Court Opinion

ID: 770753
Source: CourtListenerOpinion
Date Created: 2012-04-18 10:39:29+00
Date Added: 2024-06-11T17:55:52.826731
License: Public Domain

229 F.3d 605 (7th Cir. 2000)
Central States, Southeast and Southwest  Areas Pension Fund, and Howard McDougall,  trustee,Plaintiffs-Appellees, Cross-Appellants,v.Safeway, Inc., Defendant-Appellant, Cross-Appellee.
Nos. 99-3724 & 99-3822
In the  United States Court of Appeals  For the Seventh Circuit
Argued March 30, 2000Decided October 6, 2000

Appeals from the United States District Court  for the Northern District of Illinois, Eastern Division.  No. 98 C 2005--Harry D. Leinenweber, Judge.[Copyrighted Material Omitted]
Before Bauer, Diane P. Wood, and Williams, Circuit  Judges.
Diane P. Wood, Circuit Judge.

1
The Central States,  Southeast and Southwest Areas Pension Fund  (Central States) is a well known multiemployer  pension plan that serves members of the  International Brotherhood of Teamsters who work  in the midwestern United States. For years,  Safeway operated many grocery stores in Central  States' coverage area. The employees in these  stores were covered by collective bargaining  agreements with the Teamsters. As part of those  arrangements, Safeway was required to make  contributions to the plan for more than 1500  employees. In the late 1980s, Safeway sold the  divisions that employed most of the plan members.  By 1989, Safeway owned only one store that  employed plan participants. This was its Eau  Claire, Wisconsin, store, where 16 plan members  worked. This case concerns the payments Safeway  must make to Central States as a result of these  changes in its business--changes known as  "partial withdrawals" from the pension fund. The  district court concluded that Safeway owed  approximately $1.9 million for a 1993 partial  withdrawal assessment. We affirm.

2
* Employers who are part of multiemployer plans  make contributions on the basis of the number of  their employees covered by the plan (who are  converted into the antiseptic-sounding  "contribution base units"). So, if an employer's  workforce shrinks or the employer goes out of  business, that employer reduces or ends its  contributions to the plan. This could cause  problems, because plan participants continue to  enjoy their right to benefits upon retirement. If  employers could simply stop contributing when  they go out of business, downsize, or, as in this  case, sell the divisions employing plan  participants to somebody else, a plan could find  itself substantially underfunded. To deal with  this problem, Congress enacted the Multiemployer  Pension Plan Amendments Act of 1980 (MPPAA), Pub.  L. No. 96-364, 94 Stat. 1208 (codified in  scattered sections of 29 U.S.C.). The MPPAA  creates "withdrawal liability" for employers that  leave plans. Basically, when an employer pulls  out, the plan in which it participated is  permitted to approximate the degree to which it  is underfunded (its "unfunded vested benefits,"  or UVBs), and then charge the employer for its  share of those UVBs. Moreover, under 29 U.S.C.  sec. 1385, employers are subject to partial  withdrawal liability when their contributions  decline substantially over a period of several  years. This is what happened to Safeway.

3
Under the rules for determining when a partial  withdrawal occurs, Safeway first incurred  withdrawal liability in 1990 for its 1987 and  1988 asset divestitures. Central States demanded  $16.3 million from Safeway; eventually, they  settled on $12.6 million. This settlement was  confirmed in November 1993. In 1995, Central  States came calling again, this time claiming  that Safeway incurred partial withdrawal  liability for 1993. The gross assessment was  $11,299,544, but Safeway received a credit for  its 1990 payment, making the net demand  $1,985,363. Despite the hefty reduction that took  into account the earlier payment, Safeway argued  that it was entitled to an even greater credit.  Central States disagreed, relying on the credit  rules that are contained in the regulations  issued by the body responsible for overseeing  Employee Retirement Income Security Act (ERISA)  plans, the Pension Benefit Guarantee Corporation  (PBGC). Safeway responded that those regulations  are unreasonable since their use resulted in a  nearly two million dollar assessment even though  no additional assets were sold. Its 1993  liability rested instead only on the statutory  definition of a "partial withdrawal."

4
Anticipating that plans and employers will  occasionally have disputes over the applicability  of the rules, the MPPAA creates a "pay first,  fight later" regime under which a dispute over  withdrawal liability is referred to arbitration,  but only after the employer turns the disputed  amount over to the plan. See 29 U.S.C. sec.  1401(d). This is the path Safeway followed. It  initiated an arbitration proceeding to contest  the fund's calculation of its 1993 withdrawal  liability and the credit method the fund used. In  an interim decision, the arbitrator first decided  that the settlement agreement with respect to the  1990 withdrawal assessment (which led to the  $12.6 million figure mentioned above) did not  operate as a bar of the 1993 partial withdrawal  demand. Second, the interim decision held that  the fund was not estopped from applying its  credit method because it had not specifically  notified Safeway that it was going to change its  practice. The change arose from a final credit  regulation published in the Federal Register, 57  Fed. Reg. 59,808 (Dec. 16, 1992), which was  notice to the world that the fund would be  required to change its method. Last, the  arbitrator decided that the fund's calculation of  Safeway's 1993 withdrawal liability was flawed.  The fund used what is called the "modified  presumptive method" of calculating withdrawal  liability established in ERISA sec. 4211(c)(2).  But it applied a 10-year allocation period, found  in a separate subsection of ERISA, sec.  4211(c)(5)(C). The arbitrator found that the fund  could not put these together and thus could not  use a 10-year allocation period consistently with  ERISA sec. 4206 and the applicable credit  regulations. Instead, it had to use the five-year  period found in credit regulation 29 C.F.R. sec.  2649.4. In accordance with the arbitrator's  ruling, Central States recalculated Safeway's  withdrawal liability using the five-year  allocation period, but that led it to revise its  1993 demand upward, to approximately $2.2  million. In his final decision, the arbitrator  essentially threw up his hands in dismay. He  expressed the opinion that he was "convinced that  the Fund is due additional payment because of the  1993 partial withdrawal and that the Employer is  entitled to a reasonable credit for the payment  that it made because of the prior withdrawal."  But he ultimately concluded that the regulations  were so irrational that they did not provide  direction to the fund to calculate a proper  credit and thus that its demand for payment had  to be set aside.

5
Central States then appealed to the district  court, as permitted by 29 U.S.C. sec. 1401(b).  Safeway argued, as it had before, that the  agreement that settled the 1990 dispute precluded  Central States' request, that Central States was  estopped from demanding money for the 1993  withdrawal by virtue of statements made by one of  its representatives, and that the regulations  providing for subsequent withdrawal liability  were so incoherent as to be irrational and  unenforceable. It also urged that the regulation  was unconstitutional as applied to it, either as  a taking or as a violation of substantive due  process. The district court, properly reviewing  the arbitrator's legal conclusions de novo, see,  e.g., Joseph Schlitz Brewing Co. v. Milwaukee  Brewery Workers' Pension Plan, 3 F.3d 994, 999  (7th Cir. 1994), affirmed on other grounds, 513  U.S. 414 (1995), disagreed with all of Safeway's  arguments and vacated the arbitration award. It  also concluded that the arbitrator had erred in  finding that Central States could not use a 10-  year allocation period for its 1993 demand.  Consequently, the court held that Safeway was  liable for the $1,985,363 originally demanded by  Central States and that, since Safeway had paid  up, Central States could simply keep the money  and the case was closed. Safeway now appeals;  Central States, having seen what the five-year  period would do for it, has cross-appealed to  argue that this is the one that should apply.

II

6
Before we can consider the district court's  reasoning, we must address a jurisdictional  argument that Central States has presented. It  claims that the district court lacked  jurisdiction over Safeway's request to enforce  the arbitrator's award because it came too late.  Under 29 U.S.C. sec. 1401(b)(2), a party has 30  days to bring an action in district court to  "enforce, vacate, or modify" an MPPAA arbitration  award. The arbitrator's final decision was dated  March 21, 1998; Central States filed its action  to vacate the award on April 1, 1998, but Safeway  did not file its counterclaim until May 29, 1998,  well more than 30 days beyond the arbitrator's  decision. Central States seems to think that this  leaves the arbitrator's award in some state of  limbo, under which it is not enforceable, because  no timely petition for enforcement was filed. It  follows, according to Central States, that it can  keep the money. This, we think, is a real stretch  at best, and at worst a serious misunderstanding  of the position in which the party who is content  with an arbitral award finds itself. But there  are other reasons as well for rejecting Central  States' argument.

7
Central States' position is premised on two  points: first, that the 30-day period provided by  sec. 1401(b)(2) applies here, not the six-year  limitations period for ERISA actions contained in  29 U.S.C. sec. 1451(f) (or the three-year period  that applies when the plaintiff knows or should  know of the cause of action), and second, that  the 30 days given by sec. 1401(b)(2) are  jurisdictional in the strong sense of the term--  that is, nonwaivable and not subject to doctrines  like estoppel. The district court, relying on the  reasoning of the Third Circuit in Trustees of  Amalgamated Ins. Fund v. Sheldon Hall Clothing,  Inc., 862 F.2d 1020 (3d Cir. 1988), found that  sec. 1451(f) was the more apt statute and thus  that its six-year period applied. Sheldon Hall  Clothing found that although the 30-day limit  should apply when a party wants to vacate or  modify an award, it was not reasonable to impose  a 30-day limit on an action to enforce the award.  Consequently, it concluded that the more general  six-year period applies to an action solely to  enforce an arbitral award.

8
We are doubtful about this. The language of  sec. 1401(b)(2) says that it applies to actions  to "enforce, vacate, or modify"; the statute  draws no distinction among these types of  actions. Nor, as the parties' extensive  argumentation in this case illustrates, is it  easy to distinguish one type of action from  another. Safeway claims that it merely wants the  award enforced, while Central States says that  Safeway really wants a modification. The Third  Circuit in Sheldon Hall Clothing was concerned  that the limitations period provided in sec.  1401(b)(2) might be too short, since a party may  need more than 30 days to determine if the loser  in arbitration is willing to comply with the  terms of the award. Moreover, the Third Circuit  thought that it made little sense to allow a  party to escape an arbitration award merely by  waiting 30 days and then ignoring the award with  impunity. But this assumes that a party wishing  to enforce an arbitration award under sec.  1401(b)(2) must wait until the losing party has  violated the award in order to bring its action  in the district court. This is not the way sec.  1401(b)(2) reads. Instead, it says that "any  party [to the arbitration] may bring an action to  enforce." The reference to "any party" (rather  than, say, "any party aggrieved") undercuts the  notion that only the loser in arbitration can  bring an action. Nor does such a rule comport  with practice. See, e.g., Central States,  Southeast and Southwest Areas Pension Fund v.  Paramount Liquor Co., 203 F.3d 442, 445 (7th Cir.  2000) (holding that suits brought by victorious  employer and losing plan in separate venues were  equally appropriate). Victorious in arbitration,  Safeway could have then gone to court to reduce  its arbitration award to a judgment pursuant to  sec. 1401(b)(2).

9
We need not decide, however, if there are ever  circumstances under which the longer statute  might apply. There can be no doubt that an action  is proper within 30 days, and if there are ways  of extending that period, the action would also  satisfy the 30-day rule. The question thus is  whether the 30-day period has any flexibility, or  if it is rigidly jurisdictional such that the  district court has no power over the case if the  appeal is filed too late. We stated in Central  States, Southeast and Southwest Areas Pension  Fund v. Navco, 3 F.3d 167, 173 (7th Cir. 1993),  that "periods of limitation in federal statutes  . . . are universally regarded as  nonjurisdictional." This refers, however, to time  periods that are properly characterized as a  statute of limitations, and not a limitation on  judicial power. Examples of the latter include 28  U.S.C. sec. 2101 (specifying the time in which an  appeal or a writ of certiorari must be filed with  the Supreme Court) and Fed. R. App. P. 4  (specifying the time for filing a notice of  appeal in the court of appeals). In those cases,  the passage of too much time deprives the court  of jurisdiction, regardless of what the parties  may wish. On the other hand, a true statute of  limitations may be waived by the parties'  agreement or conduct.

10
The question is thus what kind of rule is  established by sec. 1401: a limitations period,  or a limit on judicial power? The fact that  occasional opinions can be found calling sec.  1401 a "jurisdictional" statute is not  dispositive, because some "jurisdictional" rules  (such as those governing personal jurisdiction)  really describe personal rights that can be  waived, see Insurance Corp. of Ireland, Ltd. v.  Compagnie des Bauxites de Guinee, 456 U.S. 694,  702 (1982), and others do not. Thus, we do not  agree with Central States that the Third  Circuit's passing reference to sec. 1401 as  "jurisdictional" in Crown Cork and Seal, Inc. v.  Central States, Southeast and Southwest Areas  Pension Fund, 982 F.2d 857, 860 (3d Cir. 1992),  resolves the matter. A closer look at Crown Cork  and Seal shows that the court was describing the  source of the federal question, not the question  of the proper way to regard the 30-day time  period. Our decision in Navco, holding that the  general ERISA limitations period in sec. 1451(f)  is not jurisdictional, is more directly on point.  See Navco, 3 F.3d at 173. In addition, we note  that the Supreme Court normally treats a  statutory time period within which litigation  must be commenced as non-jurisdictional. See,  e.g., Irwin v. Department of Veterans Affairs,  498 U.S. 89, 95-96 (1990); Zipes v. Trans World  Airlines, Inc., 455 U.S. 385, 393 (1982). We  conclude that sec. 1401 should be treated the  same way as sec. 1451(f), and thus that its 30-  day period is better conceived of as a  limitations period subject to the normal rules of  waiver and estoppel.

11
Estoppel (or waiver) is Safeway's alternative  argument to preserve its appeal, and we find it  persuasive on these facts. In conjunction with  its petition to the district court, Central  States sent Safeway a letter to confirm that  Safeway's local counsel would receive service of  process. In that letter, Central States "agree[d]  that Safeway has thirty days from today's date to  answer or otherwise plead in response to this  complaint." The letter was dated April 29,  exactly 30 days before Safeway filed its  counterclaim. We agree with Safeway that through  this letter Central States waived any limitations  objection it might otherwise have had. Both parts  of this case (i.e. Safeway's effort to enforce  the award, and Central States' challenge to it)  are thus properly before us, and we can now turn  to the merits.

III
A.

12
The statutory and regulatory apparatus under  which Central States was operating are not models  of clarity--at least not to those who are  uncomfortable operating in a world dominated by  numbers and mathematical formulas. Nonetheless,  neither Central States' actions nor Safeway's  challenges will be comprehensible unless we take  a moment to review the governing laws and  regulations.

13
Safeway's asset sale resulted in a "partial  withdrawal" for MPPAA purposes by virtue of 29  U.S.C. sec. 1385(a)(1), which imposes partial  withdrawal liability for any plan year during  which there is a "70 percent contribution  decline." The first question is thus how a 70%  contribution decline is calculated. Congress  could have chosen to define this in a simple way-  -if an employer's contribution is less than 30%  of the prior year's level, then it incurs  liability. This, however, would have caused  problems for employers with relatively volatile  year-to-year contributions but a consistent  contribution pattern over time. In order to  address that concern, Congress chose instead to  create an eight-year rolling window divided into  two parts: a three-year "testing" period that  consists of the three most recent plan years and  a five-year period (usually called the "lookback  period"), which is comprised of the five plan  years prior to the beginning of the testing  period. See 29 U.S.C. sec. 1385(b)(1)(B). A  partial withdrawal occurs when an employer's  contribution level for every year during the  testing period is lower than 30% of the average  of the two highest contribution years during the  lookback period. See 29 U.S.C. sec.  1385(b)(1)(A).

14
Although this method reduces problems related to  business volatility, it introduces another  problem. Because partial withdrawal liability is  determined annually and independently of any  prior partial withdrawals, an employer that  permanently reduces its contribution levels as a  result of an asset sale or other business change  will probably incur withdrawal liability several  times. The reason is that as years pass, the  lookback period will continue to reach the pre-  asset sale, high contribution years. This makes  it likely that the testing period contribution  levels (i.e. amounts paid in each of the most  recent three years) will be less than 30% of the  average of the two highest lookback years (i.e.  the period from eight years ago through four  years ago). That is what happened to Safeway. It  sold its assets primarily in 1987 and 1988. Under  these formulas, this meant that it first incurred  withdrawal liability in 1990 (because the formula  for partial withdrawal requires that the  contribution level for every testing period year  must be 70% less than the average of the two  highest lookback years, so a few years have to  pass before the employer becomes liable). At the  end of 1993, the testing period was calendar  years 1991, 1992, and 1993; the lookback period  stretched all the way to 1986. Because Safeway  had high contribution levels in 1986 and 1987  (i.e. before it sold its midwestern stores), it  incurred partial withdrawal liability for 1993.  (It also incurred such liability for 1991 and  1992, but it received a credit for its 1990  payment that covered the entire balance.)

15
In order to deal with the possibility that a  withdrawing employer could be overburdened by  application of the MPPAA partial withdrawal  formula, Congress also provided a credit  mechanism for partial withdrawal liability.  Initially, this was a simple dollar-for-dollar  credit for any amount previously paid to the  plan. See 29 U.S.C. sec. 1386(b)(1). In Safeway's  case, that would mean that it would receive a  full credit against its 1993 liability for the  $12.6 million that it paid Central States in  conjunction with its 1990 withdrawal (here, of  course, leaving no net payment due, because the  1993 charge was about $11.3 million). The dollar-  for-dollar system, however, risked being too  generous: liability for some additional UVBs  would continue to accrue, even while some  existing liabilities were satisfied. In other  words, even if the total amount of UVBs remains  the same, the composition of the liabilities will  be different. Giving withdrawing employers a full  credit for prior payments places all of the  burden of new UVBs on remaining employers, which  was precisely what the MPPAA was designed to  prevent.

16
This wrinkle led Congress to authorize PBGC to  issue regulations that "provide for proper  adjustments in [the credit] . . . so that the  liability for any complete or partial withdrawal  in any subsequent year . . . properly reflects  the employer's share of liability with respect to  the plan." See 29 U.S.C. sec. 1386(b)(2). PBGC  did so, with temporary regulations in 1987, which  it finalized in 1992. Under these regulations,  the credit phases out over time, thereby roughly  capturing the change in the composition of the  liability pool and allocating withdrawal  liability accordingly. See generally 29 C.F.R.  sec. 4206.1 et seq.

17
This, in general terms, is the system Central  States was applying when it determined that  Safeway was liable for a partial withdrawal in  1993. Safeway's opening argument is really a  broadside attack on Congress's entire reasoning.  Safeway points out that if it had withdrawn  completely from Central States in 1988, it would  have incurred only its liability for that year  and an additional $135,000 in future liability.  How, it asks, can it be rational for the statute  and the PBGC regulations to impose nearly $2  million more in liability in 1993? This in its  view cannot possibly "properly reflect" its share  of liability to Central States for the UVBs, as  required by sec. 1386(b)(2). It concludes that  only the original dollar-for-dollar formula can  be valid.

18
Given that Congress has entrusted PBGC with the  responsibility of filling out the MPPAA's  regulatory scheme, we review its work  deferentially and will uphold its regulations if  they are based on a permissible construction of  the MPPAA. See, e.g., Production Workers' Union  of Chicago and Vicinity v. NLRB, 161 F.3d 1047,  1050-51 (7th Cir. 1998). We consider those  regulations here in the context of Safeway's  challenge to their application.

19
Applying the rules for partial withdrawals,  Central States concluded that Safeway was still  liable for a partial withdrawal in 1993. It then  applied a statutory formula to calculate the  amount of the liability. Central States uses the  "modified presumptive method" that is permitted  under 29 U.S.C. sec. 1391(c)(2). Under this  provision, a plan's UVBs are divided into two  groups, which the parties call Pool 1 and Pool 2.  Pool 1 liabilities are liabilities that were  incurred before 1980 (when the MPPAA went into  effect); Pool 2 consists of post-1980  liabilities. A particular employer's share of  Pool 1 and Pool 2 liabilities is calculated  separately; the sum of these two is the total  withdrawal liability. The statutory verbiage is  complicated, but in essence this is what happens: the employer's share is determined by multiplying  each pool by the portion of all contributions to  the plan made by the withdrawing employer for the  last ten years of the pool in question (sec.  1391(c)(2) provides for five years, but Central  States exercised its option under 29 U.S.C. sec.  1391(c)(5)(C) to lengthen this to ten years). In  other words, Congress opted to allocate UVBs  according to the relative size of an employer's  contribution. PBGC followed this lead in the  credit regulations, which also use a similar  proportional method for determining the amount of  an employer's credit. 29 C.F.R. sec. 4206.5.

20
The interaction of the various MPPAA formulas  that are used to determine when a withdrawal  occurs, the employer's share of liability in the  event of a withdrawal, and the credit that an  employer is to receive all contain some factors  that in this instance worked to Safeway's  disadvantage. For example, the amount of credit  that Safeway receives for Pool 2 liabilities is  reduced on a straight-line basis over, in this  case, a ten-year period even though there is no  similar reduction when liability is calculated in  the first place. Compare 29 C.F.R. sec.  4206.5(b)(2) (reducing the credit) with 29 U.S.C.  sec. 1391(c)(2)(C) (calculating the employer's  share of Pool 2 liabilities). Along similar  lines, 29 C.F.R. sec. 4206.5(b) (which provides  the applicable methodology for calculating  Safeway's credit, subject to the modification  allowed by sec. 4206.9 for Central States' use of  a ten-year period in calculating its allocation  fractions) determines the amount of the credit on  the basis of "the end of the plan year preceding  the withdrawal for which the credit is being  calculated." It appears that Central States  interpreted the "withdrawal for which the credit  was being calculated" as the 1993 withdrawal,  meaning that it used that year's liability  values. This is not the only possible reading of  this regulation; perhaps the withdrawal to which  the regulation refers is the 1990 withdrawal, in  which case Safeway would receive a larger credit.

21
On appeal, Safeway does not mention either of  these issues, so naturally any arguments relating  to them are waived. International Union of  Operating Engineers v. Rabine, 161 F.3d 427, 432  (7th Cir. 1998); Ricci v. Village of Arlington  Heights, 116 F.3d 288, 292 (7th Cir. 1997).  Instead, it focuses its energy on a single factor  in its withdrawal liability calculation: the  changing mixture of Pool 1 and Pool 2 liabilities  in Central States' overall unfunded benefit  levels from 1990 until 1993.

22
Safeway's major problem comes from the statutory  method for determining the amount of Pool 1 and  Pool 2 liabilities. At the end of any particular  plan year, Central States' actuaries determine  the total amount of UVBs by estimating the  aggregate level of vested benefits and then  comparing this to the plan's assets. Congress  prescribed the formula for dividing these UVBs  into Pool 1 and Pool 2. First, a plan amortizes  its Pool 1 liabilities on a straight-line basis  over 15 years, meaning that it takes the 1980  level, then reduces it by 1/15 for each year that  has passed since 1980. (Note that this also means  that the problem we face here is a disappearing  one.) This reduction accounts for the commonsense  intuition that the further one gets from 1980,  the smaller the portion of total UVBs that are  properly allocable to this period. Pool 2 is then  defined as the residual amount of UVBs (i.e.  total UVBs less Pool 1). As a consequence of this  formula, a plan's total UVB level can remain  constant while the mix between Pool 1 and Pool 2  changes (as Pool 1 gets amortized away).

23
In Safeway's case, this change in the mix of  liabilities happened very quickly. Precisely how  quickly is unclear from the record. Central  States' assessment forms indicate that in 1990,  Pool 1 comprised roughly 95.5% of total UVBs,  whereas in 1993, Pool 1 had dropped to about 70%  of the total. Safeway paints a much more dramatic  picture, arguing that by 1993, Pool 1 represented  only a trivial portion of total UVBs. The reasons  for this apparent disagreement are not clear, but  what matters in this case is the direction, not  the magnitude, of the change. The reason that the  change matters is because, as discussed above,  liabilities and credits are calculated separately  for each pool, then added together to determine  an employer's net position. This means that in  1990 Safeway paid a lot of money based mostly on  Pool 1 liabilities. Then, in 1993, Central States  was entitled to take a fresh look at Safeway's  withdrawal. The company's new liability and  credit were then based on the new Pool 1 and Pool  2 levels. But since Pool 1 has shrunk, so has  Safeway's credit. Meanwhile, its liability for  Pool 2 increased. So Safeway owes again.

24
As we have already noted, Safeway's argument  that it was entitled to a full credit for its  1990 payments rests on the assumption that it  does not make any sense for it to incur  withdrawal liability multiple times when it  downsized only once. It believes that its  predicament is just an unintended (and  irrational) consequence of the rote application  of the MPPAA's formula for determining when a  partial withdrawal occurs. To the extent Safeway  argues that multiple instances of partial  withdrawal liability are patently irrational and  that the PBGC regulations are invalid if they  fail to correct the problem, we disagree. Far  from being a freak occurrence, multiple instances  of withdrawal liability are virtually guaranteed  by application of the sec. 1385 formula, and the  formula itself was rationally designed to address  a number of problems with multiple employer  plans. Congress was aware that sequential  payments would be required, as the numerical  example that appears in the MPPAA's legislative  history shows. See H.R. Rep. No. 96-869, pt. 2,  at 51 (1980). Consequently, we reject any notion  that the PBGC credit regulations must fully  correct for multiple instances of partial  withdrawal liability that arise out of the same  business event. Rather, our focus is on the  particulars of Safeway's problem and the credit  method's treatment of its case.

25
Safeway decries the change in the mix of  Central States' UVBs, calling it a "spillover" of  liabilities from Pool 1 into Pool 2. Safeway  maintains that these are really the same UVBs,  that nothing meaningful happened between 1990 and  1993, and that the conversion from Pool 1 to Pool  2 is just an accounting fiction for which it  should not have to pay. But something important  did happen: time passed. And as time passed, the  mix of Central States' UVB pool changed  substantially. In 1990, most of the UVBs were  "old" (pre-1980), whereas in 1993 many more of  them were "new" (post-1980). It is true that this  is primarily a product of the accounting method  that Congress chose to age the benefits, but the  same could be said of any attribution of benefits  to a particular plan year or set of years. (We  also see nothing that would systematically harm  all employers; the movement from one pool to  another will cause some to gain and others to  lose, depending on the composition and stability  of the workforce.)

26
Some method is necessary to handle the aging of  benefits; otherwise, there will be no match  between the time during which an employer  participated in a plan and the liabilities for  which it is responsible. Congress chose a very  simple method, placing a plan's liabilities into  one of two categories: old (i.e. Pool 1) and new  (i.e. Pool 2). Furthermore, it picked a simple  method for determining the portion of total UVBs  properly included in each of the pools: 15-year  straight-line amortization. Over time, the  proportion attributable to each pool will  inevitably change, as it did here. It would be  easy to scoff at this as accounting fiction since  the coarseness of the actuarial method is so  apparent. And certainly Congress could have come  up with (or could have had PBGC come up with)  more sophisticated methods that would more  perfectly match a plan's UVBs with a particular  plan year. But it is only accounting fiction  because Safeway is unhappy with the result.  Everywhere else, it is just accounting.

27
Safeway's position, then, boils down to a claim  that the regulations are unreasonable for failing  to correct the actuarial imperfections in the  system for aging benefits that Congress  authorized plans such as Central States to use.  We see nothing in sec. 1386(b)(2) that places  such a heavy burden on PBGC. As our discussion of  the methods underlying the calculation of MPPAA  withdrawal liability shows, there are a variety  of assumptions and tradeoffs implicit in this  system. One of these is a simplified method for  aging a plan's UVBs. Section 1386(b)(2) requires  the regulations to adjust an employer's credit so  that it "properly reflects" the employer's  liability, but this mandate must be read in light  of the other provisions of the MPPAA, including  sec. 1391(c)(2)'s approach to aging benefits. The  PBGC regulations appear to do a fairly good (or  at least not unreasonable) job of following  Congress's simple actuarial method, insofar as  the same division (between old and new UVBs) is  used to determine both liability and credit.  There is no irrationality in PBGC's decision to  apply the same rules on both the liability and  credit sides of the fence. While a more  complicated method might help Safeway, Congress  was not compelled to choose one. Because PBGC was  not under an obligation to make an imperfect  system perfect, it was by the same token not  under an obligation in Safeway's case to reverse  what Safeway calls the spillover from Pool 1 into  Pool 2.

B.

28
Next, Safeway argues that the district court  reached an entirely wrong conclusion because it  applied the wrong regulation in the first place.  Central States now agrees, though the two sides  see radically different results stemming from  this argument. The fund argues that the  applicable regulation is 29 C.F.R. sec. 4206.5.  This section provides the credit method for plans  that use the modified presumptive method for  determining liability. The modified presumptive  method normally looks back five years in  determining an employer's partial withdrawal  liability. See 29 U.S.C. sec. 1391(c)(2)(B) and  (C). As we have noted, Central States took  advantage of a provision that allowed it to  extend this five-year window to ten years. 29  U.S.C. sec. 1391(c)(5). This difference led the  district court to choose 29 C.F.R. sec. 4206.9,  which covers plans that have "adopted an  alternative method of allocating unfunded vested  benefits pursuant to [29 U.S.C. sec.  1391(c)(5)]." Under the regulation, plans must  adopt credit methods "consistent with the rules  in [29 C.F.R.] sec.sec. 4206.4 through 4206.8 for  plans using the statutory allocation method most  similar to the plan's alternative allocation  method." If this section applies, the upshot is  that Central States should use the method that  appears in sec. 4206.5, but with a modification  for its use of the ten-year period. The  difference between using the five- and ten-year  windows isn't trivial. If Central States is  allowed to use the five-year period, it is  entitled to another $225,000. Safeway teams up  with Central States in attacking the district  court's acceptance of 29 C.F.R. sec. 4206.9, but,  unsurprisingly, draws a very different conclusion  from its inapplicability. Safeway maintains that  none of the regulatory methods prescribed by PBGC  is applicable, thereby creating a sort of  "regulatory limbo." Absent a governing  regulation, Safeway maintains that we must go  back to the statutory standby, which was the  dollar-for-dollar credit of 29 U.S.C. sec.  1386(b)(1). Since Safeway paid $12.6 million in  connection with its 1990 partial withdrawal and  Central States' assessment for 1993 was only  $11.3 million, it would owe nothing under this  rule.

29
The district court concluded that the  "alternative method" regulation applied (and thus  that Central States was obliged to stick with the  ten-year period it had formally chosen) because  it refers to the "alternative method of  allocating unfunded vested benefits pursuant to  [29 U.S.C. sec. 1391(c)(5)]." 29 C.F.R. sec.  4206.9. The statutory provision that allows  Central States to use a ten- rather than five-  year window is 29 U.S.C. sec. 1391(c)(5)(C)  (allowing plans to use any period between five  and ten years for computing the various statutory  fractions), meaning that the regulation applies  on its face. Notwithstanding the fact that the  regulation refers to all of sec. 1391(c)(5),  Safeway and Central States both argue that PBGC  really meant to refer only to subsections (A) and  (B), not (C). Their main support for this  contention is that the words "alternative  methods" appear in (A) and (B) but not (C).

30
The arbitrator accepted this argument, but, like  the district court, we are not convinced. First,  neither sec. 1391(c) (5)(A) or (B) actually  prescribes an alternative method. Rather, (A)  simply gives PBGC the authority to approve  alternative methods for determining liability  that the plans themselves create. Likewise, (B)  authorizes PBGC to issue standardized approaches  to permit plans to create their own methods of  assessing liability without the need for specific  PBGC approval. Neither actually creates an  alternative method. Both relate instead to  precisely the same issue that subsection (C)  covers, which is the authority of plans to modify  their method of determining liability. No one has  suggested a good reason not to take sec. 4206.9  at face value.

31
Second, and more importantly, the reading the  district court chose avoids the strange results  that would flow from either Safeway's or Central  States' position. Safeway's argument (that no  section applies and that, consequently, the  dollar-for-dollar approach governs) creates an  enormous loophole in an otherwise comprehensive  regulation that PBGC spent more than five years  developing. Central States' (post-litigation)  position (that sec. 4206.5's five-year credit  amortization applies) makes equally little sense.  If a plan is using a ten-year window to determine  liability (which Central States is not willing to  give up), it should also use a ten-year period to  determine an employer's credit. That is the  overall point of sec. 4206.9, which directs plans  that do not follow one of the statutory methods  for computing withdrawal liability to adapt their  credit mechanisms accordingly. That was also  Central States' pre-litigation understanding of  the regulation, as evidenced by its adoption of  a credit rule that uses a ten-year amortization  period. Given all of that, we conclude that sec.  4206.9 applies, and Central States' original  assessment used the correct regulation.

C.

32
Failing all other possible avenues of attack,  Safeway turns to the Constitution. It argues that  the effect of the partial withdrawal liability  credit regulations is so unfairly skewed against  it as to amount to an unconstitutional taking.  Pointing to Connolly v. Pension Benefit Guarantee  Corp., 475 U.S. 211 (1986), which upheld the  MPPAA against a takings challenge rooted in the  employer's contract with the plan, Safeway relies  on a concurrence in which two members of the  Court suggested that "the imposition of  withdrawal liability under the MPPAA . . . may in  some circumstances be so arbitrary and irrational  as to violate the Due Process Clause of the Fifth  Amendment." 475 U.S. at 228 (O'Connor, J.,  concurring). This is just the case Justice  O'Connor had in mind, Safeway tells us. But it is  important to note what Safeway has not argued. It  has not challenged the constitutionality of the  actuarial method used to age unfunded benefits in  the first place. Rather, its argument is that the  PBGC regulations are unconstitutional for failing  to correct adequately for what it perceives as  distortions in the calculation of partial  withdrawal liability. By itself, this is an  uphill battle. The real death knell for Safeway's  position, however, is sounded by the statutory  requirement that any PBGC method used to  determine an employer's credit "properly reflect  the employer's share of liability with respect to  the plan." 29 U.S.C. sec. 1386(b)(2). The  Connolly concurrence suggests the possibility of  lurking Due Process and Takings concerns where  MPPAA withdrawal provisions "may lead to  extremely harsh results" that are "not easily  traceable to the employer's conduct." 475 U.S. at  235 (O'Connor, J., concurring). Since sec.  1386(b)(2) cabins PBGC's discretion and instructs  it to create regulations that "properly reflect"  an employer's share, a set of regulations that  passes the statutory test will, therefore, also  pass constitutional muster. For the reasons we  have already described, we conclude that the set  of possibilities allowed by sec. 1386(b)(2) and  reflected in the regulations is a subset of all  constitutionally permissible regulations. Our  conclusion that the regulation is within PBGC's  statutory authority therefore also resolves the  constitutional question against Safeway.

D.

33
Safeway makes two final arguments. First,  Safeway argues that a provision of the agreement  settling the 1990 demand precludes Central  States' current claim. Second, it claims that  Central States is estopped from making a change  away from the dollar-for-dollar system, because  of some oral representations an employee made in  June 1992. For the reasons stated by the district  court, we find these points and any others  Safeway has presented here that we have not  specifically discussed to be without merit.

IV

34
It is easy to understand why Safeway regards  itself as a victim of circumstances. The timing  of its midwestern asset sales, along with the  many approximations and balances that are part of  the MPPAA's attempt to regulate the enormously  complex area of multiemployer pensions (the  manner in which the MPPAA "ages" an employer's  liabilities, the possibility of successive  partial withdrawals as a result of the three-year  testing and five-year lookback periods, and  Congress's decision to allow plans to use ten  years of contribution history to determine an  employer's allocable share), all combined to  produce an expensive result. But we cannot say  that it was a fundamentally unfair result, nor a  result outside the boundaries of the statutes and  regulations. We therefore Affirm the judgment of  the district court.