MEMORANDUM OPINION AND ORDER
JAMES F. HOLDERMAN, UNITED STATES DISTRICT JUDGE
The Pension Benefit Guaranty Corporation ("PBGC") brought this action against defendant Artra Group, Inc. ("Artra") under Title IV of the Employee Retirement Income Security Act of 1974 ("ERISA") claiming that Artra is liable to PBGC as the sponsor of a terminated, underfunded single-employer pension plan.
The material facts are not in dispute. Plaintiff PBGC is a wholly-owned United States Government corporation created by 29 U.S.C. § 1302(a) to administer the pension plan termination insurance program established under Title IV of ERISA. Artra is a corporation organized under the laws of Pennsylvania with its principal place of business located in Northfield, Illinois. Artra was known as Dutch Boy, Inc. until it changed its name to Artra on or about December 31, 1980.
On or about June 1, 1971, the Local 1139 UE Group Pension Plan (the "UE Plan") was established to provide retirement benefits to employees of employers who entered into collective bargaining agreements with the United Electrical, Radio and Machine Workers of America (the "Union"). On or about March 17, 1978, Dutch Boy entered into a participation agreement with Local 187 of the Union whereby Dutch Boy became a participating employer in the UE Plan effective January 1, 1978. The Participation Agreement incorporates the UE Plan, making the UE Plan part of the Participation Agreement.
Before Dutch Boy became a participating employer in the UE Plan, the Secretary of the Treasury, through the Internal Revenue Service (the "IRS"), determined the UE Plan to be qualified under section 401(a) of the Internal Revenue Code, 26 U.S.C. § 401(a) (hereinafter "section 401(a)"). Favorable determination letters were issued by the IRS on May 24, 1973 and September 1, 1977. After Dutch Boy became a participating employer in the UE Plan, the UE Plan once again requested an IRS qualification letter for the UE Plan. In response, the IRS issued a favorable determination letter on June 11, 1980.
On October 31, 1980, Dutch Boy ceased operations at the Chicago plant where the participating employees were employed. The alleged Dutch Boy Plan was terminated effective December 14, 1980 and PBGC was appointed trustee of the Dutch Boy Plan.
On May 19, 1987, Artra was informed by PBGC that PBGC had determined that Artra was the sponsor of a single-employer pension plan that was underfunded by $ 27,446.00 as of December 14, 1980, the date the Dutch Boy Plan was terminated. PBGC requested payment of that amount under sections 4062 and 4068 of ERISA, 29 U.S.C. §§ 1362, 1368, plus interest from April 2, 1981.
On February 26, 1990, Artra appealed the determination of liability to PBGC's Appeals Board. On December 6, 1990, the Appeals Board issued a decision finding no basis for changing the PBGC's initial determination, except that the amount of the liability was reduced to $ 21,783.00.
In September 1990 PBGC filed this action seeking enforcement of PBGC's determination that Artra is liable to PBGC as the sponsor of a terminated, underfunded single-employer pension plan for the principal amount of $ 21,783.00 plus interest. The parties have filed cross motions for summary judgment. For the reasons stated below, PBGC's motion for summary judgment is denied and Artra's motion for summary judgment is granted.
The parties agree that there are two issues at the center of this dispute. The first issue is whether the Appeals Board correctly determined that the UE Plan was an aggregate of single-employer plans or whether, contrary to the Appeals Board's decision, the UE Plan was one multiemployer plan. If the UE Plan was one multiemployer plan, it is undisputed that Artra has no liability to PBGC. The second issue is whether the Appeals Board correctly determined that the Dutch Boy Plan was covered by Title IV of ERISA. If the Dutch Boy Plan was not covered by Title IV, it is undisputed that Artra is not liable to PBGC. Because the court finds the second issue dispositive of the case, the court need not address the first issue.
TITLE IV OF ERISA
Under § 4021(a)(2) of ERISA, 29 U.S.C. § 1321(a)(2), a plan is deemed covered by the termination insurance provisions of ERISA where such plan "is, or has been determined by the Secretary of the Treasury to be, a plan described in section 401(a) of the Internal Revenue Code."
The Appeals Board determined that "the Dutch Boy Plan is covered by Title IV of ERISA since it 'has been determined by the Secretary of the Treasury to be . . . a plan described in Section 401(a) of the Internal Revenue Code.'" PBGC based its determination on the fact that the IRS previously had found that the UE Plan had qualified under section 401(a) and that Artra, by its Participation Agreement, had "adopted the UE Plan and Trust Agreement as its own plan." (PBGC Appeals Board Determination, p. 6.) Furthermore, PBGC found that the IRS issued another favorable determination letter to the UE Plan and Trust Agreement in 1980, and that "the Dutch Boy Plan was part of the aggregate [UE] plan" at that time. (Id.)
PBGC has alerted the court to the great deference due its interpretation of statutes. The Supreme Court has set forth the general principles to be applied when federal courts review an agency's interpretation of the statute it implements:
When a court reviews an agency's construction of the statute which it administers, it is confronted with two questions. First, always, is the question whether Congress has directly spoken to the precise question at issue. If 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. If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based upon a permissible construction of the statute.