Special Financial Assistance by PBGC-Withdrawal Liability Condition Exception (rule, 88 FR 4900, January 26, 2023)
Summary
A final rule of the Pension Benefit Guaranty Corporation (PBGC), "Special Financial Assistance by PBGC—Withdrawal Liability Condition Exception" (RIN 1212–AB53), printed in the Federal Register of Thursday, January 26, 2023 (Vol. 88, No. 17). PBGC amends its special financial assistance regulation at 29 CFR Part 4262 to add an exception process for the conditions relating to withdrawal liability. The rule recounts that on July 8, 2022, PBGC issued a final rule changing the special financial assistance (SFA) program and requested comments on the condition requiring a phased recognition of SFA in a plan's determination of withdrawal liability. The rule is effective on January 26, 2023. The same pages also print a Federal Aviation Administration amendment to 14 CFR part 71 establishing RNAV route T–465.
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Cite this document
“Special Financial Assistance by PBGC-Withdrawal Liability Condition Exception (rule, 88 FR 4900, January 26, 2023).”
Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/special-financial-assistance-by-pbgc-withdrawal-liability-condition-ex-7182cb6285/
, SHA-256 17283e8604e98b56f23a1893c6f5083d62aa42ac2abbe5a283f8445d2c322a9d.Full text
4900 Federal Register / Vol. 88, No. 17 / Thursday, January 26, 2023 / Rules and Regulations
economic impact on a substantial aircraft in a defense area, or to, within, List of Subjects in 14 CFR Part 71
number of small entities under the or out of the United States through a Airspace, Incorporation by reference,
criteria of the Regulatory Flexibility Act. designated Air Defense Identification Navigation (air).
Environmental Review Zone (ADIZ) (14 CFR part 99, Security
Control of Air Traffic); authorizations The Amendment
The FAA has determined that this for operation of moored balloons,
action of establishing RNAV route T– In consideration of the foregoing, the
moored kites, amateur rockets, and Federal Aviation Administration
465 between the Des Moines, IA,
unmanned free balloons (see 14 CFR amends 14 CFR part 71 as follows:
VORTAC and the NITZR, MN, WP
qualifies for categorical exclusion under part 101, Moored Balloons, Kites,
Amateur Rockets and Unmanned Free PART 71—DESIGNATION OF CLASS A,
the National Environmental Policy Act B, C, D, AND E AIRSPACE AREAS; AIR
(42 U.S.C. 4321 et seq.) and its Balloons); and, authorizations of
parachute jumping and inspection of TRAFFIC SERVICE ROUTES; AND
implementing regulations at 40 CFR part
parachute equipment (see 14 CFR part REPORTING POINTS
1500, and in accordance with FAA
Order 1050.1F, Environmental Impacts: 105, Parachute Operations). As such,
■ 1. The authority citation for 14 CFR
Policies and Procedures, paragraph 5– this action is not expected to result in part 71 continues to read as follows:
6.5a, which categorically excludes from any potentially significant
further environmental impact review environmental impacts. In accordance Authority: 49 U.S.C. 106(f), 106(g); 40103,
40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR,
rulemaking actions that designate or with FAA Order 1050.1F, paragraph 5– 1959–1963 Comp., p. 389.
modify classes of airspace areas, 2 regarding Extraordinary
airways, routes, and reporting points Circumstances, the FAA has reviewed § 71.1 [Amended]
(see 14 CFR part 71, Designation of this action for factors and circumstances ■ 2. The incorporation by reference in
Class A, B, C, D, and E Airspace Areas; in which a normally categorically 14 CFR 71.1 of FAA Order JO 7400.11G,
Air Traffic Service Routes; and excluded action may have a significant Airspace Designations and Reporting
Reporting Points); and, 5–6.5b, which environmental impact requiring further Points, dated August 19, 2022, and
categorically excludes from further analysis. The FAA has determined that effective September 15, 2022, is
environmental impact review actions no extraordinary circumstances exist amended as follows:
regarding establishment of jet routes and that warrant preparation of an
Federal airways (see 14 CFR 71.15, Paragraph 6011 United States Area
environmental assessment or Navigation Routes.
Designation of jet routes and VOR
environmental impact study.
Federal airways); operation of civil * * * * *
T–465 Des Moines, IA (DSM) to NITZR, MN [New]
Des Moines, IA (DSM) VORTAC (Lat. 41°26′15.45″ N, long. 093°38′54.81″ W)
RRAZZ, IA WP (Lat. 43°17′00.00″ N, long. 093°33′05.00″ W)
DEMLL, MN WP (Lat. 43°57′55.00″ N, long. 093°29′29.00″ W)
NITZR, MN WP (Lat. 44°11′10.48″ N, long. 093°27′57.86″ W)
* * * * * pursuant to the American Rescue Plan SUPPLEMENTARY INFORMATION:
Issued in Washington, DC, on January 20, (ARP) Act of 2021, and provided a 30-
Executive Summary
2023. day comment period on the condition
requiring a phased recognition of On July 9, 2021, the Pension Benefit
Brian Konie,
special financial assistance in a plan’s Guaranty Corporation (PBGC) issued an
Acting Manager, Airspace Rules and interim final rule with a request for
Regulations. determination of withdrawal liability.
PBGC is amending its special financial comment, adding to its regulations a
[FR Doc. 2023–01458 Filed 1–25–23; 8:45 am]
assistance regulation to add an new part 4262 to implement the
BILLING CODE 4910–13–P requirements under section 9704 of the
exception process for the conditions
relating to withdrawal liability. American Rescue Plan Act of 2021,
DATES: This final rule is effective on ‘‘Special Financial Assistance Program
PENSION BENEFIT GUARANTY January 26, 2023. for Financially Troubled Multiemployer
CORPORATION Plans.’’ 1 On July 8, 2022, PBGC issued
FOR FURTHER INFORMATION CONTACT:
Daniel S. Liebman (liebman.daniel@ a final rule that made changes to the
29 CFR Part 4262 special financial assistance (SFA)
pbgc.gov; 202–229–6510), Deputy
RIN 1212–AB53 General Counsel, Program Law and program and requested comments on
Policy Department, Hilary Duke the condition requiring a phased
Special Financial Assistance by recognition of SFA in a plan’s
(duke.hilary@pbgc.gov; 202–229–3839),
PBGC—Withdrawal Liability Condition
Assistant General Counsel for determination of withdrawal liability
Exception Regulatory Affairs, or Stephanie Cibinic (July 2022 final rule).2 In response to
(cibinic.stephanie@pbgc.gov; 202–229– comments received, PBGC is adding an
AGENCY: Pension Benefit Guaranty
6352), Deputy Assistant General exception process for certain
Corporation.
Counsel for Regulatory Affairs, withdrawal liability conditions that
ACTION: Final rule; response to apply to a plan that receives SFA.
comments. Regulatory Affairs Division, Office of
PBGC’s legal authority for this
the General Counsel, Pension Benefit
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rulemaking comes from section 4262 of
SUMMARY: The Pension Benefit Guaranty Guaranty Corporation, 445 12th Street
the Employee Retirement Income
Corporation (PBGC) published a final SW, Washington, DC 20024–2101. If you
rule in the Federal Register on July 8, are deaf or hard of hearing or have a 1 The rule was published in the Federal Register
2022, concerning the requirements for speech disability, please dial 7–1–1 to on July 12, 2021, at 86 FR 36598.
special financial assistance applications access telecommunications relay 2 The rule was published in the Federal Register
and related restrictions and conditions services. on July 8, 2022, at 87 FR 40968.
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Federal Register / Vol. 88, No. 17 / Thursday, January 26, 2023 / Rules and Regulations 4901
Security Act of 1974 (ERISA) (Special In the July 2022 final rule, PBGC value of plan assets) as of the end of the
Financial Assistance by the provided for a 30-day comment period plan year before the employer’s
Corporation), which requires PBGC to solely on the condition requiring a withdrawal, or as otherwise provided
issue regulations or guidance setting phased recognition of SFA in a plan’s under section 4211, and (2) annual
forth requirements for SFA applications, determination of withdrawal liability in withdrawal liability payment and
permits PBGC to provide for how SFA § 4262.16(g)(2). PBGC invited comments amortization period under section 4219.
and earnings thereon are to be invested, on whether the condition requiring a
Interest Assumptions for Determining
and permits PBGC, in consultation with phased recognition of SFA in a plan’s
UVBs Under the SFA Regulation
the Secretary of the Treasury, to impose determination of withdrawal liability
reasonable conditions by regulation or strikes the correct balance among Under § 4262.16(g)(1), the interest
other guidance on an eligible stakeholders, or if a different condition assumptions used in determining UVBs
multiemployer plan that receives SFA. might work better. Additionally, PBGC for purposes of calculating withdrawal
PBGC’s legal authority also comes from expressed its interest in hearing from liability under section 4213(c) of ERISA
section 4002(b)(3) of ERISA, which stakeholders about what the expected must be the interest assumptions in
authorizes PBGC to issue regulations to impact of such a condition is likely to appendix B to 29 CFR part 4044. The
carry out the purposes of title IV of be and whether additional clarification prescribed interest assumptions must be
ERISA, and from section 4003(a) of or guidance would be useful. used until the later of: (1) 10 years after
ERISA, which authorizes PBGC to PBGC received six comment letters on the end of the plan year in which the
conduct investigations and audits. the conditions relating to the calculation plan first receives payment of SFA; and
of withdrawal liability. PBGC received (2) the last day of the plan year by
Background one comment letter on permissible which the plan projects that it will
Section 4262 of ERISA creates a investments that was not relevant to the exhaust any SFA assets as determined
program to enhance retirement security request for comments and, under § 4262.4(b) (under which benefits
for millions of Americans by providing consequently, is not discussed in this and expenses are assumed to be paid
SFA to certain financially troubled document. The next section of this exclusively from SFA assets until
multiemployer pension plans upon preamble discusses the conditions exhausted), extended by the number of
application for assistance. Section 4262 under § 4262.16(g), the six comment years, if any, that the first plan year of
of ERISA sets forth the provisions for letters on the conditions relating to the payment is after the plan year that
SFA, including which plans are eligible calculation of withdrawal liability, includes the SFA measurement date.
to apply, the cutoff date for PBGC’s responses to the comments, and The beginning of the 10-year period is
applications, rules relating to actuarial a summary of changes made in this final the last day of the plan year in which
assumptions and PBGC’s determinations rule. the plan receives payment of SFA. For
on applications, and restrictions on the example, if a calendar year plan’s SFA
Conditions Relating to Withdrawal measurement date is in 2022, the plan
use of SFA. It also provides that certain Liability, Public Comments, and PBGC’s
plans with suspended benefits must receives payment of SFA in 2023, and
Responses had projected that it would exhaust SFA
reinstate those benefits prospectively
and provide make-up payments to To ensure that SFA is used to pay assets in 2051, the exhaustion year for
restore previously suspended benefits. benefits and the expenses related to the plan to use the prescribed interest
A plan receiving SFA under section those benefit payments, section assumptions would be 2052 (29 years +
4262 has no obligation to repay SFA. 4262(m)(1) of ERISA expressly 1 year). Under this example, employers
On July 9, 2021, PBGC issued an authorizes PBGC, in consultation with withdrawing before 2054 would have
interim final rule on Special Financial the Secretary of the Treasury, to impose UVBs determined using the prescribed
Assistance by PBGC (29 CFR part 4262). reasonable conditions on an eligible interest rates. While a plan is not
Part 4262 provides guidance to multiemployer plan that receives required to use mass withdrawal
multiemployer pension plan sponsors special financial assistance relating to interest assumptions beyond the
on eligibility for SFA, determining the certain aspects of plan terms or specified period, the regulation does not
amount of SFA, content of an operations. These conditions are preclude the use of settlement rates
application for SFA, the process of described in § 4262.16 and include thereafter to determine withdrawal
applying, PBGC’s review of conditions that relate to withdrawal liability, as otherwise permitted by
applications, restrictions and liability. ERISA.
conditions, and reporting and notice Under sections 4201 through 4225 of
Phased Recognition of SFA Assets
requirements. On July 8, 2022, with the ERISA, when a contributing employer
withdraws from an underfunded Under § 4262.16(g)(2), a plan that
approval of PBGC’s board of directors, receives SFA is required to recognize
PBGC published a final rule multiemployer plan, the plan sponsor
assesses withdrawal liability against the over time the amount of SFA received
implementing changes to the SFA by the plan for the purpose of
program, including changes to the employer. Withdrawal liability
represents a withdrawing employer’s determining the plan’s UVBs for
methodology to calculate SFA, calculating withdrawal liability.
permissible investments for SFA funds proportionate share of the plan’s
unfunded benefit obligations and is an Section 4262.16(g)(2) provides the
(SFA received and any earnings procedures for determining the amount
thereon), the application of conditions important source of income for the plan.
To assess withdrawal liability, the plan of SFA that is phased in for withdrawal
on a plan that merges with a plan that liability purposes each year over the
receives SFA, and the withdrawal sponsor must determine the
withdrawing employer’s (1) allocable projected life of the SFA assets
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liability conditions that apply to a plan (determined as if SFA assets, i.e., SFA
that receives SFA.3 share of the plan’s unfunded vested
benefits (UVBs) (the value of and earnings thereon, are exhausted
3 Under section 4002(a) of ERISA, PBGC is nonforfeitable benefits that exceeds the before other plan assets are used to pay
administered in accordance with policies
benefits and expenses). The applicable
established by its Board of Directors, which is made Department of the Treasury, and the Department of phase-in period runs from the first plan
up of the Secretaries of the Department of Labor, the Commerce. year in which the plan receives payment
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4902 Federal Register / Vol. 88, No. 17 / Thursday, January 26, 2023 / Rules and Regulations
of SFA through the end of the plan year asset is a reasonable condition under expands PBGC’s authority beyond its
by which, according to the plan’s section 4262(m) of ERISA because SFA existing authority under section
projections, it will exhaust any SFA does not result from employer 4002(b)(3) and sections 4201 through
assets. For a plan that received payment contributions, but is a transfer of 4225 of ERISA to regulate withdrawal
of SFA under the terms of the interim taxpayer funds to statutorily eligible liability and authorizes PBGC to provide
final rule and files a supplemented financially distressed plans for the rules that define how SFA should be
application, the first plan year of purpose of enabling these plans to pay treated in the calculation of withdrawal
payment is the year in which it received benefits and expenses. That purpose is liability. The condition in
SFA under the terms of the interim final reflected in sections 4262(j)(1) and § 4262.16(g)(2) reflects the authority
rule. Where a plan’s first plan year of 4262(l) of ERISA. Without the Congress delegated to PBGC to oversee
payment is not the plan year that condition, the payment of SFA could the SFA program and ensure that SFA
includes the plan’s SFA measurement instead result in indirect transfers of is preserved for the payment of benefits
date, the exhaustion year is deferred by SFA to withdrawing employers from and expenses.
the number of years the first plan year plans by reducing their withdrawal One commenter was concerned that
of payment is after the plan year that liability. For a majority of plans that the phased recognition of SFA will not
includes the SFA measurement date. receive SFA, all SFA will be recognized be effective after the first few years
To calculate the amount of SFA assets as a plan asset for withdrawal liability following a plan’s receipt of SFA and
excluded for each plan year during the purposes within 10 years, and because suggested several ways of strengthening
phase-in period, the plan must take the additional SFA will be incorporated the condition. One suggestion was to
total amount of SFA paid to the plan into the determination of withdrawal apply the condition to all plans that
and multiply that by a fraction, the liability each year, the effect of the receive SFA (including plans that have
numerator of which is the number of condition will lessen over time. already applied for and received SFA
years remaining in the phase-in period The phased recognition of SFA as a under the terms of the interim final rule
as of the date that the UVBs are being plan asset is consistent with ERISA, the without requiring that the plan file a
determined, and the denominator is the Internal Revenue Code (the Code), and supplemented application) because
total number of years in the phase-in actuarial practice. It is conceptually contributing employers to these plans
period. For a plan that receives payment similar to the smoothed recognition of should not be treated more favorably in
of SFA under the interim final rule and plan assets for purposes of calculating a the calculation of withdrawal liability
receives a supplemental payment, the plan’s minimum funding requirements. than employers in plans that have not
total amount (payment under the The Department of the Treasury yet been able to apply for SFA.
interim final rule and supplemental regulation at 26 CFR 1.412(c)(2)–1(b) Alternatively, the commenter suggested
payment) will be included in the phased permits multiemployer plans to permitting a plan that received SFA
recognition of SFA assets in ‘‘smooth’’ plan asset values when before August 8, 2022, the option to
determining UVBs for withdrawals determining minimum funding by adopt the condition without having to
occurring in plan years after the plan averaging the value of plan assets over file a supplemented application.
year the supplemental payment is up to 5 years rather than using the Another suggestion was for PBGC to
received by the plan. For withdrawals current fair market value of plan assets. affirm that the amount of excluded SFA
that occur after the date the It is also roughly comparable to the should include the investment return on
supplemented application is filed and gradual recognition of SFA in SFA for each year in the phase-in
before the plan year after the plan year determining minimum funding. Section period. An additional suggestion was to
in which the supplemental payment is 432(k)(2)(D) of the Code requires that apply the condition over the full 30-year
made, only the payment of SFA under SFA be disregarded in determining period that SFA is intended to cover,
the interim final rule is included in the required contributions. Internal but that a compromise might be to
phased recognition of SFA assets. Revenue Service (IRS) Notice 2021–38, amortize the SFA over no fewer than a
As provided in § 4262.16(g)(2)(xv), 2021–30 IRB 155, provides that SFA is stated period of years, such as 20 years.
this condition is applicable to a plan in recognized in the plan’s funding PBGC considered these suggestions
determining withdrawal liability for standard account over time, in that any but decided not to adopt them. PBGC
withdrawals occurring after the plan benefit or plan expense paid from the provided a process in the July 2022 final
year in which the plan receives payment SFA account generates an actuarial gain rule for a plan that receives SFA under
of SFA. However, for a plan that that is amortized over 15 years. the terms of the interim final rule to
received SFA under the terms of the In response to the July 2022 final rule, have the withdrawal liability condition
interim final rule, this condition will three commenters generally supported in § 4262.16(g)(2) apply to the plan. The
not apply unless the plan files a the added withdrawal liability condition applies to a plan in
supplemented application. If the plan condition under § 4262.16(g)(2) or said determining withdrawal liability for a
files a supplemented application, this that the phased recognition of SFA withdrawal occurring on or after the
condition applies to the plan in funds as a plan asset was an date the plan files a supplemented
determining withdrawal liability for improvement over the interim final rule application. The supplemented
withdrawals occurring on or after the that required a plan that received SFA application used for this purpose is not
date the plan files the supplemented to immediately recognize the SFA funds burdensome for a plan to file. Regarding
application. A plan may choose to file as a plan asset. One commenter opposed the amount to be phased-in, PBGC
a supplemented application if it has the condition because of separation-of- provided examples in the July 2022
already received SFA under the terms of powers principles. PBGC disagrees with final rule that make it clear that
the interim final rule. this comment. As explained in the July investment returns are not included in
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Three examples are included in 2022 final rule, Congress chose to the calculation of the amount excluded.
§ 4262.16(g)(2) to illustrate the expressly delegate authority in section PBGC also considered requiring the
procedures for the phased recognition of 4262(m) of ERISA to PBGC to impose condition to cover a longer period of
SFA assets. reasonable conditions on a plan that time, but decided not to adopt this
PBGC determined that requiring receives SFA relating to withdrawal suggestion. A longer period, such as
phased recognition of SFA as a plan liability. This grant by Congress requiring the condition to cover 20 or 30
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Federal Register / Vol. 88, No. 17 / Thursday, January 26, 2023 / Rules and Regulations 4903
years, may not be reasonable for plans consideration of SFA in the calculation identifying, actuarial, and financial
that receive a small amount of SFA and of withdrawal liability for single-owner information described in § 4262.16(g)(3).
the contributing employers to those professional employers and relax the The exception process added by this
plans. condition in § 4262.16(g)(1) requiring final rule is separate from the SFA
Another commenter who supported the use of a specific interest rate application process. A request for an
the phased-recognition of SFA over the assumption. PBGC declines to add an exception from the withdrawal liability
projected payout period recognized that exception for single-owner professional conditions may be submitted to PBGC
the length of that period may vary based employers. The purpose of SFA is to either before the plan’s initial
on characteristics of the SFA-recipient help plans pay for benefits and plan application for SFA is filed or before a
plan. PBGC agrees with this comment. expenses and not to indirectly subsidize revised application is filed. A plan
The condition in § 4262.16(g)(2) is employers to withdraw from these sponsor requesting an exception is
reasonable and appropriate for plans plans. PBGC is not making this change encouraged to have a pre-submission
because it applies only through the end because if PBGC provided an exception consultation with PBGC.
of the plan year by which each plan for a special class, such as, single-owner When an application for SFA is
projects it will exhaust SFA assets. professional employers, it would prepared, a plan is required to take into
Some of the suggestions made by subsidize the withdrawal of these account plan assets in determining the
commenters are beyond the scope of employers rather than discourage amount of requested SFA. Under
this rulemaking. For example, one employer withdrawal. § 4262.4(c)(4), this includes withdrawal
commenter suggested that PBGC impose Another commenter requested that liability payments made and expected to
a condition so that an employer that has PBGC grant exceptions from or be made to the plan during the SFA
an obligation to contribute to a plan for modifications to the withdrawal liability coverage period taking into account a
work performed in the building and conditions under § 4262.16(g)(1) and (2) reasonable allowance for amounts
construction industry that ceases for plans that have unique facts and considered uncollectible. Accordingly,
operations or transfers operations circumstances, such as a plan that uses if a plan sponsor submits a request for
outside the jurisdiction of its collective an alternative withdrawal liability an exception from the withdrawal
bargaining unit will incur withdrawal liability conditions, the plan’s
allocation method, if applying the
liability. Under section 4203(b) of application for SFA must take the
condition to the plan would result in a
ERISA, such employers are not exception into account in the
lower assessment of withdrawal
considered to have withdrawn from the determination of the withdrawal
liability, thereby incentivizing
plan. liability payments expected to be made
Two commenters requested that PBGC contributing employers to withdraw.
After considering the comment, PBGC to the plan and the amount of requested
review the impact on the assessment of SFA.
withdrawal liability when a plan that determined that adding a process for a
receives SFA is deemed to be in critical plan to request an exception from the Compliance With Rulemaking
status through 2051. Under the withdrawal liability conditions in Guidelines
Multiemployer Pension Reform Act of § 4262.16(g)(1) and (2) under narrow
circumstances is reasonable. The Administrative Procedure Act
2014, critical status plans must ignore
certain contribution increases in conditions on withdrawal liability are As described in the July 2022 final
calculating UVBs and withdrawal intended to ensure that SFA is rule, PBGC’s adoption of a condition
liability. One of these commenters preserved for the payment of benefits requiring a phased recognition of SFA
suggested that PBGC add a condition to and expenses and not used to subsidize in a plan’s determination of withdrawal
require plans that receive SFA to employer withdrawals. If application of liability under § 4262.16(g)(2) is
include contribution increases under a the conditions would result in an consistent with PBGC’s statutory
rehabilitation plan for withdrawal increase in employer withdrawals, the authority to impose reasonable
liability purposes. This issue raises plan would be negatively impacted and conditions on plans that receive SFA
interpretive issues about sections the purpose of the conditions would not under section 4262(m) of ERISA. It is
305(g)(3), 305(d)(1)(B), and 305(f)(1)(B) be met. Accordingly, PBGC is adding also more effective, along with the other
of ERISA over which the Secretary of § 4262.16(g)(3), which provides a conditions, for achieving the intended
the Treasury has interpretive process for a plan sponsor to request purposes of that statutory authority—to
jurisdiction pursuant to section 101 of approval from PBGC for an exception help enable plans that receive SFA to
Reorganization Plan No. 4 of 1978 (5 from the withdrawal liability conditions pay benefits due through 2051 and to
U.S.C. App.). PBGC is continuing to in § 4262.16(g)(1) and (2) under specific preclude or disincentivize plans and
examine these issues with the circumstances. employers from taking actions that have
Department of the Treasury and, if Under the exception process, a plan the potential to accelerate plan
appropriate, may issue additional sponsor may request an exception from insolvencies. This condition was
guidance. the withdrawal liability conditions by adopted after consideration of
demonstrating to the satisfaction of comments received on the withdrawal
Exceptions From Withdrawal Liability PBGC that the exception lessens the risk liability condition requiring the use of
Conditions of loss to plan participants and specified interest assumptions included
PBGC received two comment letters beneficiaries and does not increase in the interim final rule. PBGC provided
requesting exceptions from the expected employer withdrawals. The for a comment period of 30 days on the
withdrawal liability conditions. One plan sponsor must also demonstrate that new withdrawal liability condition in
commenter requested an exception for the exception does not increase the § 4262.16(g)(2) because it is an area of
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single-owner professional employers amount of the plan’s SFA or complexity that PBGC recognized may
stating that the phase-in of SFA does not unreasonably increase PBGC’s risk of benefit from additional public comment.
provide sufficient relief from the loss. A request for PBGC approval of an PBGC noted this additional opportunity
withdrawal liability such employers exception must be submitted by the for public comment on the condition
could be assessed. The commenter plan sponsor or its duly authorized would allow PBGC to assess the
proposed that PBGC provide for full representative and must contain effectiveness of the withdrawal liability
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4904 Federal Register / Vol. 88, No. 17 / Thursday, January 26, 2023 / Rules and Regulations
condition, consider adjustments or rule would be contrary to the interests adversely affects in a material way a
changes, and determine whether more of the plan’s participants and sector of the economy, productivity,
clarification is needed regarding the beneficiaries and could cause a delay in competition, jobs, the environment,
condition or the mechanics of the submission of the plan’s application public health or safety, or State, local or
implementation. The preamble to the and the plan’s receipt of SFA. tribal governments or communities (also
July 2022 final rule provided that to the Accordingly, PBGC has determined that referred to as economically significant);
extent PBGC determines that the public interest is best served by (2) creates serious inconsistency or
adjustments or changes to the issuing this final rule expeditiously, otherwise interferes with an action
withdrawal liability condition are without further opportunity for notice taken or planned by another agency; (3)
appropriate and authorized, or that and comment, and that good cause materially alters the budgetary impacts
further clarification is needed, PBGC exists for making the exception process of entitlement grants, user fees, or loan
would revise the condition accordingly. set forth in this amendment effective programs, or the rights and obligations
As discussed earlier in the preamble, less than 30 days after publication. of recipients thereof; or (4) raises novel
in response to this comment PBGC is making this rule effective on legal or policy issues arising out of legal
solicitation, PBGC received comments January 26, 2023. mandates, the President’s priorities, or
on the phase-in condition in the principles set forth in the E.O.
§ 4262.16(g)(2) as well as on the Congressional Review Act
OMB has determined that this final
condition requiring the use of specified Pursuant to Subtitle E of the Small rule is economically significant under
interest assumptions in § 4262.16(g)(1). Business Regulatory Enforcement section 3(f)(1) and has therefore
Following consideration of these Fairness Act of 1996 (also known as the reviewed this rule under E.O. 12866.
comments, PBGC determined that it Congressional Review Act or CRA) (5 E.O. 13563 supplements and reaffirms
would be appropriate to provide a U.S.C. 801 et seq.), the Office of the principles, structures, and
process for plans to apply for an Management and Budget (OMB) has definitions governing contemporary
exception to the conditions in designated this final rule as a ‘‘major regulatory review that were established
§ 4262.16(g)(1) and (2), that would be rule,’’ as defined by 5 U.S.C. 804(2)(a), in E.O. 12866, emphasizing the
available where application of the which is a rule likely to result in an importance of quantifying both costs
conditions would result in an increase annual effect on the economy of $100 and benefits, reducing costs,
in employer withdrawals. Enabling a million or more. Section 808(2) of the harmonizing rules, and promoting
plan to apply for an exception from the CRA provides that, notwithstanding the flexibility. It directs agencies to assess
withdrawal liability conditions based on effective date of a major rule defined the costs and benefits of available
the specific facts and circumstances of under section 801, any rule which an regulatory alternatives and, if regulation
the plan will provide flexibility to agency for good cause finds that notice is necessary, to select regulatory
ensure that the statutory purposes of and public procedure thereon are approaches that maximize net benefits
SFA to pay for benefits and impracticable, unnecessary, or contrary (including potential economic,
administrative expenses, as described to the public interest, shall take effect at environmental, and public health and
earlier in this preamble, are met. such time as the Federal agency
The Administrative Procedure Act safety effects, distributive impacts, and
promulgating the rule determines. This equity).
provides at 5 U.S.C. 553(b) that notice good cause justification supports waiver
and comment requirements do not PBGC has provided an assessment of
of the 60-day delayed effective date for the potential benefits, costs, and
apply when an agency, for good cause, major rules under the CRA.
finds that they are impracticable, transfers associated with the final rule.
Because of the urgent need for the
unnecessary, or contrary to the public SFA program to distribute appropriate (2) Estimated Impact of Regulatory
interest. An exception is also provided financial assistance to eligible plans Action
at 5 U.S.C. 553(d)(3) to the requirement quickly, PBGC has determined that this
of a 30-day delay before the effective As discussed earlier in the preamble,
final rule must take effect January 26, PBGC published a final rule on July 8,
date of a rule ‘‘for good cause found and 2023. As described earlier in the
published with the rule.’’ As described 2022, to modify its regulations under
preamble, this effective date allows part 4262, which implement the
in PBGC’s interim final rule and July eligible plans to apply for an exception
2022 final rule, Congress expressed a requirements under ARP. It is through
from the withdrawal liability conditions this program that PBGC is providing
clear urgency for PBGC to implement an and apply for SFA without unnecessary
SFA program to get appropriate SFA to eligible multiemployer pension
delay. Under the circumstances, PBGC plans from a fund established by ARP
assistance to eligible plans as quickly as
has determined that public interest is for SFA purposes and credited with
possible. Congress authorized PBGC to
best served by making this final rule transfers from the general fund of the
prioritize the filing of applications for
effective on January 26, 2023. PBGC Department of the Treasury.
eligible plans with the greatest need,
does not want to unduly delay In the Regulatory Impact Analysis of
during the first 2 years after March 11,
providing financial assistance to plans. the July 2022 final rule, PBGC provided
2021, and PBGC provided for such a
process. PBGC is receiving and Regulatory Impact Analysis estimates of the transfer amounts of the
processing applications filed by these SFA program using Multiemployer
(1) Relevant Executive Orders and Pension Insurance Modeling System
plans. Under this final rule, a plan
eligible for SFA may apply for an Regulatory Impact Analysis (ME–PIMS), PBGC’s stochastic modeling
exception to the withdrawal liability Under Executive Order (E.O.) 12866, tool. The aggregate SFA was estimated
conditions before the plan files its SFA OMB reviews any regulation determined to be approximately $82.3 billion in
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application. It is in the interest of a plan to be a ‘‘significant regulatory action.’’ assistance payments paid to
eligible to apply during the priority Section 3(f) of E.O. 12866 defines a approximately 200 plans and $150
period to be able to determine if the ‘‘significant regulatory action’’ as an million to PBGC to administer the SFA
plan should apply for an exception to action that is likely to result in a rule program. PBGC further estimated that
the withdrawal liability conditions. Any that: (1) has an annual effect on the plans that received financial assistance
delay in the effective date of the final economy of $100 million or more, or from PBGC under section 4261 of ERISA
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Federal Register / Vol. 88, No. 17 / Thursday, January 26, 2023 / Rules and Regulations 4905
in the form of loans will repay PBGC in information, previously approved under PART 4262—SPECIAL FINANCIAL
aggregate approximately $385 million. control number 1212–0074, to the Office ASSISTANCE BY PBGC
The addition of § 4262.16(g)(3), to of Management and Budget (OMB) for
provide plans with an exception process review and approval under the ■ 1. The authority citation for part 4262
for the withdrawal liability conditions is Paperwork Reduction Act. OMB’s continues to read as follows:
expected in rare circumstances to decision regarding this information Authority: 29 U.S.C. 1302(b)(3), 1432.
impact the assumptions selected by the collection request will be available at
plan for projecting future withdrawal ■ 2. In § 4262.16, add paragraph (g)(3) to
www.Reginfo.gov. An agency may not
liability payments and ongoing conduct or sponsor, and a person is not read as follows:
employer contributions for purposes of required to respond to, a collection of § 4262.16 Conditions for special financial
determining the SFA amount in the information unless it displays a assistance.
plan’s application. In the absence of an currently valid OMB control number. * * * * *
exception process under § 4262.16(g)(3), Under § 4262.16(g)(3), PBGC is adding (g) * * *
some plans may expect an increase in a request for a determination from PBGC (3) Request for exception. The plan
employer withdrawals and a decrease in for approval of an exception from the sponsor of a plan eligible for special
employer contributions following withdrawal liability conditions under financial assistance may request
receipt of SFA. Consequently, without § 4262.16(g)(1) and (2). PBGC estimates approval from PBGC for an exception
the exception, these plans would be that, beginning in 2023, it will receive from the conditions under paragraphs
expected to incorporate these an average of only one request per year (g)(1) and (2) of this section by
anticipated employer withdrawals into with an average annual hour burden of demonstrating to the satisfaction of
their withdrawal liability payment 8 hours and an average annual cost PBGC that the exception lessens the risk
assumption, which could increase the burden of $25,000. In addition, under of loss to plan participants and
SFA requested in their applications. the circumstances described in beneficiaries and does not increase
Although this circumstance would be § 4262.16(d), (f), and (h), a plan sponsor
expected to be limited to very few plans, expected employer withdrawals. The
may file a request for a determination plan sponsor must also demonstrate to
PBGC estimates that the addition of from PBGC for approval of an exception
§ 4262.16(g)(3) could decrease overall the satisfaction of PBGC that the
from SFA conditions relating to exception does not increase the amount
SFA program transfers by $1 to $2 reductions in contributions, transfers or
billion. of the plan’s special financial assistance
mergers, and settlement of withdrawal or unreasonably increase PBGC’s risk of
As discussed earlier in the preamble, liability. PBGC estimates that beginning
PBGC considered regulatory alternatives loss. A request for PBGC approval of an
in 2023, PBGC will receive an average exception must be submitted by the
based on the public comments provided of 2.2 requests per year for these
during the 30-day comment period on plan sponsor, or its duly authorized
additional determinations. PBGC needs representative, either before an initial
the withdrawal liability condition in the information required for a request
§ 4262.16(g)(2) included in the July 2022 application or before a revised
for determination to determine whether application for special financial
final rule. Under one such regulatory to approve an exception from each of
alternative, PBGC considered extending assistance is filed by the plan, and must
the specified conditions of receiving contain all of the following identifying,
the period of time for the phased SFA. PBGC estimates that, beginning in
recognition of SFA in a plan’s actuarial, and financial information:
2023, PBGC will receive an average of (i) Name, address, email, and
determination of withdrawal liability. 3.2 requests per year for all
PBGC decided not to adopt this telephone number of the plan sponsor
determinations. PBGC estimates an and the plan sponsor’s authorized
suggestion because a longer period, such average annual hour burden of 15.6
as requiring the condition to cover 20 or representatives, if any.
hours and average annual cost burden of (ii) The nine-digit employer
30 years, may not be reasonable for $44,000.
plans that receive a small amount of identification number (EIN) assigned to
The estimated aggregate average the plan sponsor by the IRS and the
SFA and for the contributing employers
annual hour burden for the next 3 years three-digit plan identification number
to those plans. PBGC also considered
for the information collection in part (PN) assigned to the plan by the plan
leaving the withdrawal liability
4262 is 878.6 hours for employer and sponsor, and, if different, the EIN and
condition unchanged. However, it was
fund office administrative, clerical, and PN last filed with PBGC. If an EIN or PN
decided that the addition of a narrow
supervisory time. The estimated has not been assigned, that should be
exception process under § 4262.16(g)(3)
aggregate average annual cost burden for indicated.
will enhance the ability of plans, based
the next 3 years for the information (iii) Most recent plan document or
on their specific facts and
collection request in part 4262 is restatement of the plan document and
circumstances, to retain employers and
$2,130,400, for approximately 5,326 all subsequent amendments adopted (if
minimize the likelihood that the receipt
contract hours assuming an average any) and most recent Declaration of
of SFA could induce employers to
hourly rate of $400 for work done by Trust.
withdraw from these plans.
outside actuaries and attorneys. The (iv) Administrative manuals and other
Regulatory Flexibility Act actual hour burden and cost burden per documents governing the plan’s
Because PBGC is not publishing a plan will vary depending on plan size assessment or administration of
general notice of proposed rulemaking and other factors. withdrawal liability.
under 5 U.S.C. 553(b), the regulatory List of Subjects in 29 CFR Part 4262 (v) A copy of the most recent actuarial
flexibility analysis requirements of the valuation performed for the plan before
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Regulatory Flexibility Act do not apply. Employee benefit plans, Pension the date of the plan’s submission of a
See 5 U.S.C. 601(2). insurance, Pensions, Reporting and request for approval under this
recordkeeping requirements. paragraph (g)(3), and the actuarial
Paperwork Reduction Act For the reasons set forth in the valuation performed for each of the 2
With this final rule, PBGC is preamble, PBGC is amending 29 CFR plan years immediately preceding the
submitting changes to the collection of part 4262 as follows: most recent actuarial valuation.
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4906 Federal Register / Vol. 88, No. 17 / Thursday, January 26, 2023 / Rules and Regulations
(vi) A copy of the plan actuary’s most DEPARTMENT OF COMMERCE providing, inter alia, that the USPTO
recent certification under section would proceed with the voluntary CLE
305(b)(3) of ERISA, including a detailed Patent and Trademark Office certification in the spring of 2022 (New
description of the assumptions used in Implementation Date for Patent
the certification, and the basis under 37 CFR Part 11 Practitioner Registration Statement and
which they were determined. The Continuing Legal Education
[Docket No. PTO–C–2022–0028]
description must include information Certification, 86 FR 30920). On
about the assumptions used for the RIN 0651–AD62 December 16, 2021, after considering
projection of future contributions, public comments received regarding the
withdrawal liability payments, and Final Rule Eliminating Continuing proposed CLE guidelines, the USPTO
investment returns, and any other Legal Education Certification and published another Federal Register
assumption that may have a material Recognition for Patent Practitioners Notice indefinitely delaying
effect on projections. implementation of the voluntary CLE
(vii) A statement of whether the plan AGENCY: United States Patent and
certification (New Implementation Date
sponsor is requesting an exception from Trademark Office, Department of for Voluntary Continuing Legal
the condition under paragraph (g)(1) or Commerce. Education Certification, 86 FR 71453).
(2) of this section or both and a ACTION: Final rule. After receiving and considering
demonstration of how the proposed stakeholder feedback on the certification
SUMMARY: This final rule adopts, process and possible details regarding
exception lessens the risk of loss to plan
participants and beneficiaries and does without change, an interim final rule implementation, the USPTO determined
not increase expected employer with a request for comments published that it will not implement the voluntary
withdrawals. The statement must also in the Federal Register on November 14, CLE certification program at this time.
include a demonstration that the 2022, that eliminated provisions of the Accordingly, on November 14, 2022, the
exception does not increase the amount Code of Federal Regulations related to USPTO published an interim final rule
of the plan’s special financial assistance voluntary continuing legal education (IFR) eliminating voluntary CLE
or unreasonably increase PBGC’s risk of (CLE) certification and recognition for certification and recognition provisions
loss. registered patent practitioners and from the rules governing practice in
(viii) A list of employers contributing individuals granted limited recognition patent matters before the Office. The IFR
greater than 5 percent of plan to practice in patent matters before the provided an opportunity for interested
contributions in a plan year. United States Patent and Trademark persons to submit comments on or
(ix) A certification by the plan’s Office (USPTO or Office). before December 14, 2022. The USPTO
actuary that the amount of special DATES: Effective Date: February 27, did not receive any comments. Based on
financial assistance that will be 2023. the rationale set forth in the IFR, the
requested in the plan’s application for FOR FURTHER INFORMATION CONTACT: Will USPTO adopts the IFR without change.
special financial assistance will be Covey, Deputy General Counsel and In the future, the Office may
determined assuming the exception will Director for the Office of Enrollment and reconsider CLE reporting for patent
be approved. Discipline (OED Director), at 571–272– practitioners, and nothing in this notice
(x) A detailed statement certified by 4097. is intended to restrict or prohibit such
an enrolled actuary of the effect of the action at a later time.
SUPPLEMENTARY INFORMATION: The
proposed exception, and a
USPTO adopts a final rule amending 37 Discussion of Specific Rules
demonstration for 30 years that the
estimated withdrawal liability payments CFR 11.11(a)(1) and (a)(3) to eliminate The USPTO amends § 11.11 to remove
and contributions with the proposed provisions concerning the voluntary the last sentence in paragraph (a)(1) to
exception exceed the estimated CLE certification for registered patent reflect the elimination of the voluntary
withdrawal liability payments and practitioners and persons granted CLE certification for registered patent
contributions without the proposed limited recognition to practice in patent practitioners and individuals granted
exception. The demonstration must matters before the USPTO under 37 CFR limited recognition to practice in patent
show an aggregate of all withdrawal 11.9. matters before the USPTO under 37 CFR
liability payments and an aggregate of Effective August 3, 2020, 37 CFR 11.9, and to remove the entirety of
all contributions for each year in the 30- 11.11(a)(3) provided that patent paragraph (a)(3).
year period and include representative practitioners could voluntarily certify
completion of CLE to the OED Director Rulemaking Requirements
examples of employer withdrawal
liability payments and contributions. (Setting and Adjusting Patent Fees A. Administrative Procedure Act: This
An individual employer’s withdrawal During Fiscal Year 2020, 85 FR 46932). final rule, without change, removes the
liability assessment reflecting the Section 11.11(a)(1) provided that the provisions that apply to voluntary CLE
proposed exception must be no less OED Director may publish whether each certification for registered patent
than what would be assessed without registered patent practitioner or person practitioners and individuals granted
the proposed exception. granted limited recognition under 37 limited recognition to practice in patent
(xi) Any additional information PBGC CFR 11.9 has voluntarily certified that matters before the USPTO under 37 CFR
determines it needs to review a request they completed the specified amount of 11.9. The changes in this rulemaking
for approval of a proposed exception. CLE in the preceding 24 months. involve rules of agency practice and
On October 9, 2020, the USPTO procedure, and/or interpretive rules. See
* * * * *
published proposed CLE guidelines Perez v. Mortgage Bankers Ass’n, 135 S.
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Issued in Washington, DC. with a request for comments (Proposed Ct. 1199, 1204 (2015) (interpretive rules
Gordon Hartogensis, Continuing Legal Education Guidelines, ‘‘advise the public of the agency’s
Director, Pension Benefit Guaranty 85 FR 64128). The USPTO received construction of the statutes and rules
Corporation. public comments through January 7, which it administers’’) (citations and
[FR Doc. 2023–01415 Filed 1–25–23; 8:45 am] 2021. On June 10, 2021, the USPTO internal quotation marks omitted); Nat’l
BILLING CODE 7709–02–P published a Federal Register Notice Org. of Veterans’ Advocates v. Sec’y of
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- 275,772 bytes
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- Original
- www.govinfo.gov