2006 D e c i sion s O p inion s of the U nit e d

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# I n Re: K ai se r Alum

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D ocke t N o . 05-2695

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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 05-2695

IN RE: KAISER ALUMINUM CORPORATION,

Debtor

Pension Benefit Guaranty Corporation, Appellant

Appeal from the United States District Court
for the District of Delaware (D.C. Civil No. 04-cv-00145) District Judge: Honorable Joseph J. Farnan, Jr.

Argued April 3, 2006

Before: RENDELL, SMITH and ALDISERT, Circuit Judges

(Filed: July 26, 2006)2 James L. Eggeman
Charles L. Finke [ARGUED] Pension Benefit Guaranty Corporation 1200 K Street, N.W. Washington, DC 20005 Counsel for Appellant

Daniel J. DeFranceschi Richards, Layton & Finger One Rodney Square
P.O. Box 551 Wilmington, DE 19899 Gregory M. Gordon [ARGUED]
Daniel P. Winikka Jones Day
2727 North Harwood Street Dallas, TX 75201 Counsel for Appellees

OPINION OF THE COURT

RENDELL, Circuit Judge.

The Employee Retirement Income Security Act of 1974 (“ERISA”) permits an employer seeking reorganization in Chapter 11 bankruptcy to termin ate a pension plan if the employer satisfies certain notice requirements and demonstrates to a bankruptcy court that it will be unable to pay its debts and
continue in business outside of Chapter 11 unless the pension3 plan is terminated. ERIS A § 4041(c)(2)(B)(ii)(IV), 29 U.S.C. § 1341(c)(2)(B)(ii)(IV) (2000). C ourts typically refer to this requirement for a plan terminati on as the “reorganization test.” The instant case raises a ques tion of first impression among the courts of appeals: when a Chap ter 11 debtor seeks to terminate multiple pension plans simultane ously under the reorganization test, should a court apply the test to each plan independently, or to all of the plans in the aggregate?

Kaiser Aluminum Corporation and twenty-five of its affiliates (“Kaiser”) are debtor s in a Chapter 11 bankruptcy. As part of their reorganization, th ey requested that the Bankruptcy Court approve the termination of six pension plans under the reorganization test. The Bankruptcy Court applied the test to all six plans in the aggregate and c oncluded that their termination was required for Kaiser to emerge from Chapter 11. The Pension Benefit Guaranty Co rporation (“PBGC”), which is responsible under ERISA to provide benefits to participants in terminated plans, appealed the Bankruptcy Court’s decision, arguing that it should have applie d the reorganization test on a plan-by-plan basis to each of Kaiser’s pension plans. Under this approach, the PBGC contends th at some of Kaiser’s plans would not fulfill the reorganizati on test, and therefore could not
be terminated. The Distri ct Court upheld the Bankruptcy Court’s decision and the PBGC appealed to our Court.

We conclude that the Bankruptcy Court correctly applied the reorganization test in the aggregate to all of the plans Kaiser sought to terminate. Congre ss has not provide d any guidance as to how to apply the reorgani zation test given the fact pattern before us, and the plan-by-plan approach appears unworkable.4 By contrast, applying the reorganization test to multiple plans in the aggregate is straightfo rward. A basic principle of statutory construction is that we should avoid a statutory interpretation that lead s to absurd results. See Griffin v. Oceanic Contractors, Inc. , 458 U.S. 564, 575 (1982). Because it would be anomalous for Congress to mandate an unworkable approach to the reorganization test, weread ERISA as requiring an aggregated analysis.

We are also persuaded that applying the reorganization test on a plan-by-plan basis would result in unfair and inequitable consequences in that it would require bankruptcy courts to give preference to so me similarly situated constituents over others. The bankruptcy courts are courts of equity that are guided by equitable principles. Absent a clear congressional mandate to the contrary, wewill not impose upon them an approach to the reorganization test that would conflict with their tradition of preventing unfairne ss in bankruptcy proceedings. Congress must speak more clearly than it has in ERISA if it wishes the bankruptcy courts to take a plan-by-plan approach to the reorganization test.

Finally, we consider, and re ject, the PBGC’s arguments based on legislative history, de ference to its administrative interpretation, and public policy. We will therefore affirm the
decision of the District Court upholding the Bankruptcy Court.5 I.

A.

Kaiser is involved in a ll aspects of the aluminum industry, including mining raw materials, refining them, and manufacturing aluminum products . As of January 1, 2003, Kaiser employed approximately 3,000 workers domestically. In addition, it was responsible fo r the retiree benefits (primarily medical) of more than 15,300 retirees and dependent spouses and the pension benefits of over 11,000 retirees and
beneficiaries. In late 2001 and early 2002, weak industry conditions, imminent debt maturities, burdensome asbestos litigation, and growi ng legacy obligations for future retiree medical and pension costs took its toll on Kaiser. Unable to restructure their obligations out side of bankruptcy, Kaiser and its related corporate entities f iled for relief under Chapter 11 of the Bankruptcy Code between February 2002 and January 2003.

Congress established the PBGC in 1974 as part of ERISA. Its purpose is to encourage the continuation and maintenance of private-sector defined benefit pension plans, provide timely and uninterrupted payment of pension benefits, and keep pension insurance premiums at a minimum . 29 U.S.C. § 1302(a). To this end, the PB GC provides a minimum level of pension benefits to participants in qualified pension plans in the event that the plans cannot pay benefits. As of September 30, 2005, the PBGC insured 44.1 million American workers participating in 30,330 private-se ctor defined benefit pension plans. PBGC, PBGC Performance and Accountability Report for Fiscal Year 2005 1 (2005), available at1 The maximum pension benefit guaranteed by the PBGC is set by law and adjusted yearly. See 29 U.S.C. §§ 1322(a)-(b). For plans ended in 2006, workers who retire at age 65 can receive up to $3,971.59 per month ($47,659.08 annually). The guarantee is lower for those who retire early and higher for those who retire after age 65. Maximum Guaranteed Benefits, 29 C.F.R. § 4011 App. B (2006); Benefits Payable in Terminated Single-Employer Plans, 70 Fed. Reg. 72074 (Dec. 1, 2005).

6 http://www.PBGC.gov/docs/2005par.pdf (“ PBGC Performance Report”).

The PBGC is not funded by general tax revenues. Rather, it collects insurance premiums from employers that sponsor insured pension plans, earns money from investments, and receives funds from pens ion plans it takes over. Id. at 1. The PBGC pays monthly retirement benefits, up to a guaranteed maximum, to about 683,000 retirees in 3,595 pension plans that
have terminated. 1 Including those who have not yet retired and participants in multiemployer plans receiving financial assistance, the PBGC is directly responsible for the current and
future benefits of 1.3 million active and retired workers whose plans have failed. Id. at 2. The benefits guaranteed by the PBGC are often substantially lower than the fully vested pensions due to plan participants. See Mertens v. Hewitt
Assocs. , 508 U.S. 248, 250 (1993)

. Since 1987, a plan’s sponsor is liable to the PBGC for the total amount of unfunded benefit liabilities to all particip ants and beneficiaries under the plan. 29 U.S.C. § 1362(b).

B.2 An eighth pension plan, the Kaiser Aluminum Salaried Employees Retirement Plan, was involuntarily terminated by the PBGC on December 17, 2003 pursuant to 29 U.S.C. § 1342. The termination of that plan is not at issue in this appeal.

7 As part of its reorganization, Kaiser originally sought to replace seven pension plans th at had been established in
connection with collective ba rgaining agreements (“CBAs”)
then in effect with various unions. 2The plans and associated
CBAs are listed in the table below:

PENSION PLAN UNION(S) COVERED

Kaiser Aluminum Pension Plan (“KAP Plan”) United Steelworkers of America (“USWA”)

Kaiser Aluminum Tulsa Pension Plan (“Tulsa Plan”) USWA

Kaiser Aluminum Bellwood Pension Plan (“Bellwood Plan”) USWA; International Association of Machinists & Aerospace Workers (“IAM”)

Kaiser Aluminum Sherman Pension Plan (“Sherman Plan”) IAM3 The Inactive Plan is comprised of 28 prior pension plans for certain former represented empl oyees who are or were employed by businesses that have been divested by the Debtors, with the Debtors retaining certain pension benefit obligations for retirees.

8 Kaiser Aluminum Inactive Pension Plan (“Inactive Plan”) 3 USWA; IAM; United Automobile, Aerospace, and Agricultural Implement Workers of America (“UAW”)

Kaiser Aluminum Los Angeles Extrusion Pension Plan (“LA Extrusion Plan”) International Brotherhood of Teamsters (“Teamsters”)

Kaiser Center Garage Pension Plan (“Garage Plan”) Teamsters Automotive Employees,
Local 78

These plans covered nearly 13,500 active hourly workers, participants on leave or layoff, individuals who were terminated from employment, retirees, and beneficiaries. On January 11, 2004, Kaiser filed a motion seeking the Bankruptcy Court’s approval to terminate all seven plans in a voluntary
“distress termination” under Title IV of ERISA, 29 U.S.C. § 1341(c)(2)(B)(ii). Kaiser assert ed in its motion that it owed nearly $48 million in unfunded mi nimum contributions for the 2003 plan year and would be required to make $230 million in
minimum contributions to the plans between 2004 and 2009. In separate motions, Kaiser also requested that the Bankruptcy Court (1) use its authority unde r 11 U.S.C. § 1113 to reject its CBAs with USWA and IAM, under which several of the pension plans had been estab lished, and (2) authorize the9 modification of retiree benefits pursuant to 11 U.S.C. § 1114.

Prior to the February 2, 2004 hearing at which the Bankruptcy Court was to cons ider these motions, Kaiser reached agreements with US WA, IAM, and the official committee of salaried retirees (“1114 Committee”) providing for consensual termination of the KAP Plan, Tulsa Plan, Bellwood Plan, Sherman Plan, a nd Inactive Plan, and for the institution of replacements for th ese plans. At the hearing, Kaiser asked the Bankruptcy Court to approve these agreements. The company had not yet reached agreements with
UAW or the Teamsters to termin ate the Inactive Plan and the LA Extrusion Plan, respectively.

At the hearing, Kaiser also withdrew its motion for approval to terminate the Garage Plan on the grounds that it was not underfunded. Thus, th e Bankruptcy Court actually considered only whether to terminate six of Kaiser’s seven active plans.

The PBGC opposed Kaiser’s motion to terminate the six pension plans. In its briefs and at the February 2, 2004 hearing, the PBGC argued that the Bankruptcy Court should make separate determinations of wh ether each pension plan that Kaiser sought to terminate satis fied the reorganization test. Thus, rather than considering whether Kaiser could afford to fund all six plans in the aggregate, the PBGC urged the Bankruptcy Court to determin e whether the contributions required for each individual plan, considered independently and without regard to the oblig ations under the other plans, jeopardized Kaiser’s ability to reorganize successfully. The10 PBGC contended that the text a nd legislative history of ERISA required such a “plan-by-plan” approach.

The PBGC acknowledged at the hearing that two plans
– the KAP Plan and the Inac tive Plan – satisfied the reorganization test for distress termination even if considered under a plan-by-plan analysis. These plans were much larger
than the others and would cl early impose an unsustainable
burden on Kaiser. The PBGC c ontested only Kaiser’s request to terminate the Tulsa Plan, Bellwood Plan, Sherman Plan, and
LA Extrusion Plan. The combined minimum funding contributions for these four plan s were projected to be roughly $12.8 million between 2004 and 2009, less than six percent of the estimated $230 million require d to fund all of Kaiser’s pension plans during that time fra me. When these smaller plans were considered on a plan-by-plan basis, rather than in the aggregate with the KAP and In active Plans, the PBGC argued
that Kaiser could continue fundi ng some or all of them and still emerge successfully from Chapter 11 reorganization.

The Bankruptcy Court conclude d that the PBGC’s planby-plan approach would vi olate the Bankruptcy Code’s requirement that debtors barg ain fairly and equitably with
unions. See 11 U.S.C. § 1113(b). The Bankruptcy Court believed that considering th e plans piecemeal would give creditors “the kind of leverage that would force the debtor to [initiate] bargaining . . . with one union and not with another.” (Hr’g Tr., Feb. 2, 2004, at App. 445.) Likewise, debtors could use a plan-by-plan approach to gain leverage against creditors that Congress did not intend. The Court acknowledged that Kaiser could maintain up to three of its smaller plans under the11 PBGC’s plan-by-plan approach, but held that, in order to be fair to all employees covered under th e pensions, it would apply the reorganization test by consideri ng the company’s pension plans in the aggregate.

Under this standard, the Ba nkruptcy Court found that the reorganization test was satisfied w ith respect to all six plans that Kaiser sought to terminate. In a February 5, 2004 order, the Bankruptcy Court approved termin ation of the KAP Plan, the Sherman Plan, the Tulsa Plan, and the Bellwood Plan, effective upon the Court’s filing of a c ontemporaneous order approving Kaiser’s agreements with USWA, IAM, and the 1114
Committee for consensual termin ation of these plans. Though
the Inactive Plan and the LA Extrusion Plan also satisfied the reorganization test, the Bankrupt cy Court refused to approve
their termination at that time be cause the CBAs that Kaiser had with UAW and the Teamsters presented a contractual bar to
their termination. Kaiser ha s since reached agreements with
both UAW and the Teamsters to remove the contractual bar in each of these CBAs, and the Bankruptcy Court has now formally approved the terminati on of the Inactive Plan and the
LA Extrusion Plan.

The PBGC appealed the Bankruptcy Court’s decision to the District Court, which upheld the Bankruptcy Court’s aggregate analysis of the plan s under the reorganization test.
The District Court concluded that ERISA did not mandate a plan-by-plan analysis as urged by the PBGC. Furthermore, the Court believed that ERISA’s reorganization test must be read in light of § 1113 of the Bankruptcy Code, which requires debtors to engage in fair and equitable bargaining with unions before12 unilaterally modifying CBAs. Inthe District Court’s view, fairness and equity required th e Bankruptcy Court to consider the plans in the aggregate. In re Kaiser Aluminum Corp.

, Civ.A. 04-145-JJF, 2005 WL 735551, at *3 (D. Del. Mar. 30, 2005). The PBGC timely appealed the District Court’s decision
to our Court.

II.

The Bankruptcy Court had jurisdiction under 28 U.S.C. § 157 and 28 U.S.C. § 1334(a). The District Court had jurisdiction over the PBGC’s appeal under 28 U.S.C. § 158(a)(1). We have jurisdiction pursuant to 28 U.S.C. § 158(d).

We exercise plenary review of an order issued by a district court sitting as an appellate court in review of a bankruptcy court. In re Cellnet Data Sys., Inc. , 327 F.3d 242, 244 (3d Cir. 2003). We will set aside the Bankruptcy Court’s findings of fact if they are clearly erroneous and review its
conclusions of law de novo. Id.

III.

The question before us is whether the Bankruptcy Court should have made separate determinations as to whether each of the six plans Kaiser sought to terminate satisfied the reorganization test, or whethe r it properly applied the reorganization test to all six plans in the aggregate. “As in any case of statutory construction, our analysis begins with the language of the statute.” Hughes Aircraft Co. v. Jacobson , 525 U.S. 432, 438 (1999) (int ernal quotation omitted).4 The PBGC may institute proceedings for a plan’s involuntary
termination when it determines that:

(1) the plan has not met the minimum funding standard required under section 412 of Title 26 [of the United States Code], or has been notified by the Secretary of the Treasury that a notice of deficiency under section 6212 of
Title 26 has been mailed with respect to the tax imposed under section 4971(a) of Title 26, (2) the plan will be unable to pay benefits when due,

13 A.

Title IV of ERISA establishes the exclusive means of terminating single-employer pe nsion plans. 29 U.S.C. § 1341(a)(1); Hughes Aircraft , 525 U.S. at 446. Plans may be terminated voluntarily by a plan sponsor or involuntarily by the PBGC. A plan sponsor may vol untarily termin ate a pension plan in one of two ways. Firs t, it may proceed with a “standard
termination” if it has sufficien t assets to pay all benefit commitments. 29 U.S.C. § 1341( b)(1)(D). Such a situation does not implicate the PBGC’s insurance responsibilities. Alternatively, if a plan’s assets are not sufficient to satisfy all benefit liabilities, a plan sponsor may initiate a “distress termination” under 29 U.S.C. § 1341(c). 4(3) the reportable event described in [29 U.S.C. § 1343(c)(7)] has occurred, or (4) the possible long-run loss of the corporation with respect to the plan may reasonably be expected to increase unreasonably if the plan is
not terminated.

29 U.S.C. § 1342(a).

14 A single-employer plan may terminate in a distress termination only if the plan administrator provides affected parties with at least sixty days of advance written notice of its intent to terminate, 29 U.S. C. § 1341(b)(2)(B); 29 C.F.R. § 4041.43, the administrator provides the PBGC with certain
information about the terminati on no more than 120 days after the proposed termination date, 29 U.S.C. § 1341(b)(2)(A); 29 C.F.R. § 4041.45, and the PBGC determines that the plan sponsor meets one of four “dis tress tests” under 29 U.S.C. § 1341(c)(2)(B). The tests are known as (1) the liquidation test, (2) the reorganization test, (3 ) the inability to continue in business test, and (4) the unreas onably burdensome pension cost test. 29 U.S.C. §§ 1341(c)(2)(B)(i)-(iii); 29 C.F.R. § 4041.41(c)(4). In the instant case, Kaiser sought a distress termination of its plans under the reorganization test only.

Four requirements must be satisfied for a distress termination under the reorganization test. First, the plan sponsor must have filed a pe tition seeking reorganization in5 By contrast, the existence of a CBA does not prevent the PBGC from terminating a plan involuntarily. 29 U.S.C. § 1342.

15 bankruptcy. Second, the bankrupt cy case must not have been dismissed as of the proposed term ination date. Third, the plan sponsor must submit to the PBGC a request for bankruptcy court approval of the plan termination. 29 U.S.C. §§ 1341(c)(2)(B)(ii)(I)-(III). Finally, the bankruptcy court must “determine[] that, unless the pl an is terminated, [the plan sponsor] will be unable to pay all its debts pursuant to a plan of reorganization and will be unabl e to continue in business outside the chapter 11 reorganization process and approve[] the
termination.” Id. § 1341(c)(2)(B)(ii)(IV).

A plan sponsor may not voluntarily terminate a plan “if
the termination would violate the terms and conditions of an existing collective bargaining agreement.” 29 U.S.C. § 1341(a)(3). 5 However, a plan sponsor seeking a distress termination while in bankruptcy may remove a contractual bar to a plan’s termination by r eceiving the bankruptcy court’s approval to unilaterally reject or modify the CBA under 11 U.S.C. § 1113. Section 1113 requi res, among other things, that
the debtor

make a proposal to the authorized representative of the employees covered by such agreement . . . which provides for those necessary modifications in the employees benefits and protections that are16 necessary to permit the reorganization of the debtor and assures that all creditors, the debtor and all affected parties are treated fairly and equitably.

11 U.S.C. § 1113(b)(1)(A). A bankruptcy court must refuse to reject or modify a CBA if the debtor’s proposal to the union was not fair and equitable. Wheeling-Pittsburgh Steel Corp. v.
United Steelworkers , 791 F.2d 1074, 1093 (3d Cir. 1986).

B.

ERISA does not explicitly state how the reorganization test applies when an employe r seeks to terminate several pension plans at once. The reor ganization test is satisfied when a bankruptcy court determines that a plan sponsor will be unable to continue business outside of Chapter 11 “unless the plan is terminated.” 29 U.S.C. § 1341(c)(2)(B)(ii)(IV) (emphasis added). The statute lacks any parallel provision for cases in which multiple plans are at issue. Other provisions of § 1341 likewise set forth requirements for the voluntary termination of “a single-employer plan,” but do not specify how the requirements should apply inthe context of multiplan
terminations. See

, e.g. , id. § 1341(a)(1) (noting that ERISA provides the exclus ive means under which “a single-employer plan may be terminated”); id. § 1341(a)(3) (barring voluntary termination of a “plan” that would violate the terms of an existing CBA); id. § 1341(b)(1) (listing the generalrequirements for a plan administrator to terminate a “singleemployer plan” under a standard termination); id. §17 1341(c)(2)(B) (requiring the PBGC to determine whether the sponsor of a “plan” satisfies one of the distress criteria).

Absent any express statutory instruction about how the reorganization test applies in the multiplan context, we must
examine ERISA’s text for indici a of congressional intent on the
issue. See Lamie v. United States Trustee , 540 U.S. 526, 534 (2004) (“The starting point for discerning congressional intent is the existing statutory text . . . .”). The parties have not cited, and we have not found, any case in which a court has performed such an analysis. In every case that we have identified in which a debtor sought to terminate multiple pension plans under the reorganization test, bankruptcy courts have applied an aggregate analysis, apparently without protest from the PBGC. See In re Aloha Airgroup, Inc. , No. 04-3063, 2005 WL 3487724, at *1 (Bankr. D. Haw. Dec. 13, 2005), vacated as moot , No. 05- 00777, 2006 WL 695054, at * 3 (D. Haw. Mar. 14, 2006); In re Philip Servs. Corp ., 310 B.R. 802, 808 (Ba nkr. S.D. Tex. 2004); In re Wire Rope Corp. of Am. , 287 B.R. 771, 777-78 (Bankr. W.D. Mo. 2002). However, thes e courts provided no rationale as to why they employed the aggregate approach and did not discuss whether they considered an alternate approach. Thus, these cases provide us with very little guidance or authority as to how to interpret ERISA’s text.

The PBGC argues that C ongress’s use of the singular terms “single-employe r plan” and “plan” mandates a plan-byplan approach to terminati ons under § 1341 generally, and under the reorganization test in particular. In its view, ERISA defines the reorganization test in terms of a singular “plan” because Congress intended that bankruptcy courts would18 consider independentl y each plan that an employer seeks to terminate. Had Congress meant for courts to apply the aggregate approach to the reor ganization test, the PBGC urges that § 1341(c)(2)(B)(ii)(IV) would instruct bankruptcy courts to determine whether an employer can continue in business outside Chapter 11 “unless the plans are terminated.”

To support its textual interpre tation, the PBGC notes that Congress chose to use the si ngular terms “single-employer plan” or “plan” throughout Title IV in a manner that it contends created a plan-specific statutory scheme to govern the singleemployer plan termination insurance program. See, e.g. , 29 U.S.C. § 1321 (detailing when a “plan” is covered by the termination insurance program); id. § 1322 (identifying the benefits guaranteed under a “single-employer plan”); id. § 1342 (granting the PBGC authority to involuntarily terminate a “single-employer plan” and establishing the criteria on which to evaluate a “plan”); id. § 1344(a) (establishing asset allocation scheme for a “single-employer plan” that is terminated); id. § 1347 (setting forth requirements fo r restoration of a terminated “plan”); id. § 1348(a) (“For purposes of this subchapter the
termination date of a single-employer plan is . . . .” (emphasis added)); id. § 1362 (imposi ng liability on the sponsor of a “single-employer plan” that is terminated). Furthermore, the fact that Congress used the plur al “plans” in certain Title IV provisions shows that it was cognizant of the different contextual uses of the singular “plan” and plural “plans.” See
id. § 1302(a) (stating that the purposes of Title IV are “to encourage the continuation a nd maintenance of voluntary private pension plans ” and “to provide for the timely and uninterrupted payment of pe nsion benefits . . . under plans ”19 (emphasis added)); id. § 1303(a) (mandating that the PBGC audit annually a “statistically significant number of plans” terminating in standard terminations); id. § 1310(a) (requiring plan sponsors to provide “i nformation . . . necessary to
determine the liabilities and a ssets of plans” covered by ERISA). Given that ERISA “is a comprehensive and reticulated statute” that Congress drafted with care, Nachman Corp. v. Pension Benefit Guar. Corp , 446 U.S. 359, 361 (1980), the PBGC urges us to conclude thatCongress intentionally defined the reorganization test in terms of a singular “plan” and that this choice reflects Congress’s intent that the test should be applied on a plan-specific basis.

We disagree with the PBGC’s textual analysis. Its “linguistic argument makes t oo much out of too little.” United States v. Fior D’Italia, Inc. , 536 U.S. 238, 244 (2002). The use of the singular form of “plan” in § 1341 does not constitute a congressional mandate to the bankruptcy courts to apply a planby-plan approach to the reorgani zation test. As a general matter of statutory construction, the singular form of a word “include[s] and appl[ies] to seve ral persons, parties, or things”
“unless the context indicates othe rwise.” 1 U.S.C. § 1. Here, nothing about the use or context of the singular terms “plan” or “single-employment plan” in ER ISA suggests that “application of the typical rule of statutory construction set forth in 1 U.S.C. § 1 would be inappropriate.” Toy Mfrs. of Am., Inc. v. Consumer Prods. Safety Comm’n , 630 F.2d 70, 74 (2d Cir. 1980).

Furthermore, we do not thi nk that Congress intended that its use of the singular “plan” would require a plan-by-plan20 approach to the reorganization te st because, as the statute is currently written, such an appr oach is essentially unworkable. This is because the reorgani zation test cannot be rationally applied on a plan-by-plan basi s unless a court makes basic assumptions about the order in which the plans should be
considered and the status of th e other plans that the employer is seeking to terminate. ERISA conspicuously fa ils to provide any ground rules whatsoever about how courts could employ a planby-plan analysis. If Congre ss had intended the bankruptcy courts to employ the reorganizati on test on a plan-by-plan basis,
it would have done more than simply employ the singular form of “plan” in § 1341; it would al so have provided some details about how courts are to apply su ch an approach. ERISA as it is currently drafted leaves open too many questions about how to engage in a plan-by-plan anal ysis for us to conclude that Congress envisioned such an appr oach in the multiplan context.

A brief hypothetical illustrate s the problems inherent in applying the reorgani zation test on a plan-by-plan basis under the current statutory scheme. A ssume that a debtor has three pension plans, each of whic h will cost $20 million annually.
The evidence shows that the debtor can devote no more than $40 million annually to its pens ion liabilities and continue inbusiness outside of Chapter 11. Under the PBGC’s plan-byplan approach, a bankruptcy court would approve the termination of just one plan be cause the debtor could afford to fund two of the three. But which plan should be terminated? Based simply on their cost, any of the plans could conceivably be eliminated; which one depe nds wholly on the mechanics of how the bankruptcy court applie s the reorganization test. For example, the order in which th e bankruptcy court examines the6 When presented with a similar hypothetical at oral argument, counsel for the PBGC stated that a bankruptcy court should look at each plan separately and not consider the cost of the other plans at all. But this approach moves the bankruptcy court no closer to deciding which of the three plans should be terminated, and could easily result in the continued effectiveness of plans which, in the aggregate, ar e unaffordable. Without some principled resolution to this problem, the plan-by-plan approach
is not feasible.

21 plans is potentially decisive (i.e ., the first two considered will be deemed affordable, and the thir d one will not). Likewise, when examining one plan, the bankruptcy court must make a critical assumption about the status of the other two plans. A court would deem any one plan to be affordable if it assumed that one or both of the other plans had been terminated, and it would conclude that any plan is unaffo rdable if it a ssumed that the other two plans still existed. Thus, the outcome of a plan-byplan analysis changes drama tically based on the ground rules that a court employs. 6

These are fundamental problems with applying the reorganization test on a plan-by- plan basis, yet Congress did nothing to address, let alone resolve, them. Nor are these problems merely theoretical. In the instant case, the Bankruptcy Court noted that, if the KAP a nd Inactive Plans were terminated first, Kaiser could afford to fund as many as three of the four smaller plans (i.e. the Tulsa, Sherman, LA Extrusion, and7 Counsel for the PBGC suggested at oral argument that, if the KAP and Inactive Plans were terminated, Kaiser could have afforded all four of its smaller plans. But this was not the finding of the Bankruptcy Court, which concluded that Kaiser could maintain up to three plans, but “not more than that.” (Hr’g Tr., Feb. 2, 2004, at App. 445.) The PBGC has not pointed to any evidence that would cause us to question this factual finding of the Bankruptcy Court.

22 Bellwood Plans). 7 However, nothing in ERISA suggests that
the KAP and Inactive Plans should be terminated first under a plan-by-plan analysis. A court could also conclude that it should apply the reorganization test to the smallest plans first,
rather than in the ma nner that would require it to terminate the fewest number of plans. If a court were to apply the reorganization test to Kaiser’s plans in order of smallest to largest, it would determine that Kaiser could not afford even the smaller plans due to the cost of the KAP and Inactive Plans.

Similarly, if the Bankruptcy Court assumed while applying the reorganization test to one plan that all the other plans remained active, it would c onclude that the reorganization
test was satisfied as to any of the plans considered independently. The cost of th e KAP and Inactive Plans would make any other plan prohibitivel y expensive. On the other hand, if one assumed that the KAP and Inactive Plans would be eliminated, several of the smaller plans could be funded outside of Chapter 11. We see no princi pled textual basis in ERISA to adopt one set of assumptions over another.23 A basic tenet of statutory construction is that courts should interpret a law to avoid absurd or bizarre results. See Demarest v. Manspeaker , 498 U.S. 184, 191 (1991) (applying
statute’s terms where the result was not “so bizarre that Congress could not have inte nded it” (internal quotation omitted)); Griffin , 458 U.S. at 575 (“It is true that interpretations of a statute which would produce absurd results are to be avoided if alternative interpretations consistent with the legislative purpose are available. ”). If we adopted the PBGC’s interpretation of § 1341, we woul d be concluding that Congress required courts to apply the re organization test on a plan-byplan basis, but provided no gui dance on the mechanics of this approach, making it essentially unworkable. We will not adopt a statutory construction that lead s to such an anomalous result, especially where the aggreg ate approach represents an
alternative that is “neither irrational nor arbitrary.” DiGiacomo
v. Teamsters Pension Trust Fund of Philadelphia and Vicinity

, 420 F.3d 220, 228 (3d Cir. 2005).

Nor would we make the plan-by-plan approach workable by “filling in the gaps” left by Congress ourselves. See Griggs v. E.I. DuPont de Nemours & Co., 385 F.3d 440, 453 n.7 (4th Cir. 2004)

. In the context of such an “enormously complex and detailed statute,” Mertens , 508 U.S. at 262, whose text we
should be cautious about supplementing, Hughes Aircraft , 525 U.S. at 447, it is not appropriate for us to invent for the bankruptcy courts the fundamental baseline assumptions required to apply the reorganization test workably on a plan-byplan basis. To do so would re quire us to weigh sensitive policy issues that have potentially important consequences for employers, American workers, and the PBGC without any24 meaningful guidance from Congress. “The authority of courts to develop a ‘federal common law’ under ERISA is not the authority to revise the text of the statute.” Mertens , 508 U.S. at 259 (internal citation omitted). We may develop federal common law under ERISA only when it is “‘necessary to fill in interstitially or otherwise effectuate the statutory pattern enacted in the large by Congress.’” Fotta v. Trs. of the UMW, Health & Ret. Fund of 1974 , 165 F.3d 209, 211-212 (3d Cir. 1998) (quoting Bollman Hat Co. v. Root , 112 F.3d 113, 118 (3d Cir. 1997)); see also Bill Gray Enters., Inc. Employee Health and Welfare Plan v. Gourley , 248 F.3d 206, 220 n.13 (3d Cir. 2001) (“[C]ourts have held that importing federal common law doctrines to ERISA plan interpretation is generally inappropriate . . . .”). The significant gap-fillers required to apply a plan-by-plan approach workably are better developed by a policy-making or legislativ e body than by this Court. See
DiGiacomo , 420 F.3d at 228.

The PBGC contends that “[i] t is difficult to imagine how Congress could have spoken to the ‘precise question’ of whether the distress termination requireme nts . . . apply to a sponsor on a plan-by-plan basis more clear ly than it did.” (PBGC Br. at 18.) To the contrary, we ha ve no trouble envisioning how it
could have done so. It could have used the phrase “plan-byplan” in articulating the reorgani zation test, explicitly instructed courts to apply the test to eac h plan independently, or given even a modicum of guidance about how such an approach should be applied and what assu mptions should be used in the multiplan context. Absent any such textual indicators of congressional intent, we will not read them into the statute ourselves. Instead, we adopt a construction of ERISA’s25 reorganization test that does not lead to these problems, namely, the aggregate approach.

C.

We find additional support for our textual analysis in the fact that a plan-specific appr oach to the reorganization test would disrupt the bankruptcy courts in their traditional role as agents of equity. The PBGC would have the Bankruptcy Court terminate some of Kaiser’s pl ans while leaving the others in place, seemingly without a prin cipled basis on which it could
make the determination of which workers to prefer over others. We will not impose this result, which we believe would treat Kaiser’s workers unfairly and inequitably, without a clear congressional mandate.

The Supreme Court has long recognized that bankruptcy courts are courts of equity that apply equitable principles in the
administration of bankruptcy proceedings. See Local Loan Co.
v. Hunt , 292 U.S. 234, 240 (1934) (“[C ]ourts of bankruptcy are essentially courts of equity, and their proceedings inherently proceedings in equity.”). Though the enactment of the Bankruptcy Code in 1978 “increas ed the degree of regulation Congress imposed upon bankruptcy proceedings,” it did not
alter their “fundamental natur e” as courts of equity. Official Comm. of Unsecured Creditors of Cybergenics Corp. ex rel. Cybergenics Corp. v. Chinery , 330 F.3d 548, 567 (3d Cir. 2003) (en banc); see also Young v. United States , 535 U.S. 43, 50 (2002) (“[B]ankruptcy courts . . . are courts of equity and ‘apply the principles and rules of e quity jurisprudence.’” (quoting Pepper v. Litton , 308 U.S. 295, 304 (1939))).26 The “‘great principles of equ ity’” are aimed at “‘securing complete justice’” for the parties before a court. Porter v. Warner Holding Co. , 328 U.S. 395, 398 (1946) (quoting Brown
v. Swann , 35 U.S. (10 Pet.) 497, 503 (1836)). Thus, the bankruptcy courts have broad au thority to act in a manner that will prevent injustice or unfai rness in the administration of bankruptcy estates. See Pepper , 308 U.S. at 307-08 (“[I]n the exercise of its equitable jurisdiction the bankruptcy court has the power to sift the circumstances surrounding any claim to see that injustice or unfairne ss is not done . . . .”); In re Combustion Eng’g, Inc. , 391 F.3d 190, 235 (3d Cir. 2004) (“Bankruptcy courts are courts of equity, empowered to invoke equitable principles to achieve fairness a nd justice in the reorganization process.” (internal quotation omitte d)). To this end, they may, when necessary, “eschew[] mechanical rules,” Holmberg v.
Armbrecht , 327 U.S. 392, 396 (1946), “modify creditor-debtor relationships,” United States v. Energy Res. Co. , 495 U.S. 545, 549 (1990), and “craft flexibleremedies that, while not expressly authorized by the [Bankruptcy] Code, effect the result the Code was designed to obtain,” Cybergenics Corp. , 330 F.3d
at 568. See also 11 U.S.C. § 105(a) (authorizing bankruptcy courts to “tak[e] any action or mak[e] any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process.”); but see In re Combustion Eng’g , 391 F.3d at 236 (“The general grant of equitable power contained in § 105(a) cannot trump specific provisions of the Bankruptcy C ode, and must be exercised within the parameters of the Code itself.”).

Section 1113 of the Bankruptcy Code illustrates the role that the bankruptcy courts takein ensuring fairness during the8 Kaiser contends that the “fair and equitable” requirements of § 1113 and § 1114 apply directly in this proceeding because the modification of several CBAs and approval of the 1114 Committee were necessary prerequisites for the termination of its pension plans. We disagree. It was never necessary to the
terminations for Kaiser to alter its CBAs unilaterally through a court order under § 1113 and § 1114. The alternative was for
Kaiser to reach consensual agreements with the unions and retirees that provided for termination of the pensions. This is precisely what occurred here, as Kaiser’s unions and 1114 Committee have all consented to the plan terminations. The

27 course of bankruptc y proceedings. Under this provision, a bankruptcy court may permit a debt or to unilaterally reject or modify an existing collective bargaining agreement only if the court determines, inter alia , that the debtor has made a proposal
to the union that “assures that a ll creditors, the debtor and all affected parties are treated fairly and equitably .” 11 U.S.C. § 1113(b)(1)(A) (emphasis added). Likewise, § 1114, which prohibits a debtor from unilaterally terminating or modifying retiree benefits without a court order, requires the debtor to make a proposal for the modifi cation of benefits to the authorized representatives of the debtor’s retirees that treats all affected parties “fairly and equitably.” Id. § 1114(f)(1)(A). These sections also require th e bankruptcy court to determine that “the balance of the equities clearly favors” the motions before granting them. Id. § 1113(c)(3); id. § 1114(g)(3). The provisions underscore the importan ce of equitable principles for bankruptcy courts, particular ly in bankruptcies involving unionized workers and employee retirement benefits. 8plain language of § 1113 and § 1114 makes clear that these provisions are inapplicable where union and retiree representatives agree to a debtor’s proposal; they apply only where the proposal was rejected “without good cause.” See 11 U.S.C. § 1113(c)(2); id. § 1114(g)(2). Consequently, while § 1113 and § 1114 inform our view of the equitable goals of the bankruptcy courts, the “fair and equitable” requirements in these sections do not specifically govern this case.

28 We will not require the equ itable principles under which bankruptcy courts operate to bediscarded when courts are deciding whether to approve a pension plan termination under the reorganization test. See In re US Airways Group, Inc. , 296 B.R. 734, 746 (Bankr. E.D. Va. 2003) (holding that the requirement under 29 U.S.C. § 1341(c)(2 )(B)(ii)(IV) that the bankruptcy court “approve the te rmination” of an ERISA plan
authorized the court to considerthe “equities in the case”). We are convinced that, in light of th e unique facts of this case, the Bankruptcy Court could not ha ve applied the plan-by-plan approach without by producing anunfair result that would have violated principles of equity.

Had the Bankruptcy Court applied the reorganization test on a plan-by-plan basis it would have had to pick and choose between the six plans that Kaiser sought to terminate, deciding that certain plans would remainactive. Some of Kaiser’s
workers would receive their full pension benefits, while others
would receive no more thanthe amount guaranteed under ERISA. It is likely that even workers within the same union would be treated differently from each other because they29 participated in different pl ans, not all of which would necessarily be eliminated. Without some statutory basis or other principled rationale for this result, such disparate treatment
smacks of arbitrarin ess. Under § 1113, “the focus of the [bankruptcy court’s] inquiry as to ‘fair and equitable’ treatment should be whether the [debtor’s] proposal would impose a disproportionate burde n on the employees,” WheelingPittsburgh , 791 F.2d at 1091, as compared to “creditors, debtor and all of the affected parties,” 11 U.S.C. § 1113(b)(1)(A). Here, the PBGC asked the Bankruptcy Court to burden certain employees disproportionally as compared to other employees

. This strikes us as an unfair resu lt, and it is one that a bankruptcy court sitting in equity should not impose absent a clear mandate from Congress.

When pressed at oral argument, the PBGC offered no basis on which the Bankruptcy C ourt could make the difficult
decision of which of Kaiser’s four small plans should be terminated under a plan-by-plan approach. It stated only that a
debtor can make this choice in wh atever manner it wishes. But
this does little more than restate the problem before us. Here, Kaiser has voluntarily chosen to terminate all six pension plans. Thus, the “solution” the PBGC suggests does not apply in this

case.

It did apply in the case of US Airways Group . There, US Airways sought to terminate only one of its four pension plans.
The affected workers were th e company’s pilots, who had “already given up more in pay and benefits than any other employee group.” US Airways Group , 296 B.R. at 744. Not surprisingly, the pilots felt “a particularly keen sense of having9 This reasoning explains why the Bankruptcy Court need not account for any unfairness resulting from Kaiser’s decision not to terminate the Garage Plan, which covered four active employees, one employee on leave, and one whose employment had been terminated. The Bankruptcy Court was not asked to apply the reorganization test to the Garage Plan and, consequently, was not itself responsible for the disparate treatment between participants in the Garage Plan and those in Kaiser’s other plans.

30 been shabbily treated” by the reque st to terminate their pension plan. Id. They argued that it would be “highly unfair” to terminate the pilots’ plan “wh ile all the remaining employee groups would keep their curre nt pension benefits.” Id. Nevertheless, the bankruptcy c ourt approved the termination under the reorganization test, con tingent on the removal of the contractual bar in the pilots’ CBA. Id. at 745-46.

Unlike the case before us, the court in US Airways Group was asked to apply the reor ganization test to just one pension plan. Under those circumstances, any unfairness inherent in the
termination was the result of the debtor’s business decision about which plan to terminate, not the bankruptcy court’s roll of the dice as to which plan shoul d or should not be terminated. 9

The PBGC contends that the result of applying an aggregate approach is just as unfair as terminating some plans and leaving others in place. Under the aggregated analysis, more plans would be terminated , and more workers impacted, than what is required for Kais er to emerge from Chapter 11.10 This argument draws on the requirement under § 1113 and § 1114 that a proposed modification to a CBA or to retirement benefits be “necessary to permit the reorganization of the debtor.” 11 U.S.C. § 1113(b)(1)(A); id. § 1114(f)(1)(A). In Wheeling-Pittsburgh , we held that this requirement should be “construed strictly to signify only modifications that the trustee is constrained to accept because they are directly related to the [c]ompany’s financial condition and its reorganization.” 791 F.2d at 1088. As stated above, supra note 8, § 1113 and § 1114 do not directly apply here because Kaiser has reached consensual agreements with its unions and 1114 Committee to terminate the plans.

31 The Bankruptcy Court itself acknowledged that it was not necessary for Kaiser to terminate all of its plans to reorganize, yet it terminated them all anyway . Surely, the PBGC argues, it is not fair or equitable to strip an employee’s pension benefits without any economic justificati on. Faced with a choice of burdening some of the participants in Kaiser’s plans and burdening them all, the PBGC c ontends that equity weighs in
favor of the former. 10

We are not unsympathetic to this view. There is undoubtedly a tension between treating similarly situated workers alike and doing the leas t that is necessary for the company to emerge from bankruptcy. However, we are persuaded that, on the whole, an aggregate approach is more in line with the objectives of the Bankruptcy Code.

As a practical matter, volunt ary terminations under the32 reorganization test always requi re an employer to bargain with the representatives of its employees or retirees. See 11 U.S.C. § 1113(c)(2); id. § 1114(g)(2). When an employer seeks to terminate multiple plans, particip ants in one plan will be less likely to agree to a termination if doing so would open the door to a decision by a bankruptcy court to single out their plan for termination under the plan-by-plan approach, while leaving the employer’s other plans intact. See US Airways Group , 296 B.R. at 744 (describing union’s objecti on to being singled out for termination of its pension bene fits). And debtors will generally be unable to select one plan among many for unilateral
termination without the consent of its participants because doing
so would violate the fair and equitable requirements of § 1113 and § 1114. Cf. Wheeling-Pittsburgh , 791 F.2d at 1091 (defining inquiry into “fair and equitable” in terms of a “disproportionate burden” on employees).

The consequence is thatemployers that could conceivably restructure their pension liabilities and successfullyreorganize will have a harder time doing so under a plan-byplan approach. This would, in turn, lead to a higher number of liquidations and, by extension, a higher number of overall plan
terminations. The result would be to leave all interested parties – the PBGC, workers, retirees, and creditors – worse off as compared to the same number of reorganizations. An approach that results in unnecessary liquidations is neither fair nor consistent the Bankrupt cy Code’s preference for reorganization. See Nordhoff Invs., Inc. v. Zenith Elecs. Corp.

, 258 F.3d 180, 190 (3d Cir. 2001) (noting the “s trong public policy in favor of maximizing debtor’s estates and facilitating successful reorganization”); In re Baker & Drake, Inc. , 35 F.3d 1348, 135433 (9th Cir. 1994) (“Congress’s purpose in enacting the Bankruptcy Code was not to mandate that every company be reorganized at all costs , but rather to establish a preference for reorganizations, where they are legally feasible and economically practical.”).

IV.

The PBGC has leveled severa l other arguments against our reading of ERISA. It conte nds that the legislative history, its administrative interpretati on, and public policy support its view that ERISA mandates a plan -by-plan approach. As with the PBGC’s statutory analysis, we do not find its arguments on these points to be persuasive.

A.

The PBGC points to a legisl ative trend to tighten the restrictions on pension plan terminations as support for a planby-plan approach to the reorganization test. In 1986, Congress
established the four distress tests in the Single-Employer
Pension Plan Amendments Act (“SEPPAA”). Prior to the enactment of SEPPAA, “a plan could be terminated voluntarily at any time, regardless of the re lationship between its assets and
liabilities.” E. Thomas Veal & Edward R. Mackiewicz, Pension
Plan Terminations 68 (2d ed. 1998). If the plan could not provide the guaranteed benefits to pensioners, the PBGC would pay the benefits and assess liab ility against the plan’s sponsor.
Id. at 68-69. Congress found thatthis system “encourage[d] employers to terminate plans, evade their obligations to pay benefits, and shift unfunded pension liabilities” to the PBGC.34 H.R. Rep. No. 99-241, part 2, at 59 (1985), reprinted in 1986 U.S.C.C.A.N. 685, 717- 18. SEPPAA was intended to heighten the requirements for plan terminations.

In 1987, Congress passed the Pension Protection Act of 1987 (“PPA”) to restrict pension plan terminations further. PPA made employers liable, for the fi rst time, to the PBGC for the
full amount of unfunded be nefit liabilities to a ll participants and beneficiaries under the plan. See 29 U.S.C. § 1362. It also applied the reorganization test to “[t]heplan sponsor or any member of its controlled gr oup,” whereas SEPPAA applied it only to each “substantial memb er” of the control group. See 29 U.S.C. § 1341(c)(2)(B); Veal & Mackiewiz, supra , at 252 n.3. Both changes increased the bu rden on employers seeking to terminate pension plans.

The PBGC contends that SEPPAA and PPA, taken together, reflect a clear congressional purpose to limit the circumstances under which pens ion plans may be voluntarily
terminated to instances wher e sponsors are suffering “severe hardship.” H.R. Rep. No. 99-300, at 278 (1985), reprinted in 1986 U.S.C.C.A.N. 929; H.R. Rep. No. 99-241, part 2, at 59-60 (1985), reprinted in 1986 U.S.C.C.A.N. 717- 18. In addition, Congress intended to reduce the financial burdens on the PBGC and increase the chance that a pl an’s participants will receive their full expected benefits. In the context of the reorganization test, the PBGC argues that thes e objectives can only be achieved if bankruptcy courts employ a plan-by-plan approach, which prevents terminations that are economically unnecessary.

Our reading of the legislative history does not convince35 us that Congress mandated a plan-by-plan an alysis. At most, the legislative history demonstrat es that Congress had a general
intent to make it more difficu lt for employers to terminate pensions; however, that is hard ly determinative of whether, or how, the reorganization test shoul d be applied in the multiplan context. As discussed above, we think it likely that a plan-byplan analysis would actually increase the overall number of
terminations and therefore conflic t with the legislative intent on which the PBGC relies. In any ev ent, such a general legislative purpose provides no guida nce on the mechanics of applying the reorganization test workably on a plan-by-plan basis. We view the absence of any such guidance in the text of ERISA as more indicative of congressional intent than anything the PBGC has cited in the legislative record.

B.

The PBGC claims that we should defer to its interpretation of the reorganization test under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc. , 467 U.S. 837 (1984). We disagree.

Congress has delegated to th e PBGC the power to adopt rules and regulations that are ne cessary to carry out the purposes of Title IV of ERISA, see 29 U.S.C. § 1302(b)(3), and the Supreme Court has accorded Chevron deference to the PBGC’s interpretation of ERIS A on other occasions. See PBGC v. LTV Corp. , 496 U.S. 633, 652 (1990) (deferring to the PBGC’s antifollow-on policy); Mead Corp. v. Tilley , 490 U.S. 714, 725 (1989) (according Chevron deference to the PBGC’s interpretation of 29 U.S.C. § 1344 ). However, deference to the36 PBGC here is improper becaus e the PBGC has neither the expertise nor the authority to determine when a plan should be terminated under the reorganization test. Issues relating to an employer’s bankruptcy and reor ganization are within the expertise of bankruptcy courts , not the PBGC. Thus, ERISA grants the bankruptcy courts al one the power to determine when an employer “will be unable to pay all its debts pursuant to a plan of reorganization and . . . continue in business outside of chapter 11.” 29 U.S.C. § 1341(c)(2)(B)(ii)(IV). Where Congress delegates to the courts , rather than administrative agencies, the power to make determinations under a statute,
Chevron deference does not apply. See United States v. Mead Corp. , 533 U.S. 218, 226-27 (2001) (hol ding that administrative implementation of a particular statutory provision qualifies for
Chevron deference when Congress delegated authority to agency “to make rules carrying the force of law”); Murphy Exploration and Prod. Co. v. U.S. Dep’t of Interior , 252 F.3d 473, 478 (D.C. Cir. 2001) (stating that “ Chevron does not apply
to statutes that . . . confer jurisdiction on the federal courts”
because “such statutes do not grant power to agencies”);
Bamidele v. INS

, 99 F.3d 557, 561 (3d Cir. 1996) (refusing to defer to agency’s interpretation of a legal issue that is the province of the courts).

Furthermore, even if we were to hold that the PBGC had the authority to interpret § 1341(c)(2)(B)(ii)(IV), “[w]e will not defer to ‘an agency counsel’s in terpretation of a statute where the agency itself has articulat ed no position on the question.’” Connecticut General Life Ins. Co. v. Comm’r , 177 F.3d 136, 143-144 (3d Cir. 1999) (quoting Bowen v. Georgetown Univ. Hosp. , 488 U.S. 204, 212 (1988)); see also Southco, Inc. v.11 Indeed, the PBGC’s counsel conceded at oral argument that
this is the first case in which the PBGC has articulated its position that ERISA requires that the reorganization test be applied on a plan-by-plan basis. Cf. In re Wire Rope Corp. of
Am. , 287 B.R. 771, 772-73, 777-78 (Bankr. W.D. Mo. 2002) (noting that the PBGC did not oppose termination of multiple plans where court applied aggregate approach to reorganization test). Counsel explained that, in other cases involving multiple distress terminations, the plans were unsustainable under either an aggregate or plan-by-plan analysis, so the PBGC never asserted the position it has here. This supports our view that the PBGC’s argument in the instant case is more akin to a litigation strategy than an agency interpretation of a statute that is entitled
to deference. See Bowen , 488 U.S. at 213 (“Deference to what appears to be nothing more than an agency’s convenient litigating position would be entirely inappropriate.”).

37 Kanebridge Corp. , 390 F.3d 276, 300 (3d Cir. 2004) (en banc) (Roth, J., dissenting) (noting th at agency position advanced for the first time in litigation would “be entitled to no deference whatsoever”). To merit deferen ce, an agency’s interpretation of the statute must be supporte d by regulations, rulings, or administrative practice. Bowen , 488 U.S. at 212. It appears to us that the PBGC first adopted the view that ERISA requires a plan-by-plan analysis during the course of this litigation. 11

Chevron deference is not appropriate under these circumstances.
Id. at 213.

The PBGC contends that it has promulgated a series of rules that require that the vol untary terminati on of pensions12 Nor is there any reason to defer to the PBGC’s interpretation of these regulations. The rules on which the PBGC relies do nothing more than adopt ERIS A’s use of the singular “plan.” “[T]he existence of a parroting regulation does not change the fact that the question here is not the meaning of the regulation but the meaning of the statute. An agency does not acquire special authority to interpret its own words when, instead of using its expertise and experience to formulate a regulation, it has elected merely to paraphrase the statutory language.”

38 occur on a plan-by-plan basis. See 29 C.F.R. § 4041.41;
Distress Terminations and Standard Terminations of Single-Employer Plans, 57 Fed. Reg. 59206 (1992); Single-Employer Plan Termin ations Under the Pension Protection Act, 53 Fed. Reg. 1904 (1988) ; Special Procedures Relating to the Reorganizati on Distress Test, 52 Fed. Reg. 38290 (1987); Distress Terminations of Single-Employer Plans
and Standard Terminations of Single-Employer Plans, 52 Fed. Reg. 33318 (proposed Sept. 2, 1987); The Effects of the Single-Employer Pension Plan Amendments Act of 1986 on Voluntary Plan Terminations In itiated On or After January 1, 1986 and Before April 7, 1986, 51 Fed. Reg. 12489 (1986). But these rules, like ERISA’s text, me rely refer to the termination requirements for a “plan.” They neither state that bankruptcy courts should apply the reorganization test on a plan-by-plan basis nor provide any guidance as to how courts would employ such an approach in the contex t of multiplan terminations. In short, contrary to the PBGC’s urging, the rules do not reflect anadministrative determination that ERISA requires a plan-byplan analysis. 12Because the PBGC cannot point to regulations,Gonzales v. Oregon , 126 S. Ct. 904, 916 (2006).

39 rulings, or administrative prac tices in which it adopted the position that it asserts here, both the deliberateness and authoritativeness of its statutory interpretation are suspect. Smiley v. Citibank (South Dakota), N.A. , 517 U.S. 735, 741 (1996).

C.

Policy issues have provided th e subtext for several of the PBGC’s arguments in favor of a plan-by-plan approach and, at times, the PBGC has brought these issues to the surface explicitly. There is no question that this case implicates significant policy concerns that potentially affect millions of American workers and hundreds of businesses. Furthermore, the PBGC is an important govern ment entity whose interests are not lightly ignored. We theref ore address its policy arguments briefly and comment on their role in our analysis.

The policy concerns in this case have formed two parallel tracks. First, the PBGC has contended repeatedly that an aggregate approach to the reor ganization test harms American workers who participate in ERISA plans because it subjects them to plan terminations that are economically unnecessary. Its fear is that our holding today will make it too easy to terminate pension plans that ar e actually affordable and will create an incentive for employers to terminate plans that they
would otherwise maintain. As a result, more workers will lose their fully vested pensions and receive only the benefits40 guaranteed by ERISA.

The second concern is that our holding will negatively impact the PBGC itself. We take judicial notice of the fact that the PBGC’s financial health has deteriorated sharply in recent

years. At the end of the 2005 fiscal year, the PBGC’s liabilities exceeded its assets by $23.1 billion, a swing in its net position of nearly $33 billion since 2000. PBGC Performance Report at 4; Congressional Budget Office, A Guide to Understanding the Pension Benefit Guaranty Corporation 1 (2005), available at http://www.cbo.gov/ftpdocs/66xx/doc6657/09-23-GuideToP BGC.pdf . The PBGC noted in its brief that “[t]he issue presented in this case recurs in other large bankruptcy cases in which the agency is a guarantor of pension benefits.” Interpreting ERISA in a way that triggers more plan terminations, and thereby increases the burdens on the PBGC, could undermine the PBGC’s already shaky financial position and “pose a considerable risk to the single-employer termination insurance program.” (PBGC Br. at 3.)

We do not downplay the significance of either argument. They provide sound policy rationales for the result for which the PBGC advocates and highlight the important interests at stake in this case. Moreover, there is no question that the aggregate approach may, in some cases, lead to results that are less than ideal for workers and for the PBGC. Nevertheless, “[w]e do not sit here as a policy-making or legislative body.” DiGiacomo

, 420 F.3d at 228. There are no clear answers to the difficult policy issues involved in this case and, in any event, their resolution is better left to Congress than the courts. We have taken Congress’s failure to provide a shred of guidance on how41 to apply a plan-by-plan approach as indicative of its intent. If Congress perceives our holding to be in error, the cure is to
amend ERISA. See Griffin , 458 U.S. at 576.

V.

For the reasons stated above, we conclude that when an employer in Chapter 11 bankruptcy seeks to terminate multiple pension plans voluntarily under the reorganization test, Congress intended the bankruptcy courts to apply the test to all of the plans in the aggregate. Consequently, we will affirm the order of the District Court upholding the Bankruptcy Court’s conclusion that Kaiser had satisfied the reorganization test with respect to all six plans that it sought to terminate.