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Subject: 89-390, OPINION, PBGC v. LTV CORP.




NOTICE: This opinion is subject to formal revision before publication in
the preliminary print of the United States Reports.  Readers are requested
to notify the Reporter of Decisions, Supreme Court of the United States,
Washington, D. C. 20543, of any typographical or other formal errors, in
order that corrections may be made before the preliminary print goes to
press.

SUPREME COURT OF THE UNITED STATES


No. 89-390



PENSION BENEFIT GUARANTY CORPORATION,
PETITIONER v. LTV CORPORATION et al.


on writ of certiorari to the united states court of appeals for the second
circuit

[June 18, 1990]



    Justice Blackmun delivered the opinion of the Court.
    In this case we must determine whether the decision of the Pension
Benefit Guaranty Corporation (PBGC) to restore certain pension plans under
4047 of the Employee Retirement Income Security Act of 1974 (ERISA), 88
Stat. 1028, as amended, 100 Stat. 237, 29 U. S. C. 1347 (1982 ed., Supp.
IV), was, as the Court of Appeals concluded, arbitrary and capricious or
contrary to law, within the meaning of 706 of the Administrative Procedure
Act (APA), 5 U. S. C. 706.

I
    Petitioner PBGC is a wholly owned United States Government corporation,
see 29 U. S. C. 1302, modeled after the Federal Deposit Insurance
Corporation.  See 120 Cong. Rec. 29950 (1974) (statement of Sen. Bentsen).
The Board of Directors of the PBGC consists of the Secretaries of the
Treasury, Labor, and Commerce.  29 U. S. C. 1302(d).  The PBGC administers
and enforces Title IV of ERISA.  Title 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. {1}  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."  Pension Benefit Guaranty Corp.
v. R. A. Gray & Co., 467 U. S. 717, 720 (1984).  See also Nachman Corp. v.
Pension Benefit Guaranty Corp., 446 U. S. 359, 361-362, 374-375 (1980).
    When a plan covered under Title IV terminates with insufficient assets
to satisfy its pension obligations to the employees, the PBGC becomes
trustee of the plan, taking over the plan's assets and liabilities.  The
PBGC then uses the plan's assets to cover what it can of the benefit
obligations.  See 29 U. S. C. 1344 (1982 ed. and Supp. IV).  The PBGC then
must add its own funds to ensure payment of most of the remaining
"nonforfeitable" benefits, i. e., those benefits to which participants have
earned entitlement under the plan terms as of the date of termination.
1301(a)(8) and 1322(a) and (b) (1982 ed. and Supp. IV).  ERISA does place
limits on the benefits PBGC may guarantee upon plan termination, however,
even if an employee is entitled to greater benefits under the terms of the
plan.  See 29 CFR 2621.3(a)(2) and App. A (1989); 29 U. S. C.
1322(b)(3)(B).  In addition, benefit increases resulting from plan
amendments adopted within five years of the termination are not paid in
full.  Finally, active plan participants (current employees) cease to earn
additional benefits under the plan upon its termination, and lose
entitlement to most benefits not yet fully earned as of the date of plan
termination.  29 U. S. C. 1322(a) and (b) (1982 ed. and Supp. IV), and
1301(a)(8); 29 CFR 2613.6 (1989).
    The cost of the PBGC insurance is borne primarily by employers that
maintain ongoing pension plans.  Sections 4006 and 4007 of ERISA require
these employers to pay annual premiums.  See 29 U. S. C. 1306 and 1307
(1982 ed. and Supp. IV).  The insurance program is also financed by
statutory liability imposed on employers who terminate underfunded pension
plans.  Upon termination, the employer becomes liable to the PBGC for the
benefits that the PBGC will pay out. {2}  Because the PBGC historically has
recovered only a small portion of that liability, Congress repeatedly has
been forced to increase the annual premiums.  Even with these increases,
the PBGC in its most recent Annual Report noted liabilities of $4 billion
and assets of only $2.4 billion, leaving a deficit of over $1.5 billion.
    As noted above, plan termination is the insurable event under Title IV.
Plans may be terminated "voluntarily" by an employer or "involuntarily" by
the PBGC.  An employer may terminate a plan voluntarily in one of two ways.
It may proceed with a "standard termination" only if it has sufficient
assets to pay all benefit commitments.  A standard termination thus does
not implicate PBGC insurance responsibilities.  If an employer wishes to
terminate a plan whose assets are insufficient to pay all benefits, the
employer must demonstrate that it is in financial "distress" as defined in
29 U. S. C. 1341(c) (1982 ed. Supp. IV).  Neither a standard nor a distress
termination by the employer, however, is permitted if termination would
violate the terms of an existing collective-bargaining agreement.  29 U. S.
C. 1341(a)(3) (1982 ed. Supp. IV).
    The PBGC, though, may terminate a plan "involuntarily," notwithstanding
the existence of a collective-bargaining agreement.  Ibid.  Section 4042 of
ERISA provides that the PBGC may terminate a plan whenever it determines
that:


    "(1) the plan has not met the minimum funding standard required under
section 412 of title 26, 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 4791(a) of title
26,
    "(2) the plan will be unable to pay benefits when due,
    "(3) the reportable event described in section 1343(b)(7) of this title
has occurred, or
    "(4) the possible long-run loss of the [PBGC] with respect to the plan
may reasonably be expected to increase unreasonably if the plan is not
terminated."  29 U. S. C. 1342(a) (1982 ed. Supp. IV).


    Termination can be undone by PBGC.  Section 4047 of ERISA, 29 U. S. C.
1347, provides:


"In the case of a plan which has been terminated under section 1341 or 1342
of this title the [PBGC] is authorized in any such case in which [it]
determines such action to be appropriate and consistent with its duties
under this subchapter, to take such action as may be necessary to restore
the plan to its pretermination status, including, but not limited to, the
transfer to the employer or a plan administrator of control of part or all
of the remaining assets and liabilities of the plan."


When a plan is restored, full benefits are reinstated, and the employer,
rather than the PBGC, again is responsible for the plan's unfunded
liabilities.

II
    This case arose after respondent The LTV Corporation (LTV Corp.) and
many of its subsidiaries, including LTV Steel Company Inc., (LTV Steel)
(collectively LTV), in July 1986 filed petitions for reorganization under
Chapter 11 of the Bankruptcy Code.  At that time, LTV Steel was the sponsor
of three defined benefit pension plans (the Plans) covered by Title IV of
ERISA.  Two of the Plans were the products of collective-bargaining
negotiations with the United Steelworkers of America.  The third was for
non- union salaried employees.  Chronically underfunded, the Plans, by late
1986, had unfunded liabilities for promised benefits of almost $2.3
billion.  Approximately $2.1 billion of this amount was covered by PBGC
insurance.
    It is undisputed that one of LTV Corp's principal goals in filing the
Chapter 11 petitions was the restructuring of LTV Steel's pension
obligations, a goal which could be accomplished if the Plans were
terminated and responsibility for the unfunded liabilities was placed on
the PBGC.  LTV Steel then could negotiate with its employees for new
pension arrangements.  LTV, however, could not voluntarily terminate the
Plans because two of them had been negotiated in collective bargaining.
LTV therefore sought to have the PBGC terminate the Plans.
    To that end, LTV advised the PBGC in 1986 that it could not continue to
provide complete funding for the Plans.  PBGC estimated that, without
continued funding, the Plans' $2.1 billion underfunding could increase by
as much as $65 million by December 1987 and by another $63 million by
December 1988, unless the Plans were terminated.  Moreover, extensive plant
shutdowns were anticipated.  These shutdowns, if they occurred before the
Plans were terminated, would have required the payment of significant
"shutdown benefits."  The PBGC estimated that such benefits could increase
the Plans' liabilities by as much as $300 million to $700 million, of which
up to $500 million was covered by PBGC insurance.  Confronted with this
information, the PBGC, invoking 4042(a)(4) of ERISA, 29 U. S. C.
1342(a)(4), determined that the Plans should be terminated in order to
protect the insurance program from the unreasonable risk of large losses,
and commenced termination proceedings in the District Court.  With LTV's
consent, the Plans were terminated effective January 13, 1987. {3}
    Because the Plans' participants lost some benefits as a result of the
termination, the Steelworkers filed an adversary action against LTV in the
Bankruptcy Court, challenging the termination and seeking an order
directing LTV to make up the lost benefits.  This action was settled, with
LTV and the Steelworkers negotiating an interim collective-bargaining
agreement that included new pension arrangements intended to make up
benefits that plan participants lost as a result of the termination.  New
payments to retirees were based explicitly upon "a percentage of the
difference between the benefit that was being paid under the Prior Plans
and the amount paid by the PBGC."  App. 181.  Retired participants were
thereby placed in substantially the same positions they would have occupied
had the old Plans never been terminated.  The new agreements respecting
active participants were also designed to replace benefits under the old
Plans that were not insured by the PBGC, such as early-retirement benefits
and shutdown benefits.  With respect to shutdown benefits, LTV stated in
Bankruptcy Court that the new benefits totaled "75% of benefits lost as a
result of plan termination."  Id., at 159.  With respect to some other
kinds of benefits for active participants, the new arrangements provided
100% or more of the lost benefits.  Id., at 235.
    The PBGC objected to these new pension agreements, characterizing them
as "follow-on" plans.  It defines a follow- on plan as a new benefit
arrangement designed to wrap around the insurance benefits provided by the
PBGC in such a way as to provide both retirees and active participants
substantially the same benefits as they would have received had no
termination occurred.  The PBGC's policy against follow- on plans stems
from the agency's belief that such plans are "abusive" of the insurance
program and result in the PBGC's subsidizing an employer's ongoing pension
program in a way not contemplated by Title IV.  The PBGC consistently has
made clear its policy of using its restoration powers under 4047 if an
employer institutes an abusive follow-on plan.  In three opinion letters,
two in 1981 and one in 1986, the PBGC stated: "[T]he "termination insurance
program of Title IV was not intended to subsidize an employer's ongoing
retirement program."  App. to Pet. for Cert. 162a, 167a, 173a.
Accordingly, the PBGC has indicated that if an employer adopts a new plan
that, "together with the guaranteed benefits paid by the PBGC under the
terminated plan, provide[s] for the payment of, accrual of, or eligibility
for benefits that are substantially the same as those provided under the
terminated plan," App. 229, the PBGC will view the plan as an attempt to
shift liability to the termination insurance program while continuing to
operate the plan.
    LTV ignored the PBGC's objections to the new pension arrangements and
asked the Bankruptcy Court for permission to fund the follow-on plans.  The
Bankruptcy Court granted LTV's request.  In doing so, however, it noted
that the PBGC "may have legal options or avenues that it can assert
administratively . . . to implement its policy goals.  Nothing done here
tonight precludes the PBGC from pursuing these options. . . ."  Id., at
261.
    In early August 1987, the PBGC determined that the financial factors on
which it had relied in terminating the Plans had changed significantly.  Of
particular significance to the PBGC was its belief that the steel industry,
including LTV Steel, was experiencing a dramatic turnaround.  As a result,
the PBGC concluded it no longer faced the imminent risk, central to its
original termination decision, of large unfunded liabilities stemming from
plant shutdowns.  Later that month, the PBGC's internal working group made
a recommendation, based upon LTV's improved financial circumstances and its
follow-on plans, to the PBGC's Executive Director to restore the Plans
under the PBGC's 4047 powers.  After consulting the PBGC's Board of
Directors, which agreed with the working group that restoration was
appropriate, the Executive Director decided to restore the Plans. {4}
    The Director issued a Notice Of Restoration on September 22, 1987,
indicating the PBGC's intent to restore the terminated Plans.  The PBGC
Notice explained that the restoration decision was based on (1) LTV's
establishment of "a retirement program that results in an abuse of the
pension plan termination insurance system established by Title IV of
ERISA," and (2) LTV's "improved financial circumstances."  See App. to Pet.
for Cert. 182a. {5}  Restoration meant that the Plans were ongoing, and
that LTV again would be responsible for administering and funding them.
    LTV refused to comply with the restoration decision.  This prompted the
PBGC to initiate an enforcement action in the District Court. {6}  The
court vacated the PBGC's restoration decision, finding, among other things,
that the PBGC had exceeded its authority under 4047.  See In re Chateaugay
Corp., 87 B. R. 779 (SDNY 1988).
    The Court of Appeals for the Second Circuit affirmed, holding that the
PBGC's restoration decision was "arbitrary and capricious" or contrary to
law under 706(2)(A) of the APA, 5 U. S. C. 706(2)(A), in various ways.  875
F. 2d 1008, 1015-1021 (1989).  The court first concluded that the PBGC's
action was arbitrary and capricious because the PBGC focused "inordinately
on ERISA" to the exclusion of other laws.  Id., at 1016.  The court then
found the agency's anti-follow-on policy to be contrary to law because the
"legislative history of section 4047 reveals no indication that Congress
intended the establishment of successive [i. e., follow- on] benefit plans
to be a ground for restoration."  Id., at 1017.  The court also found the
PBGC's other basis for restoration, improved financial condition,
inadequate because the PBGC did not explain many of its economic
assumptions.  Id., at 1018-1020.  Finally, the court concluded that the
agency's restoration decision was arbitrary and capricious because the
PBGC's decision-making process of informal adjudication lacked adequate
procedural safeguards.  Id., at 1021.   Because of the significant
administrative law questions raised by this case, and the importance of the
PBGC's insurance program, we granted certiorari.   U. S.  (1989).

III


A
    The Court of Appeals first held that the restoration decision was
arbitrary and capricious under 706(2)(A) because the PBGC did not take
account of all the areas of law the court deemed relevant to the
restoration decision.  The court expressed the view that "[b]ecause ERISA,
bankruptcy and labor law are all involved in the case at hand, there must
be a showing on the administrative record that PBGC, before reaching its
decision, considered all of these areas of law, and to the extent possible,
honored the policies underlying them."  875 F. 2d, at 1015.  The court
concluded that the administrative record did not reflect thorough and
explicit consideration by the PBGC of the "policies and goals" of each of
the three bodies of law.  Id., at 1016.  As the court put it, the PBGC
"focused inordinately on ERISA."  Ibid.  The Court of Appeals did not hold
that the PBGC's decision actually conflicted with any provision in the
bankruptcy or labor laws, or that the PBGC's action "trench[ed] upon the .
. . jurisdiction" of another agency.  See Burlington Truck Lines, Inc. v.
United States, 371 U. S. 156, 173 (1962).  Rather, the court held that
because labor law and bankruptcy law are "involved in the case at hand,"
the PBGC had an affirmative obligation, which had not been met, to address
them.  875 F. 2d, at 1015.
    The PBGC contends that the Court of Appeals misapplied the general rule
that an agency must take into consideration all relevant factors, see
Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U. S. 402, 416
(1971), by requiring the agency explicitly to consider and discuss labor
and bankruptcy law.  We agree.
    First, and most important, we do not think that the requirement imposed
by the Court of Appeals upon the PBGC can be reconciled with the plain
language of 4047, under which the PBGC is operating in this case.  This
section gives the PBGC the power to restore terminated plans in any case in
which the PBGC determines such action to be "appropriate and consistent
with its duties under this title, [i. e., Title IV of ERISA]" (emphasis
added).  The statute does not direct the PBGC to make restoration decisions
that further the "public interest" generally, but rather empowers the
agency to restore when restoration would further the interests that Title
IV of ERISA is designed to protect.  Given this specific and unambiguous
statutory mandate, we do not think that the PBGC did or could focus
"inordinately" on ERISA in making its restoration decision.
    Even if Congress' directive to the PBGC had not been so clear, we are
not entirely sure that the Court of Appeals' holding makes good sense as a
general principle of administrative law.  The PBGC points up problems that
would arise if federal courts routinely were to require each agency to take
explicit account of public policies that derive from federal statutes other
than the agency's enabling act.  To begin with, there are numerous federal
statutes that could be said to embody countless policies.  If agency action
may be disturbed whenever a reviewing court is able to point to an arguably
relevant statutory policy that was not explicitly considered, then a very
large number of agency decisions might be open to judicial invalidation.
    The Court of Appeals' directive that the PBGC give effect to the
"policies and goals" of other statutes, apart from what those statutes
actually provide, {7} is questionable for another reason as well.  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.  This Court recently observed:


"[N]o legislation pursues its purposes at all costs.  Deciding what
competing values will or will not be sacrificed to the achievement of a
particular objective is the very essence of legislative choice, and it
frustrates rather than effectuates legislative intent simplistically to
assume that whatever furthers the statute's primary objective must be the
law."  Rodriguez v. United States, 480 U. S. 522, 525-26 (1987).


For these reasons, we believe the Court of Appeals erred in holding that
the PBGC's restoration decision was arbitrary and capricious because the
agency failed adequately to consider principles and policies of bankruptcy
law and labor law.

B
    The Court of Appeals also rejected the grounds for restoration that the
PBGC did assert and discuss.  The court found that the first ground the
PBGC proffered to support the restoration, its policy against follow-on
plans, was contrary to law because there was no indication in the text of
the restoration provision, 4047, or its legislative history that Congress
intended the PBGC to use successive benefit plans as a basis for
restoration.  The PBGC argues that in reaching this conclusion the Court of
Appeals departed from traditional principles of statutory interpretation
and judicial review of agency construction of statutes.  Again, we must
agree.
    In Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc.,
467 U. S. 837 (1984), we 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."  Id., at 842-843 (footnotes
omitted).


Here, the PBGC has interpreted 4047 as giving it the power to base
restoration decisions on the existence of follow-on plans.  Our task, then,
is to determine whether any clear congressional desire to avoid restoration
decisions based on successive pension plans exists, and, if the answer is
in the negative, whether the PBGC's policy is based upon a permissible
construction of the statute.  See Mead Corp. v. Tilley, 490 U. S.  (1989)
(applying Chevron principles to PBGC's construction of ERISA).
    Turning to the first half of the inquiry, we observe that the text of
4047 does not evince a clear congressional intent to deprive the PBGC of
the ability to base restoration decisions on the existence of follow-on
plans.  To the contrary, the textual grant of authority to the PBGC
embodied in this section is broad.  As noted above, the section authorizes
the PBGC to restore terminated plans "in any such case in which [the PBGC]
determines such action to be appropriate and consistent with its duties
under [Title IV of ERISA]."  29 U. S. C. 1347 (1982 ed. Supp. IV).  The
PBGC's duties consist primarily of furthering the statutory purposes of
Title IV identified by Congress.  These are:


    "(1) to encourage the continuation and maintenance of voluntary private
pension plans for the benefit of their participants;
    "(2) to provide for the timely and uninterrupted payment of pension
benefits to participants and beneficiaries under plans to which this
subchapter applies; and
    "(3) to maintain premiums established by [the PBGC] under section 1306
of this title at the lowest level consistent with carrying out the
obligations of this subchapter."  29 U. S. C. 1302(a).


On their face, of course, none of these statutorily identified purposes has
anything to say about the precise question at issue, the use of follow-on
plans as a basis for restoration decisions.
    Nor do any of the other traditional tools of statutory construction
compel the conclusion that Congress intended that the PBGC not base its
restoration decisions on follow-on plans.  The Court of Appeals relied
extensively on passages in the legislative history of the 1974 enactment of
ERISA which suggest that Congress considered financial recovery a valid
basis for restoration, but which make no mention of follow-on plans.  The
court reasoned that because follow-ons were not among the bases for
restoration discussed by Members of Congress, that body must have intended
that the existence of follow-ons not be a reason for restoring pension
plans.  See 875 F. 2d, at 1017.
    We do not agree with this conclusion.  We first note that the
discussion in the legislative history concerning grounds for restoration
was not limited to the financial-recovery example.  The House Conference
Report indicated that restoration was appropriate if financial recovery or
"some other factor made termination no longer advisable."  H. R. Conf. Rep.
No. 93-1280, p. 378 (1974).  Moreover, and more generally, the language of
a statute, particularly language expressly granting an agency broad
authority, is not to be regarded as modified by examples set forth in the
legislative history.  An example, after all, is just that: an illustration
of a statute's operation in practice.  It is not, as the Court of Appeals
apparently thought, a definitive interpretation of a statute's scope.  We
see no suggestion in the legislative history that Congress intended its
list of examples to be exhaustive.  Under these circumstances, we conclude
that ERISA's legislative history does not suggest "clear congressional
intent" on the question of follow-on plans.
    The Court of Appeals also relied on the legislative history of the 1987
amendments to ERISA effected by the Pension Protection Act, Pub. L. No.
100-203, 101 Stat. 1330-333.  See 875 F. 2d, at 1017.  This history reveals
that Congress in 1987 considered, but did not enact, a provision that
expressly would have authorized the PBGC to prohibit follow-on plans.  But
subsequent legislative history is a "hazardous basis for inferring the
intent of an earlier" Congress.  United States v. Price, 361 U. S. 304, 313
(1960).  It is a particularly dangerous ground on which to rest an
interpretation of a prior statute when it concerns, as it does here, a
proposal that does not become law.  See, e. g., United States v. Wise, 370
U. S. 405, 411 (1962).  Congressional inaction lacks "persuasive
significance" because "several equally tenable inferences" may be drawn
from such inaction, "including the inference that the existing legislation
already incorporated the offered change."  Ibid.  These admonitions are
especially apt in the instant case because Congress was aware of the action
taken by the PBGC with respect to LTV at the time it rejected the proposed
amendment.  See H. R. Rep. No. 100-391, pt. 1, at pp. 106-107 (1987).
Despite Congress' awareness of the PBGC's belief that the adoption of
follow-on plans was a ground for restoration, Congress did not amend 4047
to restrict the PBGC's discretion.  The conclusion that Congress thought
the PBGC was properly exercising its authority is at least as plausible as
any other.  Thus, the legislative history surrounding the 1987 amendments
provides no more support than the 1974 legislative history for the Court of
Appeals' holding that the PBGC's interpretation of 4047 contravened clear
congressional will.
    Having determined that the PBGC's construction is not contrary to clear
congressional intent, we still must ascertain whether the agency's policy
is based upon a "permissible" construction of the statute, that is, a
construction that is "rational and consistent with the statute."  NLRB v.
Food & Commercial Workers, 484 U. S. 112, 123 (1987); see also Sullivan v.
Everhart,  U. S.  (1990).  Respondents argue that the PBGC's anti-follow-on
plan policy is irrational because, as a practical matter, no purpose is
served when the PBGC bases a restoration decision on something other than
the improved financial health of the employer.  According to respondents,
"financial improvement [is] both a necessary and a sufficient condition for
restoration.  The agency's asserted abuse policy . . . is logically
irrelevant to the restoration decision."  Brief for Respondents LTV Corp.
and LTV Steel 33 (emphasis added).  We think not.  The PBGC's
anti-follow-on policy is premised on the belief, which we find eminently
reasonable, that employees will object more strenuously to a company's
original decision to terminate a plan (or to take financial steps that make
termination likely) if the company cannot use a follow-on plan to put the
employees in the same (or a similar) position after termination as they
were in before.  The availability of a follow-on plan thus would remove a
significant check, employee resistance, against termination of a pension
plan.
    Consequently, follow-on plans may tend to frustrate one of the
objectives of ERISA that the PBGC is supposed to accomplish, the
"continuation and maintenance of voluntary private pension plans."  29 U.
S. C. 1302(a)(1).  In addition, follow-on plans have a tendency to increase
the PBGC's deficit and increase the insurance premiums all employers must
pay, thereby frustrating another related statutory objective, the
maintenance of low premiums.  See 29 U. S. C. 1302(a)(3).  In short, the
PBGC's construction based upon its conclusion that the existence of
follow-on plans will lead to more plan terminations and increased PBGC
liabilities is "assuredly a permissible one."  Everhart,  U. S., at  (Slip
op. 9).  Indeed, the judgments about the way the real world works that have
gone into the PBGC's anti-follow-on policy are precisely the kind that
agencies are better equipped to make than are courts. {8}  This practical
agency expertise is one of the principal justifications behind Chevron
deference.  See 467 U. S., at 865.
    None of this is to say that financial improvement will never be
relevant to a restoration decision.  Indeed, if an employer's financial
situation remains so dire that restoration would lead inevitably to
immediate retermination, the PBGC may decide not to restore a terminated
plan even where the employer has instituted a follow-on plan. {9}  For
present purposes, however, it is enough for us to decide that where, as
here, there is no suggestion that immediate retermination of the plans will
be necessary, {10} it is rational for the PBGC to disfavor follow-on plans.
{11}

C
    Finally, we consider the Court of Appeals' ruling that the agency
procedures were inadequate in this particular case.  Relying upon a passage
in Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., 419
U. S. 281, 288, n. 4 (1974), the court held that the PBGC's decision was
arbitrary and capricious because the "PBGC neither apprised LTV of the
material on which it was to base its decision, gave LTV an adequate
opportunity to offer contrary evidence, proceeded in accordance with
ascertainable standards . . . , nor provided [LTV] a statement showing its
reasoning in applying those standards."  875 F. 2d, at 1021.  The court
suggested that on remand the agency was required to do each of these
things.
    The PBGC argues that this holding conflicts with Vermont Yankee Nuclear
Power Corp. v. Natural Resources Defense Council, Inc., 435 U. S. 519
(1978), where, the PBGC contends, this Court made clear that when the Due
Process Clause is not implicated and an agency's governing statute contains
no specific procedural mandates, the Administrative Procedure Act
establishes the maximum procedural requirements a reviewing court may
impose on agencies.  Although Vermont Yankee concerned additional
procedures imposed by the Court of Appeals for the District of Columbia
Circuit on the Atomic Energy Commission when the agency was engaging in
informal rulemaking, the PBGC argues that the informal adjudication process
by which the restoration decision was made should be governed by the same
principles.
    Respondents counter by arguing that courts, under some circumstances,
do require agencies to undertake additional procedures.  As support for
this proposition, they rely on Citizens to Preserve Overton Park, Inc. v.
Volpe, 401 U. S. 402 (1971).  In Overton Park, the Court concluded that the
Secretary of Transportation's "post hoc rationalizations" regarding a
decision to authorize the construction of a highway did not provide "an
[a]dequate basis for [judicial] review" for purposes of 706 of the APA.
Id., at 419.  Accordingly, the Court directed the District Court on remand
to consider evidence that shed light on the Secretary's reasoning at the
time he made the decision.  Of particular relevance for present purposes,
the Court in Overton Park intimated that one recourse for the District
Court might be a remand to the agency for a fuller explanation of the
agency's reasoning at the time of the agency action.  See id., at 420-421.
Subsequent cases have made clear that remanding to the agency in fact is
the preferred course.  See Florida Power & Light Co. v. Lorion, 470 U. S.
729, 744 (1985) ("[I]f the reviewing court simply cannot evaluate the
challenged agency action on the basis of the record before it, the proper
course, except in rare circumstances, is to remand to the agency for
additional investigation or explanation").  Respondents contend that the
instant case is controlled by Overton Park rather than Vermont Yankee, and
that the Court of Appeals' ruling was thus correct.
    We believe that respondents' argument is wide of the mark.  We begin by
noting that although one initially might feel that there is some tension
between Vermont Yankee and Overton Park, the two cases are not necessarily
inconsistent.  Vermont Yankee stands for the general proposition that
courts are not free to impose upon agencies specific procedural
requirements that have no basis in the APA.  See 435 U. S., at 524.  At
most, Overton Park suggests that 706 (2)(A) of the APA, which directs a
court to ensure that an agency action is not arbitrary and capricious or
otherwise contrary to law, imposes a general "procedural" requirement of
sorts by mandating that an agency take whatever steps it needs to provide
an explanation that will enable the court to evaluate the agency's
rationale at the time of decision.
    Here, unlike in Overton Park, the Court of Appeals did not suggest that
the administrative record was inadequate to enable the court to fulfill its
duties under 706.  Rather, to support its ruling, the court focused on
"fundamental fairness" to LTV.  875 F. 2d, at 1020-1021.  With the possible
exception of the absence of "ascertainable standards", by which we are not
exactly sure what the Court of Appeals meant, the procedural inadequacies
cited by the court all relate to LTV's role in the PBGC's decisionmaking
process.  But the court did not point to any provision in ERISA or the APA
which gives LTV the procedural rights the court identified.  Thus, the
court's holding runs afoul of Vermont Yankee and finds no support in
Overton Park.
    Nor is Arkansas-Best, the case on which the Court of Appeals relied, to
the contrary.  The statement relied upon (which was dictum) said: "A party
is entitled, of course, to know the issues on which decision will turn and
to be apprised of the factual material on which the agency relies for
decision so that he may rebut it."  419 U. S., at 288, n. 4.  That
statement was entirely correct in the context of Arkansas-Best, which
involved a formal adjudication by the Interstate Commerce Commission
pursuant to the trial-type procedures set forth in 5, 7 and 8 of the APA, 5
U. S. C. 554, 556-557, which include requirements that parties be given
notice of "the matters of fact and law asserted," 554(b)(3), an opportunity
for "the submission and consideration of facts [and] arguments," 554(c)(1),
and an opportunity to submit "proposed findings and conclusions" or
"exceptions," 557(c)(1), (2).  See 5 U. S. C. 554(a); 49 Stat. 548, 54
Stat. 913, formerly codified at 49 U. S. C. 17, 305(h) (1976 ed.), repealed
92 Stat. 1466; 96 Stat. 2444.  The determination in this case, however, was
lawfully made by informal adjudication, the minimal requirements for which
are set forth in 555 of the APA, and do not include such elements.  A
failure to provide them where the Due Process Clause itself does not
require them (which has not been asserted here) is therefore not unlawful.


IV
    We conclude that the PBGC's failure to consider all potentially
relevant areas of law did not render its restoration decision arbitrary and
capricious.  We also conclude that the PBGC's anti-follow-on policy, an
asserted basis for the restoration decision, is not contrary to clear
congressional intent and is based on a permissible construction of 4047.
Finally, we find the procedures employed by the PBGC to be consistent with
the APA.  Accordingly, the judgment of the Court of Appeals is reversed and
the case is remanded for further proceedings consistent with this opinion.

It is so ordered.







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1
    Title IV covers virtually all "defined benefit" pension plans sponsored
by private employers.  A defined benefit plan is one that promises to pay
employees, upon retirement, a fixed benefit under a formula that takes into
account factors such as final salary and years of service with the
employer.  See 29 U. S. C. 1321.  It is distinguished from a "defined
contribution" plan (also known as an "individual account" plan), under
which the employer typically contributes a percentage of an employee's
compensation to an account, and the employee is entitled to the account
upon retirement.  See 29 U. S. C. 1002(34) and (35).  ERISA insurance does
not cover defined contribution plans because employees are not promised any
particular level of benefits; instead, they are promised only that they
will receive the balances in their individual accounts.

2
    Prior to 1987, employers were liable for only 75% of PBGC's
expenditures.  In that year, Congress eliminated the 75% cap.  See Pension
Protection Act, Pub. L. No. 100-203, 101 Stat. 1330-333.

3
    The Steelworkers appealed the District Court's judgment (giving effect
to the PBGC's termination) to the United States Court of Appeals for the
Second Circuit.  That court affirmed.  Jones & Laughlin Hourly Pension Plan
v. The LTV Corp., 824 F. 2d 197 (1987).

4
    Thereafter, the Executive Director offered to meet with LTV to
"consider any additional information [it] might wish to supply."  App. 348.
Representatives of LTV and the PBGC then met on September 19 and 21, 1987.
At these meetings, LTV officials expressed concern about the timing of the
restoration decision and indicated that restoration would give rise to
time-consuming litigation, which would cast doubt on the bankruptcy
reorganization, thereby imposing hardship on other creditors.

5
    The PBGC also gave a third reason for restoration, LTV's "demonstrated
willingness to fund employee retirement arrangements."  See App. to Pet.
for Cert. 182a.  Before the Court of Appeals for the Second Circuit, the
PBGC conceded that this reason was not an independent basis for the
restoration decision but rather was "subsumed [with]in the other two"
grounds.  See 875 F. 2d 1008, 1020 (1989).  Accordingly, the Court of
Appeals did not address this explanation for restoration, and neither do
we.

6
    Meanwhile, LTV filed an action in the Bankruptcy Court alleging that
restoration would violate the automatic stay provision of the Bankruptcy
Code.  See 11 U. S. C. 362(a).  The District Court granted the PBGC's
motion to withdraw LTV's action from the Bankruptcy Court pursuant to 28 U.
S. C. 157(d) (1982 ed. Supp. IV), and considered the two actions together.
See In re Chateaugay Corp., 86 B. R. 33 (SDNY 1987).

7
    It is worth noting that the provisions of ERISA itself do take account
of other areas of federal law.  For example, as noted above, an employer
may not voluntarily terminate a plan if to do so would violate the terms of
a collective-bargaining agreement.  29 U. S. C. 1341(a)(3) (1982 ed. Supp.
IV).

8
    Justice Stevens suggests that the possibility of follow-on plans will
make employees "no less likely to object to the financial steps that will
lead to [an involuntary] plan termination because they would have no basis
for belief that a union will insist on [the adoption of follow-on plans]
when, perhaps years later, the PBGC involuntarily terminates the plan."
Post, at 3.  There is no reason to believe, however, that financial
decisions that lead to an involuntary termination always or ordinarily
occur far in advance of the termination itself.  Thus, as Justice Stevens
himself acknowledges with respect to a voluntary termination, "those who
could object to [the events resulting in an involuntary termination may
also be] reasonably assured of receiving benefits when the insurance is
paid."  Post, at 2-3.  Moreover, even when an involuntary termination does
not occur until well after the financial decisions that lead to termination
are made, we think the PBGC's apparent belief that employee resistance to
those financial decisions will be lessened to some degree by the prospect
of follow-on plans after termination is not an unreasonable one.

9
    For example, the PBGC did not restore a fourth LTV plan that had been
terminated because, among other things, the plan had insufficient assets to
pay benefits when due.  App. 318.

10
    In this respect we observe that in its Notice of Restoration, the PBGC
relied on the long-term potential for PBGC liability.  See 1342(a)(4).  The
PBGC did not conclude that the Plans were in any imminent danger or that
LTV could not meet the statutory minimum-funding requirements.  In fact,
the PBGC observed in the Notice that LTV did have "sufficient cash" to
cover current benefits.  See App. to Pet. for Cert. 183a.  No party has
suggested to this Court that, at the time of restoration, immediate
retermination, either voluntary or involuntary, was likely.

11
    Because we, like the Court of Appeals, read the PBGC's Notice of
Restoration as indicating that the PBGC's anti-follow-on policy constitutes
an independent ground for the restoration decision, we need not address
that court's ruling that the PBGC's methodology with regard to the other
asserted basis for restoration, improved financial condition, was flawed.