Pension Benefit Guaranty Corporation 

86-2 

January 31, 1986 

REFERENCE: 

 [*1] 4217 Applicability of MPPAA to Certain Pre-1980 W ithdrawals

4402 Action Taken before Regulations Prescribed 

OPINION: 

This responds to your request for the opinion of the Pension Benefit Guaranty Corporation regarding the meaning

of the term "facility" as used in section 4217 of the Employee Retirement Income Security Act, as amended (ERISA),

and whether a multiemployer pension plan has authority to adopt its own definition of that term. ERISA contains no

definition of "facility". 

In the situation you describe, a national chain (the "Company") operated over 50 retail stores in the * * *, area prior

to the enactment of the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA). All but two of these stores

were closed before September 26, 1980, the date of enactment of MPPAA. Your specific question is whether these stores

constituted "facilities" within the meaning of section 4217 of ERISA. 

You represent that each store was located at a discrete geographical location and was operated as a separate profit

center and managed by a separate store manager. Each store was self-contained, meaning that it carried a full

complement of food and related items typically found in a full-line supermarket. [*2] 

You further represent that certain of the Company's employees at these stores were represented by local unions of

the * * * International Association, now know as the * * * Union (the "Union") under three collective bargaining

agreements. The Company made contributions to the * * * Union and Food Employers Pension Plan of * * * (the "Plan")

in a lump sum representing the total amount due from the Company to the Plan during the relevant period. The plan

document defines the term "facility" as "all store locations covered by a single collective bargaining agreement." 

Section 4217 of ERISA provides, in pertinent part, as follows: 

(a) For the purpose of determining the amount of unfunded vested benefits allocable to an employer for a partial or

complete withdrawal from a plan which occurs after September 25, 1980, and for the purpose of determining whether

there has been a partial withdrawal after such date, the amount of contributions, and the number of contribution base

units, of such employer properly allocable-- 

(2) to work performed at a facility at which all covered operations permanently ceased before September 25, 1980,

or for which there was a permanent cessation of the [*3] obligation to contribute before that date, 

shall not be taken into account. [29 U.S.C. § 1397(a)(2).] 

In Opinion Letter 82-33 (October 28, 1983), the PBGC reviewed the question of whether section 4217 of ERISA

applies to the closing of a single retail food store or only to the closing of a group of stores in a defined geographical

area. The General Counsel concluded that the term "facility" in section 4217 of ERISA, in the context of the retail food

industry, ordinarily means a single store. We hereby affirm that opinion. This interpretation is based on generally

accepted economic terminology under which "facility" means a discrete economic unit of an employer. It is also

consistent with the long-standing definition of the term "establishment" used in the Standard Industrial Classification

Manual. Finally, as noted in Opinion Letter 82-33, this interpretation is consistent with the definition of "facility" that

Congress considered promulgating with respect to the partial withdrawal rules. (See H.R. Rep. No. 869, Part II, 96th

Cong., 2nd Sess. 18 (1980).) As you have noted, this definition and the accompanying explanatory text were dropped

from the final version of MPPAA. [*4] This Congressional expression of the meaning of the term "facility" is therefore

not dispositive of the issue. It was referenced in Opinion Letter 82-33 merely to demonstrate that the interpretation set

forth in that letter was in accord with the commonly used meaning of "facility". 

Opinion Letter 82-33 did not expressly address a plan's authority to adopt its own definition of the term "facility".

It is out opinion that Congress did not grant plans the authority to adopt their own definitions of "facility." In earlier
versions of MPPAA, Congress permitted (or required) plans to define "facility." Since the bill that was ultimately enacted

did not contain such a provision, we conclude that Congress decided against allowing plans to adopt their own definitions

of "facility." This conclusion is supported by the fact that in other sections of ERISA, e.g., section 4219(c)(5)(B),

Congress did expressly give plans the authority to provide their own definitions of specified terms. 

We recognize, of course, that there are many undefined terms in ERISA and that in the absence of PBGC

interpretations of those terms, plans might need to construct their own definitions in order to implement [*5] the law.

This is permissible provided those definitions are reasonable. However, once the PBGC has issued its interpretation of

a statutory term (as we did with respect to "facility" on October 28, 1982) plans are precluded from adopting their own

definitions unless that power is specifically conferred by ERISA or by the PBGC. Moreover, where plans adopt

definitions of statutory terms in contradiction to the PBGC's interpretations, the PBGC, in appropriate cases, will seek

to intervene or file an amicus brief in a court proceeding to uphold its interpretation. 

I hope this has been of assistance. If you have further questions please contact the attorney handling this matter,

Steven Rothenberg, of the Corporate Policy and Regulations Department. His telephone number is (202) 956-5050. 

Edward R. Mackiewicz 

General Counsel