Third Circuit Upholds PBGC Regulations on ARPA Pension Assistance and Confirms Contractual Withdrawal Liability Obligations

In In re Yellow Corporation, No. 25-1421, —F.4th—-, 2025 WL 2647752 (3rd Cir. 2025) (Before: Shwartz, Montgomery-Reeves, and Ambro, Circuit Judges), the Third Circuit addressed significant issues at the intersection of ERISA, the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), and the American Rescue Plan Act of 2021 (ARPA). The court affirmed both the validity of Pension Benefit Guaranty Corporation (“PBGC”) regulations limiting how ARPA special financial assistance is treated in withdrawal liability calculations, and the enforceability of contractual terms requiring higher-than-statutory withdrawal liability payments.

Yellow Corporation, once one of the nation’s largest trucking companies, filed for Chapter 11 bankruptcy in 2023. Its withdrawal from eleven multiemployer pension plans (MEPPs) triggered approximately $6.5 billion in withdrawal liability claims. Two PBGC regulations implementing ARPA’s “special financial assistance” program were central to the dispute:

• Phase-In Regulation, 29 C.F.R. § 4262.16(g)(2)(viii)–(xii), which requires MEPPs to recognize ARPA funds as plan assets incrementally rather than immediately; and
• No-Receivables Regulation, 29 C.F.R. § 4262.16(g)(2)(xiii), which bars plans from recognizing as assets ARPA funds that have been awarded but not yet received.

Yellow argued these rules unlawfully inflated its withdrawal liability. In addition, two pension funds sought to enforce a 2013 agreement under which Yellow, though contributing at only 25% of standard rates during participation, agreed that any future withdrawal liability would be calculated as if contributions were made at 100%.

Third Circuit’s Analysis

1. PBGC’s Statutory Authority Under ARPA

The court first held that the challenged regulations were within PBGC’s statutory authority. Congress expressly authorized PBGC to impose “reasonable conditions” on MEPPs receiving ARPA assistance, including conditions relating to “the allocation of plan assets” and “withdrawal liability.” 29 U.S.C. § 1432(m)(1).

Although the MPPAA generally calculates withdrawal liability based on “unfunded vested benefits” — the value of vested benefits minus the “value of the assets of the plan,” 29 U.S.C. § 1393(c) — ARPA specifically required that special financial assistance be used only “to make benefit payments and pay plan expenses” and that such funds be “segregated from other plan assets.” 29 U.S.C. § 1432(l). Relying on the principle that specific statutes govern over more general ones, see FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 143 (2000), the court concluded that ARPA’s specific directives superseded the MPPAA’s general formula.

Thus, excluding ARPA funds from immediate recognition in withdrawal liability calculations was a reasonable interpretation that prevented those funds from subsidizing employer exits.

2. Arbitrary-and-Capricious Review

Yellow also contended the rules were arbitrary and capricious under the Administrative Procedure Act. The Third Circuit disagreed, applying the standard from Motor Vehicle Mfrs. Ass’n v. State Farm, 463 U.S. 29, 43 (1983), and Ohio v. EPA, 603 U.S. 279, 292 (2024). The PBGC had engaged in robust notice-and-comment rulemaking, including input from employers, plans, actuaries, and legislators. The agency reasonably concluded that immediate recognition of ARPA funds would encourage employer withdrawals, creating a “death spiral” of plan exits — precisely the scenario Congress sought to prevent in ERISA and the MPPAA. See Peick v. PBGC, 724 F.2d 1247, 1267–68 (7th Cir. 1983).

The court emphasized that predictive judgments about economic effects are entitled to deference so long as the agency acts within a “zone of reasonableness.” FCC v. Prometheus Radio Project, 592 U.S. 414, 423 (2021). The PBGC’s reasoning easily cleared that bar.

3. Major Questions Doctrine

The court rejected Yellow’s attempt to invoke the “major questions doctrine,” which limits agency authority in matters of “vast economic and political significance” absent clear congressional authorization. West Virginia v. EPA, 597 U.S. 697, 716–24 (2022). Because ARPA explicitly authorized PBGC to regulate the allocation of special assistance funds and withdrawal liability, the court found no extraordinary expansion of agency power.

4. Contractual Withdrawal Liability

Turning to the 2013 agreements with the New York and Western Pennsylvania Teamsters Funds, the court upheld provisions requiring Yellow to pay withdrawal liability calculated at 100% of standard contribution rates. While the MPPAA typically requires liability to be based on actual contribution history, 29 U.S.C. § 1391, the court emphasized that the statute establishes a floor, not a ceiling. See Artistic Carton Co. v. Paper Indus. Union-Mgmt. Pension Fund, 971 F.2d 1346, 1353 (7th Cir. 1992).

Employers cannot bargain to pay less than the statutory minimum, but they may contractually agree to pay more. Such agreements, the court explained, advance ERISA’s purpose of ensuring plan solvency. See Cent. States, Se. & Sw. Areas Pension Fund v. Laguna Dairy, S. de R.L. de C.V., 132 F.4th 672, 678 (3d Cir. 2025). Because Yellow voluntarily accepted these terms in exchange for reduced contributions while active, the court enforced the bargain.

The Third Circuit affirmed the Bankruptcy Court’s order in full:

1. PBGC’s Phase-In and No-Receivables Regulations were valid exercises of authority under ARPA (29 U.S.C. § 1432(m)(1)) and not arbitrary or capricious under the APA.
2. The major questions doctrine did not apply, because Congress clearly delegated authority to PBGC regarding special financial assistance and withdrawal liability.
3. Yellow’s contractual agreements with two pension funds to pay withdrawal liability at 100% contribution rates were enforceable, as the MPPAA sets a liability floor but does not prevent employers from agreeing to higher obligations.

As a result, Yellow remained liable for billions in withdrawal liability claims, calculated both under PBGC’s ARPA regulations and its own contractual commitments.