ORDER ON MOTION FOR RECONSIDERATION
The motion for reconsideration asks me to change my conclusion thatJuly 22, 2003, is the date as of when ERISA preempted the City ofPortland's Domestic Partner Ordinance. The motion is DENIED.
On February 6, 2004, I issued an order granting in part and denying inpart Catholic Charities of Maine, Inc.'s ("Catholic Charities'") and theCity of Portland's motions for summary judgment. In that order, I ruledthat before July 22, 2003, Catholic Charities' health benefit plans were"church plans," exempt from ERISA and therefore subject to the PortlandOrdinance. I also ruled, however, that Catholic Charities' health benefitplans became subject to ERISA when Catholic Charities filed an electionunder section 410(d) of the Internal Revenue Code on July 22, 2003, andthat ERISA preempted the Ordinance from that date forward. Catholic Charities has moved for reconsideration, arguing that itssection 410(d) election was retroactive and effective for years predatingenactment of the Portland Ordinance.
Catholic Charities' arguments focus on a Treasury Regulation,26 C.F.R. § 1.410(d)-1, and several Internal Revenue Service private letterrulings which Catholic Charities claims authorize retroactive section410(d) elections. But neither the regulation nor the letter rulingspurport to address the question at hand: when did ERISA preemption begin?26 C.F.R. § 1.410(d)-1 deals with the mechanics of filing a section410(d) election; it is unclear from the language of the regulation whenthe election takes effect for tax purposes. It may be, as CatholicCharities argues, that the election takes effect at the beginning of aplan year. Probably for the sake of administrative convenience, theInternal Revenue Service often ties "effective" dates to the beginning ofa plan or tax year. See, e.g., 26 U.S.C. § 1362(S-Corporation election). It does not follow, however, that the PortlandOrdinance, which lawfully applies to non-ERISA plans, is retroactivelypreempted.
Catholic Charities points to no authority that the time for preemptionis tied in any way to the date that a section 410(d) election becomes"effective" under the Internal Revenue Code. In fact, the plain languageof ERISA suggests that preemption occurs upon the "making" or filing of asection 410(d) election. ERISA's preemption provision provides that ERISA"shall supersede any and all State laws insofar as they may now orhereafter relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section1003(b) of this title." 29 U.S.C. § 1144(a) (emphasis added).Section 1003(b) provides that ERISA "shall not apply to any employeebenefit plan if . . . such plan is a church plan . . . with respectto which no election has been made under section 410(d) ofTitle 26." (emphasis added). Until July 22, 2003, Catholic Charities'health benefit plans were church plans with respect to which no electionhad been made. Thus, under the statute's plain language, ERISA did notpreempt the Ordinance before July 22, 2003.1
I express no opinion on when Catholic Charities' section 410(d)election became "effective" under the Code or whether the Code permitsplan administrators to elect retroactively for tax purposes. I conclude,however, that until Catholic Charities filed the election, its plans wereexempt from ERISA under 29 U.S.C. § 1003(b) and that ERISA'spreemption provision therefore did not apply. As I ruled in theFebruary order, ERISA preemption began on July 22, 2003, whenCatholic Charities made the section 410(d) election. Themotion is therefore DENIED.
1. Moreover, allowing retroactive preemption would create enormousdifficulties for state and local governments who could regulate lawfullyfor years under then existing circumstances only to find that theirlawful actions were in fact impermissible because of a later "election"by an organization. There is no reason to believe that Congress createdsuch a regime.