Plаintiff-Appellant Blue Diamond Coal Company (“Blue Diamond”) appeals the district court’s order granting summary judgment to Defendants-Appellees Donna E. Shalala, Secretary of Health and Human Services (the “Secretary”), and the Trustees of the United Mine Workers of America Combined Benefit Fund (the “Trustees”). Blue Diamond argues that application of the Coal Industry Retiree Health Benefit Act of 1992, 26 U.S.C. §§ 9701-9722 & 30 U.S.C. §§ 1231-1232 (the “Coal Act”), to Blue Diamond violates substantive due process and is an uncompensated taking. For the reasons stated below, we affirm.
I
The Coal Act is the culmination of a long history of federal involvement in coal industry labor issues. That involvement began in 1946, when a prolonged coal strike occurred. The federal government took over the operation of the nation’s coal mines and entered into an agreement with the United Mine Workers of America (“UMWA”). That agreement, called the Krug-Lewis Agreement, included provisions that required coal producers to provide health and pension benefits to their workers. In 1947, after the mines were returned to their owners, a group of coal producers called the Bituminous Coal Operators’ Association, Inc. (“BCOA”), entered into the first National Bituminous Coal Wаge Agreement (“NBCWA”) collective bargaining agreement with the UMWA. Blue Diamond, although it was not a BCOA mem
In 1974, the UMWA Fund was restructured in the wake of the passage of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001-1461. The UMWA Fund was divided into two funds, the 1950 UMWA Benefit Plan and the 1974 UMWA Benefit Plan (the “1974 Funds”). For the first time, the 1974 NBCWA contained an explicit promise of lifetime health benefits. The 1974 Funds soon became financially unstable, however, due to a combination of factors. First, many coal producers either went out of business or became non-union, and thus ceased contributing to the 1974 Funds. Second, many miners reached retirement age. Third, health care costs continued to increase. In 1989, the UMWA initiated a 10-month strike against the Pittstоn Coal Company over retiree benefits, which was settled only with federal intervention. After the Pittston strike was settled, the Secretary of Labor appointed the Advisory Commission on United Mine Workers of America Retiree Health Benefits (the “Coal Commission”) to study the problems with the 1974 Funds and to propose solutions. The Coal Commission’s report was presented to Congress, along with other information, during Congress’s deliberations over a legislative solution to the 1974 Funds’ problems.
To solve the 1974 Funds’ problems, Congress enacted the Coal Act in 1992. Congress’s stated purpose for enacting the Coal Act was “... to identify persons most responsible for plan liabilities in order to stabilize plan funding and allow for the provision of health care benefits to retirees.” Coal Industry Retiree Health Benefit Act of 1992, Pub.L. No. 102-486, § 19142, 1992 U.S.C.C.A.N. (106 Stat.) 3036, 3037. The Coal Act requires all past coal operator NBCWA signatories to finance the benefits to be paid by the “Combined Fund,” which the Coal Act created by consolidating the 1974 Funds. 26 U.S.C. §§ 9701(a)(5), 9702, 9704, 9705. Under the Coal Act, the Secretary must identify retired coal miners and their dependents who were entitled to health care benefits under the 1974 Funds and must assign those beneficiaries to NBCWA signatory coal operators that remain in business on the bаsis of the operators’ contractual obligations under the NBCWAs. 26 U.S.C. § 9706. “Eligible beneficiaries” under the Coal Act are coal industry retirees and their dependents who were eligible to receive, and receiving, benefits from either of the 1974 Funds. 26 U.S.C. § 9703(f). The Secretary first must assign eligible beneficiaries to coal mine operators that most recently employed the beneficiaries for at least two years, and were signatories to 1978 or later NBCWAs. 26 U.S.C. § 9706(a)(1). If no such operator exists for a particular beneficiary, the Secretary must assign the beneficiary to an operator that most recently employed the beneficiary and was a signatory to the 1978 or later NBCWAs. 26 U.S.C. § 9706(a)(2). If no such operator exists for a particular beneficiary, the beneficiary must be assigned to a pre-1978 signatory operator, such as Blue Diamond, that employed the beneficiary for the longest period of time. 26 U.S.C. § 9706(a)(3). For each beneficiary assigned to it, the coal mine operator must pay a premium to the Combined Fund. 26 U.S.C. § 9704(a).
The Secretary also must assess each NBCWA signatory operator for that operator’s proportional share of “orphan” retirees. 26 U.S.C. § 9704(d). “Orphan” retirees, which the Coal Act refers to as “unassigned beneficiaries,” are those eligible beneficiaries who cannot be assigned pursuant to any provision of § 9706(a) because their employers have gone out of business. See 26 U.S.C. §§ 9703(f), 9704(d). Each coal mine operator’s share of the liability for orphan retirees is proportional to the number of beneficiaries assigned to that operator under § 9706(a) of
Blue Diamond, a coal mining company located in Knoxville, Tennessee, is a reorganized debtor under Chapter 11 of the Bankruptcy Code. Blue Diamond has been in the coal mining business for more than 50 years. Until 1964, Blue Diamond employed miners who were members of the UMWA, and the company agreed to be bound by the NBCWA collective bargaining agreements between coal producers and the UMWA. Pursuant to those NBCWAs, Blue Diamond contributed per-ton royalties to the then-existing UMWA Fund. In 1964, Blue Diamond stopped employing union miners and terminated its obligations to the UMWA Fund. Blue Diamond has continued to mine coal since 1964 with non-UMWA miners.
The bulk of the 1400 living beneficiaries assigned to Blue Diamond (or their decedents) worked for the company at some point in their careers but retired frоm other employers. Blue Diamond First Amended Complaint at 7-8, J.A. at 14; Declaration of Donald Pierce at 8, J.A. at 364. Approximately 74 of Blue Diamond’s assigned beneficiaries were retired and receiving benefits from the UMWA Fund when Blue Diamond switched to non-union labor in 1964. Id. Blue Diamond alleges that its Coal Act premiums will total $4.9 million in the first year, and that the premiums to be paid.over the life of the Act have a present value of $25 million.
Blue Diamond sued the Secretary and the Trustees in May 1993, alleging that imposing the liabilities required by the Coal Act on Blue Diamond violated substantive due process and was an uncompensated, аnd therefore unconstitutional, taking of Blue Diamond’s property. The district court granted summary judgment to the Secretary and the Trustees, In re Blue Diamond Coal Co.,
II
This court reviews the district court’s grant of summary judgment de novo. Coffey v. Foamex L.P.,
III
Blue Diamond argues that the Coal Act violates substantive due process by imposing liability upon Blue Diamond for plan liabilities that were created after Blue Diamond had terminated its relationship with the UMWA Fund. Blue Diamond asserts that no NBCWA that it signed contained an express promise of lifetime health benefits and that only the coal mine operators who signed the 1974 NBCWA or later NBCWAs promised lifetime health benefits. Thus, Blue Diamond argues, it had no part in creating the UMWA members’ expectations of lifetime health benefits, and it should not bе required to provide funds to fulfill the promises of lifetime health benefits made by the 1974 signatory operators.
Legislative acts “adjusting the burdens and benefits of economic life” are presumed constitutional. Usery v. Turner Elkhorn Mining Co.,
The deferential standard of review also applies to retroactive economic legislation. Pension Benefit Guaranty Corp. v. R.A. Gray & Co.,
“It does not follow ... that what Congress can legislate prospectively it can legislate retrospectively. The retroactive aspects of legislation, as well as the prospective aspects, must meet the test of due process, and the justifications for the latter may not suffice for the former.” (citation omitted) But that burden is met simply by showing that the retroactive application of the legislation is itself justified by a rational legislative purpose.
Id. (quoting Usery,
Like the plaintiff in Concrete Pipe, Blue Diamond argues that it is irrational to apply the Coal Act to Blue Diamond because Blue Diamond’s employees did not have vested rights in the UMWA Fund while Blue Diamond contributed to the UMWA Fund. However, the UMWA Fund, like the fund at issue in Concrete Pipe, was a multiemployer fund that paid benefits on the basis of service with any union еmployer. Blue Diamond, like the plaintiff in Concrete Pipe, provided service credits to its union employees that contributed to the fund’s eventual liability to those union employees. Therefore, Blue Diamond contributed to the UMWA Fund’s liabilities and provided a rational basis for Congress to impose Coal Act liability upon it.
Blue Diamond further argues that it was irrational for Congress to impose Coal Act liability upon Blue Diamond because Blue Diamond did not promise its employees that they would receive lifetime health benefits. It is undisputed that the NBCWAs did not contain an explicit promise of lifetime benefits until the 1974 NBCWA agreement. However, several federal courts have found that UMWA members had a legitimate expectation of lifetime benefits before the 1974 NBCWA, based on the various funds’ more than 30-year history of continuous payment of benefits and the statements of coal industry officials. Davon,
... [E]very NBCWA signatory company shared some responsibility in creating a legitimate expectation among miners of lifetime health benefits.... [T]he fact that plaintiffs never contractually agreed to provide lifetime benefits does not rebut the rationality of finding that they contributed to the expectation of lifetime benefits. The Coal Commission and Congress found that the promise of lifetime benefits dates back to the 1940s, even though it is not explicit in any NBCWA until 1974. Even if no such promise was made, every NBCWA contributed to the expectation by creating a continuous mechanism for providing UMWA multiemployer-sponsored health benefit plans.... Plaintiffs were part of this tradition and can rationally be said to have contributed to a reasonable expectation of lifetime health benefits.
Davon,
Even if Blue Diamond did not specifically create the UMWA members’ expectations of lifetime coverage or if those expectations were not reasonable, Congress could still impose Coal Act liability on Blue
Even if the liability imposed by the Coal Act is considered “retroactive” as argued by Blue Diamond, the Coal Act still withstands substantive due process scrutiny. The Coal Act, as applied to Blue Diamond, is retroactive legislation in the sense that it imposes a new duty of payments to the Combined Fund based on each signatory operator’s act of participating in a previous and expired NBCWA. See Davon,
Also, Blue Diamond, like every other coal mine operator who participated in the NBCWAs, profited from the labor of the retired miners that the company once employed. See Davon,
The Coal Act’s imposition of retroactive liability for orphan retirеes likewise passes substantive due process muster. Al
But this argument [that the plaintiff should not have to pay a share of the vested benefits of other companies’ employees] simply ignores the nature of multiemрloyer plans, which ... operate by pooling contributions and liabilities. An employer’s contributions are not solely for the benefit of its employees or employees who have worked for it alone.
Moreover, Congress chose a logical scheme to finance orphan retirees’ health benefits by imposing liability in proportion to each operator’s number of assigned beneficiaries, and by including provisions to mitigate liability for orphans’ benefits. 26 U.S.C. §§ 9704(d); 9705(a)(3), (b). Under these circumstances, Congress’s imposition of retroactive liability for orphan retirees’ benefits is rational. See Davon,
IV
On another constitutional front, Blue Diamond argues that a legislative monetary assessment, such as the Coal Act, that is intended to finance liabilities not created by Blue Diamond, is a “taking” that must be compensated. The Takings Clause of the Fifth Amendment reads in pertinent part, “... nor shall private property be taken for public use, without just compensation.” The main purpose of the Takings Clause is “ ‘to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.’ ” Penn Central Transportation Co. v. City of New York,
(1) the economic impact of the regulation on the claimant;
(2) the extent to which the regulation has interfered with distinct investment-backed expectations; and
(3) the character of the governmental action.
Connolly v. Pension Benefit Guaranty Corp.,
Connolly involved a Takings Clause challenge to the MPPAA, a statute similar to the Coal Act in that it regulated multiemployer benefit plans by imposing retroactive withdrawal liability. In Connolly, the Court assessed the three factors and held that the MPPAA did not constitute a taking. The severity of the economic impact factor weighed against a taking finding, because the plaintiffs liability was proportionate to the plaintiffs relationship with the pension plan at issue. Connolly,
Blue Diamond’s Takings Clause challenge to the Coal Act fares no better than did the plaintiffs challenge in Connolly. In this case, the district court found that the economic impact factor favored Blue Diamond, but focused solely on the costs imposed upon Blue Diamond by the Coal Act. The proper question is not, however, merely the size of the company’s liability under the Act. The Supreme Court has stated that the proper inquiry under the economic impact prong of the takings inquiry in a multiemployer benefit plan context is whether the plaintiffs liability is proportionate to the plaintiffs experience with the fund at issue. Connolly,
Moreover, the Coal Act contains provisions that moderate the impact of the liability for orphans so that liability more closely approximates the operators’ experiences with the UMWA Fund. For example, the Coal Act causes funds remaining in the 1950 UMWA Pension Plan and funds collected under the Abandoned Mine Reclamation Act to be paid to the Combined Fund. 26 U.S.C. § 9705(a)(3), (b). See Davon,
Although it is a closer question, the Coal Act as applied to Blue Diamond does not interfere with reasonable investment-backed expectations in a way that weighs in favor of a takings finding. The federal government pеrvasively regulates the coal mining industry, the UMWA Fund originated from a federal takeover of the nation’s coal mines, and federal intervention has been required to settle strikes over benefits issues. Given these circumstances, Blue Diamond cannot argue that it was reasonable for Blue Diamond to believe that Congress would never intervene in the management of the UMWA Fund or its successor funds. See Davon,
Moreover, Blue Diamond also participated in the NBCWA system that fostered UMWA members’ legitimate expeсtations of lifetime benefits, as discussed above. Thus, Blue Diamond’s expectation that it would not be required to fund lifetime health benefits was not reasonable. See Davon,
[W]e reject [plaintiffs] contention that it was reasonable to expect to be held no more accountable than society at large for the health care of its retired coal miners.... In light of the fact that [plaintiff] benefitted enormously from the Wage Agreements, from the labor of its former employees, and from the promise of lifetime health benefits that in part attracted them, any interference wrought by the Coal Act with [plaintiffs] expectations was interference with unreasonable, not reasonable, expectations.
Chateaugay,
Finally, the character of the Coal Act is identical to the character of the MPPAA— the Coal Act does not physically invade the plaintiffs assets or permanently appropriate them for the government’s own use but instead requires payment to a private benefit fund. See Davon,
Blue Diamond cannot show that the Coal Act hаd a disproportionate economic impact upon the company. The Coal Act does not appropriate private property for governmental use and does not interfere with any of Blue Diamond’s reasonable investment-backed expectations. In sum, none of the significant factors in the Takings Clause inquiry favors Blue Diamond.
Y
The Coal Act, as applied to Blue Diamond, is neither a violation of substantive due process nor an unconstitutional taking. Blue Diamond thus cannot meet its heavy burden of proving that the Coal Act as applied to it is unconstitutional, even under the facts as alleged by Blue Diamond. Therefore, the district court’s order granting summary judgment to the appellees is AFFIRMED.