Second Circuit Holds that Special Financial Assistance Program Does Not Per Se Exclude Multiemployer Pension Plans Previously Terminated by Mass Withdrawal

In Bd. of Trs. of Bakery Drivers Loc. 550 & Indus. Pension Fund v. Pension Benefit Guar. Corp., No. 23-7868, –F.4th—-, 2025 WL 1226844 (2d Cir. Apr. 29, 2025), the Second Circuit considered a dispute over eligibility for the Special Financial Assistance (SFA) program created under the American Rescue Plan Act of 2021. The case involved two questions of statutory interpretation: “(1) whether § 1432(b)(1)(A), the SFA eligibility provision at issue, per se excludes multiemployer plans that previously terminated by mass withdrawal; and (2) whether ERISA permits such plans to be restored.” The court decided in favor of the Board of Trustees of Bakery Drivers Local 550 and Industry Pension Fund.

The court examined the language of 29 U.S.C. § 1432(b)(1)(A), which outlines eligibility for the SFA program. Specifically, the statute mandates that the Pension Benefit Guaranty Corporation (PBGC) must grant assistance to plans in “critical and declining status” as defined in 29 U.S.C. § 1085(b)(6). The court noted that the statutory language did not explicitly exclude plans that had terminated by mass withdrawal. The court rejected the PBGC’s argument that the Fund was ineligible due to its lack of “zone status” since 2016 because the statute’s text did not support such an exclusion.

The court emphasized that the SFA statute incorporates the definition of “critical and declining status” from § 1085(b)(6) but does not incorporate other limitations from ERISA. The court highlighted the principle that when a statute incorporates another statute by specific reference, it only adopts the text of the referenced provision, not any external limitations or conditions.

The PBGC argued that 29 U.S.C. § 1081(c) applies to the status definitions in § 1085, and because the Fund terminated in 2016, it could not have a “status” under § 1085 in plan years 2020-2022. The court found this inapplicable to the SFA statute because the SFA eligibility criteria are located in a different part of ERISA not affected by § 1081(c).

The court acknowledged the PBGC’s concerns about administrative challenges and potential increased eligibility beyond Congressional Budget Office (CBO) estimates. However, it reiterated that it must interpret the statute as enacted by Congress, which did not include a per se exclusion for terminated plans. The court also noted that Congress explicitly excluded terminated plans in another part of the SFA eligibility section (29 U.S.C. § 1432(b)(1)(D)), suggesting that its absence in § 1432(b)(1)(A) was intentional.

The court concluded that the SFA statute does not exclude plans that terminated by mass withdrawal. Consequently, the PBGC’s denial of the Fund’s application based on its terminated status was contrary to law. The court reversed the district court’s decision, instructed it to enter summary judgment in favor of the Fund, vacated the PBGC’s denial, and remanded for reconsideration.