Opinion ID: 430879
Heading Depth: 2
Heading Rank: 1

Heading: Appellants' Claims Against PBGC

Text: 15 Appellants contend that PBGC's decision to deny insurance coverage based exclusively on its application of the other reasonable basis test was arbitrary, capricious, and an abuse of discretion. Appellants stress that the purpose of ERISA is to provide relief for employees who otherwise would lose their pension benefits. In light of the remedial purpose underlying ERISA, appellants argue that section 1461(b) must be construed to provide expansive relief. Appellants therefore contend that section 1461(b) requires PBGC to apply the ceased to accrue test and allow window period coverage when, as here, any pension benefits accrued during the window period. If no pension benefits accrued during the window period, appellants contend that PBGC still has discretion to extend coverage pursuant to the other reasonable basis test. Because PBGC allegedly ignored the ceased to accrue test and relied exclusively on the other reasonable basis test, appellants argue that PBGC was arbitrary and capricious in its interpretation of section 1461(b). 16 We are not persuaded by appellants' argument. PBGC's interpretation of ERISA is entitled to great deference. See United Steelworkers of America v. Harris & Sons Steel Co., 706 F.2d 1289, 1296 (3d Cir.1983); Concord Control, Inc. v. International Union, UAW, 647 F.2d 701, 704 (6th Cir.), cert. denied, 454 U.S. 1054, 102 S.Ct. 599, 70 L.Ed.2d 590 (1981); Connolly v. PBGC, 581 F.2d 729, 730 (9th Cir.1978), cert. denied, 440 U.S. 935, 99 S.Ct. 1278, 59 L.Ed.2d 492 (1979). We do not rely solely on great deference here, however, because PBGC's interpretation of section 1461(b) was consistent with the plain language of ERISA. 17 Our starting point for determining whether PBGC properly interpreted section 1461(b) is, of course, the language of the statute itself. See March v. United States, 506 F.2d 1306, 1313 & n. 26 (D.C.Cir.1974). If the statutory language is plain and admits of no more than one meaning, the duty of interpretation does not arise, and the rules which are to aid doubtful meanings need no discussion. Id. at 1313 (quoting Caminetti v. United States, 242 U.S. 470, 485, 37 S.Ct. 192, 194, 61 L.Ed. 442 (1917)). Section 1461(b) is phrased unambiguously in the disjunctive. PBGC is authorized to determine whether the Georgia-Pacific Pension Plan terminated during the window period on the basis of the date on which benefits ceased to accrue or on any other reasonable basis consistent with the purposes of this subsection. 29 U.S.C. Sec. 1461(b) (emphasis added). The statute clearly accords to PBGC the discretion to use the other reasonable basis test so long as the test is consistent with the purposes of section 1461(b). 18 PBGC's use of the other reasonable basis test here was consistent with the purposes of section 1461(b). An obvious purpose of this section is to provide insurance coverage retroactively for eligible pension plans. Another purpose, however, is to promote low insurance premiums. 4 Although Congress was concerned in ERISA with protecting employees' expectations of pension benefits, Congress also realized that employers would neither create nor maintain pension plans if ERISA imposed too much cost. Consequently, the entire statute is a finely tuned balance between protecting pension benefits for employees while limiting the cost to employers. A-T-O, Inc. v. PBGC, 634 F.2d 1013, 1021 (6th Cir.1980). Because PBGC's use of the other reasonable basis test here was consistent with maintaining insurance premium rates at the lowest practicable level, PBGC complied with the plain meaning of section 1461(b). 5 19 We are mindful of the principle that remedial statutes are to be liberally construed to effectuate their purpose. See International Union, UAW v. Marshall, 584 F.2d 390, 396 (D.C.Cir.1978). That principle, however, does not give the judiciary license, in interpreting a provision, to disregard entirely the plain meaning of the words used by Congress. Symons v. Chrysler Corp. Loan Guarantee Board, 670 F.2d 238, 241 (D.C.Cir.1981). If Congress had intended that PBGC always use the ceased to accrue test in making window period coverage decisions, that intention would be manifest in the statutory language. 6 We find no evidence that section 1461(b) requires PBGC to use the ceased to accrue test when deciding the eligibility of pension plans seeking window period coverage. Instead, section 1461(b) gives PBGC discretion to use the other reasonable basis test so long as PBGC adheres to the purposes of section 1461(b). Here, PBGC adhered to an express statutory purpose and complied with the statute's plain language. We therefore reject appellants' argument that PBGC's decision to use the other reasonable basis test was arbitrary, capricious, and an abuse of discretion. 7 20
21 PBGC decided, pursuant to its application of the other reasonable basis test, that the Georgia-Pacific Pension Plan terminated before July 1, 1974. Appellants contend that this decision was arbitrary and capricious. Appellants emphasize that two Portage plant employees worked in the plant and accrued pension benefits from July 1 to July 4, 1974. Twelve employees received vacation pay after July 1, 1974 for vacation time earned before that date. Nine employees received shortage accrued vacation pay after July 1, 1974. 8 Appellants argue that these events demonstrate that the plan did not terminate before July 1, 1974. 22 Our standard of review is governed by the Administrative Procedure Act, which requires us 23 to strike agency action, findings and conclusions that we find to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law .... This standard of review ... presumes agency action to be valid. Moreover, it forbids the court's substituting its judgment for that of the agency, and requires affirmance if a rational basis exists for the agency's decision. 24 Ethyl Corp. v. Environmental Protection Agency, 541 F.2d 1, 34 (D.C.Cir.1976) (en banc) (quoting Administrative Procedure Act, 5 U.S.C. Sec. 706(2)(A) (citations and footnotes omitted). In applying this standard, we must consider whether PBGC's determination that the pension plan terminated before the window period was based on a consideration of the relevant factors and whether there has been a clear error of judgment. Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., 419 U.S. 281, 285, 95 S.Ct. 438, 441, 42 L.Ed.2d 447 (1974) (quoting Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 823, 28 L.Ed.2d 136 (1971)). 25 PBGC considered the following factors in determining that the Georgia-Pacific Pension Plan terminated before July 1, 1974: (1) the date of termination set by the Plan Administrator, (2) the number of participants for whom benefits continued to accrue and the length of time over which those benefits accrued, (3) the date work terminated for the participants, (4) the date employer contributions ceased, (5) the type of work performed for which pension benefits accrued, and (6) the accrual of holiday or vacation benefits. J.A. at 596-97. We find these factors are eminently relevant to a determination of when the pension plan terminated. 9 26 In applying these factors, 10 PBGC found that the pension plan terminated before the window period based on the de minimis participation by appellants in the plan after June 30, 1974. The facts revealed that Georgia-Pacific announced in March 1974 that the Portage plant would close by June 30, 1974; the plant ceased production operations in June 1974; all but two employees were terminated by June 30, 1974; these two employees worked only three days in July, and their work consisted entirely of plant shutdown operations; except for these two employees, Georgia-Pacific made neither contributions to the pension plan nor vacation payments to appellants for work performed after June 30, 1974. J.A. at 29, 106, 593. In light of these facts, we cannot say that PBGC committed a clear error of judgment in deciding that the plan terminated before the window period. Accordingly, we find that PBGC was not arbitrary and capricious in deciding that the plan terminated before July 1, 1974. 27
28 Appellants contend that PBGC abused its discretion in failing to promulgate rules governing the eligibility of pension plans seeking window period coverage. Relying on SEC v. Chenery Corp., 332 U.S. 194, 202-03, 67 S.Ct. 1575, 1580, 91 L.Ed. 1995 (1947), appellants aver that agencies are restricted in their ability to make case-by-case determinations to one of three situations: (1) where the agency must solve a problem that it could not reasonably foresee; (2) where the agency has insufficient experience with a problem to warrant rigidifying its tentative judgment into a rule; and (3) where the problem is so specialized that it cannot be captured within the boundaries of a rule. Brief for Appellants at 49-50. Appellants assert that the instant case fits none of these situations, and therefore PBGC was arbitrary and capricious in its failure to promulgate rules. 11 29 Although an agency is not unfettered in its choice of whether to proceed by general rule or by case-by-case determination, that choice ... is one that lies primarily in the informed discretion of the administrative agency. Chenery, 332 U.S. at 203, 67 S.Ct. at 1580. We believe that PBGC was justified in choosing a case-by-case approach for window period determinations. 30 PBGC came into existence on September 2, 1974 charged with the responsibility of administering a complex and novel pension plan insurance program. One of PBGC's challenges was the task of processing window period claims. Because the filing of window period claims was limited to the two-month period between September 2 and October 31, 1974, 29 U.S.C. Sec. 1461(b)(4), only about 200 claims were filed. PBGC chose to process this finite number of claims on a case-by-case basis. In view of the limited utility of a window period regulation, the demand for immediate disposition of window period claims, and the fact that appellants were afforded ample opportunity to present information to PBGC concerning their claim, we find that PBGC did not abuse its discretion in choosing to make window period decisions on a case-by-case basis. See generally A-T-O, Inc. v. PBGC, 634 F.2d 1013, 1023-24 (6th Cir.1980). 31