|
|
|
|
2003-16A
ERISA Sec. 3(32)
|
|
Stephanie B. Gracia, Esq.
Hallett & Perrin, PC
2001 Bryan Street, Suite 3900
Dallas, Texas 75201
|
|
Dear Ms. Gracia:
|
|
This is in response to your request for an advisory
opinion concerning the applicability of Title I of the Employee Retirement
Income Security Act of 1974, as amended (ERISA), to the Lower Colorado
River Authority 401(k) Plan and the Lower Colorado River Authority
Retirement Plan (collectively, the LCRA Plans). Specifically, you request
an advisory opinion concluding that the status of the LCRA Plans as “governmental
plan[s]” within the meaning of section 3(32) of ERISA would not be
adversely affected if they were extended to cover the employees of GenTex
Power Corporation (GenTex).
|
|
Your correspondence and the materials you enclosed contain the following
facts and representations. The Texas legislature passed the Lower Colorado
River Authority Act (LCRA Act) in 1934 to create the Lower Colorado River
Authority (LCRA) as a conservation and reclamation district.(1)
Section 1 of the LCRA Act provides that LCRA “shall be and is hereby
declared to be a governmental agency and body politic and corporate, with
the powers of government and with the authority to exercise the rights,
privileges and functions hereinafter specified, and the creation of such
district is hereby determined to be essential to the accomplishment of the
purposes of Section 59 of Article 16 of the Constitution of the State of
Texas . . . .” 1934 Tex. Gen. Laws, 4th C.S., ch. 7, at 19. LCRA’s
statutorily defined purposes include: to control, store, preserve and
distribute the waters of the Colorado River and its tributaries within the
district’s boundaries; to develop and generate electric energy and power;
to develop and manage parks on district owned land; and to conserve and
develop forests, water and electric power in the State of Texas. LCRA is
statutorily precluded from levying taxes, creating any indebtedness payable
out of taxes, or in any way pledging the credit of the state.
|
|
LCRA is controlled by a board of fifteen directors all of whom are appointed
by the governor of the State of Texas. The LCRA board of directors consists
of at least one director from each of the counties comprising the district
and three directors appointed at large. The board of directors has the
authority to exercise the powers, right and privileges conferred by general
law upon a conservation and reclamation district created pursuant to Section
59 of Article 16 of the Texas Constitution, including the power to acquire
by condemnation property within the district’s boundaries.
|
|
LCRA created GenTex(2)
as a nonmember, nonstock corporation pursuant to section 152.051 of the
Texas Water Code. Section 152.051 authorizes river authorities, such as
LCRA,(3) engaged in the distribution
and sale of electric energy to the public to create nonprofit corporations
to act as the district’s instrumentality in exercising powers and
functions conferred upon the district by law. GenTex’s purpose, as
stated in its Articles of Incorporation, is to accomplish the “public
purposes of LCRA by . . . acquiring, financing, construction, rebuilding,
repowering, operating and selling facilities related to the generation of
electricity; selling the output of such facilities . . . and performing
such other activities that are associated with the generation, purchase,
sale, transmission and provision of energy services as may be authorized
by LCRA’s Board of Directors . . . .”
|
|
Under section 152.054 of the Texas Water Code, GenTex’s activities are
subject to the continuing review and supervision of LCRA’s board of
directors. GenTex’s board of directors is appointed by and serves at the
will of the LCRA’s board of directors. Under GenTex’s bylaws, five of
the nine members on GenTex’s board of directors must be members of LCRA’s
board of directors. LCRA’s board of directors possesses the authority to
amend GenTex’s governing documents, bylaws and articles of incorporation,
and may dissolve GenTex at any time. GenTex’s budget must be approved by
LCRA’s board of directors, and any net earnings of GenTex must be paid to
LCRA.(4) GenTex may not issue bonds and
other debt obligations without approval from LCRA’s board of directors.(5)
GenTex is subject to both the Texas Open Meetings Act and the Texas Open
Records Act.
|
|
The Lower Colorado River Authority Retirement Plan (LCRA Retirement Plan)
and the Lower Colorado River Authority 401(k) Plan (LCRA 401(k) Plan) were
established by duly executed resolutions of LCRA’s board of directors in
1946 and 1984, respectively. Both plans have been amended and restated
several times by LCRA’s board of directors since their inception. You
represent that the LCRA Plans are single employer plans and only LCRA
employees participate in the plans at this time. The LCRA Retirement Plan is
funded by contributions solely from LCRA, and the 401(k) Plan is funded by
participant elective deferrals and employer matching contributions from LCRA.
You represent for purposes of your request, and we assume without examining
or expressing an opinion on the issue, that each of the LCRA Plans as
currently operated constitutes a “governmental plan” within the meaning
of section 3(32) of ERISA.
|
|
Section 4(b)(1) of ERISA excludes from coverage under
Title I of ERISA any plan that is a “governmental plan.” The term “governmental
plan” is defined in section 3(32) of ERISA, in pertinent part, as “a
plan established or maintained for its employees by the Government of the
United States, by the government of any State or political subdivision
thereof, or by any agency or instrumentality of any of the foregoing.” The
phrase “agency or instrumentality” is not defined in ERISA, and no
regulations issued pursuant to ERISA interpret that phrase. Accordingly,
whether an entity is an “agency or instrumentality” of government,
depends on the facts and circumstances of the relationship between the
government and the entity whose benefit arrangement’s status as a “governmental
plan” is at issue.
|
|
Based on the facts and representations you provided as described above, it
is the view of the Department that GenTex is an “agency or instrumentality”
of state government for purposes of section 3(32) of ERISA. Accordingly, and
based on the assumption that the LCRA Plans as currently organized and
operated are “governmental plan[s]” excluded from Title I coverage by
section 4(b)(1) of ERISA, it is the opinion of the Department that amending
the LCRA Plans to permit participation of GenTex’s employees would not
adversely affect the status of the plans as “governmental plan[s]”
within the meaning of section 3(32) of ERISA.
|
|
This letter constitutes an advisory opinion under ERISA Procedure 76-1 and,
accordingly, is issued subject to the provisions of the procedure, including
section 10 thereof relating to the effect advisory opinions. This letter
relates solely to the application of the provisions of Title I of ERISA and
is not determinative of any particular treatment under the Internal Revenue
Code.
|
|
Sincerely,
John J. Canary
Chief, Division of Coverage, Reporting and Disclosure
Office of Regulations and Interpretations
|
|
|
|
|
-
Section 59 of Article 16 of the
Constitution of the State of Texas placed the duty to preserve Texas
natural resources on the State. Section 59 provides that “[t] here
may be created within the State of Texas, or the State may be divided
into, such number of conservation and reclamation districts as may be
determined to be essential to the accomplishment of the purposes of
this amendment to the constitution, which districts shall be
governmental agencies and bodies politic and corporate with such
powers of government and with the authority to exercise such rights,
privileges and functions concerning the subject matter of this
amendment as may be conferred by law.”
-
By an amendment to its Articles of
Incorporation dated October 6, 1998, and certified on October 7, 1998,
the name of the corporation was changed to “GenTex Power Corporation”
from the “LCRA Energy Services Corporation.”
-
You have represented, and we have
assumed for purposes of this letter, that LCRA is a river authority
within the meaning of Texas Water Code section 152.051.
-
Tex. Water Code Ann. § 152.054(a)
(West 2002).
-
Tex. Water Code Ann. § 152.054(c)
(West 2002).
|
| |
|
