals h old cla ss A or B surv eyi ng l icen ses cert if ied by the Co mm onw ealth o f Virgin ia Board for Architects , Professional Engineers, Land Surveyors and Landsca pe Arc hitects, and all pay profession al license fees. You further r epresent that t he great majorit y of * * * ' s revenu es are derived from surveying and engineeri ng design consulting ser vice s. * * * ' s pri ncipa ls aff ix t heir prof essi onal seal and s ignat ure to ev ery pl at, s urvey a nd design they prepare and all of th e profess ional opinions they iss ue are memori aliz ed in a r ep ort. Ad dit ionally, yo u state tha t all princ ipals rema in perso nally liable to their re spec tive clients, a nd all three princi pals mai ntai n profes sional malpract ice acts and omissions insurance, as required by Virginia law. It is undi sput ed th at a t no t ime h as t he Pla n had mor e th an 25 active participants. Discus sion Secti on 4021 (b)(13 ) of ERISA [*3] excludes from coverage any plan "established and mainta ined by a profe ssi onal servi ce emp loyer tha t doe s not at a ny time a fter the d ate of e nactm ent of this Act have mor e than 2 5 activ e par ticipan ts in the pla n." Under § 4021 (c) (2) of ERISA, a profe ssi onal servi ce employer is any enti ty owned or control led by prof essi onal individ uals where both the entity and the professional individuals owning and controlling i t are engaged in the perf ormance of t he sa me prof essi onal serv ice. See PBGC Opinion L ett er 76- 106. As st ated in PBGC Opinion Lett er 76- 106, a pr ofessio nal i ndivi dual gener ally is one w ho provides s ervice s that require knowledge of an advanc ed ty pe in a fi eld of sci ence or lea rni ng cus tomar il y acqu ire d by a prol onged cou rse of special ized int elle ctual inst ructi on and stu dy, as dist ingui shed fr om a general academ ic e ducat ion and from an app rentice ship or from training in th e per form ance of rou tine me ntal, ma nual o r ph ysi cal proces s. The rende rin g of profess ional service s gene rally requires the consi stent exerci se of discreti on and judgment in its perfo rman ce an d wo uld be predom inantly intell ectual in charact er. Based on our review of the rel evant factors, we believe that [ *4] the Plan is ex cluded f rom Title I V coverage as a

plan establ ished an d maintai ned by pro fessiona l service emp loyer. W e agree t hat t he surv eying consult ing s ervice s that * * * provides require knowledge of an advanc ed type t hat i s cust omarily acquired t hrough a prol onged course of special int elle ctual instruct ion. Surveyors seeki ng licensure by the Co mm onw ealth o f Virgin ia are g enera lly require d to gr adu ate from a sur veyi ng or s urve yi ng t echnol ogy cu rri culu m of f our y ears or more prior to being admitted to si t for the sixteen- hour st ate li cens in g ex ami nat ion . I f a n appl ica nt has not gra duat ed f rom s uch a progr am, the applican t must have a spec ific record of t en years of approved sur veyin g experi ence before being admitted to sit for the si xteen-hour li censing examination. Ne xt, it appears that * * * r enders professional servi ces that requir e the cons istent exe rcis e of discreti on and judgment whi ch ar e predomi nant ly int ell ectu al i n nat ure. You st ate in y our r eques t f or reconsi derati on that the s ervice s from which * * * derives the majorit y of it s revenue are far dif ferent f rom those of the surveyors "one sees l ocating surveying points and planting s urveying stakes as one d rives along [*5] the roa dside" (R equest for Reconsi derati on at 4). Rathe r, * * * 's principa ls, relying up on kn owle dge gained throug h aca dem ic study and experience and exerc ising their pro fe s sional judg men t and d iscretio n, evalu ate co nflicting da ta and advise their clien ts base d up on an analysis o f this data. Final ly, we note t hat t he princ ipals , pursu ant t o Virgini a law, remain personally l iable for acts of negligence rel ating to the renderi ng of t heir pr ofessi onal ser vices and maint ain prof essi onal malpr acti ce ins urance. Conclusi on Fo r the reaso ns disc ussed abo ve, and on the basis o f informa tion pr ovid ed to us, we co nclud e that the P lan is excluded from cov erage und er Title IV as a plan est abli shed a nd mai ntai ned by a professional servi ce employer pursuant to section 4021(b)(13) of ER ISA. This letter const itutes a final decision by the PBGC regarding the Plan. Charles Korb Manager, Processi ng and Technical Assis tance Branch Stan dard Termi nati on Compli ance Di vis ion Insura nce a nd O pera tions D epa rtmen t