Document: 496 U.S. 633 110 S.Ct. 2668 L.Ed.2d 579 PENSION BENEFIT GUARANTY CORPORATION, Petitionerv.LTV CORPORATION et al. No. 89-390. Argued Feb. 27, 1990. Decided June 18, Syllabus Title IV of the Employee Retirement Income Security Act 1974 (ERISA) includes a mandatory Government insurance program that protects private-sector workers participating in covered pension plans against termination their before sufficient funds have been accumulated to pay anticipated benefits. The is administered by petitioner Pension Benefit Guaranty Corporation (PBGC), which responsible for paying terminated plans' unfunded liabilities out proceeds annual premiums collected from employers maintaining on-going plans. Respondent LTV and many its subsidiaries (collectively LTV) filed reorganization petitions under Bankruptcy Code purpose, inter alia, restructuring obligations one three ERISA-covered, chronically underfunded (Plans), two could not be voluntarily ERISA's terms because they resulted collective-bargaining negotiations with United Steelworkers America. In light LTV's statement it no longer provide complete funding, PBGC sought involuntary Plans protect risk large losses. After District Court Plans, negotiated new arrangements, characterized as "follow-on" plans; i.e., arrangements designed wrap around benefits substantially same would received had occurred. Pursuant anti-follow-on policy, considers such "abusive" program, perception financial circumstances dramatically improved, issued notice restoration § 4047 ERISA, authorizes undo "in any . case [it] determines action appropriate consistent duties [Title IV]." When refused comply decision, an enforcement action, but vacated decision upon finding, among other things, exceeded authority. Appeals affirmed, holding was, various respects, "arbitrary capricious" or contrary law Administrative Procedure (APA), 5 U.S.C. 706(2)(A). Held: PBGC's was arbitrary capricious Pp. 645-656. (a) failure consider discuss "policies goals" underlying federal bankruptcy labor did not, held, render capricious. That cannot reconciled plain language 4047, does direct further "public interest" generally, but, rather, specifically unambiguously requires focus on ERISA. Moreover, if agency disturbed whenever reviewing court able pinpoint arguably relevant statutory policy explicitly considered, very number decisions might open judicial invalidation numerous statutes said embody countless goals. Also, can claim expertise areas, may ill equipped undertake difficult task discerning applying those fields. 645-647. [[SC2Q!]] (b) law. A clear congressional intent avoid based existence follow-on evinced text embodies broad grant authority PBGC, legislative history ERISA 1987 amendments. "permissible" construction rational therefore entitled deference. premised eminently reasonable belief employees will object more strenuously company's original plan used put them position after were before. availability thus remove employee resistance significant check termination, tend frustrate objectives supposed accomplish—the continuation maintenance voluntary private addition, tendency increase deficit employers' premiums, thereby frustrating related objective low premiums. Although employer's improvement respondents contend, only permissible consideration. It disfavor where, here, there suggestion immediate retermination rendered necessary situation. 2676-2679. (c) this use inadequate procedures. Since point APA provision giving procedural rights identified court—an apprisal material based, adequate opportunity offer evidence, proceedings accordance ascertainable standards, showing reasoning standards—the court's ran afoul Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc., 435 519, 524, 98 1197, 1202, 55 460. since administrative record enable fulfill 706 duties, finds support Citizens Preserve Overton Park, Inc. Volpe, 401 402, 419, 91 814, 825, 28 136. Nor aided dictum Bowman Transportation, Arkansas-Best Freight System, 419 281, 288, n. 4, 95 438, 443, 42 447, "party know issues turn apprised factual relies so he rebut it." made context formal adjudication trial-type procedures APA, §§ 554, 556-557, require legal matters asserted, submission consideration facts arguments, submit proposed findings conclusions exceptions. determination however, lawfully informal 555, elements. 653-656. 875 F.2d 1008 (CA 2 1989), reversed remanded. BLACKMUN, J., delivered opinion Court, REHNQUIST, C.J., BRENNAN, MARSHALL, SCALIA, KENNEDY, JJ., joined, WHITE O'CONNOR, joined except judgment 11. WHITE, concurring part dissenting part, post, p. 656. STEVENS, opinion, 657. Carol Connor Flowe, petitioner. Lewis B. Kaden, New York City, respondents. Justice BLACKMUN Court. 1 we must determine whether (PBGC) restore certain (ERISA), 88 Stat. 1028, amended, 100 237, 29 1347, concluded, law, within meaning 706. * Petitioner wholly owned States corporation, see 1302, modeled Federal Deposit Insurance Corporation. See 120 Cong.Rec. 29950 (1974) (statement Sen. Bentsen). Board Directors consists Secretaries Treasury, Labor, Commerce. 1302(d). administers enforces over 30 million American who participate Title.1 enacting IV, Congress ensure beneficiaries completely "deprived retirement plans." R.A. Gray & Co., 467 717, 720, 104 2709, 2713, 81 601 (1984). also Nachman Corporation, 446 359, 361-362, 374-375, 1723, 1726, 1732-33, 64 354 (1980). 3 terminates insufficient assets satisfy employees, becomes trustee plan, taking plan's liabilities. then uses cover what benefit obligations. 1344 (1982 ed. Supp. IV). add own payment most remaining "nonforfeitable" benefits, participants earned entitlement date termination. 1301(a)(8), 1322(a) (b). place limits guarantee even greater plan. CFR 2621.3(a)(2) App. (1989); 1322(b)(3)(B). increases resulting amendments adopted five years are paid full. Finally, active (current employees) cease earn additional lose yet fully (b), 1301(a)(8); 2613.6 (1989). 4 cost borne primarily maintain ongoing Sections 4006 4007 these 1306 1307 financed liability imposed terminate under-funded Upon employer liable out.2 Because historically has recovered small portion liability, repeatedly forced Even increases, recent report noted $4 billion $2.4 billion, leaving $1.5 billion. As above, insurable event IV. "voluntarily" "involuntarily" PBGC. An ways. proceed "standard termination" all commitments. standard implicate responsibilities. If wishes whose demonstrate "distress" defined 1341(c) ed., Neither nor distress employer, permitted violate existing agreement. 1341(a)(3). 6 though, "involuntarily," notwithstanding Ibid. Section 4042 provides that: 7 "(1) met minimum funding required section 412 title 26, notified Secretary Treasury deficiency 6212 26 mailed respect tax 4971(a) 8 "(2) unable when due, 9 "(3) reportable described 1343(b)(7) occurred, 10 "(4) possible long-run loss [PBGC] reasonably expected unreasonably terminated." 1342(a). 11 Termination undone provides: 12 "In 1341 1342 authorized subchapter, take pretermination status, including, limited to, transfer administrator control plan." 13 restored, full reinstated, rather than again II 14 This arose respondent (LTV Corp.) subsidiaries, including Steel Company Steel), LTV), July 1986 Chapter Code. At time, sponsor (Plans) Two products America (Steelworkers). third nonunion salaried employees. Chronically underfunded, late 1986, promised almost $2.3 Approximately $2.1 amount insurance. 15 undisputed Corp.'s principal goals filing Steel's obligations, goal accomplished responsibility placed negotiate arrangements. LTV, collective bargaining. Plans. 16 To end, advised continue estimated that, without continued Plans' underfunding much $65 December another $63 1988, unless terminated. extensive plant shutdowns anticipated. These shutdowns, occurred terminated, "shutdown benefits." $300 $700 million, up $500 Confronted information, invoking 4042(a)(4) 1342(a)(4), determined should order unreasonable losses, commenced With consent, effective January 13, 1987.3 17 lost some result adversary challenging seeking directing make settled, negotiating interim agreement included intended payments retirees "a percentage difference between being Prior PBGC." 181. Retired positions occupied old never agreements respecting replace insured early shutdown stated totaled "75% termination." Id., at 159. kinds participants, provided 100% 235. 18 objected agreements, characterizing defines arrangement way both stems agency's subsidizing contemplated consistently using powers institutes abusive letters, 1981 stated: "[T]he subsidize program." Pet. Cert. 162a, 167a, 173a. Accordingly, indicated adopts "together guaranteed provide[s] of, accrual eligibility plan," 229, view attempt shift while continuing operate 19 ignored objections asked permission fund granted request. doing so, "may options avenues assert administratively implement Nothing done here tonight precludes pursuing options. ." 261. 20 August 1987, factors relied terminating changed significantly. Of particular significance steel industry, Steel, experiencing dramatic turnaround. result, concluded faced imminent risk, central stemming shutdowns. Later month, internal working group recommendation, improved plans, Executive Director powers. consulting Directors, agreed appropriate, decided Plans.4 21 September 22, indicating explained (1) establishment results abuse system established ERISA," (2) "improved circumstances." 182a.5 Restoration meant ongoing, administering them. 22 decision. prompted initiate Court.6 4047. re Chateaugay Corp., 87 B.R. 779 (SDNY 1988). 23 Second Circuit 706(2)(A), 1008, 1015-1021 first focused "inordinately ERISA" exclusion laws. 1016. found "legislative reveals indication successive [i.e., follow-on] ground restoration." 1017. basis condition—inadequate explain economic assumptions. 1018-1020. decisionmaking process lacked safeguards. 1021. 24 questions raised case, importance certiorari. 493 932, 321, 107 311 III A. 25 held 706(2)(A) account areas deemed expressed "[b]ecause involved hand, reaching considered extent possible, honored policies them." F.2d, 1015. reflect thorough explicit each bodies it, "focused inordinately ERISA." hold actually conflicted laws, "trench[ed] jurisdiction" agency. Burlington Truck Lines, States, 371 156, 173, 83 239, 248, 207 (1962). Rather, "involved hand," affirmative obligation, met, address contends misapplied general rule into factors, 416, 823, 136 (1971), requiring We agree. 27 First, important, do think requirement operating case. gives power "appropriate ERISA]" (emphasis added). statute empowers interests protect. Given specific unambiguous mandate, "inordinately" making Congress' directive clear, entirely sure Appeals' makes good sense principle points problems arise courts routinely public derive enabling Act. begin with, policies. invalidation. give effect statutes, apart provide,7 questionable reason well. recently observed: "[N]o legislation pursues purposes costs. Deciding competing values sacrificed achievement essence choice—and frustrates effectuates simplistically assume whatever furthers statute's primary law." Rodriguez 480 522, 525-526, 1391, 1393, 94 533 (1987). For reasons, believe erred failed adequately principles B 31 rejected grounds discuss. proffered restoration—its plans—was provision, restoration. argues conclusion departed traditional interpretation review statutes. Again, 32 Chevron U.S.A. 837, 2778, 694 (1984), set forth applied implements: 33 "When reviews administers, confronted questions. always, question directly spoken precise issue. end matter; court, well agency, Congress. If, addressed issue, simply impose statute, absence interpretation. silent ambiguous answer statute." 842-843, 2781-82 (footnotes omitted). 34 Here, interpreted base Our task, then, desire exists, and, negative, statute. Mead Tilley, 490 714, 109 2156, 796 (1989) (applying ERISA). 35 Turning half inquiry, observe evince deprive ability contrary, textual embodied broad. [the PBGC] ERISA]." 1347. consist furthering are: 36 encourage 37 timely uninterrupted subchapter applies, 38 lowest level carrying subchapter." 1302(a). 39 On face, course, none statutorily anything say about issue—the decisions. 40 tools compel extensively passages enactment suggest recovery valid restoration, mention reasoned follow-ons bases discussed Members Congress, body restoring 41 agree conclusion. note discussion concerning financial-recovery example. House Conference Report "some factor advisable." H.R.Conf.Rep. 93-1280, 378 (1974), U.S.Code Cong. Admin.News 1974, pp. 4639, 5157. particularly expressly granting regarded modified examples history. example, all, just illustration operation practice. apparently thought, definitive scope. list exhaustive. Under circumstances, conclude "clear intent" effected Protection Act, Pub.L. 100-203, 101 1330-333. enact, prohibit But subsequent "hazardous inferring earlier" Price, 361 304, 313, 80 326, 332, 334 (1960). dangerous rest prior concerns, proposal become See, e.g., Wise, 370 405, 411, 82 1354, 1358, 590 Congressional inaction lacks "persuasive significance" "several equally tenable inferences" drawn inaction, "including inference already incorporated offered change." Id. admonitions especially apt instant aware taken time amendment. H.R.Rep. 100-391, pt. 1, 106-107 (1987), 2313-1. Despite awareness adoption amend restrict discretion. thought properly exercising least plausible other. Thus, surrounding contravened will. 43 Having intent, still ascertain is, "rational NLRB Food Commercial Workers, 484 112, 123, 108 413, 421, 429 (1987); Sullivan Everhart, 494 83, 960, 72 (1990). Respondents argue irrational because, practical matter, purpose served something health employer. According respondents, "financial [is] condition asserted logically irrelevant decision." Brief not. belief, find reasonable, (or steps likely) company similar) check—employee resistance—against 44 Consequently, accomplish "continuation 1302(a)(1). pay, objective—the 1302(a)(3). short, lead terminations increased "assuredly one." U.S., 93, S.Ct., 966. Indeed, judgments real world works gone precisely kind agencies better courts.8 justifications behind 865, 2793. 45 None situation remains dire inevitably retermination, decide where instituted plan.9 present purposes, enough us necessary,10 plans.11 C 46 ruling Relying passage 447 "PBGC neither gave proceeded standards ., [LTV] standards." suggested remand things. 47 conflicts 460 (1978), contends, Due Process Clause implicated governing contains mandates, establishes maximum requirements agencies. concerned Columbia Atomic Energy Commission engaging rulemaking, governed principles. 48 counter arguing courts, proposition, rely (1971). Transportation's "post hoc rationalizations" regarding authorize highway "an [a]dequate [judicial] review" 825. directed evidence shed Secretary's relevance Park intimated recourse fuller explanation action. id., 420-421, 825-26. Subsequent cases remanding fact preferred course. Florida Light Co. Lorion, 470 729, 744, 105 1598, 1607, 84 643 (1985) ("[I]f evaluate challenged proper rare investigation explanation"). contend controlled Yankee, correct. 49 respondents' argument wide mark. noting although initially feel tension necessarily inconsistent. stands proposition free APA. 1202. most, suggests directs otherwise imposes "procedural" sorts mandating needs rationale 50 unlike ruling, "fundamental fairness" LTV. 1020-1021. exception "ascertainable standards"—by exactly meant—the inadequacies cited relate role process. identified. runs Park. 51 Arkansas-Best, relied, contrary. (which dictum) said: "A party entitled, 4. correct Interstate Commerce pursuant 5, include parties given "the asserted," 554(b)(3), [and] arguments," 554(c)(1), "proposed conclusions" "exceptions," 557(c)(1), (2). 554(a); 548, 54 913, formerly codified 17, 305(h) (1976 ed.), repealed 92 1466; 96 2444. adjudication, minimal itself here) unlawful. 52 potentially employed reversed, remanded opinion. 53 ordered. whom O'CONNOR joins, part. I join Court's footnote particular, issue prohibited Unlike read relying alleged alternative, independent notice, clearly rested conjunction. Furthermore, position, least, serious doubt assessment inadequate—and was—the order. 56 realize represented oral separate Tr. Oral Arg. 25-26, counsel's post rationalizations substitute itself. Motor Vehicle Mfrs. Assn. State Farm Mutual Automobile 463 29, 50, 103 2856, 2870, 77 443 (1983). upheld though reach remand, policy. "[The agency's] measured did, done. [agency's] merely considerations disclosed justify safeguard protected Act." SEC Chenery 318 80, 93-94, 63 454, 461-62, L.Ed. 626 (1943). 57 reverse affirm directions return 58 dissenting. 59 my involuntarily, mandate. Unless order, aside. I, therefore, supported record. 60 undergoing continues business satisfactory relationship work force successfully. previous involuntarily consequence assumed discharging share important resource right during cushion capital investments, current salary, contractual obligation long best efforts (and, incidentally, reimburse former ERISA),1 interfere managerial approves. Whether resources dedicated expenditures investments package composed wages, vacation insurance, other, indifference faithful ante, 648, favor alternative beneficiaries. 61 adopt "company's plan"; "to likely." Ante, 651. justified immediately assured receiving paid.2 unwarranted, event, presumably meet less likely union insist course when, perhaps later, safety comes healthy overcome hope future remember Plan legitimate curative problem moral hazard, constitutes punishment management imprudence predecessors. 62 mistake analysis made, change reinstatement Without justification, nothing prevent creating enacted encourage. respectfully dissent. covers virtually "defined benefit" sponsored employers. promises retirement, fixed formula takes final salary service 1321. distinguished contribution" (also known "individual account" plan), typically contributes employee's compensation account, retirement. 1002(34) (35). contribution benefits; instead, receive balances individual accounts. 75% expenditures. year, eliminated cap. appealed (giving termination) Circuit. affirmed. Jones Laughlin Hourly 824 197 Thereafter, "consider information wish supply." 348. Representatives 21, 1987. meetings, officials concern timing rise time-consuming litigation, cast reorganization, imposing hardship creditors. restoration—LTV's "demonstrated willingness arrangements." 182a. Before Circuit, conceded "subsumed [with]in two" grounds. 1020 we. Meanwhile, alleging automatic stay 362(a). motion withdraw 157(d) IV), actions together. 86 1987). worth provisions STEVENS possibility "no [an involuntary] plans] Post, 659 (dissenting opinion). There believe, always ordinarily occur far advance himself acknowledges "those events be] paid." 659. until apparent lessened degree prospect one. fourth due. 318. long-term potential liability. 1342(a)(4). danger minimum-funding requirements. fact, observed "sufficient cash" 183a. No either involuntary, likely. we, like Appeals, need methodology regard restoration—improved condition—was flawed. recover 75 percent amounts expended discharge amended recovery. represents upheld, if—as seems highly probable—it promptly followed $2 $3 33, 21. justification letters identifying terminations. 159a, 165a, 172a. entered unprecedented.

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