Quality Automotive Services, LLC v. Pension Benefit Guaranty Corporation

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
QUALITY AUTOMOTIVE
SERVICES, LLC,
Plaintiff,
v. Civil Action No. 12-1503 (ESH)
PENSION BENEFIT GUARANTY
CORPORATION,
Defendant.
MEMORANDUM OPINION
Plaintiff Quality Automotive Services, LLC (“QAS”) has sued the Pension Benefit
Guaranty Corporation (“PBGC”), challenging its determination of “substantial damage” to the
Freight Drivers and Helpers Local No. 557 Pension Fund as arbitrary and capricious. Before the
Court are plaintiff’s Motion for Summary Judgment (Mar. 13, 2013 [ECF No. 15] (“Pl.’s Mot.”))
and defendant’s Cross-Motion for Summary Judgment (Apr. 12, 2013 [ECF No. 17] (“Def.’s
Mot.”)). For the reasons set forth below, plaintiff’s motion will be denied, and defendant’s
motion will be granted.
BACKGROUND
I. STATUTORY FRAMEWORK
The Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1001 et seq., as
amended by the Multiemployer Pension Plan Amendments Act of 1980 (“MPPAA”), 29 U.S.C.
§§ 1381 et seq., seeks to protect the viability of multiemployer pension plans. It provides that
when a contributing employer withdraws from a multiemployer pension plan, that employer
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owes withdrawal liability in the amount of its share of the plan’s unfunded vested benefits. See
29 U.S.C. § 1381. However, there are a number of exceptions to that rule, including one for
withdrawals from plans that receive contributions primarily from employers engaged in the
trucking industry. See id. § 1383(d). Under this “trucking industry exception,” a withdrawal
occurs—and withdrawal liability is incurred—only if:
(A) an employer permanently ceases to have an obligation to contribute under
the plan or permanently ceases all covered operations under the plan, and
(B) either:
(i) [PBGC] determines that the plan has suffered substantial damage
to its contribution base as a result of such cessation, or
(ii) the employer fails to furnish a bond issued by a corporate surety
company that is an acceptable surety for purposes of section 1112
of this title, or an amount held in escrow by a bank or similar
financial institution satisfactory to the plan, in an amount equal to
50 percent of the withdrawal liability of the employer.
Id. § 1383(d)(3) (emphasis added). The statute goes on to state:
If, after an employer furnishes a bond or escrow to a plan under paragraph
(3)(B)(ii), [PBGC] determines that the cessation of the employer’s obligation to
contribute under the plan (considered together with any cessations by other
employers), or cessation of covered operations under the plan, has resulted in
substantial damage to the contribution base of the plan, the employer shall be
treated as having withdrawn from the plan on the date on which the obligation to
contribute or covered operations ceased, and such bond or escrow shall be paid to
the plan. [PBGC] shall not make a determination under this paragraph more than
60 months after the date on which such obligation to contribute or covered
operations ceased.
Id. § 1383(d)(4) (emphasis added).
II. FACTUAL BACKGROUND
CSX Corporation owns an intermodal railroad loading and unloading facility in Jessup,
Maryland, called the Annapolis Junction Facility. (Administrative Record [ECF Nos. 6-10, 13]
(“AR”) at 1, 1378.) Total Distribution Services, Inc. (“TDI”), a subsidiary of CSX Corporation,
hires subcontractors to operate the facility. (Id. at 1385.) Beginning in August 2005, QAS began
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operating the facility as a subcontractor for TDI. (Id. at 1378, 1385.) QAS signed a collective
bargaining agreement with Freight Drivers and Helpers Local Union No. 557 (“Local 557”) and
employed members of Local 557 at the facility. (Id. at 1, 1378, 1385.) Pursuant to the terms of
the collective bargaining agreement, QAS contributed to the Freight Drivers and Helpers Local
No. 557 Pension Fund (“the Fund”) based on the number of hours worked by its union
employees. (Id. at 1, 1378.)
Effective July 31, 2007, TDI replaced QAS with another subcontractor, Annapolis
Junction Rail Solutions (“AJRS”). (Id. at 1378-79, 2084.) At that time, QAS ceased to have any
obligation to contribute to the Fund. (Id. at 6, 1411, 1379.) As QAS had done, AJRS signed the
Local 557 collective bargaining agreement, hired members of Local 557, and began contributing
to the Fund. (Id. at 1379, 2084.)
On December 3, 2009, the Fund assessed withdrawal liability against QAS in the amount
of $2,045,014. (Id. at 6, 1438, 2081, 2083.) Thereafter, QAS’s parent company, MCS
Properties, LLC, deposited 50% of the assessed withdrawal liability in escrow. (Id. at 6-7 & n.6,
1379, 1758.)
On September 30, 2011, QAS requested a determination from PBGC that its departure
from the Fund had not caused “substantial damage” to the Fund’s contribution base. (Id. at
1378-82.) QAS argued that “its substitution with AJRS did not result in substantial damage to
the Fund’s contribution base because, inter alia, AJRS continued to contribute to the Fund on
behalf of a similar number of employees as QAS did before it.” (Pl.’s Mot. at 9 (citing AR at
1378-82, 2085-143).)
On January 27, 2012, the Fund urged PBGC to reject QAS’s position and to conclude
that QAS’s exit had caused the Fund’s contribution base to suffer substantial damage because
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AJRS’s replacement of QAS as a contributing employer was not the relevant inquiry, but rather,
PBGC should focus on the decline in the overall financial condition of the Fund since 2000. (AR
at 1-25.)
On July 31, 2012, exactly 60 months after QAS ceased its obligation to contribute to the
plan, PBGC determined that “[QAS’s] cessation of covered operations on July 31, 2007,
substantially damaged the contribution base of the Fund.” (Id. at 2075.) The determination
stated that it was based on “the cessation of contributions by both the employer under
consideration and all other employers that have ceased contributing to the plan prior to the date
PBGC’s determination must be made.” (Id.) The determination also noted that in previous such
determinations, PBGC had also considered “the plan’s overall financial health and its benefit
cost structure.” (Id.) PBGC based its determination of substantial damage on numerous
financial metrics of the Fund’s overall health, including the recent decreases in contribution base
units, contributing employers, number of active participants, and ratio of inactive to active
participants, as well as the increase in employers’ annual cost of benefits. (Id. at 2076).
As correctly recognized by plaintiff, there is only one issue presented by this case: did
PBGC correctly determine that QAS’s cessation of covered operations “resulted in substantial
damage” to the Fund’s contribution base? (Pl.’s Mot. at 6 (quoting 29 U.S.C. § 1383(d)(4)).) To
decide this issue of statutory interpretation, the Court must decide whether PBGC’s
determination was arbitrary and capricious and contrary to law under the Administrative
Procedure Act (“APA”), 5 U.S.C. § 706(2)(A), because it relied on the cumulative effect of the
cessations of all withdrawn employers, as opposed to the effect of the cessation of the exiting
employer—QAS. (Pl.’s Mot. at 12-13.)
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LEGAL FRAMEWORK
I. MOTION FOR SUMMARY JUDGMENT
Normally, a motion for summary judgment under Rule 56 shall be granted if the
pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as a matter
of law. Fed. R. Civ. P. 56(a), (c); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247
(1986). “In a case involving review of a final agency action under the [APA], however, the
standard set forth in Rule 56[] does not apply because of the limited role of a court in reviewing
the administrative record.” Sierra Club v. Mainella, 459 F. Supp. 2d 76, 89 (D.D.C. 2006)
(citation omitted). “Under the APA, it is the role of the agency to resolve factual issues to arrive
at a decision that is supported by the administrative record, whereas ‘the function of the district
court is to determine whether or not as a matter of law the evidence in the administrative record
permitted the agency to make the decision it did.’” Id. at 90 (quoting Occidental Eng’g Co. v.
I.N.S., 753 F.2d 766, 769-70 (9th Cir. 1985)).
II. ARBITRARY AND CAPRICIOUS STANDARD
The APA provides that the reviewing court shall set aside an agency action that is found
to be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” or
“in excess of statutory jurisdiction, authority, or limitations.” 5 U.S.C. § 706. An agency action
is “arbitrary and capricious” if “the agency has relied on factors which Congress has not intended
it to consider, entirely failed to consider an important aspect of the problem, offered an
explanation for its decision that runs counter to the evidence before the agency, or is so
implausible that it could not be ascribed to a difference in view or the product of agency
expertise.” Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983).
5
At its core, “to survive arbitrary and capricious review, an agency action must be the product of
reasoned decisionmaking.” Fox v. Clinton, 684 F.3d 67, 74-75 (D.C. Cir. 2012). The arbitrary
and capricious standard of review is highly deferential; the reviewing court will “defer to the
wisdom of the agency, provided its decision is reasoned and rational.” Dillmon v. Nat’l Transp.
Safety Bd., 588 F.3d 1085, 1089 (D.C. Cir. 2009) (citations and quotation marks omitted); see
also Fox, 684 F.3d at 74-75 (review is “fundamentally deferential,” determining only whether
process was “logical and rational” (citing Tripoli Rocketry Ass’n, Inc. v. Bureau of Alcohol,
Tobacco, Firearms, and Explosives, 437 F.3d 75, 77 (D.C. Cir. 2006))).
III. CHEVRON DEFERENCE
As a general rule, when reviewing an agency’s interpretation of the statute which that
agency administers, courts apply the familiar two-part framework announced in Chevron, U.S.A.,
Inc. v. Natural Res. Def. Council, 467 U.S. 837, 842-43 (1984). See Fox, 684 F.3d at 75. In the
first step, the Court asks “whether Congress has directly spoken to the precise question at issue.”
Chevron, 467 U.S. at 842. If the statutory language is unambiguous and “the intent of Congress
is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the
unambiguously expressed intent of Congress.” Id. at 842–43. However, “if the statute is silent
or ambiguous with respect to the specific issue,” the Court will proceed to step two of the
Chevron analysis and ask whether the agency’s interpretation is “permissible.” Id. at 843. At
this step, the interpretation is “given controlling weight unless” it is “manifestly contrary to the
statute.” Id. at 844. The question at this step “is not whether the [plaintiff's] proposed
alternative is an acceptable policy option but whether the [agency action] reflects a reasonable
interpretation of [the statute].” Coal. for Common Sense in Gov't Procurement v. United States,
707 F.3d 311, 317 (D.C. Cir. 2013). As the Supreme Court recently explained, “Chevron thus
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provides a stable background rule against which Congress can legislate: Statutory ambiguities
will be resolved, within the bounds of reasonable interpretation, not by the courts but by the
administering agency.” City of Arlington, Tex. v. F.C.C., 133 S. Ct. 1863, 1868 (2013).
ANALYSIS
I. PBGC’S CONSIDERATION OF THE CUMULATIVE IMPACT OF ALL
EMPLOYER CESSATIONS
Plaintiff’s first argument is that PBGC’s determination was arbitrary and capricious
because it was contrary to the plain language of the statute. (See Pl.’s Mot. at 13-16.)
Specifically, plaintiff claims that the statute requires PBGC to consider “the effect of the
cessation of the exiting employer, not the cumulative effect of the cessations of other employers
to the exclusion of the exiting employer.” (Id. at 14.) Thus, because PBGC acknowledged that it
based its determination on the “cumulative effect of all withdrawn employers rather than the
withdrawal of [QAS specifically]” (AR at 1411), plaintiff asserts that PBGC violated “both the
plain language and intent of the statute.” (Pl.’s Mot. at 15.)
The Court disagrees. As an initial matter, the plain language of the statute is ambiguous
as to what the agency is to consider. First, in section (d)(3), the statute appears to endorse
plaintiff’s view of the issue; that section provides that a withdrawal “only occurs” if the agency
finds that “the plan has suffered substantial damage to its contribution base as a result of such
cessation.” 29 U.S.C. § 1383(d)(3) (emphasis added). That language suggests that the agency
must determine the impact on the plan’s contribution base that is attributable only to the
departure of the exiting employer. However, in the very next section, the statute suggests the
opposite and instructs the agency to treat an employer as having withdrawn from the plan if that
employer’s cessation, “considered together with any cessations by other employers,” has
substantially damaged the plan’s contribution base. Id. § 1383(d)(4). Nowhere does the statute
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explain how these seemingly inconsistent sections are to be reconciled. But at a minimum, the
Court cannot conclude that Congress’ intent is “unambiguously expressed,” Chevron, 467 U.S. at
843, so it must proceed to Chevron’s step two to determine whether the agency’s interpretation is
permissible as a “reasonable interpretation” of the statute. Coal. for Common Sense in Gov't
Procurement, 707 F.3d at 317.
In order to answer this question, the Court must first decide what the agency’s
interpretation of the statute was in this case. Plaintiff contends that PBGC considered the
cumulative effect of all prior employer cessations to the exclusion of the exiting employer. (Pl.’s
Mot. at 14.) However, an examination of the Administrative Record reveals that that is not an
accurate portrayal of what happened. In its determination, PBGC clearly stated that it had
considered “the impact of the cessation of contributions by both the employer under
consideration and all other employers that have ceased contributing to the plan prior to the date
PBGC’s determination must be made.” (AR at 2075 (emphasis added).) PBGC then concluded
that “Quality’s cessation, along with the cessation of all other employers through this date,
substantially damaged the Fund’s contribution base.” (Id. at 2076 (emphasis added).) And
indeed, one of the reasons given for that conclusion was that “Quality was a 3.9% contributor at
the time of its withdrawal in 2007.” (Id.) Thus, while its reasoning could have been more
clearly stated, the determination does reflect consideration of the effect of QAS’s departure on
the contribution base. That conclusion is bolstered by PBGC’s Executive Summary
Memorandum, prepared by the Assistant Chief Counsel and an attorney in the Office of the
Chief Counsel, which sets forth in detail the agency’s rationale for its determination and its
understanding of § 4203(d) of ERISA. (AR at 1437-42.) In that memorandum, a section of the
analysis is entitled “Quality’s Withdrawal,” in which the agency again noted the percentage of
8
the contribution base that QAS accounted for and stated that “the relevant analysis in this case is
whether Quality’s cessation in conjunction with other cessations substantially damaged the
Fund.” (Id. at 1441-42.) In their internal memorandum, the PBGC lawyers also recognized that
[T]he relevant analysis in this case is whether Quality’s cessation in conjunction
with other cessations substantially damaged the Fund. And here, the combined
cessations caused such damage, regardless of the addition of an employer
“replacing” Quality.
The Fund’s declining contribution base and general financial distress demonstrate
the substantial damage imposed by the cessation of Quality and other employers
and direct against applying the trucking exception to the normal imposition of
withdrawal liability.
(AR at 1442.) Moreover, in both that internal memorandum and in the final determination, the
agency considered the financial condition of the Fund from roughly 1999 to 2011, which extends
both prior to and after QAS’s cessation. (See id. at 1439-41, 2075.) Changes to the Fund’s
contribution base occurring after QAS’s cessation in July 2007 could be attributed, at least in
part, to QAS’s departure. In short, PBGC interpreted the statute as requiring it to consider the
cumulative effect of all employer cessations, including QAS.
With that understanding in mind, the Court can comfortably conclude that the agency’s
interpretation of the statute is reasonable. As explained above, section (d)(4) of the statute
clearly instructs the agency to consider the impact of the cessation of the employer in question
“together with any cessations by other employers.” 29 U.S.C. § 1383(d)(4). Thus, far from
being “manifestly contrary to the statute,” Chevron, 467 U.S. at 844, PBGC’s interpretation
represents a reasonable reading of the statute. 1
1
In reaching this conclusion, the Court does not adopt PBGC’s argument that once it has
determined that a fund has been substantially damaged by the withdrawal of one contributing
employer, as PBGC did when U.S.F. Red Star, Inc. (“Red Star”) withdrew in 2009 (see Def.’s
Mot. at 14 (citing AR at 1443-49)), the trucking plan exception no longer applies to future
cessations by other employers. (See Def.’s Mot. at 5; PBGC’s Response to Plaintiff’s Motion for
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II. CONSISTENCY WITH PRIOR AGENCY PRECEDENT
QAS next argues that PBGC’s determination was arbitrary and capricious because it
improperly departed, without explanation, from prior agency precedent. (Pl.’s Mot. at 16-17.)
Specifically, QAS claims that PBGC deviated from its prior opinions relating to the trucking
industry exception in two ways: (1) by pursuing a “cumulative only” approach rather than
directly analyzing the impact of QAS’s cessation; and (2) by expanding the time period during
which other employers’ cessations were considered. (See id. at 18.) The Court disagrees that
either of these approaches represents a departure from the agency’s prior precedents.
With respect to the “cumulative only” approach, the Court concludes that PBGC has been
consistent in its consideration of other employers’ cessations. Prior to this determination, PBGC
has issued four other determinations regarding “substantial damage” to a plan under the trucking
industry exception. See Determination of Substantial Damage with Respect to Cessation of
Contributions by DeHart Motor Lines, Inc., and United News Transp. Co. to Trucking
Summary Judgment, Apr. 12, 2013 [ECF No. 16] (“Def.’s Opp’n”) at 4.) This interpretation
does not appear to have any support in the statute, but more importantly, this rationale was not
relied on by the agency at the time it issued its determination. A reviewing court “may not
accept appellate counsel’s post hoc rationalizations for agency action.” State Farm, 463 U.S. at
50. Instead, “an agency’s action must be upheld, if at all, on the basis articulated by the agency
itself.” Id.Nonetheless, as a practical matter, PBGC’s argument regarding the inapplicability of the trucking
plan exception once there is a prior finding of substantial damage by the withdrawal of one
contributing employer would produce the same outcome as the one reached here. In 2009,
PBGC determined that Red Star’s departure, together with other previous cessations, had
substantially damaged the Fund. (AR at 1443-49.) Then, a mere three years later, PBGC
undertook to determine whether QAS’s cessation, together with those same previous
cessations—including Red Star’s—had left the Fund substantially damaged. Barring some
dramatic turnaround in those intervening three years, the addition of yet another employer’s
cessation to a plan that was already substantially damaged will almost always lead to the
conclusion that the plan remains substantially damaged. However, the mere likelihood that the
exception would be found not to apply in a particular case does not justify eliminating the
application of the exception altogether. Rather, it is only by conducting the requisite analysis
that the agency can determine whether a plan has indeed recovered.
10
Employees of North Jersey Welfare Fund, Local 641 (“DeHart”), 50 Fed. Reg. 36,171 (Sept. 5,
1985); Request for Determination of Substantial Damage with Respect to Cessation of
Contributions by Pioneer Paper Stock to Freight Drivers and Helpers Local 557 Pension Fund
(“Pioneer Paper Stock”), 52 Fed. Reg. 28,881 (Aug. 4, 1987); Request for Determination of
Substantial Damage with Respect to the Cessation of the Obligation to Contribute by Kane
Transfer Co. to the Freight Drivers and Helpers Local Union No. 557 Pension Fund (“Kane”),
63 Fed. Reg. 1,511 (Jan. 9, 1998); Freight Drivers and Helpers Local Union No. 557 Pension
Plan Request for Substantial Damage Determination Relating to USF Red Star, Inc. (“Red Star”)
(May 22, 2009) (AR at 1443-49) (unpublished). In those determinations, PBGC has consistently
stated that it considers each cessation “within the context of other cessations under the same
plan.” See Pioneer Paper Stock, 52 Fed. Reg. at 28,882; DeHart, 50 Fed. Reg. at 36,171; Red
Star, AR at 1445. The difference between considering an employer’s withdrawal “within the
context of” other cessations—as was done in previous cases—and considering “the impact of
contributions by both the exiting employer and all other employers that have ceased contributing
to the plan”—as was done here (see AR at 2075)—is one of semantics, not substance.
And indeed, PBGC’s prior determinations have consistently focused on the overall
financial health of the plan in question, as affected not only by the departure of the exiting
employer, but also by other employer cessations and other market factors. In fact, with respect
to three of the four previous determinations, PBGC made no finding whatsoever as to the
departing employer’s direct impact on the plan’s contribution base, but instead, it focused only
on the plan’s overall financial health. See DeHart, 50 Fed. Reg. at 36,171; Pioneer Paper Stock,
52 Fed. Reg. at 28, 881; Kane, 63 Fed. Reg. at 1,512. That is exactly what PBGC did in this
11
case. Therefore, there is no support for the claim that PBGC “disregarded its prior precedents.”
(Pl.’s Mot. at 17.) 2
The same conclusion applies to the time period PBGC considered in analyzing other
employer cessations. QAS claims that all of PBGC’s prior determinations evaluated employer
cessations over a time period that “correlated meaningfully with the date of the cessation in
question,” while in this case the agency considered data “spanning a full decade.” (Id. at 19.) A
review of the relevant precedents, however, reveals that PBGC has been consistent in its
approach to substantial damage determinations. First, PBGC has often acknowledged that the
60-month limitation on “substantial damage” determinations found in 29 U.S.C. § 1983(d)(4)
effectively sets the end date of its determination at five years post-departure. See DeHart, 50
Fed. Reg. at 36,171; Pioneer Paper Stock, 52 Fed. Reg. at 28,882. With respect to the start date,
PBGC has correctly observed that “[t]he statute does not limit [the context of other cessations] to
any specific time period.” See DeHart, 50 Fed. Reg. at 36,171; Pioneer Paper Stock, 52 Fed.
Reg. at 28,882; Red Star, AR at 1446. In DeHart and Pioneer Paper Stock, PBGC reviewed data
beginning five years prior to the departing employer’s cessation. See DeHart, 50 Fed. Reg. at
36,171; Pioneer Paper Stock, 52 Fed. Reg. at 28,882. However, in Pioneer Paper Stock the
agency acknowledged that “[i]n other cases, the PBGC may find that other time periods are
appropriate.” Pioneer Paper Stock, 52 Fed Reg. at 28,882. And indeed, it did. In Red Star, the
agency took a narrower approach, looking back only to the year prior to Red Star’s cessation.
2
QAS makes much of PBGC statement in its Red Star determination that the “cessation of
contributions accounted for a decrease in [contribution base units] of approximately 16%.” (Pl.’s
Mot. at 18.) However, that 16% figure represented the decrease in contribution base units
resulting from “the cessation of contributions to the Fund by Red Star, considered together with
cessation by other employers.” (AR at 1448 (emphasis added).) Thus, it supports this Court’s
conclusion that PBGC has not departed from its prior precedent by considering the cumulative
impact of employer cessations in this case.
12
(AR at 1446.) In Kane, the agency took a broader approach, looking as far back as thirteen years
prior to Kane’s 1993 cessation with respect to certain considerations. See 63 Fed. Reg. at 1,512
(considering change in contribution base of the Fund and number of active employers from
1980-1995; considering number of employer cessations from 1986-1994; considering
contribution rates from 1986-1995; considering unfunded vested benefits from 1992-1996). In
light of those decisions, PBGC’s consideration of data ranging from 2000 (seven years prior to
QAS’s cessation) to 2010 (three years after it) is consistent with its previous decisions.
Because the Court concludes that PBGC’s determination in this case did not represent a
departure from the approach used in its prior determinations, the Court will not set aside the
determination as arbitrary and capricious on that basis.
III. PBGC’S CONSIDERATION OF ALL NECESSARY FACTORS
QAS next argues that PBGC improperly failed to consider its argument that “no
substantial damage to the Fund occurred because AJRS replaced QAS and filled the void left by
its cessation.” (Pl.’s Mot. at 21.) Plaintiff suggests that this was improper for two reasons. First,
plaintiff argues that an agency’s action is arbitrary and capricious if it “entirely fail[s] to consider
an important aspect of the problem,” and “[w]hether another employer filled the void left by
QAS is plainly an important aspect of the problem here.” (Id. at 20.) Second, plaintiff claims
that the statute clearly requires the agency to consider “whether other employers filled the void
by rehiring the exiting employer’s former employees and continuing to make contributions on
their behalf.” (Plaintiff’s Opposition to Defendant’s Motion for Summary Judgment, May 13,
2013 [ECF No. 19] (“Pl.’s Opp’n”) at 7.) In this instance, these two arguments essentially
coalesce, since PBGC’s explanation for not considering whether AJRS filled the void left by
QAS’s departure was that it was not required to consider that factor under the statute. (See AR at
13
1442 (“[T]he fact that a new employer may have performed similar covered work as Quality is
not relevant to an analysis under ERISA § 4203(d).”).)
The Court again concludes that it cannot resolve this question based on the statute under
step one of Chevron. As an initial matter, the statute itself is silent as to how PBGC is to
determine “substantial damage” and whether the entry of a new contributing employer should be
factored into that determination. Moreover, reference to the legislative history and statutory
context does not solve the query. As plaintiff correctly points out, there is language in the
legislative history to suggest that Congress intended PBGC to consider whether the void left by
one contributing employer was filled by another. (See Pl.’s Opp’n at 10.) In particular, in
explaining the trucking industry exception, Senator Durenberger stated that “the contribution
base of a plan in the trucking industry almost always will be protected because motor freight
volume is relatively constant. When one employer leaves a plan, affected employees will almost
always be reemployed by another employer who takes his place.” 126 Cong. Rec. 23286 (Aug.
26, 1980). However, if Congress had intended the agency to rely on a departing employer’s
replacement by another contributing employer, it could have included language to that effect.
Indeed, it did exactly that in the very next section of the statute. There, the statute describes
when the sale of an employer’s assets will constitute a withdrawal for purposes of imposing
withdrawal liability. See 29 U.S.C. § 1384. The statute provides that a withdrawal will not be
deemed to have occurred in such circumstances if, among other things, “the purchaser has an
obligation to contribute to the plan with respect to the operations for substantially the same
number of contribution base units for which the seller had an obligation to contribute to the plan”
and in fact does “provide[] to the plan for a period of 5 plan years.” Id. § 1384(a)(1)(A), (B). In
other words, Congress instructed the agency to consider this very factor in determining
14
withdrawal based on sale of assets under § 1384, but not based on cessation of operations under
§ 1383.
Given this ambiguity, the Court must move on to Chevron’s step two and determine
whether the agency’s interpretation of how it should determine “substantial damage” is
reasonable. As noted, the legislative history and the statutory structure point in opposite
directions. PBGC has chosen to follow one of those two directions. There can therefore be little
dispute that the agency action in this case “reflects a reasonable interpretation of [the statute].”
Coal. For Common Sense in Gov’t Procurement, 707 F.3d at 317. As a result, the Court will not
set aside PBGC’s determination based on its failure to consider the fact that AJRS had replaced
QAS as a contributing employer to the Fund.
IV. PBGC’S CONSIDERATION OF IMPROPER FACTORS
QAS’s next argument is that PBGC improperly relied on factors that Congress did not
intend it to consider. (Pl.’s Mot. at 23.) Plaintiff insists that in determining whether a plan has
suffered “substantial damage to its contribution base,” 29 U.S.C. § 1383(d)(3)(B)(i), the agency
is only permitted to consider the employer’s cessation and any cessations by other employers,
but nothing else. (Pl.’s Mot. at 23.) Thus, PBGC’s consideration of other factors—most notably
the plan’s overall financial condition—rendered the agency’s determination arbitrary and
capricious. (Id. at 23-24.) PBGC responds that “it is only when a reduction in [contribution base
units] is considered in the context of a plan’s financial condition that it can be determined
whether substantial damage has occurred.” (Def.’s Mot. at 15.)
The Court agrees with PBGC. As already discussed, the statute itself is silent with
respect to how the agency should determine whether “substantial damage to its contribution
base” has occurred. And indeed, if Congress had intended PBGC to focus solely on the number
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of contribution base units—perhaps the only economic metric directly attributable to an
employer’s cessation—it could have done so; instead, it mandated a broader consideration of
whether the plan’s contribution base was “substantially damaged.” Thus, it simply cannot be
said that considering the plan’s overall financial condition at the time of an employer’s cessation
is a factor “which Congress has not intended [the agency] to consider.” State Farm, 463 U.S. at
43.
Nor is the overall financial health of a plan “a matter irrelevant” to the question of
whether the plan has been substantially damaged. Judulang v. Holder, 132 S. Ct. 476, 484
(2011). On the contrary, it is highly relevant to that question. As PBGC points out, a mere
reduction in contribution base units “is not always detrimental to a plan’s contribution base . . . if
the current contribution base supports future benefits.” (Def.’s Mot. at 15.) So again, the Court
concludes that PBGC’s determination cannot be faulted because the agency considered the plan’s
overall financial condition and the various other metrics that affect its financial well-being.
V. PBGC’S ARTICULATION OF A SATISFACTORY EXPLANATION
Finally, QAS argues that PBGC failed to articulate a satisfactory explanation for its
action. (Pl.’s Mot. at 24.) It is true that “[a] ‘fundamental’ requirement of administrative law is
that an agency ‘set forth its reasons’ for decision; an agency’s failure to do so constitutes
arbitrary and capricious agency action.” Tourus Records, Inc. v. Drug Enforcement Admin., 259
F.3d 731, 737 (D.C. Cir. 2001) (quoting Roelofs v. Sec’y of the Air Force, 628 F.2d 594, 599
(D.C. Cir. 1980)). This requirement is codified at 5 U.S.C. § 555(e), which requires an agency to
provide “a brief statement of the grounds for denial.” The purpose of the rule is two-fold: it “not
only ensures the agency’s careful consideration of such requests, but also gives parties the
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opportunity to apprise the agency of any errors it may have made and, if the agency persists in its
decision, facilitates judicial review.” Tourus Records, 259 F.3d at 737.
The D.C. Circuit has described the “brief statement” requirement as “minimal,” Butte
Cnty. v. Hogen, 613 F.3d 190, 194 (D.C. Cir. 2010), requiring only that the agency explain “why
it chose to do what it did.” Tourus Records, 259 F.3d at 737 (internal quotation marks and
citation omitted). As this Court has recently noted, “[t]he agency explanations that the D.C.
Circuit has branded too brief seem to be limited to single, conclusory sentences.” Remmie v.
Mabus, 898 F. Supp. 2d 108, 119-20 (D.D.C. 2012) (collecting cases).
Here, though far from a model of detail and clarity, PBGC’s determination complied with
the basic requirement that it provide a brief statement setting forth the reasons for its decision.
The two-page determination clearly identified the materials it had reviewed, the factors it had
considered, and six specific reasons in support of its conclusion that the Fund’s contribution base
had been substantially damaged. (AR at 2075-76.)
CONCLUSION
For the foregoing reasons, plaintiff’s motion for summary judgment is denied, and
defendant’s motion for summary judgment is granted. A separate Order accompanies this
Memorandum Opinion.
/s/
ELLEN SEGAL HUVELLE
United States District Judge
Date: August 15, 2013
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