MPPAA Rule: Prior Partial-Withdrawal Credit Applies After Full § 1381(b) Calculation (Including the § 1399 20-Year Cap)

I. Introduction

In Central States, Southeast and Southwest Areas Pension Fund v. Consumers Concrete Corp. (7th Cir. Sept. 17, 2026), the Seventh Circuit addressed a recurring technical question under the Multiemployer Pension Plan Amendments Act (“MPPAA”): when an employer that previously incurred partial withdrawal liability later incurs complete withdrawal liability, when must the statutory “credit” for the earlier partial withdrawal be applied?

The parties were Consumers Concrete Corp. (“Consumers”), a contributing employer that partially withdrew in 2017 and completely withdrew in 2019, and the Central States Southeast and Southwest Areas Pension Fund (“the Fund”), the multiemployer plan sponsor. The dispute mattered because the MPPAA’s 20-year payment cap can drastically shrink the collectible amount; applying the credit before or after that cap can change liability by millions, potentially to zero.

Procedurally, the arbitrator accepted the Fund’s approach (credit applied during “step two” of the § 1381(b)(1) sequence). The district court vacated that award and adopted Consumers’s approach (credit applied after all four steps). The Seventh Circuit affirmed the district court and expressly diverged from the Eleventh and Ninth Circuits on this point.

II. Summary of the Opinion

The Seventh Circuit held that the partial-withdrawal credit in 29 U.S.C. § 1386(b)(1) reduces an employer’s fully calculated “withdrawal liability”—i.e., the amount produced after completing the four-step adjustment process in 29 U.S.C. § 1381(b)(1), including the § 1399(c)(1)(B) 20-year payment limitation.

The court’s central interpretive move was definitional: because § 1381(b)(1) defines “withdrawal liability” as the allocable unfunded vested benefits under § 1391 as adjusted by steps (A) through (D), § 1386(b)(1)’s command that later “withdrawal liability … shall be reduced” naturally operates on that end product, not on intermediate figures.

III. Analysis

A. Precedents Cited

1. MPPAA framework and policy backdrop

  • Supervalu, Inc. v. United Food & Com. Workers Unions & Emps. Midwest Pension Fund, 155 F.4th 913 (7th Cir. 2025): used to describe how multiemployer plans function and to emphasize that the MPPAA is an “intricate statutory scheme” whose detailed calculations reflect legislative compromise. The court also relied on Supervalu for the de novo standard of review on legal questions.
  • Milwaukee Brewery Workers' Pension Plan v. Joseph Schlitz Brewing Co., 513 U.S. 414 (1995): supplied the canonical explanation of the MPPAA’s unusual installment methodology and the role of the 20-year cap in 29 U.S.C. § 1399(c)(1)(B). That discussion framed why the timing of a credit can be outcome-determinative.
  • M&K Emp. Sols., LLC v. Trs. of IAM Nat'l Pension Fund, 146 S. Ct. 1224 (2026): cited for a succinct definition of “withdrawal liability” as the difference between vested benefit obligations and plan assets, tethered to the statutory provisions.

2. Statutory interpretation methodology (text, context, surplusage, grammar)

  • Levin v. United States, 568 U.S. 503 (2013): ordinary meaning and starting with the statutory text.
  • FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000): words must be read in context and as part of the overall statutory scheme.
  • TRW Inc. v. Andrews, 534 U.S. 19 (2001), and Beeler v. Saul, 977 F.3d 577 (7th Cir. 2020): avoid superfluity; interpret as a coherent, harmonious whole.
  • Pulsifer v. United States, 601 U.S. 124 (2024), and Servotronics, Inc. v. Rolls-Royce PLC, 975 F.3d 689 (7th Cir. 2020): the presumption that the same term used across a statute keeps the same meaning (“withdrawal liability” must mean what § 1381 defines).
  • Castañon-Nava v. U.S. Dep't of Homeland Sec., 175 F.4th 828 (7th Cir. 2026), United States v. Balint, 201 F.3d 928 (7th Cir. 2000), and United States v. Wilson, 503 U.S. 329 (1992): verb tense and grammar matter; supported the court’s view that § 1386(b)(1) is forward-looking (“subsequent plan year”).

3. Distinguishing “withdrawal liability” from “allocable unfunded vested benefits”

  • Bd. of Trs. of Int'l Bhd. of Teamsters Loc. 863 Pension Fund v. C&S Wholesale Grocers, Inc., 802 F.3d 534 (3d Cir. 2015): quoted for the proposition that “withdrawal liability” and “allocable amount of unfunded vested benefits” are not synonymous—supporting the Seventh Circuit’s insistence that § 1386(b)(1) acts on “withdrawal liability” as ultimately computed, not the preliminary § 1391 figure.

4. Circuit conflict on sequencing the § 1386(b) credit

  • Perfection Bakeries, Inc. v. Retail Wholesale & Dep't Store Int'l Union and Indus. Pension Fund, 147 F.4th 1314 (11th Cir. 2025), cert. denied, 224 L.Ed.2d 498 (2026): identified as a “tough case” with three opinions. The Seventh Circuit adopted the conceptual approach echoed in the dissent’s reasoning (as described by the Seventh Circuit), concluding the credit applies after the four-step § 1381(b) computation.
  • GCIU-Emp. Ret. Fund v. Quad/Graphics, Inc., 909 F.3d 1214 (9th Cir. 2018): cited as supporting the Fund’s approach and illustrating the split. The Seventh Circuit “respectfully diverge[d]” from the Ninth Circuit as well.

5. PBGC guidance and post-Loper Bright deference

  • Loper Bright Enters. v. Raimondo, 603 U.S. 369 (2024), and Skidmore v. Swift & Co., 323 U.S. 134 (1944): the court treated the PBGC’s consistent position as persuasive “experience and informed judgment” under Skidmore-type respect, not binding deference.

B. Legal Reasoning

1. The court’s core holding: what “withdrawal liability” means

Section 1386(b)(1) says later “withdrawal liability … shall be reduced” by prior partial-withdrawal liability. The court asked: reduced from what? It answered by tying “withdrawal liability” to its statutory definition in § 1381(b)(1): the § 1391 allocable amount “adjusted” by steps (A) through (D). Therefore, the credit is most naturally applied after the four-step process completes (including the annual-payment limitation in step three).

2. Why “step two” does not control credit timing in a later complete withdrawal

The Fund argued that because step two says “next, in the case of a partial withdrawal, in accordance with section 1386,” the entirety of § 1386— including subsection (b)’s credit—must be applied as part of the step sequence, even during complete-withdrawal calculations when an employer had a prior partial withdrawal.

The Seventh Circuit rejected that reading as linguistically and structurally unnatural:

  • “In the case of a partial withdrawal” most naturally refers to the current withdrawal event being partial (not to a historical fact about a prior year).
  • Section 1386(b) is written as a forward-looking bookkeeping rule: once partial liability exists, any withdrawal in a “subsequent plan year” is reduced. That orientation is reinforced by § 1386(b)(2)’s instruction to issue regulations ensuring later-year liability properly reflects the employer’s share.
  • The court noted that the MPPAA elsewhere contemplates modifications after § 1381(b)’s steps (e.g., § 1387(a) and § 1388), undermining the claim that applying a credit after the four steps is an impermissible “extra” step.

3. PBGC’s consistent interpretation as confirmatory support

The PBGC had addressed the “exact question” in Pension Benefit Guar. Corp., Opinion Letter 85-4 (Jan. 30, 1985), concluding the credit is “an adjustment to withdrawal liability” and thus must be applied after § 1381’s computation. The court also cited 29 C.F.R. § 4206.1(a) for the credit’s anti-double-counting purpose. In the appeal, the PBGC reaffirmed that § 1386(b)(1) operates on the “fully-adjusted amount” determined under § 1381(b)(1).

C. Impact

1. Practical consequences for plan sponsors and employers

  • Credit can offset capped liability: In cases where the uncapped allocable unfunded vested benefits are far larger than the 20-year collectible amount, the ruling ensures prior partial-withdrawal payments can meaningfully reduce—potentially eliminate—the amount collectible after the cap.
  • Recalibration of bargaining and withdrawal strategy: Employers with prior partial withdrawals gain greater certainty that prior payments will reduce the amount actually payable under the later complete withdrawal’s capped payment stream.
  • Arbitration and litigation posture: The decision strengthens employer challenges to fund calculations that “bury” the credit before the cap, and it may prompt funds to revise standard calculation templates within the Seventh Circuit.

2. Doctrinal consequences: an acknowledged circuit split

The court expressly diverged from Perfection Bakeries, Inc. v. Retail Wholesale & Dep't Store Int'l Union and Indus. Pension Fund and GCIU-Emp. Ret. Fund v. Quad/Graphics, Inc.. That sharpened split creates a realistic pathway to Supreme Court review, particularly because the issue is purely legal, recurs across multiemployer plans, and has large financial stakes.

3. Administrative-law signal after Loper Bright

Even without Chevron-style deference, the Seventh Circuit treated PBGC’s longstanding view as persuasive under Loper Bright Enters. v. Raimondo and Skidmore v. Swift & Co.. For ERISA/MPPAA practitioners, the decision illustrates that consistent agency interpretations—especially contemporaneous with enactment—can remain influential.

IV. Complex Concepts Simplified

  • Multiemployer plan: A shared pension plan covering workers who move among multiple unionized employers in an industry.
  • Unfunded vested benefits: Benefits already earned (vested) minus plan assets available to pay them; the “shortfall.”
  • Allocable amount: The portion of that shortfall assigned to a particular employer under statutory allocation rules.
  • Withdrawal liability: The amount the employer must pay when it exits, computed by taking the allocable shortfall and applying statutory adjustments.
  • Partial vs. complete withdrawal: A reduction in participation meeting statutory triggers vs. fully exiting the plan.
  • The “four steps” (§ 1381(b)(1)): (A) de minimis reduction; (B) partial-withdrawal calculation rules; (C) installment/payment limitation including the 20-year cap; (D) further statutory limits.
  • 20-year cap (§ 1399(c)(1)(B)): Even if an employer’s computed liability would take more than 20 years to amortize under the statute’s installment method, liability is limited to the first 20 annual payments.
  • § 1386(b) “credit”: A mechanism to prevent double charging—amounts paid/owed for a prior partial withdrawal reduce later withdrawal liability.

V. Conclusion

The Seventh Circuit established a clear sequencing rule: the § 1386(b)(1) credit for prior partial withdrawal liability is applied after computing withdrawal liability under § 1381(b)(1), including the § 1399(c)(1)(B) 20-year limitation. The court grounded the holding in the statutory definition of “withdrawal liability,” the forward-looking text of § 1386(b), and confirmatory PBGC guidance. The decision deepens an inter-circuit conflict and meaningfully affects the real-world amounts employers may owe when prior partial withdrawals precede a complete exit from a multiemployer plan.