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Pension Benefit Guar. Corp. v. LTV Corp. - 496 U.S. 633, 110 S. Ct. 2668 (1990)


Failure to provide notice and opportunity to be heard, where the due process clause itself does not require them, is not unlawful.


Petitioner, Pension Benefit Guaranty Corporation (PBGC), is a wholly owned United States Government corporation modeled after the Federal Deposit Insurance Corporation. The Board of Directors of the PBGC consists of the Secretaries of the Treasury, Labor, and Commerce. The PBGC administers and enforces Title IV of Employee Retirement Income Security Act of 1974 (ERISA). ITLE IV includes a mandatory Government insurance program that protects the pension benefits of over 30 million private-sector American workers who participate in plans covered by the Title. In enacting Title IV, Congress sought to ensure that employees and their beneficiaries would not be completely deprived of anticipated retirement benefits by the termination of pension plans before sufficient funds have been accumulated in the plans. Under 4042 of ERISA, the PBGC may terminate a plan if the PBGC determines that the plan has not met certain funding requirements. Respondent LTV Corporation and many of its subsidiaries (collectively LTV) filed reorganization petitions under the Bankruptcy Code for the purpose, inter alia, of restructuring the pension obligations of one of the subsidiaries under three ERISA-covered, chronically underfunded pension plans (the Plans), two of which could not be voluntarily terminated by LTV under ERISA's terms because they resulted from collective bargaining negotiations with the United Steelworkers of America. In light of LTV's statement that it could no longer provide complete funding, the PBGC sought involuntary termination of the Plans to protect the insurance program from the risk of large losses. After the District Court terminated the Plans, LTV and the Steelworkers negotiated new pension arrangements, which the PBGC characterized as "follow-on" plans - arrangements designed to wrap around PBGC insurance benefits to provide substantially the same benefits as would have been received had no termination occurred. Pursuant to its anti-follow-on policy, which considers such plans to be "abusive" of the insurance program, and in light of its perception that LTV's financial circumstances had dramatically improved, the PBGC issued a Notice of Restoration of the terminated Plans under §4047 of ERISA, which authorizes the PBGC to undo a termination in any case in which it determines such action to be appropriate and consistent with its duties under Title IV. When LTV refused to comply with the restoration decision, the PBGC filed an enforcement action, but the District Court vacated the decision upon finding, among other things, that the PBGC had exceeded its § 4047 authority. The Court of Appeals affirmed, holding that the restoration decision was, in various respects, "arbitrary and capricious" or contrary to law under § 706(2)(A) of the Administrative Procedure Act (APA).


Was the restoration decision of Pension Benefit Guaranty Corporation arbitrary and capricious, or contrary to law under § 706(2)(A) of Administrative Procedure Act (APA)?




The Court held that Pension Benefit Guaranty Corporation’s (PBGC) failure to consider and discuss the "policies and goals" underlying federal bankruptcy and labor law did not, as the Court of Appeals held, render the restoration decision arbitrary and capricious. According to the Court, the decision of the Court of Appeals cannot be reconciled with the plain language of §4047, which does not direct that the decision further the "public interest" generally, but, rather, specifically and unambiguously requires the PBGC to focus on Employee Retirement Income Security Act of 1974 (ERISA). Moreover, according to the Court, if agency action could be disturbed whenever a reviewing court was able to pinpoint an arguably relevant statutory policy that was not explicitly considered, a very large number of agency decisions might be open to judicial invalidation in light of numerous federal statutes that could be said to embody countless goals. The Court further posited that because the PBGC can claim no expertise in the labor and bankruptcy areas, it may be ill-equipped to undertake the difficult task of discerning and applying the "policies and goals" of those fields. The Court also opined that PBGC's anti-follow-on policy was not contrary to law, within the meaning of 706(2)(A), given that the PBGC's construction of §4047 as allowing the PBGC to base restoration decisions on the policy was not contrary to clear congressional intent, and the availability of a follow-on plan would tend to frustrate ERISA objectives. The Court also held that the restoration decision was not rendered arbitrary and capricious, within the meaning of 706(2)(A), by the PBGC's purported failure to allow the corporation certain procedural rights during the informal adjudication process, given that no provision in ERISA or the Administrative Procedure Act (APA) had been pointed to which gave the corporation such procedural rights. According to the Court, courts are not free to impose upon agencies specific procedural requirements that have no basis in the APA.

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