Advisory Opinion 2001-07A

July 2, 2001

Alan B. Cabral, Esq.
Seyfarth, Shaw, Fairweather & Geraldson
One Century Plaza, Suite 3300
2029 Century Park East
Los Angeles, California 90067-3063

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  • 3(32)

Dear Mr. Cabral:

This responds 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 Santa Clara County (county) Transit District Amalgamated Transit Union Pension Plan (plan). Specifically, you propose that the plan, which now covers approximately 1,620 employees of Santa Clara Valley Transportation Authority (VTA), will be modified to also cover three employees of the Amalgamated Transit Union Local 265 (LU 265), which is the labor union representing VTA employees who participate in the plan. Based on your representations and documents submitted, you request an opinion concluding that the plan, as so modified, would meet the definition of a governmental plan" in ERISA § 3(32) and, thus, be excluded from Title I coverage by ERISA § 4(b)(1).

VTA, an independent transit district, was established in 1972 through a county-wide election as provided for by California statute. See Cal. Pub. Util. Code § § 100040-100050. On behalf of the county and cities within the county, VTA operates virtually all county transit services, which include bus and light rail systems, transit planning, and highway projects. It exercises the power of eminent domain and, as authorized by county election, may issue bonds. Cal. Pub. Util. Code § § 100130, 100400-100413. A twelve-member board of directors, which is designated by statute a legislative body for VTA and may enact ordinances, supervises VTA transit operations. Cal. Pub. Util. Code § § 100060-100070. VTA's board of directors must include two members of the county board of supervisors; five members of San Jose's city council; and five city council members from other cities within the county. Id. at § 100060. There appear to be no private interests involved in VTA operations.

County sales and use taxes provide more than 55 percent of VTA's operating revenues, and state sales taxes provide an additional 27 percent of revenues. VTA's remaining financial support is from passenger fares and from a grant agreement with the U.S. Department of Transportation.

To operate the VTA transit system, VTA employs approximately 2,100 individuals, all of whom you represent to be government employees.(1) See Cal. Pub. Util. Code § 100120. VTA has a collective bargaining agreement with LU 265 that covers most VTA employees, excepting only about 480. Further, LU 265 represents in collective bargaining all VTA employees for whom the plan provides pension benefits.

The plan was established pursuant to an authorization in Cal. Pub Util. Code § 100370 and became effective January 1, 1973.(2) It is a defined benefit pension plan to which only VTA contributes. The plan is administered by a five-member joint pension board. VTA appoints three members to the pension board; they are its chief financial officer, its deputy director of fiscal resources, and its personnel manager. LU 265 appoints the other two members to the pension board.

LU 265, according to its constitution and bylaws, is organized so that local union members elect its officers. Among its elected officers is a president and business agent who generally supervises LU 265's business affairs, including exercising hiring and firing authority over LU 265's three employees. You propose that all three individuals employed by LU 265 will join the plan as participants. Further, you propose that the plan will begin accepting LU 265's contributions on behalf of its three employees, including contributions for past service credit.

ERISA § 4(b)(1) provides that Title I of ERISA does not apply to a governmental plan as defined in ERISA §3(32). Section 3(32) of ERISA defines the term governmental plan, 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.

Based on the facts provided in your submission, we conclude that VTA is an agency or instrumentality of government within the meaning of ERISA § 3(32). VTA was organized, as provided by California statute, pursuant to a county-wide election. It operates under control of the county and of multiple cities within the county;(3) performs a public function; exercises, among other governmental powers, the power of eminent domain; and has no private interests involved in its operations. Further, state and local sales and use taxes provide most financial support for VTA, with the remainder coming from VTAs collection of transit fares and from federal government grants.

The Department of Labor (department) has previously addressed whether § 3(32) of ERISA includes in the governmental plan definition not only plans established by the unilateral action of employers which are governmental entities, but also plans collectively bargained by governmental entities and plans jointly administered by trustees appointed by governmental entities and by labor unions where such plans were funded by, and covered only employees of, such governmental entities. It is also the department's view that participation by a de minimis number of private sector employees in an otherwise governmental plan will not adversely affect the plan's status as a governmental plan. However, if a benefit arrangement were to cover more than a de minimis number of private sector employees, the department may not consider it a governmental plan under Title I of ERISA.

Your submission indicates that the plan is maintained pursuant to collective bargaining agreement between LU 265 and VTA; the plan is funded exclusively by contributions from VTA, except that, as discussed above, LU 265 will begin contributing on behalf of its three employees; VTA appoints three of five directors on the plan's joint pension board; and, except for three employees of LU 265 discussed above, the plan covers only employees and retired employees of VTA (and their dependents). Based on this information, it is the view of the department that the plan is a governmental plan within the meaning of § 3(32) of ERISA, despite its inclusion of three non-governmental employees, particularly inasmuch as the activities of the non- governmental employees relate exclusively to representing the governmental employees in regard to aspects of their employment with their governmental employer. Accordingly, the plan, as a governmental plan within the meaning of ERISA § 3(32), is excluded from ERISA Title I coverage by ERISA § 4(b)(1).

This letter constitutes an advisory opinion under ERISA Procedure 76-1, and is issued subject to the provisions of that procedure, including section 10 thereof, concerning the effect of advisory opinions. This letter relates solely to the application of provisions of Title I of ERISA and is not determinative of any particular tax treatment under the Internal Revenue Code.


John J. Canary
Chief, Division of Coverage, Reporting and Disclosure
Office of Regulations and Interpretations


  1. The transit district's public employer status was noted by the United States Supreme Court in a decision concerning Title VII of the Civil Rights Act of 1964. See Johnson v. Transportation Agency, 480 U.S. 616, 627 n. 6 (1987).The Although the name Santa Clara County Transportation Agency was used in the cited decision, the transit district is now legally known as the Santa Clara Valley Transportation Authority. Cal. Pub. Util. Code 100002.

  2. This letter is not intended to express any view concerning whether adding three employees of LU 265 as plan participants meets any applicable requirements of California law.

  3. For the purposes of this opinion, we assume that the county is a political subdivision of California and that each city within the county is a political subdivision of California. We assume without discussion, for purposes of the views expressed in this letter, that the county and cities within the county are political subdivisions of California.