[Federal Register: July 7, 2005 (Volume 70, Number 129)]
[Notices]               
[Page 39349-39350]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07jy05-98]                         

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PENSION BENEFIT GUARANTY CORPORATION

 
Pendency of Request for Exemption From the Bond/Escrow 
Requirement Relating to the Sale of Assets by an Employer Who 
Contributes to a Multiemployer Plan; LA Team Co. LLC

AGENCY: Pension Benefit Guaranty Corporation.

ACTION: Notice of pendency of request.

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SUMMARY: This notice advises interested persons that the Pension 
Benefit Guaranty Corporation has received a request from LA Team Co. 
LLC, for an exemption from the bond/escrow requirement of section 
4204(a)(1)(B) of the Employee Retirement Income Security Act of 1974, 
as amended, with respect to the Major League Baseball Players Benefit 
Plan. Section 4204(a)(1) provides that the sale of assets by an 
employer that contributes to a multiemployer pension plan will not 
constitute a complete or partial withdrawal from the plan if certain 
conditions are met. One of these conditions is that the purchaser post 
a bond or deposit money in escrow for the five-plan-year period 
beginning after the sale. The PBGC is authorized to grant individual 
and class exemptions from this requirement. Before granting an 
exemption the PBGC is required to give interested persons an 
opportunity to comment on the exemption request. The purpose of this 
notice is to advise interested persons of the exemption request and 
solicit their views on it.

DATES: Comments must be submitted on or before August 22, 2005.

ADDRESSES: Comments may be mailed to the Office of the Chief Counsel, 
Pension Benefit Guaranty Corporation, 1200 K Street, NW., Washington, 
DC 20005-4026, or delivered to Suite 340 at the above address. Comments 
also may be submitted electronically through the PBGC's Web site at 
http://www.pbgc.gov/, or by fax to 202-326-4112. The PBGC will make
 all comments available on its Web site, http://www.pbgc.gov/. 
Copies of the comments and the non-confidential portions of the request 
may be obtained by writing to the PBGC's Communications and Public 
Affairs Department at Suite 240 at the above address or by visiting 
that office or calling 202-326-4040 during normal business hours. (TTY 
and TDD users may call the Federal relay service toll-free at 1-800-
877-8339 and ask to be connected to 202-326-4040.)

FOR FURTHER INFORMATION CONTACT: Gennice D. Brickhouse, Office of the 
Chief Counsel, Suite 340, 1200 K Street, NW., Washington, DC 20005-
4026, 202-326-4020. (For TTY/TTD users, call the Federal relay service 
toll-free at 1-800-877-8339 and ask to be connected to 202-326-4020.)

SUPPLEMENTARY INFORMATION:

Background

    Section 4204 of the Employee Retirement Income Security Act of 
1974, as amended by the Multiemployer Pension Plan Amendments Act of 
1980, (``ERISA'' or ``the Act''), provides that a bona fide arm's-
length sale of assets of a contributing employer to an unrelated party 
will not be considered a withdrawal if three conditions are met. These 
conditions, enumerated in section 4204(a)(1)(A)-(C), are that--
    (A) the purchaser has an obligation to contribute to the plan with 
respect to the operations for substantially the same number of 
contributions base units for which the seller was obligated to 
contribute;
    (B) the purchaser obtains a bond or places an amount in escrow, for 
a period of five plan years after the sale, an amount equal to the 
greater of the seller's average required annual contribution to the 
plan for the three plan years preceding the year in which the sale 
occurred or the seller's required annual contribution for the plan year 
preceding the year in which the sale occurred (the amount of the bond 
or escrow is doubled if the plan is in reorganization in the year in 
which the sale occurred); and
    (C) the contract of sale provides that if the purchaser withdraws 
from the plan within the first five plan years beginning after the sale 
and fails to pay any of its liability to the plan, the seller shall be 
secondarily liable for the liability it (the seller) would have had but 
for section 4204.
    The bond or escrow described above would be paid to the plan if the 
purchaser withdraws from the plan or fails to make any required 
contributions to the plan within the first five plan years beginning 
after the sale. Additionally, section 4204(b)(1) provides that if a 
sale of assets is covered by section 4204, the purchaser assumes by 
operation of law the contribution record of the seller for the plan 
year in which the sale occurred and the preceding four plan years.
    Section 4204(c) of ERISA authorizes the Pension Benefit Guaranty 
Corporation (``PBGC'') to grant individual or class variances or 
exemptions from the purchaser's bond/escrow requirement of section 
4204(a)(1)(B) when warranted. The legislative history of section 4204 
indicates a Congressional intent that the sales rules be administered 
in a manner that assures protection of the plan with the least 
practicable intrusion into normal business transactions. Senate 
Committee on Labor and Human Resources, 96th Cong., 2nd Sess., S.1076, 
The Multiemployer Pension Plan Amendments Act of 1980: Summary and 
Analysis of Considerations 16 (Comm. Print, April 1980); 128 Cong. Rec. 
S10117 (July 29, 1980). The granting of an exemption or variance from 
the bond/escrow requirement does not constitute a

[[Page 39350]]

finding by the PBGC that a particular transaction satisfies the other 
requirements of section 4204(a)(1).
    Under the PBGC's regulation on variances for sales of assets (29 
CFR Part 4204), a request for a variance or waiver of the bond/escrow 
requirement under any of the tests established in the regulation (Sec.  
4204.12 and 4204.13) is to be made to the plan in question. The PBGC 
will consider waiver requests only when the request is not based on 
satisfaction of one of the four regulatory tests or when the parties 
assert that the financial information necessary to show satisfaction of 
one of the regulatory tests is privileged or confidential financial 
information within the meaning of 5 U.S.C. 552(b)(4) (Freedom of 
Information Act).
    Under Sec.  4204.22 of the regulation, the PBGC shall approve a 
request for a variance or exemption if it determines that approval of 
the request is warranted, in that it--
    (1) Would more effectively or equitably carry out the purposes of 
Title IV of the Act; and
    (2) Would not significantly increase the risk of financial loss to 
the plan.
    Section 4204(c) of ERISA and section 4204.22(b) of the regulation 
require the PBGC to publish a notice of the pendency of a request for a 
variance or exemption in the Federal Register, and to provide 
interested parties with an opportunity to comment on the proposed 
variance or exemption.

The Request

    The PBGC has received a request from the LA Team Co. LLC (the 
``Buyer'') for an exemption from the bond/escrow requirement of section 
4204(a)(1)(B) with respect to its purchase of the Los Angeles Dodgers 
Baseball Team from Los Angeles Dodgers, Inc. (the ``Seller'') on 
February 13, 2004. In the request, the Buyer represents among other 
things that:
    1. The Seller was obligated to contribute to the Major League 
Baseball Players Benefit Plan (the ``Fund'') for certain employees of 
the sold operations.
    2. The Buyer has agreed to assume the obligation to contribute to 
the Fund for substantially the same number of contribution base units 
as the Seller.
    3. The Seller has agreed to be secondarily liable for any 
withdrawal liability it would have had with respect to the sold 
operations (if not for section 4204) should the Buyer withdraw from the 
Fund within the five plan years following the sale and fail to pay its 
withdrawal liability.
    4. The estimated amount of the unfunded vested benefits allocated 
to the Seller with respect to the operations subject to the sale could 
be as high as $32,300,000.
    5. The amount of the bond/escrow established under section 
4204(a)(1)(B) is $2,466,666.67.
    6. The Major League Baseball Clubs (the ``Clubs'') have established 
the Major League Central Fund (the ``Central Fund'') pursuant to the 
Major League Baseball Constitution. Under this agreement, contributions 
to the Fund for all participating employers are paid by the Office of 
the Commissioner of Baseball from the Central Fund on behalf of each 
participating employer in satisfaction of the employer's pension 
liability under the Fund's funding agreement. The monies in the Central 
Fund are derived directly from (i) gate receipts from All-Star games; 
(ii) radio and television revenue from World Series, League 
Championship Series, Division Series, All-Star Games, and (iii) certain 
other radio and television revenue, including revenues from foreign 
broadcasts, regular, spring training and exhibition games.
    7. In support of the waiver request, the requester asserts that:

     ``The Fund is thus funded from revenues which are paid from the 
Central Fund directly to the Fund without passing through the hands 
of any of the Clubs. The revenues of the Central Fund are therefore 
not exclusively or even largely dependent on the financial viability 
of anyone Club. Furthermore, a change in ownership of a Club does 
not affect the obligation of the Central Fund to fund the Fund out 
of the Revenue. Accordingly, the Fund enjoys a substantial degree of 
security with respect to contributions on behalf of the Clubs, and 
as such, approval of this exemption request would not significantly 
increase the risk of financial loss to the Fund.''

    8. A complete copy of the request was sent to the Fund and to the 
Major League Baseball Players Association by certified mail, return 
receipt requested.

Comments

    All interested persons are invited to submit written comments on 
the pending exemption request to the above address. All comments will 
be made a part of the record. The PBGC will make the comments received 
available on its Web site, http://www.pbgc.gov/. Copies of the comments 

and the non-confidential portions of the request may be obtained by 
writing or visiting the PBGC's Communications and Public Affairs 
Department (CPAD) at Suite 240 at the above address or by visiting that 
office or calling 202-326-4040 during normal business hours.

    Issued at Washington, DC, on this 30th of June, 2005.
Vincent K. Snowbarger,
Acting Executive Director.
[FR Doc. 05-13311 Filed 7-6-05; 8:45 am]

BILLING CODE 7708-01-P