Opinions of the United
2006 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


7-26-2006

In Re: Kaiser Alum
Precedential or Non-Precedential: Precedential

Docket No. 05-2695




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                                           PRECEDENTIAL

       UNITED STATES COURT OF APPEALS
            FOR THE THIRD CIRCUIT


                       No. 05-2695


    IN RE: KAISER ALUMINUM CORPORATION,
                                 Debtor


         Pension Benefit Guaranty Corporation,
                                    Appellant


       Appeal from the United States District Court
                for the District of Delaware
               (D.C. Civil No. 04-cv-00145)
      District Judge: Honorable Joseph J. Farnan, Jr.


                  Argued April 3, 2006

Before: RENDELL, SMITH and ALDISERT, Circuit Judges

                  (Filed: July 26, 2006)
James L. Eggeman
Charles L. Finke [ARGUED]
Pension Benefit Guaranty Corporation
1200 K Street, N.W.
Washington, DC 20005
   Counsel for Appellant

Daniel J. DeFranceschi
Richards, Layton & Finger
One Rodney Square
P.O. Box 551
Wilmington, DE 19899
Gregory M. Gordon [ARGUED]
Daniel P. Winikka
Jones Day
2727 North Harwood Street
Dallas, TX 75201
  Counsel for Appellees


                 OPINION OF THE COURT


RENDELL, Circuit Judge.

       The Employee Retirement Income Security Act of 1974
(“ERISA”) permits an employer seeking reorganization in
Chapter 11 bankruptcy to terminate a pension plan if the
employer satisfies certain notice requirements and demonstrates
to a bankruptcy court that it will be unable to pay its debts and
continue in business outside of Chapter 11 unless the pension

                               2
plan is terminated. ERISA § 4041(c)(2)(B)(ii)(IV), 29 U.S.C.
§ 1341(c)(2)(B)(ii)(IV) (2000). Courts typically refer to this
requirement for a plan termination as the “reorganization test.”
The instant case raises a question of first impression among the
courts of appeals: when a Chapter 11 debtor seeks to terminate
multiple pension plans simultaneously under the reorganization
test, should a court apply the test to each plan independently, or
to all of the plans in the aggregate?

        Kaiser Aluminum Corporation and twenty-five of its
affiliates (“Kaiser”) are debtors in a Chapter 11 bankruptcy. As
part of their reorganization, they requested that the Bankruptcy
Court approve the termination of six pension plans under the
reorganization test. The Bankruptcy Court applied the test to all
six plans in the aggregate and concluded that their termination
was required for Kaiser to emerge from Chapter 11. The
Pension Benefit Guaranty Corporation (“PBGC”), which is
responsible under ERISA to provide benefits to participants in
terminated plans, appealed the Bankruptcy Court’s decision,
arguing that it should have applied the reorganization test on a
plan-by-plan basis to each of Kaiser’s pension plans. Under this
approach, the PBGC contends that some of Kaiser’s plans
would not fulfill the reorganization test, and therefore could not
be terminated. The District Court upheld the Bankruptcy
Court’s decision and the PBGC appealed to our Court.

       We conclude that the Bankruptcy Court correctly applied
the reorganization test in the aggregate to all of the plans Kaiser
sought to terminate. Congress has not provided any guidance
as to how to apply the reorganization test given the fact pattern
before us, and the plan-by-plan approach appears unworkable.

                                3
By contrast, applying the reorganization test to multiple plans
in the aggregate is straightforward. A basic principle of
statutory construction is that we should avoid a statutory
interpretation that leads to absurd results. See Griffin v. Oceanic
Contractors, Inc., 

, 575 (1982). Because it would
be anomalous for Congress to mandate an unworkable approach
to the reorganization test, we read ERISA as requiring an
aggregated analysis.

        We are also persuaded that applying the reorganization
test on a plan-by-plan basis would result in unfair and
inequitable consequences in that it would require bankruptcy
courts to give preference to some similarly situated constituents
over others. The bankruptcy courts are courts of equity that are
guided by equitable principles. Absent a clear congressional
mandate to the contrary, we will not impose upon them an
approach to the reorganization test that would conflict with their
tradition of preventing unfairness in bankruptcy proceedings.
Congress must speak more clearly than it has in ERISA if it
wishes the bankruptcy courts to take a plan-by-plan approach to
the reorganization test.

       Finally, we consider, and reject, the PBGC’s arguments
based on legislative history, deference to its administrative
interpretation, and public policy. We will therefore affirm the
decision of the District Court upholding the Bankruptcy Court.




                                4
                                I.

                                A.

        Kaiser is involved in all aspects of the aluminum
industry, including mining raw materials, refining them, and
manufacturing aluminum products. As of January 1, 2003,
Kaiser employed approximately 3,000 workers domestically.
In addition, it was responsible for the retiree benefits (primarily
medical) of more than 15,300 retirees and dependent spouses
and the pension benefits of over 11,000 retirees and
beneficiaries. In late 2001 and early 2002, weak industry
conditions, imminent debt maturities, burdensome asbestos
litigation, and growing legacy obligations for future retiree
medical and pension costs took its toll on Kaiser. Unable to
restructure their obligations outside of bankruptcy, Kaiser and
its related corporate entities filed for relief under Chapter 11 of
the Bankruptcy Code between February 2002 and January 2003.

       Congress established the PBGC in 1974 as part of
ERISA. Its purpose is to encourage the continuation and
maintenance of private-sector defined benefit pension plans,
provide timely and uninterrupted payment of pension benefits,
and keep pension insurance premiums at a minimum. 29 U.S.C.
§ 1302(a). To this end, the PBGC provides a minimum level of
pension benefits to participants in qualified pension plans in the
event that the plans cannot pay benefits. As of September 30,
2005, the PBGC insured 44.1 million American workers
participating in 30,330 private-sector defined benefit pension
plans. PBGC, PBGC Performance and Accountability Report
for Fiscal Year 2005 1 (2005), available at

                                5
http://www.PBGC.gov/docs/2005par.pdf (“PBGC Performance
Report”).

       The PBGC is not funded by general tax revenues.
Rather, it collects insurance premiums from employers that
sponsor insured pension plans, earns money from investments,
and receives funds from pension plans it takes over. 

The PBGC pays monthly retirement benefits, up to a guaranteed
maximum, to about 683,000 retirees in 3,595 pension plans that
have terminated.1 Including those who have not yet retired and
participants in multiemployer plans receiving financial
assistance, the PBGC is directly responsible for the current and
future benefits of 1.3 million active and retired workers whose
plans have failed. 

The benefits guaranteed by the
PBGC are often substantially lower than the fully vested
pensions due to plan participants. See Mertens v. Hewitt
Assocs., 

, 250 (1993). Since 1987, a plan’s
sponsor is liable to the PBGC for the total amount of unfunded
benefit liabilities to all participants and beneficiaries under the
plan. 29 U.S.C. § 1362(b).

                                B.

  1
    The maximum pension benefit guaranteed by the PBGC is
set by law and adjusted yearly. See 29 U.S.C. §§ 1322(a)-(b).
For plans ended in 2006, workers who retire at age 65 can
receive up to $3,971.59 per month ($47,659.08 annually). The
guarantee is lower for those who retire early and higher for those
who retire after age 65. Maximum Guaranteed Benefits, 29
C.F.R. § 4011 App. B (2006); Benefits Payable in Terminated
Single-Employer Plans, 70 Fed. Reg. 72074 (Dec. 1, 2005).

                                6
            As part of its reorganization, Kaiser originally sought to
     replace seven pension plans that had been established in
     connection with collective bargaining agreements (“CBAs”)
     then in effect with various unions.2 The plans and associated
     CBAs are listed in the table below:

PENSION PLAN                            UNION(S) COVERED
Kaiser Aluminum Pension Plan            United Steelworkers of America
(“KAP Plan”)                            (“USWA”)
Kaiser Aluminum Tulsa Pension           USWA
Plan (“Tulsa Plan”)
Kaiser Aluminum Bellwood                USWA; International Association
Pension Plan (“Bellwood Plan”)          of Machinists & Aerospace
                                        Workers (“IAM”)
Kaiser Aluminum Sherman                 IAM
Pension Plan (“Sherman Plan”)




         2
         An eighth pension plan, the Kaiser Aluminum Salaried
     Employees Retirement Plan, was involuntarily terminated by the
     PBGC on December 17, 2003 pursuant to 29 U.S.C. § 1342.
     The termination of that plan is not at issue in this appeal.

                                    7
Kaiser Aluminum Inactive Pension         USWA; IAM; United Automobile,
Plan (“Inactive Plan”)3                  Aerospace, and Agricultural
                                         Implement Workers of America
                                         (“UAW”)
Kaiser Aluminum Los Angeles              International Brotherhood of
Extrusion Pension Plan (“LA              Teamsters (“Teamsters”)
Extrusion Plan”)
Kaiser Center Garage Pension Plan        Teamsters Automotive Employees,
(“Garage Plan”)                          Local 78

            These plans covered nearly 13,500 active hourly
     workers, participants on leave or layoff, individuals who were
     terminated from employment, retirees, and beneficiaries. On
     January 11, 2004, Kaiser filed a motion seeking the Bankruptcy
     Court’s approval to terminate all seven plans in a voluntary
     “distress termination” under Title IV of ERISA, 29 U.S.C. §
     1341(c)(2)(B)(ii). Kaiser asserted in its motion that it owed
     nearly $48 million in unfunded minimum contributions for the
     2003 plan year and would be required to make $230 million in
     minimum contributions to the plans between 2004 and 2009. In
     separate motions, Kaiser also requested that the Bankruptcy
     Court (1) use its authority under 11 U.S.C. § 1113 to reject its
     CBAs with USWA and IAM, under which several of the
     pension plans had been established, and (2) authorize the

       3
        The Inactive Plan is comprised of 28 prior pension plans for
     certain former represented employees who are or were employed
     by businesses that have been divested by the Debtors, with the
     Debtors retaining certain pension benefit obligations for retirees.

                                     8
modification of retiree benefits pursuant to 11 U.S.C. § 1114.

        Prior to the February 2, 2004 hearing at which the
Bankruptcy Court was to consider these motions, Kaiser
reached agreements with USWA, IAM, and the official
committee of salaried retirees (“1114 Committee”) providing
for consensual termination of the KAP Plan, Tulsa Plan,
Bellwood Plan, Sherman Plan, and Inactive Plan, and for the
institution of replacements for these plans. At the hearing,
Kaiser asked the Bankruptcy Court to approve these
agreements. The company had not yet reached agreements with
UAW or the Teamsters to terminate the Inactive Plan and the
LA Extrusion Plan, respectively.

       At the hearing, Kaiser also withdrew its motion for
approval to terminate the Garage Plan on the grounds that it was
not underfunded. Thus, the Bankruptcy Court actually
considered only whether to terminate six of Kaiser’s seven
active plans.

       The PBGC opposed Kaiser’s motion to terminate the six
pension plans. In its briefs and at the February 2, 2004 hearing,
the PBGC argued that the Bankruptcy Court should make
separate determinations of whether each pension plan that
Kaiser sought to terminate satisfied the reorganization test.
Thus, rather than considering whether Kaiser could afford to
fund all six plans in the aggregate, the PBGC urged the
Bankruptcy Court to determine whether the contributions
required for each individual plan, considered independently and
without regard to the obligations under the other plans,
jeopardized Kaiser’s ability to reorganize successfully. The

                               9
PBGC contended that the text and legislative history of ERISA
required such a “plan-by-plan” approach.

       The PBGC acknowledged at the hearing that two plans
– the KAP Plan and the Inactive Plan – satisfied the
reorganization test for distress termination even if considered
under a plan-by-plan analysis. These plans were much larger
than the others and would clearly impose an unsustainable
burden on Kaiser. The PBGC contested only Kaiser’s request
to terminate the Tulsa Plan, Bellwood Plan, Sherman Plan, and
LA Extrusion Plan. The combined minimum funding
contributions for these four plans were projected to be roughly
$12.8 million between 2004 and 2009, less than six percent of
the estimated $230 million required to fund all of Kaiser’s
pension plans during that time frame. When these smaller plans
were considered on a plan-by-plan basis, rather than in the
aggregate with the KAP and Inactive Plans, the PBGC argued
that Kaiser could continue funding some or all of them and still
emerge successfully from Chapter 11 reorganization.

        The Bankruptcy Court concluded that the PBGC’s plan-
by-plan approach would violate the Bankruptcy Code’s
requirement that debtors bargain fairly and equitably with
unions. See 11 U.S.C. § 1113(b). The Bankruptcy Court
believed that considering the plans piecemeal would give
creditors “the kind of leverage that would force the debtor to
[initiate] bargaining . . . with one union and not with another.”
(Hr’g Tr., Feb. 2, 2004, at App. 445.) Likewise, debtors could
use a plan-by-plan approach to gain leverage against creditors
that Congress did not intend. The Court acknowledged that
Kaiser could maintain up to three of its smaller plans under the

                               10
PBGC’s plan-by-plan approach, but held that, in order to be fair
to all employees covered under the pensions, it would apply the
reorganization test by considering the company’s pension plans
in the aggregate.

        Under this standard, the Bankruptcy Court found that the
reorganization test was satisfied with respect to all six plans that
Kaiser sought to terminate. In a February 5, 2004 order, the
Bankruptcy Court approved termination of the KAP Plan, the
Sherman Plan, the Tulsa Plan, and the Bellwood Plan, effective
upon the Court’s filing of a contemporaneous order approving
Kaiser’s agreements with USWA, IAM, and the 1114
Committee for consensual termination of these plans. Though
the Inactive Plan and the LA Extrusion Plan also satisfied the
reorganization test, the Bankruptcy Court refused to approve
their termination at that time because the CBAs that Kaiser had
with UAW and the Teamsters presented a contractual bar to
their termination. Kaiser has since reached agreements with
both UAW and the Teamsters to remove the contractual bar in
each of these CBAs, and the Bankruptcy Court has now
formally approved the termination of the Inactive Plan and the
LA Extrusion Plan.

        The PBGC appealed the Bankruptcy Court’s decision to
the District Court, which upheld the Bankruptcy Court’s
aggregate analysis of the plans under the reorganization test.
The District Court concluded that ERISA did not mandate a
plan-by-plan analysis as urged by the PBGC. Furthermore, the
Court believed that ERISA’s reorganization test must be read in
light of § 1113 of the Bankruptcy Code, which requires debtors
to engage in fair and equitable bargaining with unions before

                                11
unilaterally modifying CBAs. In the District Court’s view,
fairness and equity required the Bankruptcy Court to consider
the plans in the aggregate. In re Kaiser Aluminum Corp.,
Civ.A. 04-145-JJF, 

, at *3 (D. Del. Mar. 30,
2005). The PBGC timely appealed the District Court’s decision
to our Court.

                               II.

       The Bankruptcy Court had jurisdiction under 28 U.S.C.
§ 157 and 28 U.S.C. § 1334(a). The District Court had
jurisdiction over the PBGC’s appeal under 28 U.S.C. §
158(a)(1). We have jurisdiction pursuant to 28 U.S.C. § 158(d).

        We exercise plenary review of an order issued by a
district court sitting as an appellate court in review of a
bankruptcy court. In re Cellnet Data Sys., Inc., 

,
244 (3d Cir. 2003). We will set aside the Bankruptcy Court’s
findings of fact if they are clearly erroneous and review its
conclusions of law de novo. 

question before us is whether the Bankruptcy Court
should have made separate determinations as to whether each of
the six plans Kaiser sought to terminate satisfied the
reorganization test, or whether it properly applied the
reorganization test to all six plans in the aggregate. “As in any
case of statutory construction, our analysis begins with the
language of the statute.” Hughes Aircraft Co. v. Jacobson, 

, 438 (1999) (internal quotation omitted).

                               12
                                A.

       Title IV of ERISA establishes the exclusive means of
terminating single-employer pension plans. 29 U.S.C. §
1341(a)(1); Hughes 

. Plans may be
terminated voluntarily by a plan sponsor or involuntarily by the
PBGC. A plan sponsor may voluntarily terminate a pension
plan in one of two ways. First, it may proceed with a “standard
termination” if it has sufficient assets to pay all benefit
commitments. 29 U.S.C. § 1341(b)(1)(D). Such a situation
does not implicate the PBGC’s insurance responsibilities.
Alternatively, if a plan’s assets are not sufficient to satisfy all
benefit liabilities, a plan sponsor may initiate a “distress
termination” under 29 U.S.C. § 1341(c).4


 4
   The PBGC may institute proceedings for a plan’s involuntary
termination when it determines that:

              (1) the plan has not met the
              minimum funding standard
              required under section 412 of Title
              26 [of the United States Code], or
              has been notified by the Secretary
              of the Treasury that a notice of
              deficiency under section 6212 of
              Title 26 has been mailed with
              respect to the tax imposed under
              section 4971(a) of Title 26,
              (2) the plan will be unable to pay
              benefits when due,

                                13
       A single-employer plan may terminate in a distress
termination only if the plan administrator provides affected
parties with at least sixty days of advance written notice of its
intent to terminate, 29 U.S.C. § 1341(b)(2)(B); 29 C.F.R. §
4041.43, the administrator provides the PBGC with certain
information about the termination no more than 120 days after
the proposed termination date, 29 U.S.C. § 1341(b)(2)(A); 29
C.F.R. § 4041.45, and the PBGC determines that the plan
sponsor meets one of four “distress tests” under 29 U.S.C. §
1341(c)(2)(B). The tests are known as (1) the liquidation test,
(2) the reorganization test, (3) the inability to continue in
business test, and (4) the unreasonably burdensome pension cost
test. 29 U.S.C. §§ 1341(c)(2)(B)(i)-(iii); 29 C.F.R. §
4041.41(c)(4). In the instant case, Kaiser sought a distress
termination of its plans under the reorganization test only.

      Four requirements must be satisfied for a distress
termination under the reorganization test. First, the plan
sponsor must have filed a petition seeking reorganization in



              (3) the reportable event described
              in [29 U.S.C. § 1343(c)(7)] has
              occurred, or
              (4) the possible long-run loss of the
              corporation with respect to the plan
              may reasonably be expected to
              increase unreasonably if the plan is
              not terminated.

29 U.S.C. § 1342(a).

                               14
bankruptcy. Second, the bankruptcy case must not have been
dismissed as of the proposed termination date. Third, the plan
sponsor must submit to the PBGC a request for bankruptcy
court approval of the plan termination. 29 U.S.C. §§
1341(c)(2)(B)(ii)(I)-(III). Finally, the bankruptcy court must
“determine[] that, unless the plan is terminated, [the plan
sponsor] will be unable to pay all its debts pursuant to a plan of
reorganization and will be unable to continue in business
outside the chapter 11 reorganization process and approve[] the
termination.” 

       A plan sponsor may not voluntarily terminate a plan “if
the termination would violate the terms and conditions of an
existing collective bargaining agreement.” 29 U.S.C. §
1341(a)(3).5 However, a plan sponsor seeking a distress
termination while in bankruptcy may remove a contractual bar
to a plan’s termination by receiving the bankruptcy court’s
approval to unilaterally reject or modify the CBA under 11
U.S.C. § 1113. Section 1113 requires, among other things, that
the debtor

              make a proposal to the authorized
              representative of the employees
              covered by such agreement . . .
              which provides for those necessary
              modifications in the employees
              benefits and protections that are


   5
  By contrast, the existence of a CBA does not prevent the
PBGC from terminating a plan involuntarily. 29 U.S.C. § 1342.

                               15
              necessary to permit the
              reorganization of the debtor and
              assures that all creditors, the debtor
              and all affected parties are treated
              fairly and equitably.

11 U.S.C. § 1113(b)(1)(A). A bankruptcy court must refuse to
reject or modify a CBA if the debtor’s proposal to the union was
not fair and equitable. Wheeling-Pittsburgh Steel Corp. v.
United Steelworkers, 

, 1093 (3d Cir. 1986).

                               B.

       ERISA does not explicitly state how the reorganization
test applies when an employer seeks to terminate several
pension plans at once. The reorganization test is satisfied when
a bankruptcy court determines that a plan sponsor will be unable
to continue business outside of Chapter 11 “unless the plan is
terminated.” 29 U.S.C. § 1341(c)(2)(B)(ii)(IV) (emphasis
added). The statute lacks any parallel provision for cases in
which multiple plans are at issue. Other provisions of § 1341
likewise set forth requirements for the voluntary termination of
“a single-employer plan,” but do not specify how the
requirements should apply in the context of multiplan
terminations. See, e.g., 

(noting that ERISA
provides the exclusive means under which “a single-employer
plan may be terminated”); 

(barring voluntary
termination of a “plan” that would violate the terms of an
existing CBA); 

(listing the general
requirements for a plan administrator to terminate a “single-
employer plan” under a standard termination); 

1341(c)(2)(B) (requiring the PBGC to determine whether the
sponsor of a “plan” satisfies one of the distress criteria).

        Absent any express statutory instruction about how the
reorganization test applies in the multiplan context, we must
examine ERISA’s text for indicia of congressional intent on the
issue. See Lamie v. United States Trustee, 

, 534
(2004) (“The starting point for discerning congressional intent
is the existing statutory text . . . .”). The parties have not cited,
and we have not found, any case in which a court has performed
such an analysis. In every case that we have identified in which
a debtor sought to terminate multiple pension plans under the
reorganization test, bankruptcy courts have applied an aggregate
analysis, apparently without protest from the PBGC. See In re
Aloha Airgroup, Inc., No. 04-3063, 

, at *1
(Bankr. D. Haw. Dec. 13, 2005), vacated as moot, No. 05-
00777, 

, at * 3 (D. Haw. Mar. 14, 2006); In re
Philip Servs. Corp., 

, 808 (Bankr. S.D. Tex. 2004);
In re Wire Rope Corp. of Am., 

, 777-78 (Bankr.
W.D. Mo. 2002). However, these courts provided no rationale
as to why they employed the aggregate approach and did not
discuss whether they considered an alternate approach. Thus,
these cases provide us with very little guidance or authority as
to how to interpret ERISA’s text.

       The PBGC argues that Congress’s use of the singular
terms “single-employer plan” and “plan” mandates a plan-by-
plan approach to terminations under § 1341 generally, and
under the reorganization test in particular. In its view, ERISA
defines the reorganization test in terms of a singular “plan”
because Congress intended that bankruptcy courts would

                                 17
consider independently each plan that an employer seeks to
terminate. Had Congress meant for courts to apply the
aggregate approach to the reorganization test, the PBGC urges
that § 1341(c)(2)(B)(ii)(IV) would instruct bankruptcy courts to
determine whether an employer can continue in business outside
Chapter 11 “unless the plans are terminated.”

       To support its textual interpretation, the PBGC notes that
Congress chose to use the singular terms “single-employer
plan” or “plan” throughout Title IV in a manner that it contends
created a plan-specific statutory scheme to govern the single-
employer plan termination insurance program. See, e.g., 29
U.S.C. § 1321 (detailing when a “plan” is covered by the
termination insurance program); 

(identifying the
benefits guaranteed under a “single-employer plan”); 

(granting the PBGC authority to involuntarily terminate a
“single-employer plan” and establishing the criteria on which to
evaluate a “plan”); 

(establishing asset allocation
scheme for a “single-employer plan” that is terminated); 

(setting forth requirements for restoration of a terminated
“plan”); 

(“For purposes of this subchapter the
termination date of a single-employer plan is . . . .” (emphasis
added)); 

(imposing liability on the sponsor of a
“single-employer plan” that is terminated). Furthermore, the
fact that Congress used the plural “plans” in certain Title IV
provisions shows that it was cognizant of the different
contextual uses of the singular “plan” and plural “plans.” See

(stating that the purposes of Title IV are “to
encourage the continuation and maintenance of voluntary
private pension plans” and “to provide for the timely and
uninterrupted payment of pension benefits . . . under plans”

                               18
(emphasis added)); 

(mandating that the PBGC
audit annually a “statistically significant number of plans”
terminating in standard terminations); 

(requiring
plan sponsors to provide “information . . . necessary to
determine the liabilities and assets of plans” covered by
ERISA). Given that ERISA “is a comprehensive and reticulated
statute” that Congress drafted with care, Nachman Corp. v.
Pension Benefit Guar. Corp, 

, 361 (1980), the
PBGC urges us to conclude that Congress intentionally defined
the reorganization test in terms of a singular “plan” and that this
choice reflects Congress’s intent that the test should be applied
on a plan-specific basis.

        We disagree with the PBGC’s textual analysis. Its
“linguistic argument makes too much out of too little.” United
States v. Fior D’Italia, Inc., 

, 244 (2002). The use
of the singular form of “plan” in § 1341 does not constitute a
congressional mandate to the bankruptcy courts to apply a plan-
by-plan approach to the reorganization test. As a general matter
of statutory construction, the singular form of a word
“include[s] and appl[ies] to several persons, parties, or things”
“unless the context indicates otherwise.” 1 U.S.C. § 1. Here,
nothing about the use or context of the singular terms “plan” or
“single-employment plan” in ERISA suggests that “application
of the typical rule of statutory construction set forth in 1 U.S.C.
§ 1 would be inappropriate.” Toy Mfrs. of Am., Inc. v.
Consumer Prods. Safety Comm’n, 

, 74 (2d Cir.
1980).

       Furthermore, we do not think that Congress intended that
its use of the singular “plan” would require a plan-by-plan

                                19
approach to the reorganization test because, as the statute is
currently written, such an approach is essentially unworkable.
This is because the reorganization test cannot be rationally
applied on a plan-by-plan basis unless a court makes basic
assumptions about the order in which the plans should be
considered and the status of the other plans that the employer is
seeking to terminate. ERISA conspicuously fails to provide any
ground rules whatsoever about how courts could employ a plan-
by-plan analysis. If Congress had intended the bankruptcy
courts to employ the reorganization test on a plan-by-plan basis,
it would have done more than simply employ the singular form
of “plan” in § 1341; it would also have provided some details
about how courts are to apply such an approach. ERISA as it is
currently drafted leaves open too many questions about how to
engage in a plan-by-plan analysis for us to conclude that
Congress envisioned such an approach in the multiplan context.

       A brief hypothetical illustrates the problems inherent in
applying the reorganization test on a plan-by-plan basis under
the current statutory scheme. Assume that a debtor has three
pension plans, each of which will cost $20 million annually.
The evidence shows that the debtor can devote no more than
$40 million annually to its pension liabilities and continue in
business outside of Chapter 11. Under the PBGC’s plan-by-
plan approach, a bankruptcy court would approve the
termination of just one plan because the debtor could afford to
fund two of the three. But which plan should be terminated?
Based simply on their cost, any of the plans could conceivably
be eliminated; which one depends wholly on the mechanics of
how the bankruptcy court applies the reorganization test. For
example, the order in which the bankruptcy court examines the

                               20
plans is potentially decisive (i.e., the first two considered will be
deemed affordable, and the third one will not). Likewise, when
examining one plan, the bankruptcy court must make a critical
assumption about the status of the other two plans. A court
would deem any one plan to be affordable if it assumed that one
or both of the other plans had been terminated, and it would
conclude that any plan is unaffordable if it assumed that the
other two plans still existed. Thus, the outcome of a plan-by-
plan analysis changes dramatically based on the ground rules
that a court employs.6

        These are fundamental problems with applying the
reorganization test on a plan-by-plan basis, yet Congress did
nothing to address, let alone resolve, them. Nor are these
problems merely theoretical. In the instant case, the Bankruptcy
Court noted that, if the KAP and Inactive Plans were terminated
first, Kaiser could afford to fund as many as three of the four
smaller plans (i.e. the Tulsa, Sherman, LA Extrusion, and




  6
   When presented with a similar hypothetical at oral argument,
counsel for the PBGC stated that a bankruptcy court should look
at each plan separately and not consider the cost of the other
plans at all. But this approach moves the bankruptcy court no
closer to deciding which of the three plans should be terminated,
and could easily result in the continued effectiveness of plans
which, in the aggregate, are unaffordable. Without some
principled resolution to this problem, the plan-by-plan approach
is not feasible.

                                 21
Bellwood Plans).7 However, nothing in ERISA suggests that
the KAP and Inactive Plans should be terminated first under a
plan-by-plan analysis. A court could also conclude that it
should apply the reorganization test to the smallest plans first,
rather than in the manner that would require it to terminate the
fewest number of plans. If a court were to apply the
reorganization test to Kaiser’s plans in order of smallest to
largest, it would determine that Kaiser could not afford even the
smaller plans due to the cost of the KAP and Inactive Plans.

       Similarly, if the Bankruptcy Court assumed while
applying the reorganization test to one plan that all the other
plans remained active, it would conclude that the reorganization
test was satisfied as to any of the plans considered
independently. The cost of the KAP and Inactive Plans would
make any other plan prohibitively expensive. On the other
hand, if one assumed that the KAP and Inactive Plans would be
eliminated, several of the smaller plans could be funded outside
of Chapter 11. We see no principled textual basis in ERISA to
adopt one set of assumptions over another.



  7
   Counsel for the PBGC suggested at oral argument that, if the
KAP and Inactive Plans were terminated, Kaiser could have
afforded all four of its smaller plans. But this was not the
finding of the Bankruptcy Court, which concluded that Kaiser
could maintain up to three plans, but “not more than that.”
(Hr’g Tr., Feb. 2, 2004, at App. 445.) The PBGC has not
pointed to any evidence that would cause us to question this
factual finding of the Bankruptcy Court.

                               22
        A basic tenet of statutory construction is that courts
should interpret a law to avoid absurd or bizarre results. See
Demarest v. Manspeaker, 

, 191 (1991) (applying
statute’s terms where the result was not “so bizarre that
Congress could not have intended it” (internal quotation
omitted)); 

(“It is true that interpretations
of a statute which would produce absurd results are to be
avoided if alternative interpretations consistent with the
legislative purpose are available.”). If we adopted the PBGC’s
interpretation of § 1341, we would be concluding that Congress
required courts to apply the reorganization test on a plan-by-
plan basis, but provided no guidance on the mechanics of this
approach, making it essentially unworkable. We will not adopt
a statutory construction that leads to such an anomalous result,
especially where the aggregate approach represents an
alternative that is “neither irrational nor arbitrary.” DiGiacomo
v. Teamsters Pension Trust Fund of Philadelphia and Vicinity,

, 228 (3d Cir. 2005).

        Nor would we make the plan-by-plan approach workable
by “filling in the gaps” left by Congress ourselves. See Griggs
v. E.I. DuPont de Nemours & Co., 

, 453 n.7 (4th
Cir. 2004). In the context of such an “enormously complex and
detailed statute,” 

, whose text we
should be cautious about supplementing, Hughes 

, it is not appropriate for us to invent for the
bankruptcy courts the fundamental baseline assumptions
required to apply the reorganization test workably on a plan-by-
plan basis. To do so would require us to weigh sensitive policy
issues that have potentially important consequences for
employers, American workers, and the PBGC without any

                                 23
meaningful guidance from Congress. “The authority of courts
to develop a ‘federal common law’ under ERISA is not the
authority to revise the text of the statute.” 

(internal citation omitted). We may develop federal
common law under ERISA only when it is “‘necessary to fill in
interstitially or otherwise effectuate the statutory pattern enacted
in the large by Congress.’” Fotta v. Trs. of the UMW, Health &
Ret. Fund of 1974, 

, 211-212 (3d Cir. 1998)
(quoting Bollman Hat Co. v. Root, 

, 118 (3d Cir.
1997)); see also Bill Gray Enters., Inc. Employee Health and
Welfare Plan v. Gourley, 

, 220 n.13 (3d Cir. 2001)
(“[C]ourts have held that importing federal common law
doctrines to ERISA plan interpretation is generally
inappropriate . . . .”). The significant gap-fillers required to
apply a plan-by-plan approach workably are better developed by
a policy-making or legislative body than by this Court. See

.

        The PBGC contends that “[i]t is difficult to imagine how
Congress could have spoken to the ‘precise question’ of whether
the distress termination requirements . . . apply to a sponsor on
a plan-by-plan basis more clearly than it did.” (PBGC Br. at
18.) To the contrary, we have no trouble envisioning how it
could have done so. It could have used the phrase “plan-by-
plan” in articulating the reorganization test, explicitly instructed
courts to apply the test to each plan independently, or given
even a modicum of guidance about how such an approach
should be applied and what assumptions should be used in the
multiplan context. Absent any such textual indicators of
congressional intent, we will not read them into the statute
ourselves. Instead, we adopt a construction of ERISA’s

                                24
reorganization test that does not lead to these problems, namely,
the aggregate approach.

                               C.

       We find additional support for our textual analysis in the
fact that a plan-specific approach to the reorganization test
would disrupt the bankruptcy courts in their traditional role as
agents of equity. The PBGC would have the Bankruptcy Court
terminate some of Kaiser’s plans while leaving the others in
place, seemingly without a principled basis on which it could
make the determination of which workers to prefer over others.
We will not impose this result, which we believe would treat
Kaiser’s workers unfairly and inequitably, without a clear
congressional mandate.

        The Supreme Court has long recognized that bankruptcy
courts are courts of equity that apply equitable principles in the
administration of bankruptcy proceedings. See Local Loan Co.
v. Hunt, 

, 240 (1934) (“[C]ourts of bankruptcy are
essentially courts of equity, and their proceedings inherently
proceedings in equity.”). Though the enactment of the
Bankruptcy Code in 1978 “increased the degree of regulation
Congress imposed upon bankruptcy proceedings,” it did not
alter their “fundamental nature” as courts of equity. Official
Comm. of Unsecured Creditors of Cybergenics Corp. ex rel.
Cybergenics Corp. v. Chinery, 

, 567 (3d Cir. 2003)
(en banc); see also Young v. United States, 

, 50
(2002) (“[B]ankruptcy courts . . . are courts of equity and ‘apply
the principles and rules of equity jurisprudence.’” (quoting
Pepper v. Litton, 

, 304 (1939))).

                               25
        The “‘great principles of equity’” are aimed at “‘securing
complete justice’” for the parties before a court. Porter v.
Warner Holding Co., 

, 398 (1946) (quoting Brown
v. Swann, 35 U.S. (10 Pet.) 497, 503 (1836)). Thus, the
bankruptcy courts have broad authority to act in a manner that
will prevent injustice or unfairness in the administration of
bankruptcy estates. See 

(“[I]n the
exercise of its equitable jurisdiction the bankruptcy court has the
power to sift the circumstances surrounding any claim to see
that injustice or unfairness is not done . . . .”); In re Combustion
Eng’g, Inc., 

, 235 (3d Cir. 2004) (“Bankruptcy
courts are courts of equity, empowered to invoke equitable
principles to achieve fairness and justice in the reorganization
process.” (internal quotation omitted)). To this end, they may,
when necessary, “eschew[] mechanical rules,” Holmberg v.
Armbrecht, 

, 396 (1946), “modify creditor-debtor
relationships,” United States v. Energy Res. Co., 

,
549 (1990), and “craft flexible remedies that, while not
expressly authorized by the [Bankruptcy] Code, effect the result
the Code was designed to obtain,” Cybergenics 

. See also 11 U.S.C. § 105(a) (authorizing bankruptcy
courts to “tak[e] any action or mak[e] any determination
necessary or appropriate to enforce or implement court orders
or rules, or to prevent an abuse of process.”); but see In re
Combustion 

(“The general grant of
equitable power contained in § 105(a) cannot trump specific
provisions of the Bankruptcy Code, and must be exercised
within the parameters of the Code itself.”).

        Section 1113 of the Bankruptcy Code illustrates the role
that the bankruptcy courts take in ensuring fairness during the

                                26
course of bankruptcy proceedings. Under this provision, a
bankruptcy court may permit a debtor to unilaterally reject or
modify an existing collective bargaining agreement only if the
court determines, inter alia, that the debtor has made a proposal
to the union that “assures that all creditors, the debtor and all
affected parties are treated fairly and equitably.” 11 U.S.C. §
1113(b)(1)(A) (emphasis added). Likewise, § 1114, which
prohibits a debtor from unilaterally terminating or modifying
retiree benefits without a court order, requires the debtor to
make a proposal for the modification of benefits to the
authorized representatives of the debtor’s retirees that treats all
affected parties “fairly and equitably.” 

These sections also require the bankruptcy court to determine
that “the balance of the equities clearly favors” the motions
before granting them. 

The
provisions underscore the importance of equitable principles for
bankruptcy courts, particularly in bankruptcies involving
unionized workers and employee retirement benefits.8


  8
    Kaiser contends that the “fair and equitable” requirements of
§ 1113 and § 1114 apply directly in this proceeding because the
modification of several CBAs and approval of the 1114
Committee were necessary prerequisites for the termination of
its pension plans. We disagree. It was never necessary to the
terminations for Kaiser to alter its CBAs unilaterally through a
court order under § 1113 and § 1114. The alternative was for
Kaiser to reach consensual agreements with the unions and
retirees that provided for termination of the pensions. This is
precisely what occurred here, as Kaiser’s unions and 1114
Committee have all consented to the plan terminations. The

                                27
       We will not require the equitable principles under which
bankruptcy courts operate to be discarded when courts are
deciding whether to approve a pension plan termination under
the reorganization test. See In re US Airways Group, Inc., 

, 746 (Bankr. E.D. Va. 2003) (holding that the
requirement under 29 U.S.C. § 1341(c)(2)(B)(ii)(IV) that the
bankruptcy court “approve the termination” of an ERISA plan
authorized the court to consider the “equities in the case”). We
are convinced that, in light of the unique facts of this case, the
Bankruptcy Court could not have applied the plan-by-plan
approach without by producing an unfair result that would have
violated principles of equity.

       Had the Bankruptcy Court applied the reorganization test
on a plan-by-plan basis it would have had to pick and choose
between the six plans that Kaiser sought to terminate, deciding
that certain plans would remain active. Some of Kaiser’s
workers would receive their full pension benefits, while others
would receive no more than the amount guaranteed under
ERISA. It is likely that even workers within the same union
would be treated differently from each other because they



plain language of § 1113 and § 1114 makes clear that these
provisions are inapplicable where union and retiree
representatives agree to a debtor’s proposal; they apply only
where the proposal was rejected “without good cause.” See 11
U.S.C. § 1113(c)(2); 

Consequently, while §
1113 and § 1114 inform our view of the equitable goals of the
bankruptcy courts, the “fair and equitable” requirements in these
sections do not specifically govern this case.

                               28
participated in different plans, not all of which would
necessarily be eliminated. Without some statutory basis or other
principled rationale for this result, such disparate treatment
smacks of arbitrariness. Under § 1113, “the focus of the
[bankruptcy court’s] inquiry as to ‘fair and equitable’ treatment
should be whether the [debtor’s] proposal would impose a
disproportionate burden on the employees,” Wheeling-

, as compared to “creditors, debtor
and all of the affected parties,” 11 U.S.C. § 1113(b)(1)(A).
Here, the PBGC asked the Bankruptcy Court to burden certain
employees disproportionally as compared to other employees.
This strikes us as an unfair result, and it is one that a bankruptcy
court sitting in equity should not impose absent a clear mandate
from Congress.

       When pressed at oral argument, the PBGC offered no
basis on which the Bankruptcy Court could make the difficult
decision of which of Kaiser’s four small plans should be
terminated under a plan-by-plan approach. It stated only that a
debtor can make this choice in whatever manner it wishes. But
this does little more than restate the problem before us. Here,
Kaiser has voluntarily chosen to terminate all six pension plans.
Thus, the “solution” the PBGC suggests does not apply in this
case.

       It did apply in the case of US Airways Group. There, US
Airways sought to terminate only one of its four pension plans.
The affected workers were the company’s pilots, who had
“already given up more in pay and benefits than any other
employee group.” US Airways 

. Not
surprisingly, the pilots felt “a particularly keen sense of having

                                29
been shabbily treated” by the request to terminate their pension
plan. 

that it would be “highly unfair” to
terminate the pilots’ plan “while all the remaining employee
groups would keep their current pension benefits.” 

bankruptcy court approved the termination
under the reorganization test, contingent on the removal of the
contractual bar in the pilots’ CBA. 

       Unlike the case before us, the court in US Airways Group
was asked to apply the reorganization test to just one pension
plan. Under those circumstances, any unfairness inherent in the
termination was the result of the debtor’s business decision
about which plan to terminate, not the bankruptcy court’s roll of
the dice as to which plan should or should not be terminated.9

       The PBGC contends that the result of applying an
aggregate approach is just as unfair as terminating some plans
and leaving others in place. Under the aggregated analysis,
more plans would be terminated, and more workers impacted,
than what is required for Kaiser to emerge from Chapter 11.


  9
   This reasoning explains why the Bankruptcy Court need not
account for any unfairness resulting from Kaiser’s decision not
to terminate the Garage Plan, which covered four active
employees, one employee on leave, and one whose employment
had been terminated. The Bankruptcy Court was not asked to
apply the reorganization test to the Garage Plan and,
consequently, was not itself responsible for the disparate
treatment between participants in the Garage Plan and those in
Kaiser’s other plans.

                               30
The Bankruptcy Court itself acknowledged that it was not
necessary for Kaiser to terminate all of its plans to reorganize,
yet it terminated them all anyway. Surely, the PBGC argues, it
is not fair or equitable to strip an employee’s pension benefits
without any economic justification. Faced with a choice of
burdening some of the participants in Kaiser’s plans and
burdening them all, the PBGC contends that equity weighs in
favor of the former.10

       We are not unsympathetic to this view. There is
undoubtedly a tension between treating similarly situated
workers alike and doing the least that is necessary for the
company to emerge from bankruptcy. However, we are
persuaded that, on the whole, an aggregate approach is more in
line with the objectives of the Bankruptcy Code.

       As a practical matter, voluntary terminations under the


  10
    This argument draws on the requirement under § 1113 and
§ 1114 that a proposed modification to a CBA or to retirement
benefits be “necessary to permit the reorganization of the
debtor.” 11 U.S.C. § 1113(b)(1)(A); 

In
Wheeling-Pittsburgh, we held that this requirement should be
“construed strictly to signify only modifications that the trustee
is constrained to accept because they are directly related to the
[c]ompany’s financial condition and its 

. As stated above, supra note 8, § 1113 and § 1114
do not directly apply here because Kaiser has reached
consensual agreements with its unions and 1114 Committee to
terminate the plans.

                               31
reorganization test always require an employer to bargain with
the representatives of its employees or retirees. See 11 U.S.C.
§ 1113(c)(2); 

When an employer seeks to
terminate multiple plans, participants in one plan will be less
likely to agree to a termination if doing so would open the door
to a decision by a bankruptcy court to single out their plan for
termination under the plan-by-plan approach, while leaving the
employer’s other plans intact. See US Airways 

(describing union’s objection to being singled out for
termination of its pension benefits). And debtors will generally
be unable to select one plan among many for unilateral
termination without the consent of its participants because doing
so would violate the fair and equitable requirements of § 1113
and § 1114. Cf. Wheeling-

(defining inquiry into “fair and equitable” in terms of a
“disproportionate burden” on employees).

       The consequence is that employers that could
conceivably restructure their pension liabilities and successfully
reorganize will have a harder time doing so under a plan-by-
plan approach. This would, in turn, lead to a higher number of
liquidations and, by extension, a higher number of overall plan
terminations. The result would be to leave all interested parties
– the PBGC, workers, retirees, and creditors – worse off as
compared to the same number of reorganizations. An approach
that results in unnecessary liquidations is neither fair nor
consistent the Bankruptcy Code’s preference for reorganization.
See Nordhoff Invs., Inc. v. Zenith Elecs. Corp., 

,
190 (3d Cir. 2001) (noting the “strong public policy in favor of
maximizing debtor’s estates and facilitating successful
reorganization”); In re Baker & Drake, Inc., 

, 1354

                               32
(9th Cir. 1994) (“Congress’s purpose in enacting the
Bankruptcy Code was not to mandate that every company be
reorganized at all costs, but rather to establish a preference for
reorganizations, where they are legally feasible and
economically practical.”).

                               IV.

       The PBGC has leveled several other arguments against
our reading of ERISA. It contends that the legislative history,
its administrative interpretation, and public policy support its
view that ERISA mandates a plan-by-plan approach. As with
the PBGC’s statutory analysis, we do not find its arguments on
these points to be persuasive.

                               A.

         The PBGC points to a legislative trend to tighten the
restrictions on pension plan terminations as support for a plan-
by-plan approach to the reorganization test. In 1986, Congress
established the four distress tests in the Single-Employer
Pension Plan Amendments Act (“SEPPAA”). Prior to the
enactment of SEPPAA, “a plan could be terminated voluntarily
at any time, regardless of the relationship between its assets and
liabilities.” E. Thomas Veal & Edward R. Mackiewicz, Pension
Plan Terminations 68 (2d ed. 1998). If the plan could not
provide the guaranteed benefits to pensioners, the PBGC would
pay the benefits and assess liability against the plan’s sponsor.

Congress found that this system “encourage[d]
employers to terminate plans, evade their obligations to pay
benefits, and shift unfunded pension liabilities” to the PBGC.

                               33
H.R. Rep. No. 99-241, part 2, at 59 (1985), reprinted in 1986
U.S.C.C.A.N. 685, 717-18. SEPPAA was intended to heighten
the requirements for plan terminations.

       In 1987, Congress passed the Pension Protection Act of
1987 (“PPA”) to restrict pension plan terminations further. PPA
made employers liable, for the first time, to the PBGC for the
full amount of unfunded benefit liabilities to all participants and
beneficiaries under the plan. See 29 U.S.C. § 1362. It also
applied the reorganization test to “[t]he plan sponsor or any
member of its controlled group,” whereas SEPPAA applied it
only to each “substantial member” of the control group. See 29
U.S.C. § 1341(c)(2)(B); Veal & 

n.3.
Both changes increased the burden on employers seeking to
terminate pension plans.

        The PBGC contends that SEPPAA and PPA, taken
together, reflect a clear congressional purpose to limit the
circumstances under which pension plans may be voluntarily
terminated to instances where sponsors are suffering “severe
hardship.” H.R. Rep. No. 99-300, at 278 (1985), reprinted in
1986 U.S.C.C.A.N. 929; H.R. Rep. No. 99-241, part 2, at 59-60
(1985), reprinted in 1986 U.S.C.C.A.N. 717-18. In addition,
Congress intended to reduce the financial burdens on the PBGC
and increase the chance that a plan’s participants will receive
their full expected benefits. In the context of the reorganization
test, the PBGC argues that these objectives can only be achieved
if bankruptcy courts employ a plan-by-plan approach, which
prevents terminations that are economically unnecessary.

       Our reading of the legislative history does not convince

                                34
us that Congress mandated a plan-by-plan analysis. At most,
the legislative history demonstrates that Congress had a general
intent to make it more difficult for employers to terminate
pensions; however, that is hardly determinative of whether, or
how, the reorganization test should be applied in the multiplan
context. As discussed above, we think it likely that a plan-by-
plan analysis would actually increase the overall number of
terminations and therefore conflict with the legislative intent on
which the PBGC relies. In any event, such a general legislative
purpose provides no guidance on the mechanics of applying the
reorganization test workably on a plan-by-plan basis. We view
the absence of any such guidance in the text of ERISA as more
indicative of congressional intent than anything the PBGC has
cited in the legislative record.

                               B.

        The PBGC claims that we should defer to its
interpretation of the reorganization test under Chevron U.S.A.
Inc. v. Natural Resources Defense Council, Inc., 

(1984). We disagree.

       Congress has delegated to the PBGC the power to adopt
rules and regulations that are necessary to carry out the purposes
of Title IV of ERISA, see 29 U.S.C. § 1302(b)(3), and the
Supreme Court has accorded Chevron deference to the PBGC’s
interpretation of ERISA on other occasions. See PBGC v. LTV
Corp., 

, 652 (1990) (deferring to the PBGC’s anti-
follow-on policy); Mead Corp. v. Tilley, 

, 725
(1989) (according Chevron deference to the PBGC’s
interpretation of 29 U.S.C. § 1344). However, deference to the

                               35
PBGC here is improper because the PBGC has neither the
expertise nor the authority to determine when a plan should be
terminated under the reorganization test. Issues relating to an
employer’s bankruptcy and reorganization are within the
expertise of bankruptcy courts, not the PBGC. Thus, ERISA
grants the bankruptcy courts alone the power to determine when
an employer “will be unable to pay all its debts pursuant to a
plan of reorganization and . . . continue in business outside of
chapter 11.” 29 U.S.C. § 1341(c)(2)(B)(ii)(IV). Where
Congress delegates to the courts, rather than administrative
agencies, the power to make determinations under a statute,
Chevron deference does not apply. See United States v. Mead
Corp., 

, 226-27 (2001) (holding that administrative
implementation of a particular statutory provision qualifies for
Chevron deference when Congress delegated authority to
agency “to make rules carrying the force of law”); Murphy
Exploration and Prod. Co. v. U.S. Dep’t of Interior, 

, 478 (D.C. Cir. 2001) (stating that “Chevron does not apply
to statutes that . . . confer jurisdiction on the federal courts”
because “such statutes do not grant power to agencies”);
Bamidele v. INS, 

, 561 (3d Cir. 1996) (refusing to
defer to agency’s interpretation of a legal issue that is the
province of the courts).

       Furthermore, even if we were to hold that the PBGC had
the authority to interpret § 1341(c)(2)(B)(ii)(IV), “[w]e will not
defer to ‘an agency counsel’s interpretation of a statute where
the agency itself has articulated no position on the question.’”
Connecticut General Life Ins. Co. v. Comm’r, 

,
143-144 (3d Cir. 1999) (quoting Bowen v. Georgetown Univ.
Hosp., 

, 212 (1988)); see also Southco, Inc. v.

                               36
Kanebridge Corp., 

, 300 (3d Cir. 2004) (en banc)
(Roth, J., dissenting) (noting that agency position advanced for
the first time in litigation would “be entitled to no deference
whatsoever”). To merit deference, an agency’s interpretation of
the statute must be supported by regulations, rulings, or
administrative practice. 

. It appears to
us that the PBGC first adopted the view that ERISA requires a
plan-by-plan analysis during the course of this litigation.11
Chevron deference is not appropriate under these circumstances.

       The PBGC contends that it has promulgated a series of
rules that require that the voluntary termination of pensions


  11
     Indeed, the PBGC’s counsel conceded at oral argument that
this is the first case in which the PBGC has articulated its
position that ERISA requires that the reorganization test be
applied on a plan-by-plan basis. Cf. In re Wire Rope Corp. of
Am., 

, 772-73, 777-78 (Bankr. W.D. Mo. 2002)
(noting that the PBGC did not oppose termination of multiple
plans where court applied aggregate approach to reorganization
test). Counsel explained that, in other cases involving multiple
distress terminations, the plans were unsustainable under either
an aggregate or plan-by-plan analysis, so the PBGC never
asserted the position it has here. This supports our view that the
PBGC’s argument in the instant case is more akin to a litigation
strategy than an agency interpretation of a statute that is entitled
to deference. See 

(“Deference to what
appears to be nothing more than an agency’s convenient
litigating position would be entirely inappropriate.”).

                                37
occur on a plan-by-plan basis. See 29 C.F.R. § 4041.41;
Distress Terminations and Standard Terminations of
Single-Employer Plans, 57 Fed. Reg. 59206 (1992);
Single-Employer Plan Terminations Under the Pension
Protection Act, 53 Fed. Reg. 1904 (1988); Special Procedures
Relating to the Reorganization Distress Test, 52 Fed. Reg.
38290 (1987); Distress Terminations of Single-Employer Plans
and Standard Terminations of Single-Employer Plans, 52 Fed.
Reg. 33318 (proposed Sept. 2, 1987); The Effects of the
Single-Employer Pension Plan Amendments Act of 1986 on
Voluntary Plan Terminations Initiated On or After January 1,
1986 and Before April 7, 1986, 51 Fed. Reg. 12489 (1986). But
these rules, like ERISA’s text, merely refer to the termination
requirements for a “plan.” They neither state that bankruptcy
courts should apply the reorganization test on a plan-by-plan
basis nor provide any guidance as to how courts would employ
such an approach in the context of multiplan terminations. In
short, contrary to the PBGC’s urging, the rules do not reflect an
administrative determination that ERISA requires a plan-by-
plan analysis.12 Because the PBGC cannot point to regulations,


 12
    Nor is there any reason to defer to the PBGC’s interpretation
of these regulations. The rules on which the PBGC relies do
nothing more than adopt ERISA’s use of the singular “plan.”
“[T]he existence of a parroting regulation does not change the
fact that the question here is not the meaning of the regulation
but the meaning of the statute. An agency does not acquire
special authority to interpret its own words when, instead of
using its expertise and experience to formulate a regulation, it
has elected merely to paraphrase the statutory language.”

                               38
rulings, or administrative practices in which it adopted the
position that it asserts here, both the deliberateness and
authoritativeness of its statutory interpretation are suspect.
Smiley v. Citibank (South Dakota), N.A., 

, 741
(1996).

                               C.

       Policy issues have provided the subtext for several of the
PBGC’s arguments in favor of a plan-by-plan approach and, at
times, the PBGC has brought these issues to the surface
explicitly. There is no question that this case implicates
significant policy concerns that potentially affect millions of
American workers and hundreds of businesses. Furthermore,
the PBGC is an important government entity whose interests are
not lightly ignored. We therefore address its policy arguments
briefly and comment on their role in our analysis.

       The policy concerns in this case have formed two parallel
tracks. First, the PBGC has contended repeatedly that an
aggregate approach to the reorganization test harms American
workers who participate in ERISA plans because it subjects
them to plan terminations that are economically unnecessary.
Its fear is that our holding today will make it too easy to
terminate pension plans that are actually affordable and will
create an incentive for employers to terminate plans that they
would otherwise maintain. As a result, more workers will lose
their fully vested pensions and receive only the benefits


Gonzales v. Oregon, 

, 916 (2006).

                               39
guaranteed by ERISA.

       The second concern is that our holding will negatively
impact the PBGC itself. We take judicial notice of the fact that
the PBGC’s financial health has deteriorated sharply in recent
years. At the end of the 2005 fiscal year, the PBGC’s liabilities
exceeded its assets by $23.1 billion, a swing in its net position
of nearly $33 billion since 2000. PBGC Performance Report at
4; Congressional Budget Office, A Guide to Understanding the
Pension Benefit Guaranty Corporation 1 (2005), available at
http://www.cbo.gov/ftpdocs/66xx/doc6657/09-23-GuideToP
BGC.pdf. The PBGC noted in its brief that “[t]he issue
presented in this case recurs in other large bankruptcy cases in
which the agency is a guarantor of pension benefits.”
Interpreting ERISA in a way that triggers more plan
terminations, and thereby increases the burdens on the PBGC,
could undermine the PBGC’s already shaky financial position
and “pose a considerable risk to the single-employer termination
insurance program.” (PBGC Br. at 3.)

        We do not downplay the significance of either argument.
They provide sound policy rationales for the result for which the
PBGC advocates and highlight the important interests at stake
in this case. Moreover, there is no question that the aggregate
approach may, in some cases, lead to results that are less than
ideal for workers and for the PBGC. Nevertheless, “[w]e do not
sit here as a policy-making or legislative body.” 

. There are no clear answers to the difficult
policy issues involved in this case and, in any event, their
resolution is better left to Congress than the courts. We have
taken Congress’s failure to provide a shred of guidance on how

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to apply a plan-by-plan approach as indicative of its intent. If
Congress perceives our holding to be in error, the cure is to
amend ERISA. See 

.

                               V.

        For the reasons stated above, we conclude that when an
employer in Chapter 11 bankruptcy seeks to terminate multiple
pension plans voluntarily under the reorganization test,
Congress intended the bankruptcy courts to apply the test to all
of the plans in the aggregate. Consequently, we will affirm the
order of the District Court upholding the Bankruptcy Court’s
conclusion that Kaiser had satisfied the reorganization test with
respect to all six plans that it sought to terminate.




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