LegiStorm

Summary:
Highlights

GAO reviewed the Pension Benefit Guaranty Corporation's (PBGC) new rule entitled "Special Financial Assistance by PBGC." GAO found that the interim final rule adds to the regulations of PBGC the requirements under section 9704 of the American Rescue Plan Act of 2021 (ARPA). 

Enclosed is our assessment of PBGC's compliance with the procedural steps required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule. If you have any questions about this report or wish to contact GAO officials responsible for the evaluation work relating to the subject matter of the rule, please contact Shari Brewster, Assistant General Counsel, at (202) 512-6398.





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B-333446

July 26, 2021

The Honorable Patty Murray
Chair
The Honorable Richard Burr
Ranking Member
Committee on Health, Education, Labor, and Pensions
United States Senate

The Honorable Robert C. ?Bobby? Scott
Chairman
The Honorable Virginia Foxx
Ranking Member
Committee on Education and Labor
House of Representatives

Subject:  Pension Benefit Guaranty Corporation:  Special Financial Assistance by PBGC

Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on a major rule promulgated by the Pension Benefit Guaranty Corporation (PBGC) entitled ?Special Financial Assistance by PBGC? (RIN:  1212-AB53).  We received the rule on July 12, 2021.  It was published in the Federal Register as an interim final rule; request for comments on July 12, 2021.  86 Fed. Reg. 36598.  The effective date is July 12, 2021. 

According to PBGC, this interim final rule adds to the regulations of PBGC the requirements under section 9704 of the American Rescue Plan Act of 2021 (ARPA), ?Special Financial Assistance Program for Financially Troubled Multiemployer Plans.?  See generally Pub .L. No.117-2, § 9704, 134 Stat. 4, 190?191 (Sept. 2, 1974) (amending the Employee Retirement Income Security Act of 1974 (ERISA)).  According to PBGC, this program enhances retirement security for millions of Americans by providing eligible multiemployer defined benefit pension plans with special financial assistance (SFA) in the amounts required for the plans to pay all benefits due during the period beginning on the date of payment of SFA through the plan year ending in 2051.

The Congressional Review Act (CRA) requires a 60-day delay in the effective date of a major rule from the date of publication in the Federal Register or receipt of the rule by Congress, whichever is later.  5 U.S.C. §§ 553(b)(3)(B), 801(a)(3)(A).  The 60-day delay in effective date can be waived, however, if the agency finds for good cause that delay is impracticable, unnecessary, or contrary to the public interest, and the agency incorporates a statement of the findings and its reasons in the rule issued.  5 U.S.C. § 808(2).  PBGC stated that the immediate effective date for this interim final rule is necessary based on a mandate under the amendments to ERISA, enacted in ARPA, to issue regulations or guidance setting forth the requirements for SFA applications within 120 days of the date of enactment of ARPA.  According to PBGC, this short statutory deadline will allow eligible plans, particularly plans that are close to insolvency or already insolvent, to begin applying for much needed financial assistance.  Thus, under the circumstances, PBGC has determined that prior notice and comment through the issuance of a notice of proposed rulemaking is impracticable and that the public interest is best served by making this interim final rule effective on July 12, 2021.  PBGC stated further that this good cause justification supports waiver of the 60-day delayed effective date for major rules under CRA.

Enclosed is our assessment of PBGC?s compliance with the procedural steps required by section 801(a)(1)(B)(i) through (iv) of title 5 with respect to the rule.  If you have any questions about this report or wish to contact GAO officials responsible for the evaluation work relating to the subject matter of the rule, please contact Shari Brewster, Assistant General Counsel, at (202) 512-6398.


Shirley A. Jones
Managing Associate General Counsel

Enclosure

cc: Stephanie Cibinic
Deputy Assistant General Counsel
for Regulatory Affairs
Pension Benefit Guaranty Corporation

ENCLOSURE

REPORT UNDER 5 U.S.C. § 801(a)(2)(A) ON A MAJOR RULE
ISSUED BY THE
PENSION BENEFIT GUARANTY CORPORATION
ENTITLED
?SPECIAL FINANCIAL ASSISTANCE BY PBGC?
(RIN:  1212-AB53)

(i) Cost-benefit analysis

The Pension Benefit Guaranty Corporation (PBGC) provided estimates of the cost and benefits of this interim final rule.  PBGC stated that it projects the aggregate amount of special financial assistance (SFA) provided by the program to be approximately $94 billion to more than 200 multiemployer pension plans (plans).  PBGC also stated that PBGC will receive $150 million to administer the SFA program.  PBGC stated further that plans which received financial assistance from PBGC in the form of loans will repay PBGC in aggregate approximately $200 million.  See generally 29 U.S.C. § 1431.

(ii) Agency actions relevant to the Regulatory Flexibility Act (RFA), 5 U.S.C. §§ 603?605, 607, and 609

PBGC stated, because it is not publishing a general notice of proposed rulemaking, the regulatory flexibility analysis requirements of RFA do not apply.  See generally 5 U.S.C. 601(2).

(iii) Agency actions relevant to sections 202?205 of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. §§ 1532?1535

In its submission to us, PBGC indicated that the analysis provided for under the Unfunded Mandates Reform Act is not applicable to this interim final rule.

(iv) Other relevant information or requirements under acts and executive orders

Administrative Procedure Act, 5 U.S.C. §§ 551 et seq.

PBGC has determined that prior notice and comment through the issuance of a notice of proposed rulemaking is impracticable and that the public interest is best served by issuing this interim final rule immediately.  PBGC stated that the compressed statutory timeline for issuing rules, applying for assistance, and processing applications expresses a clear urgency to get appropriate assistance to eligible plans as quickly as possible.  See generally Pub .L. No.117-2, § 9704, 134 Stat. 4, 190?191 (Mar. 11, 2021) (adding section 4262 to the Employee Retirement Income Security Act of 1974).  PBGC also stated that if financial assistance is delayed and plans become insolvent, benefits for participants and beneficiaries will be reduced.  PBGC stated further that for plans already insolvent, any delay will result in participants and beneficiaries having to wait longer to have their benefits reinstated and to receive their make-up payments.

Paperwork Reduction Act (PRA), 44 U.S.C. §§ 3501?3520

PBGC determined that this interim final rule contains information collection requirements under the Act, which it has submitted to the Office of Management and Budget (OMB) for review.  PBGC stated that it estimated the aggregate average annual burden hours for 2021?2023 for the information collection to be 723.20 hours, which means a cost equivalent of $54,240.  PBGC also stated that it estimated the aggregate average annual cost burden for 2021?2023 to be $1,946,600, which means approximately 4,867 contract hours.

Statutory authorization for the rule

PBGC promulgated this interim final rule pursuant to sections 1083, 1302, and 1432 of title 29, United States Code.

Executive Order No. 12866 (Regulatory Planning and Review)

PBGC stated that OMB has determined that this interim final rule is economically significant under the Order.

Executive Order No. 13132 (Federalism)

In its submission to us, PBGC indicated the analysis provided for under this Order is not applicable to this interim final rule.




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