OCTOBER TERM, 1997
Syllabus
EASTERN ENTERPRISES
v. APFEL, COMMISSIONER OF SOCIAL
SECURITY, ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIRST
CIRCUIT
No. 97-42. Argued March 4, 1998-Decided June 25,1998
In 1946, a historic labor agreement between coal operators and
the United Mine Workers of America (UMWA) led to the creation of
benefit funds that provided for the medical expenses of miners and
their dependents, with the precise benefits determined by
UMWA-appointed trustees. Those trusts served as the model for the
United Mine Workers of America Welfare and Retirement Fund (1947 W
&R Fund), which was established by the National Bituminous Coal
Wage Agreement of 1947 (1947 NBCWA). The Fund used proceeds of a
royalty on coal production to provide benefits to miners and their
families, and trustees determined benefit levels and other matters.
The 1950 NBCWA created a new fund (1950 W &R Fund), which used
a fixed amount of royalties for benefits, gave trustees the
authority to establish and adjust benefit levels so as to remain
within the budgetary restraints, and did not guarantee lifetime
health benefits for retirees and their dependents. The 1950 W
&R Fund continued to operate with benefit levels subject to
revision until the Employee Retirement Income Security Act of 1974
(ERISA) introduced specific funding and vesting requirements for
pension plans. To comply with ERISA, the UMWA and the Bituminous
Coal Operators' Association entered into the 1974 NBCWA, which
created four new trusts. It was the first agreement to expressly
reference health benefits for retirees, but it did not alter the
employers' obligation to contribute a fixed amount of royalties.
The new agreement did not extend the employers' liability beyond
the term of the agreement. Miners who retired before 1976 were
covered by the 1950 Benefit Plan and Trust (1950 Benefit Plan), and
those retiring after 1975 were covered by the 1974 Benefit Plan and
Trust (1974 Benefit Plan). The increase in benefits and other
factors-the decline in coal production, the retirement of a
generation of miners, and rapid acceleration in health care
costsquickly caused financial problems for the 1950 and 1974
Benefit Plans. To ensure the Plans' solvency, the 1978 NBCWA
obligated signatories to make sufficient contributions to maintain
benefits as long as they were in the coal business. As the Plans
continued to suffer financially, employers began to withdraw,
leaving the remaining signatories to absorb the increasing cost of
covering retirees left behind.
499
Ultimately, Congress passed the Coal Industry Retiree Health
Benefit Act of 1992 (Coal Act) to stabilize funding and provide for
benefits to retirees by merging the 1950 and 1974 Benefit Plans
into a new fund (Combined Fund) that provides substantially the
same benefits as provided by the 1950 and 1974 Plans and is funded
by premiums assessed against coal operators that signed any NBCWA
or other agreement requiring contributions to the 1950 or 1974
Benefit Plans. Respondent, Commissioner of Social Security, assigns
retirees to signatory coal operators according to the following
allocation formula: First, to the most recent signatory to the 1978
or a subsequent NBCWA to employ the retiree in the coal industry
for at least two years, 26 U. S. C. § 9706(a)(I); second, to the
most recent signatory to the 1978 or a subsequent NBCWA to employ
the retiree in the coal industry, § 9706(a)(2); and third, to the
signatory operator that employed the retiree in the coal industry
for the longest period of time prior to the effective date of the
1978 NBCWA, § 9706(a)(3).
Petitioner Eastern Enterprises (Eastern) was a signatory to
every NBCWA executed between 1947 and 1964. It is "in business"
within the Coal Act's meaning, although it left the coal industry
in 1965, after transferring its coal operations to a subsidiary
(EACC) and ultimately selling its interest in EACC to respondent
Peabody Holding Company, Inc. (Peabody). Under the Coal Act, the
Commissioner assigned Eastern the obligation for Combined Fund
premiums respecting over 1,000 retired miners who had worked for
the company before 1966. Eastern sued the Commissioner and other
respondents, claiming that the Coal Act violates substantive due
process and constitutes a taking in violation of the Fifth
Amendment. The District Court granted respondents summary judgment,
and the First Circuit affirmed.
Held: The judgment is reversed, and the case is remanded.
110 F.3d
150, reversed and remanded.
JUSTICE O'CONNOR, joined by THE CHIEF JUSTICE, JUSTICE SCALIA,
and JUSTICE THOMAS, concluded:
1. The declaratory judgment and injunction petitioner seeks are
an appropriate remedy for the taking alleged in this case, and it
is within the district courts' power to award such equitable
relief. The Tucker Act may require that a just compensation claim
under the Takings Clause be filed in the Court of Federal Claims,
but petitioner does not seek compensation from the Government. In
situations analogous to the one here, this Court has assumed the
lack of a compensatory remedy and has granted equitable relief for
Takings Clause violations without discussing the Tucker Act's
applicability. See,
e. g., Babbitt v.
Youpee,
519 U. S. 234,
234-235. pp. 519-522.
500
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2. The Coal Act's allocation of liability to Eastern violates
the Takings Clause. Pp. 522-537.
(a) Economic regulation such as the Coal Act may effect a
taking.
United States v.
Security Industrial Bank,
459 U. S. 70, 78.
The party challenging the government action bears a substantial
burden, for not every destruction or injury to property by such
action is a constitutional taking. A regulation's constitutionality
is evaluated by examining the governmental action's "justice and
fairness." See
Andrus v.
Allard, 444 U. S. 51, 65. Although
that inquiry does not lend itself to any set formula, three factors
traditionally have informed this Court's regulatory takings
analysis: "[T]he economic impact of the regulation, its
interference with reasonable investment backed expectations, and
the character of the governmental action."
Kaiser Aetna v.
United States, 444 U. S. 164, 175. Pp.
522-524.
(b) The analysis in this case is informed by previous decisions
considering the constitutionality of somewhat similar legislative
schemes:
Usery v.
Turner Elkhorn Mining Co., 428 U. S. 1 (Black Lung
Benefits Act of 1972);
Connolly v.
Pension Benefit
Guaranty Corporation, 475 U. S. 211 (Multiemployer Pension Plan
Amendments Act of 1980); and
Concrete Pipe &
Products
of Cal., Inc. v.
Construction Laborers Pension Trust for
Southern Cal., 508 U. S. 602 (same).
Those opinions make clear that Congress has considerable leeway to
fashion economic legislation, including the power to affect
contractual commitments between private parties; and that it may
impose retroactive liability to some degree, particularly where it
is "'confined to short and limited periods required by the
practicalities of producing national legislation,' "
Pension
Benefit Guaranty Corporation v.
R. A. Gray &
Co., 467 U. S.
717, 731. The decisions, however, have left open the
possibility that legislation might be unconstitutional if it
imposes severe retroactive liability on a limited class of parties
that could not have anticipated the liability, and if the extent of
that liability is substantially disproportionate to the parties'
experience. Pp. 524-529.
(c) The Coal Act's allocation scheme, as applied to Eastern,
presents such a case, when the three traditional factors are
considered. As to the economic impact, Eastern's Coal Act liability
is substantial, and the company is clearly deprived of the $50 to
$100 million it must pay to the Combined Fund. An employer's
statutory liability for multiemployer plan benefits should reflect
some proportionality to its experience with the plan.
Concrete
Pipe, supra, at 645. Eastern contributed to the 1947 and 1950
W&R Funds, but ceased its coal mining operations in 1965 and
neither participated in negotiations nor agreed to make
contributions in connection with the Benefit Plans established
under the 1974, 1978, or subsequent NBCWA's. It is the latter
agreements, however, that first suggest an industry commitment to
funding lifetime health
501
benefits for retirees and their dependents. During the years
that Eastern employed miners, such benefits were far less extensive
than under the 1974 NBCWA, were unvested, and were fully subject to
alteration or termination. To the extent that Eastern may be able
to seek indemnification from EACC or Peabody under contractual
arrangements that might insure Eastern against liabilities arising
out of its former coal operations, that indemnity is neither
enhanced nor supplanted by the Coal Act and does not affect the
availability of the declaratory relief sought here. Respondents'
argument that the Coal Act moderates and mitigates the economic
impact by allocating some of Eastern's former employees to
signatories of the 1978 NBCWA is unavailing. That Eastern is not
forced to bear the burden of lifetime benefits for all of its
former employees does not mean that its liability is not a
significant economic burden.
For similar reasons, the Coal Act substantially interferes with
Eastern's reasonable investment-backed expectations. It operates
retroactively, reaching back 30 to 50 years to impose liability
based on Eastern's activities between 1946 and 1965. Retroactive
legislation is generally disfavored. It presents problems of
unfairness because it can deprive citizens of legitimate
expectations and upset settled transactions.
General Motors
Corp. v.
Romein, 503 U. S. 181, 191. The
distance into the past that the Coal Act reaches back to impose
liability on Eastern and the magnitude of that liability raise
substantial fairness questions. The pre-1974 NBCWA's do not
demonstrate that there was an implicit industrywide agreement to
fund lifetime health benefits at the time that Eastern was involved
in the coal industry. The 1947 and 1950 W&R Funds, in which
Eastern participated, operated on a pay-as-you-go basis and the
classes of beneficiaries were subject to the trustees' discretion.
Not until 1974, when ERISA forced revisions to the 1950 W&R
Fund and when Eastern was no longer in the industry, could lifetime
medical benefits have been viewed as promised. Thus, the Coal Act's
scheme for allocating Combined Fund premiums is not calibrated
either to Eastern's past actions or to any agreement by the
company. Nor would the Federal Government's pattern of involvement
in the coal industry have given Eastern sufficient notice that
lifetime health benefits might be guaranteed to retirees several
decades later. Eastern's liability for such benefits also differs
from coal operators' responsibility under the Black Lung Benefits
Act of 1972, which spread the cost of employmentrelated
disabilities to those who profited from the fruits of the
employees' labor,
Turner Elkhorn, supra, at 18. Finally, the
nature of the governmental action in this case is quite unusual in
that Congress' solution to the grave funding problem that it
identified singles out certain employers to bear a substantial
burden, based on the employers' conduct
502
Syllabus
far in the past, and unrelated to any commitment that the
employers made or to any injury they caused. Pp. 529-537.
JUSTICE KENNEDY concluded that application of the Coal Act to
Eastern would violate the proper bounds of settled due process
principles. Although the Court has been hesitant to subject
economic legislation to due process scrutiny as a general matter,
this country's law has harbored a singular distrust of retroactive
statutes, and that distrust is reflected in this Court's due
process jurisprudence. For example, in
Usery v.
Turner
Elkhorn Mining Co., 428 U. S. 1, 15, the Court
held that due process requires an inquiry into whether a
legislature acted in an arbitrary and irrational way when enacting
a retroactive law. This formulation has been repeated in numerous
recent cases,
e. g., United States v.
Carlton,
512 U. S. 26, 31,
which reflect the recognition that retroactive lawmaking is a
particular concern because of the legislative temptation to use it
as a means of retribution against unpopular groups or individuals,
Landgraf v.
USI Film Products, 511 U. S. 244, 266.
Because change in the legal consequences of transactions long
closed can destroy the reasonable certainty and security which are
the very objects of property ownership, due process protection for
property must be understood to incorporate the settled tradition
against retroactive laws of great severity. The instant case
presents one of those rare instances where the legislature has
exceeded the limits imposed by due process. The Coal Act's remedy
bears no legitimate relation to the interest which the Government
asserts supports the statute. The degree of retroactive effect,
which is a significant determinant in a statute's
constitutionality,
e. g., United States v.
Carlton,
supra, at 32, is of unprecedented scope here, since the Coal
Act created liability for events occurring 35 years ago. While the
Court has upheld the imposition of liability on former employers
based on past employment relationships when the remedial statutes
were designed to impose an actual, measurable business cost which
the employer had been able to avoid in the past,
e. g., Turner
Elkhorn, supra, at 19, the Coal Act does not serve this
purpose. The beneficiaries' expectation of lifetime benefits was
created by promises and agreements made long after Eastern left the
coal business, and Eastern was not responsible for the perilous
condition of the 1950 and 1974 Plans which jeopardized the
benefits. Pp. 547-550.
O'CONNOR, J., announced the judgment of the Court and delivered
an opinion, in which REHNQUIST, C. J., and SCALIA and THOMAS, JJ.,
joined. THOMAS, J., filed a concurring opinion,
post, p.
538. KENNEDY, J., filed an opinion concurring in the judgment and
dissenting in part,
post, p. 539. STEVENS, J., filed a
dissenting opinion, in which SOUTER, GINSBURG, and BREYER, JJ.,
joined,
post, p. 550. BREYER, J., filed a dissenting
opinion, in which STEVENS, SOUTER, and GINSBURG, JJ., joined,
post, p. 553.
503
John T. Montgomery argued the cause for petitioner.
With him on the briefs were
John H. Mason and
L.
William Law.
Deputy Solicitor General Kneedler argued the cause for the
federal respondent. With him on the brief were Solicitor General
Waxman, Assistant Attorney General Hunger, Paul R. Q. Wolfson,
Douglas N. Letter, and Sushma Soni.
Peter Buscemi argued the cause for respondents UMW A
Combined Benefit Fund et al. With him on the brief were
Stanley
F. Lechner, David Lubitz, John R. Mooney, Paul A. Green, and
David W Allen. Kenneth A. Sweder filed a brief for
respondents Peabody Holding Co., Inc., et al. *
JUSTICE O'CONNOR announced the judgment of the Court and
delivered an opinion, in which THE CHIEF JUSTICE, JusTICE SCALIA,
and JUSTICE THOMAS join.
In this case, the Court considers a challenge under the Due
Process and Takings Clauses of the Constitution to the Coal
*Briefs of amici curiae urging reversal were filed for
AlliedSignal Inc. et al. by Donald B. Ayer, Jonathan C. Rose, James
E. Gauch, and Gregory G. Katsas; for Davon, Inc., by John W Fischer
II; for Pardee & Curtin Lumber Co. et al. by Arthur Newbold,
Ethan D. Fogel, and Andrew S. Miller; for Unity Real Estate Co. et
al. by Robert H. Bork, David J. Laurent, Patrick M. McSweeney,
William B. Ellis, and John L. Marshall; and for the Washington
Legal Foundation by Timothy S. Bishop, Daniel
Briefs of
amici curiae urging affirmance were filed for
the Bituminous Coal Operators' Association, Inc., by
Clifford M.
Sloan and
Paul L. Joffe; for California Cities and
Counties et al. by
John R. Calhoun, John D. Echeverria, James K.
Hahn, Anthony Saul Alperin, Samuel L. Jackson, Joan R. Gallo,
George Rios, Louise H. Renne, Gary T. Ragghianti, and S.
Shane Stark; for Cedar Coal Co. et al. by
David M.
Cohen; for Freeman United Coal Mining Co. by
Kathryn S.
Matkov; for Ohio Valley Coal Co. et al. by
John G.
Roberts, Jr.; and for the United Mine Workers of America by
Grant Crandall.
Briefs of amici curiae were filed for Midwest Motor Express,
Inc., by Hervey H. Aitken, Jr., and Roy A. Sheetz; and for Pittston
Co. by A. E. Dick Howard, Stephen M. Hodges, Wade W Massie, and
Gregory B. Robertson.
504
Opinion of O'CONNOR, J.
Industry Retiree Health Benefit Act of 1992 (Coal Act or Act),
26 U. S. C. §§ 9701-9722 (1994 ed. and Supp. II), which establishes
a mechanism for funding health care benefits for retirees from the
coal industry and their dependents. We conclude that the Coal Act,
as applied to petitioner Eastern Enterprises, effects an
unconstitutional taking.
I A
For a good part of this century, employers in the coal industry
have been involved in negotiations with the United Mine Workers of
America (UMWA or Union) regarding the provision of employee
benefits to coal miners. When petitioner Eastern Enterprises
(Eastern) was formed in 1929, coal operators provided health care
to their employees through a prepayment system funded by payroll
deductions. Because of the rural location of most mines, medical
facilities were frequently substandard, and many of the medical
professionals willing to work in mining areas were "company
doctors," often selected by the coal operators for reasons other
than their skills or training. The health care available to coal
miners and their families was deficient in many respects. In
addition, the cost of company-provided services, such as housing
and medical care, often consumed the bulk of miners' compensation.
See generally U. S. Dept. of Interior, Report of the Coal Mines
Administration, A Medical Survey of the Bituminous-Coal Industry
(1947) (Boone Report); Report of United States Coal Commission, S.
Doc. No. 195, 68th Cong., 2d Sess. (1925).
In the late 1930's, the UMWA began to demand changes in the
manner in which essential services were provided to miners, and by
1946, the subject of miners' health care had become a critical
issue in collective bargaining negotiations between the Union and
bituminous coal companies. When a breakdown in those negotiations
resulted in a nationwide
505
strike, President Truman issued an Executive order directing
Secretary of the Interior Julius Krug to take possession of all
bituminous coal mines and to negotiate "appropriate changes in the
terms and conditions of employment" of miners with the UMW A. 11
Fed. Reg. 5593 (1946). A week of negotiations between Secretary
Krug and UMW A President John L. Lewis produced the historic
Krug-Lewis Agreement that ended the strike. See App. in No. 96-1947
(GAl), p. 610 (hereinafter App. (GAl)).
That agreement, described as "an almost complete victory for the
miners," M. Fox, United We Stand 405 (1990), led to the creation of
benefit funds, financed by royalties on coal produced and payroll
deductions. The funds compensated miners and their dependents and
survivors for wages lost due to disability, death, or retirement.
The funds also provided for the medical expenses of miners and
their dependents, with the precise benefits determined by
UMWA-appointed trustees. In addition, the Krug-Lewis Agreement
committed the Government to undertake a comprehensive survey of the
living conditions in coal mining areas in order to assess the
improvements necessary to bring those communities up to "recognized
American standards." Krug-Lewis Agreement § 5, App. (GAl) 613. That
study concluded that the medical needs of miners and their
dependents would be more effectively served through "a broad
prepayment system, based on sound actuarial principles." Boone
Report 226-227.
Shortly after the study was issued, the mines returned to
private control and the UMWA and several coal operators entered
into the National Bituminous Goal Wage Agreement of 1947 (1947
NBGWA), App. (GAl) 615, which established the United Mine Workers
of America Welfare and Retirement Fund (1947 W &R Fund),
modeled after the KrugLewis benefit trusts. The Fund was to use the
proceeds of a royalty on coal production to provide pension and
medical
506
Opinion of O'CONNOR, J.
benefits to miners and their families. The 1947 NBCWA did not
specify the benefits to which miners and their dependents were
entitled. Instead, three trustees appointed by the parties were
given authority to determine "coverage and eligibility, priorities
among classes of benefits, amounts of benefits, methods of
providing or arranging for provisions for benefits, investment of
trust funds, and all other related matters." 1947 NBCWA 146, App.
(CA1) 619.
Disagreement over benefits continued, however, leading to the
execution of another NBCWA in 1950, which created a new
multiemployer trust, the United Mine Workers of America Welfare and
Retirement Fund of 1950 (1950 W&R Fund). The 1950 W &R Fund
established a 30-cents-per-ton royalty on coal produced, payable by
signatory operators on a "several and not joint" basis for the
duration of the 1950 Agreement. 1950 NBCWA 63, App. (CA1) 640. As
with the 1947 W&R Fund, the 1950 W&R Fund was governed by
three trustees chosen by the parties and vested with responsibility
to determine the level of benefits.
Id., at 59-61, App.
(CA1) 638-639. Between 1950 and 1974, the 1950 NBCW A was amended
on occasion, and new NBCW A's were adopted in 1968 and 1971. Except
for increases in the amount of royalty payments, however, the terms
and structure of the 1950 W &R Fund remained essentially
unchanged. A 1951 amendment recognized the creation of the
Bituminous Coal Operators' Association (BCOA), a multiemployer
bargaining association, which became the primary representative of
coal operators in negotiations with the Union. See App. (CA1)
647-648.
Under the 1950 W &R Fund, miners and their dependents were
not promised specific benefits. As the 1950 W &R Fund's Annual
Report for the fiscal year ending June 30, 1955, explained:
"Under the legal and financial obligations ... imposed [by the
Trust Agreement], the Fund is operated on a pay-as-you-go basis,
maintaining a sound relation-
507
ship between revenues and expenditures. Resolutions adopted by
the Trustees governing Fund Benefits-Pensions, Hospital and Medical
Care, and Widows and Survivors Benefits-specifically provide that
all these Benefits are subject to termination, revision, or
amendment, by the Trustees in their discretion at any time. No
vested interest in the Fund extends to any beneficiary." Id., at
3-4, App. (CA1) 869-870.
See also
Mine Workers Health and Retirement Funds v.
Robinson, 455
U. S. 562, 565, and n. 2 (1982). Thus, the Fund operated using
a fixed amount of royalties, with the trustees having the authority
to establish and adjust the level of benefits provided so as to
remain within the budgetary constraints.
Subsequent annual reports of the 1950 W &R Fund reiterated
that benefits were subject to change. See,
e. g.,
1950 W&R Fund Annual Report for the Year Ending June 30,
1956 (1956 Annual Report), p. 30, App. (CA1) 929 ("Resolutions
adopted by the Trustees governing Fund BenefitsPensions, Hospital
and Medical Care, and Widows and Survivors Benefits-specifically
provide that all these Benefits are subject to termination,
revision, or amendment, by the Trustees in their discretion at any
time"); 1950 W &R Fund Annual Report for the Year Ending June
30, 1958, pp. 20-21, App. (CA1) 955-956 ("Trustee regulations
governing Benefits specifically provide that all Benefits which
have been authorized are subject to termination, suspension,
revision, or amendment by the Trustees in their discretion at any
time. Each beneficiary is officially notified of this governing
provision at the time his Benefit is authorized").l Thus,
although
1 See also 1950 W &R Fund Annual Report for the Year Ending
June 30, 1959, pp. 27-28, App. (CA1) 995-996; 1950 W &R Fund
Annual Report for the Year Ending June 30, 1960 (1960 Annual
Report), pp. 19-20, App. (CA1) 1028-1029; 1950 W&R Fund Annual
Report for the Year Ending June 30, 1961 (1961 Annual Report), p.
5, App. (CA1) 1047; 1950 W &R Fund Annual Report for the Year
Ending June 30, 1962, p. 5, App. (CA1)
508
Opinion of O'CONNOR, J.
persons involved in the coal industry may have made occasional
statements intimating that the 1950 W &R Fund promised lifetime
health benefits, see App. (CA1) 1899, 1971-1972, it is clear that
the 1950 W &R Fund did not, by its terms, guarantee lifetime
health benefits for retirees and their dependents. In fact, as to
widows of miners, the 1950 W &R Fund expressly limited health
benefits to the time period during which widows would also receive
death benefits. See,
e. g.,
Robinson, supra, at
565-566; 1956 Annual Report 14, App. (CA1) 913.
Between 1950 and 1974, the trustees often exercised their
prerogative to alter the level of benefits according to the Fund's
budget. In 1960, for instance, "[t]he Trustees of the Fund,
recognizing their legal and fiscal obligation to soundly administer
the Trust Fund, took action prior to the close of the fiscal year,
to curtail the excess of expenditures over income," by "limit[ing]
or terminat[ing] eligibility for [certain] Trust Fund Benefits."
1960 Annual Report 2, App. (CA1) 1011. Similar concerns prompted
the trustees to reduce monthly pension benefits by 25% at one
point, and to limit the range of medical and pension benefits
available to miners employed by operators who did not pay the
required royalties. See 1961 Annual Report 2, 11-12, App. (CA1)
1044, 1053-1054; 1963 Annual Report 13, 16, App. (CA1) 1121,
1124.
Reductions in benefits were not always acceptable to the miners,
and some wildcat strikes erupted in the 1960's. See Secretary of
Labor's Advisory Commission on United Mine Workers of America
Retiree Health Benefits, Coal Commission Report 22-23 (1990) (Coal
Comm'n Report), App. (CA1)
1080; 1950 W &R Fund Annual Report for the Year Ending June
30, 1963 (1963 Annual Report), p. 5, App. (CA1) 1113; 1950 W &R
Fund Annual Report for the Year Ending June 30, 1964, p. 8, App.
(CA1) 1146; 1950 W &R Fund Annual Report for the Year Ending
June 30, 1965, p. 18, App. (CA1) 1191; 1950 W&R Fund Annual
Report for the Year Ending June 30, 1966 (1966 Annual Report), p.
19, App. (CA1) 1223.
509
1352-1353. Nonetheless, the 1950 W&R Fund continued to
provide benefits on a "pay-as-you-go" basis, with the level of
benefits fully subject to revision, until the Employee Retirement
Income Security Act of 1974 (ERISA), 29 U. S. C. § 1001
et
seq., introduced specific funding and vesting requirements for
pension plans. To comply with ERISA, the UMWA and the BCOA entered
into a new agreement, the 1974 NBCW A, which created four trusts,
funded by royalties on coal production and premiums based on hours
worked by miners, to replace the 1950 W&R Fund. See
Robinson, supra, at 566. Two of the new trusts, the UMWA
1950 Benefit Plan and Trust (1950 Benefit Plan) and the UMW A 1974
Benefit Plan and Trust (1974 Benefit Plan), provided nonpension
benefits, including medical benefits. Miners who retired before
January 1, 1976, and their dependents were covered by the 1950
Benefit Plan, while active miners and those who retired after 1975
were covered by the 1974 Benefit Plan.
The 1974 NBCWA thus was the first agreement between the UMWA and
the BCOA to expressly reference health benefits for retirees; prior
agreements did not specifically mention retirees, and the scope of
their benefits was left to the discretion of fund trustees. The
1974 NBCWA explained that it was amending previous medical benefits
to provide a Health Services card for retired miners until their
death, and to their widows until their death or remarriage. 1974
NBCWA 99, 105 (Summary of Principal Provisions, UMWA Health and
Retirement Benefits), App. (CA1) 755, 758. Despite the expanded
benefits, the 1974 NBCW A did not alter the employers' obligation
to contribute only a fixed amount of royalties, nor did it extend
employers' liability beyond the life of the agreement. See id.,
Art. XX, § (d), App. (CA1) 749.
As a result of the broadened coverage under the 1974 NBCW A, the
number of eligible benefit recipients jumped dramatically. See 1977
Annual Report of the UMWA Wel-
510
Opinion of O'CONNOR, J.
fare and Retirement Funds 3, App. (CA1) 1253. A 1993 Report of
the House Committee on Ways and Means explained:
"The 1974 agreement was the first NBCW A to mention retiree
health benefits. As part of a substantial liberalization of
benefits and eligibility under both the pension and health plans,
the 1974 contract provided lifetime health benefits for retirees,
disabled mine workers, and spouses, and extended the benefits to
surviving spouses .... " House Committee on Ways and Means,
Financing UMW A Coal Miner "Orphan Retiree" Health Benefits, 103d
Cong., 1st Sess., 4 (Comm. Print 1993) (House Report).
The increase in benefits, combined with various other
circumstances-such as a decline in the amount of coal produced, the
retirement of a generation of miners, and rapid escalation of
health care costs-quickly resulted in financial problems for the
1950 and 1974 Benefit Plans. In response, the next NBCW A, executed
in 1978, assigned responsibility to signatory employers for the
health care of their own active and retired employees. See 1978
NBCWA, Art. XX, § (c)(3), App. (CA1) 778. The 1974 Benefit Plan
remained in effect, but only to cover retirees whose former
employers were no longer in business.
To ensure the Benefit Plans' solvency, the 1978 NBCWA included a
"guarantee" clause obligating signatories to make sufficient
contributions to maintain benefits during that agreement, and
"evergreen" clauses were incorporated into the Benefit Plans so
that signatories would be required to contribute as long as they
remained in the coal business, regardless of whether they signed a
subsequent agreement. See id., § (h), App. (CA1) 787-788; House
Report 5. As a result, the coal operators' liability to the Benefit
Plans shifted from a defined contribution obligation, under which
employers were responsible only for a predetermined
511
amount of royalties, to a form of defined benefit obligation,
under which employers were to fund specific benefits.
Despite the 1978 changes, the Benefit Plans continued to suffer
financially as costs increased and employers who had signed the
1978 NBCW A withdrew from the agreement, either to continue in
business with nonunion employees or to exit the coal business
altogether. As more and more coal operators abandoned the Benefit
Plans, the remaining signatories were forced to absorb the
increasing cost of covering retirees left behind by exiting
employers. A spiral soon developed, with the rising cost of
participation leading more employers to withdraw from the Benefit
Plans, resulting in more onerous obligations for those that
remained. In 1988, the UMWA and BCOA attempted to relieve the
situation by imposing withdrawal liability on NBCW A signatories
who seceded from the Benefit Plans. See 1988 NBCW A, Art. XX, §§
(i) and (j), App. (CA1) 805, 828-829. Even so, by 1990, the 1950
and 1974 Benefit Plans had incurred a deficit of about $110
million, and obligations to beneficiaries were continuing to
surpass revenues. See House Report 9; Coal Comm'n Report 43-44,
App. (CA1) 1373-1374.
B
In response to unrest among miners, such as the lengthy strike
that followed Pittston Coal Company's refusal to sign the 1988
NBCWA, Secretary of Labor Elizabeth Dole announced the creation of
the Advisory Commission on United Mine Workers of America Retiree
Health Benefits (Coal Commission or Commission). The Coal
Commission was charged with "recommend[ing] a solution for ensuring
that orphan retirees in the 1950 and 1974 Benefit Trusts will
continue to receive promised medical care." Coal Comm'n Report 2,
App. (CA1) 1333. The Commission explained that "[h]ealth care
benefits are an emotional subject in the coal industry, not only
because coal miners have been promised
512
Opinion of O'CONNOR, J.
and guaranteed health care benefits for life, but also because
coal miners in their labor contracts have traded lower pensions
over the years for better health care benefits." Coal Comm'n
Report, Executive Summary vii, App. (CA1) 1324. The Commission
agreed that "a statutory obligation to contribute to the plans
should be imposed on current and former signatories to the
[NBCWA]," but disagreed about "whether the entire [coal] industry
should contribute to the resolution of the problem of orphan
retirees."
Id., at vii-viii, App. (CA1) 1324-1325.
Therefore, the Commission proposed two alternative funding plans
for Congress' consideration.
First, the Commission recommended that Congress establish a fund
financed by an industrywide fee to provide health care to orphan
retirees at the level of benefits they were entitled to receive at
that fund's inception. To cover the cost of medical benefits for
retirees from signatories to the 1978 or subsequent NBCWA's who
remained in the coal business, the Commission proposed the creation
of another fund financed by the retirees' most recent employers.
Id., at 61, App. (CA1) 1390. The Commission also recommended
that Congress codify the "evergreen" obligation of the 1978 and
subsequent NBCWA's. Id., at 63, App. (CA1) 1392.
As an alternative to imposing industrywide liability, the
Commission suggested that Congress spread the cost of retirees'
health benefits across "a broadened base of current and past
signatories to the contracts," apparently referring to the 1978 and
subsequent NBCW A's. See id., at 58, 65, App. (CA1) 1387, 1394. Not
all Commission members agreed, however, that it would be fair to
assign such a burden to signatories of the 1978 agreement. Four
Commissioners explained that "[i]ssues of elemental fairness are
involved" in imposing obligations on "respectable operators who
made decisions in the past to move to different locales, invest in
different technology, or pursue their business with or without
respect to union presence."
Id., at 85, App. (CA1) 1414
(statement of Commissioners Michael J. Mahoney,
513
Carl J. Schramm, Arlene Holen, Richard M. Holsten); see also
id., at 81-82, App. (CA1) 1410-1411 (statement of Commissioner
Richard M. Holsten).
After the Coal Commission issued its report, Congress considered
several proposals to fund health benefits for UMWA retirees. At a
1991 hearing, a Senate subcommittee was advised that more than
120,000 retirees might not receive "the benefits they were
promised." Coal Commission Report on Health Benefits of Retired
Coal Miners: Hearing before the Subcommittee on Medicare and
Long-Term Care of the Senate Committee on Finance, 102d Cong., 1st
Sess., 45 (1991) (statement of BCOA Chairman Michael K. Reilly).
The Coal Commission's Chairman submitted a statement urging that
Congress' assistance was needed "to fulfill the promises that began
in the collective bargaining process nearly 50 years ago .... "
Id., at 306 (prepared statement of W. J. Usery, Jr.). Some
Senators expressed similar concerns that retired miners might not
receive the benefits promised to them. See id., at 16 (statement of
Sen. Dave Durenberger) (describing issue as involving "a whole
bunch of promises made to a whole lot of people back in the 1940s
and 1950s when the cost consequences of those problems were totally
unknown"); id., at 59 (prepared statement of Sen. Orrin G. Hatch)
(stating that "miners and their families ... were led to believe by
their own union leaders and the companies for which they worked
that they were guaranteed lifetime [health] benefits").
In 1992, as part of a larger bill, both Houses passed
legislation based on the Coal Commission's first proposal, which
required signatories to the 1978 or any subsequent NBCW A to fund
their own retirees' health care costs and provided for orphan
retirees' benefits through a tax on future coal production. See H.
R. Conf. Rep. No. 102-461, pp. 268-295 (1992). President Bush,
however, vetoed the entire bill. See H. R. Doc. No. 102-206, p. 1
(1992).
514
Opinion of O'CONNOR, J.
Congress responded by passing the Coal Act, a modified version
of the Coal Commission's alternative funding plan. In the Act,
Congress purported "to identify persons most responsible for [1950
and 1974 Benefit Plan] liabilities in order to stabilize plan
funding and allow for the provision of health care benefits to ...
retirees." § 19142(a)(2), 106 Stat. 3037, note following 26 U. S.
C. § 9701; see also 138 Congo Rec. 34001 (1992) (Conference Report
on Coal Act) (explaining that, under the Coal Act, "those companies
which employed the retirees in question, and thereby benefitted
from their services, will be assigned responsibility for providing
the health care benefits promised in their various collective
bargaining agreements").
The Coal Act merged the 1950 and 1974 Benefit Plans into a new
multiemployer plan called the United Mine Workers of America
Combined Benefit Fund (Combined Fund). See 26 U. S. C. §§
9702(a)(1), (2).2 The Combined Fund provides "substantially the
same" health benefits to retirees and their dependents that they
were receiving under the 1950 and 1974 Benefit Plans. See §§
9703(b)(1), (f). It is financed by annual premiums assessed against
"signatory coal operators," i.
e., coal operators that
signed any NBCWA or any other agreement requiring contributions to
the 1950 or 1974 Benefit Plans. See §§ 9701(b)(1), (3); §
9701(c)(1). Any signatory operator who "conducts or derives revenue
from any business activity, whether or not in the coal industry,"
may be liable for those premiums. §§ 9706(a), 9701(c)(7). Where a
signatory is no longer involved in any business activity, premiums
may be levied against "related person[s]," including successors in
interest and businesses or corporations under common control. §§
9706(a), 9701(c)(2)(A).
The Commissioner of Social Security (Commissioner) calculates
the premiums due from any signatory operator based
2The Coal Act also established another fund, the 1992 UMWA
Benefit Plan, which is not at issue here. See 26 U. S. C. §
9712.
515
on the following formula, by which retirees are assigned to
particular operators:
"For purposes of this chapter, the Commissioner of Social
Security shall ... assign each coal industry retiree who is an
eligible beneficiary to a signatory operator which (or any related
person with respect to which) remains in business in the following
order:
"(1) First, to the signatory operator which-
"(A) was a signatory to the 1978 coal wage agreement or any
subsequent coal wage agreement, and
"(B) was the most recent signatory operator to employ the coal
industry retiree in the coal industry for at least 2 years.
"(2) Second, if the retiree is not assigned under paragraph (1),
to the signatory operator which-
"(A) was a signatory to the 1978 coal wage agreement or any
subsequent coal wage agreement, and
"(B) was the most recent signatory operator to employ the coal
industry retiree in the coal industry.
"(3) Third, if the retiree is not assigned under paragraph (1)
or (2), to the signatory operator which employed the coal industry
retiree in the coal industry for a longer period of time than any
other signatory operator prior to the effective date of the 1978
coal wage agreement." § 9706(a).
It is the application of the third prong of the allocation
formula, § 9706(a)(3), to Eastern that we review in this case.3
3 The Coal Act also provides for an allocation of liability for
unassigned beneficiaries. See 26 U. S. C. § 9704(d). That
liability, however, has thus far been covered through the transfer
of funds from other sources. See § 9705; 30 U. S. C. § 1232(h).
This case presents no question regarding the assignment to Eastern
of liability for any retirees other than its own former
employees.
516
Opinion of O'CONNOR, J.
II A
Eastern was organized as a Massachusetts business trust in 1929,
under the name Eastern Gas and Fuel Associates. Its current
holdings include Boston Gas Company and a barge operator.
Therefore, although Eastern is no longer involved in the coal
industry, it is "in business" within the meaning of the Coal Act.
Until 1965, Eastern conducted extensive coal mining operations
centered in West Virginia and Pennsylvania. As a signatory to each
NBCWA executed between 1947 and 1964, Eastern made contributions of
over $60 million to the 1947 and 1950 W&R Funds. Brief for
Petitioner 6.
In 1963, Eastern decided to transfer its coal-related operations
to a subsidiary, Eastern Associated Coal Corp. (EACC). The transfer
was completed by the end of 1965, and was described in Eastern's
federal income tax return as an agreement by EACC to assume all of
Eastern's liabilities arising out of coal mining and marketing
operations in exchange for Eastern's receipt of EACC's stock. EACC
made similar representations in Security and Exchange Commission
filings, describing itself as the successor to Eastern's coal
business. See App. (CA1) 117-118. At that time, the 1950 W&R
Fund had a positive balance of over $145 million. 1966 Annual
Report 3, App. (CA1) 1207.
Eastern retained its stock interest in EACC through a subsidiary
corporation, Coal Properties Corp. (CPC), until 1987, and it
received dividends of more than $100 million from EACC during that
period. See Brief for Petitioner 6, n. 13. In 1987, Eastern sold
its interest in CPC to respondent Peabody Holding Company, Inc.
(Peabody). Under the terms of the agreement effecting the transfer,
Peabody, CPC, and EACC assumed responsibility for payments to
certain benefit plans, including the "Benefit Plan for UMW A
Represented Employees of EACC and Subs." App. 206a, 210a.
517
As of June 30,1987, the 1950 and 1974 Benefit Plans reported
surplus assets, totaling over $33 million. House Report 9.
B
Following enactment of the Coal Act, the Commissioner assigned
to Eastern the obligation for Combined Fund premiums respecting
over 1,000 retired miners who had worked for the company before
1966, based on Eastern's status as the pre-1978 signatory operator
for whom the miners had worked for the longest period of time. See
26 U. S. C. § 9706(a). Eastern's premium for a 12-month period
exceeded $5 million. See Brief for Petitioner 16.
Eastern responded by suing the Commissioner, as well as the
Combined Fund and its trustees, in the United States District Court
for the District of Massachusetts. Eastern asserted that the Coal
Act, either on its face or as applied, violates substantive due
process and constitutes a taking of its property in violation of
the Fifth Amendment. Eastern also challenged the Commissioner's
interpretation of the Coal Act. The District Court granted summary
judgment for respondents on all claims, upholding both the
Commissioner's interpretation of the Coal Act and the Act's
constitutionality.
Eastern Enterprises v.
Shalala,
942 F. Supp. 684 (Mass. 1996).
The Court of Appeals for the First Circuit affirmed.
Eastern Enterprises v.
Chater, 110 F.3d
150 (1997). The court rejected Eastern's challenge to the
Commissioner's interpretation of the Coal Act. Addressing Eastern's
substantive due process claim, the court described the Coal Act as
"entitled to the most deferential level of judicial scrutiny,"
explaining that, "[w]here, as here, a piece of legislation is
purely economic and does not abridge fundamental rights, a
challenger must show that the legislature acted in an arbitrary and
irrational way."
Id., at 155-156 (internal quotation marks
omitted). In the court's view, the retroactive liability imposed by
the Act was permissible "[a]s long as the
518
Opinion of O'CONNOR, J.
retroactive application ... is supported by a legitimate
legislative purpose furthered by rational means," for "judgments
about the wisdom of such legislation remain within the exclusive
province of the legislative and executive branches."
I d.,
at 156 (internal quotation marks omitted). The court concluded that
Congress' purpose in enacting the Coal Act was legitimate and that
Eastern's obligations under the Act are rationally related to those
objectives, because Eastern's execution of pre-1974 NBCWA's
contributed to miners' expectations of lifetime health benefits.
Id., at 157. The court rejected Eastern's argument that
costs of retiree health benefits should be borne by post-1974 coal
operators, reasoning that Eastern's proposal would require coal
operators to fund health benefits for miners whom the operators had
never employed.
I d., at 158, n. 5. The court also noted the
substantial dividends that Eastern had received from EACC.
Id., at 158.
The court analyzed Eastern's claim that the Coal Act effects an
uncompensated taking under the three factors set out in
Connolly v.
Pension Benefit Guaranty Corporation,
475 U. S. 211,
225 (1986): "(1) the economic impact of the regulation on the
claimant, (2) the extent to which the regulation interferes with
the claimant's reasonable investmentbacked expectations, and (3)
the nature of the governmental action." 110 F. 3d, at 160. With
respect to the Act's economic impact on Eastern, the court observed
that the Act "does not involve the total deprivation of an asset."
Ibid. The Act's terms, the court found, "reflec[t] a
sufficient degree of proportionality" because Eastern is assigned
liability only for miners "whom it employed for a relevant (and
relatively long) period of time," and then only if no post-1977
NBCWA signatory (or related person) can be found.
Ibid. The
court also rejected Eastern's contention that the Act unreasonably
interferes with its investment-backed expectations, explaining that
the pattern of federal intervention in the coal industry and
Eastern's role in fostering an expectation of
519
lifetime health benefits meant that Eastern "had every reason to
anticipate that it might be called upon to bear some of the
financial burden that this expectation engendered."
Id., at
161. Finally, in assessing the nature of the challenged
governmental action, the court determined that the Coal Act does
not result in the physical invasion or permanent appropriation of
Eastern's property, but merely "adjusts the benefits and burdens of
economic life to promote the common good."
Ibid. (internal
quotation marks omitted). The court also noted that the premiums
are disbursed to the privately operated Combined Fund, not to a
government entity. For those reasons, the court concluded, "there
is no basis whatever for [Eastern's] claim that the [Coal Act]
transgresses the Takings Clause."
Ibid.
Other Courts of Appeals have also upheld the Coal Act against
constitutional challenges.4 In view of the importance of the issues
raised in this case, we granted certiorari. 522 U. S. 931
(1997).
III
We begin with a threshold jurisdictional question, raised in the
federal respondent's answer to Eastern's complaint:
Whether petitioner's takings claim was properly filed in Federal
District Court rather than the United States Court of Federal
Claims. See App. (CA1) 40. Although the Commissioner no longer
challenges the Court's adjudication of this action, see Brief for
Federal Respondent 38-39, n. 30, it is appropriate that we clarify
the basis of our jurisdiction over petitioner's claims.
4See, e. g., Holland v. Keenan Trucking Co.,
102 F.3d
736, 739-742 (CA4 1996); Lindsey Coal Mining Co. v. Chater,
90 F.3d
688, 693-695 (CA3 1996); In re Blue Diamond Coal Co.,
79 F.3d
516, 521-526 (CA6 1996), cert. denied, 519 U. S. 1055 (1997);
Davon, Inc. v. Shalala,
75 F.3d
1114, 1121-1130 (CA7), cert. denied, 519 U. S. 808 (1996); In
re Chateaugay Corp.,
53 F.3d
478, 486-496 (CA2), cert. denied sub nom. LTV Steel Co. v.
Shalala, 516 U. S. 913 (1995).
520
Opinion of O'CONNOR, J.
Under the Tucker Act, 28 U. S. C. § 1491(a)(1), the Court of
Federal Claims has exclusive jurisdiction to render judgment upon
any claim against the United States for money damages exceeding
$10,000 that is "founded either upon the Constitution, or any Act
of Congress or any regulation of an executive department, or upon
any express or implied contract with the United States, or for
liquidated or unliquidated damages in cases not sounding in tort."
Accordingly, a claim for just compensation under the Takings Clause
must be brought to the Court of Federal Claims in the first
instance, unless Congress has withdrawn the Tucker Act grant of
jurisdiction in the relevant statute. See,
e. g.,
Ruckelshaus v.
Monsanto Co., 467 U. S. 986, 1016-1019
(1984).
In this case, however, Eastern does not seek compensation from
the Government. Instead, Eastern requests a declaratory judgment
that the Coal Act violates the Constitution and a corresponding
injunction against the Commissioner's enforcement of the Act as to
Eastern. Such equitable relief is arguably not within the
jurisdiction of the Court of Federal Claims under the Tucker Act.
See
United States v.
Mitchell, 463 U. S. 206, 216 (1983)
(explaining that, in order for a claim to be "cognizable under the
Tucker Act," it "must be one for money damages against the United
States"); see also,
e. g., Bowen v.
Massachusetts,
487 U. S. 879,
905 (1988).
Some Courts of Appeals have accepted the view that the Tucker
Act does not apply to suits seeking only equitable relief, see
In re Chateaugay Corp., 53 F.3d
478, 493
(CA2), cert. denied
sub nom. LTV Steel
Co. v.
Shalala, 516 U. S. 913
(1995); Southeast
Kansas Community Action Program, Inc. v.
Secretary of
Agriculture, 967 F.2d
1452, 1455-1456 (CAlO 1992), while others have concluded that a
claim for equitable relief under the Takings Clause is
hypothetical, and therefore not within the district courts'
jurisdiction, until compensation has been sought and refused in the
Court of Federal Claims, see
Bay View, Inc. v.
Ahtna,
Inc., 105 F.3d
1281,
521
1286 (CA9 1997); Rose Acre Farms, Inc. v. Madigan, 956
On the one hand, this Court's precedent can be read to support
the latter conclusion that regardless of the nature of relief
sought, the availability of a Tucker Act remedy renders premature
any takings claim in federal district court. See
Preseault
v.
ICC, 494 U.
S. 1, 11 (1990); see also
Monsanto, supra, at 1016. On
the other hand, in a case such as this one, it cannot be said that
monetary relief against the Government is an available remedy. See
Brief for Federal Respondent 38-39, n. 30. The payments mandated by
the Coal Act, although calculated by a Government agency, are paid
to the privately operated Combined Fund. Congress could not have
contemplated that the Treasury would compensate coal operators for
their liability under the Act, for "[e]very dollar paid pursuant to
a statute would be presumed to generate a dollar of Tucker Act
compensation."
In re Chateaugay Corp., 53 F. 3d, at 493.
Accordingly, the "presumption of Tucker Act availability must be
reversed where the challenged statute, rather than burdening real
or physical property, requires a direct transfer of funds" mandated
by the Government.
Ibid. In that situation, a claim for
compensation "would entail an utterly pointless set of activities."
Student Loan Marketing Assn. v.
Riley, 104 F.3d
397, 401 (CADC), cert. denied, 522 U. S. 913 (1997). Instead,
as we explained in
Duke Power Co. v.
Carolina
Environmental Study Group, Inc., 438 U. S. 59, 71, n. 15
(1978), the Declaratory Judgment Act "allows individuals threatened
with a taking to seek a declaration of the constitutionality of the
disputed governmental action before potentially uncompensable
damages are sustained."
Moreover, in situations analogous to this case, we have assumed
the lack of a compensatory remedy and have granted equitable relief
for Takings Clause violations without discussing the applicability
of the Tucker Act. See,
e. g.,
Babbitt v.
Youpee, 519 U.
S. 234, 243-245 (1997);
Hodel v.
Ir-
522
Opinion of O'CONNOR, J.
ving, 481
U. S. 704, 716-718 (1987). Without addressing the basis of this
Court's jurisdiction, we have also upheld similar statutory schemes
against Takings Clause challenges. See
Concrete Pipe &
Products of Cal., Inc. v.
Construction Laborers Pension
Trust for Southern Cal., 508 U. S. 602, 641647
(1993);
Connolly, 475 U. S., at 221-228. "While we are not
bound by previous exercises of jurisdiction in cases in which our
power to act was not questioned but was passed
sub silentio,
neither should we disregard the implications of an exercise of
judicial authority assumed to be proper" in previous cases.
Brown Shoe Co. v.
United States, 370 U. S. 294, 307 (1962)
(citations omitted). Based on the nature of the taking alleged in
this case, we conclude that the declaratory judgment and injunction
sought by petitioner constitute an appropriate remedy under the
circumstances, and that it is within the district courts' power to
award such equitable relief.
IV A
The Takings Clause of the Fifth Amendment provides: "[N]or shall
private property be taken for public use, without just
compensation." The aim of the Clause is to prevent the 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."
Armstrong v.
United States, 364 U. S. 40, 49
(1960).
This case does not present the "classi[c] taking" in which the
government directly appropriates private property for its own use.
See
United States v.
Security Industrial Bank,
459 U. S. 70, 78
(1982). Although takings problems are more commonly presented when
"the interference with property can be characterized as a physical
invasion by government, than when interference arises from some
public program adjusting the benefits and burdens of economic life
to promote the common good,"
Penn Central Transp. Co. v.
New York City, 438 U. S. 104, 124 (1978)
(citation omitted),
523
economic regulation such as the Coal Act may nonetheless effect
a taking, see
Security Industrial Bank, supra, at 78. See
also
Calder v.
Bull, 3 Dall. 386, 388 (1798) (opinion
of Chase, J.) ("It is against all reason and justice" to presume
that the legislature has been entrusted with the power to enact "a
law that takes
property from A. and gives it to B"). By
operation of the Act, Eastern is "permanently deprived of those
assets necessary to satisfy its statutory obligation, not to the
Government, but to [the Combined Fund],"
Connolly, supra, at
222, and "a strong public desire to improve the public condition is
not enough to warrant achieving the desire by a shorter cut than
the constitutional way of paying for the change,"
Pennsylvania
Coal Co. v.
Mahon, 260 U. S. 393, 416
(1922).
Of course, a party challenging governmental action as an
unconstitutional taking bears a substantial burden. See
United
States v.
Sperry Corp., 493 U. S. 52, 60 (1989).
Government regulation often "curtails some potential for the use or
economic exploitation of private property,"
Andrus v.
Allard, 444 U.
S. 51, 65 (1979), and "not every destruction or injury to
property by governmental action has been held to be a 'taking' in
the constitutional sense,"
Armstrong, supra, at 48. In light
of that understanding, the process for evaluating a regulation's
constitutionality involves an examination of the "justice and
fairness" of the governmental action. See
Andrus, 444 U. S.,
at 65. That inquiry, by its nature, does not lend itself to any set
formula, see
ibid., and the determination whether "'justice
and fairness' require that economic injuries caused by public
action [must] be compensated by the government, rather than remain
disproportionately concentrated on a few persons," is essentially
ad hoc and fact intensive,
Kaiser Aetna v.
United
States, 444 U. S.
164, 175 (1979) (internal quotation marks omitted). We have
identified several factors, however, that have particular
significance: "[T]he economic impact of the regulation, its
interference with reasonable investment backed expectations,
and
524
Opinion of O'CONNOR, J.
the character of the governmental action."
Ibid.; see
also
Connolly, supra, at 224-225.
B
Our analysis in this case is informed by previous decisions
considering the constitutionality of somewhat similar legislative
schemes. In
Usery v.
Turner Elkhorn Mining Co., 428
U. S. 1 (1976), we had occasion to review provisions of the Black
Lung Benefits Act of 1972, 30 U. S. C. § 901
et seq., which
required coal operators to compensate certain miners and their
survivors for death or disability due to black lung disease caused
by employment in coal mines. Coal operators challenged the
provisions of the Act relating to miners who were no longer
employed in the industry, arguing that those provisions violated
substantive due process by imposing "an unexpected liability for
past, completed acts that were legally proper and, at least in
part, unknown to be dangerous at the time." 428 U. S., at 15.
In rejecting the operators' challenge, we explained that
"legislative Acts adjusting the burdens and benefits of economic
life come to the Court with a presumption of constitutionality, and
... the burden is on one complaining of a due process violation to
establish that the legislature has acted in an arbitrary and
irrational way."
Ibid. We observed that stricter limits may
apply to Congress' authority when legislation operates in a
retroactive manner, id., at 16-17, but concluded that the
assignment of liability for black lung benefits was "justified as a
rational measure to spread the costs of the employees' disabilities
to those who have profited from the fruits of their labor," id., at
18.
Several years later, we confronted a due process challenge to
the Multiemployer Pension Plan Amendments Act of 1980 (MPP AA), 94
Stat. 1208. See
Pension Benefit Guaranty Corporation v.
R. A. Gray &
Co., 467 U. S. 717 (1984). The
MPPAA was enacted to supplement ERISA, 29 U. S. C. § 1001
et
seq., which established the Pension Benefit Guar-
525
anty Corporation (PBGC) to administer an insurance program for
vested pension benefits. For a temporary period, the PBGC had
discretionary authority to pay benefits upon the termination of
multiemployer pension plans, after which insurance coverage would
become mandatory. If the PBGC exercised that authority, employers
who had contributed to the plan during the five years before its
termination faced liability for an amount proportional to their
share of contributions to the plan during that period. See 467 U.
S., at 720-721.
Despite Congress' effort to insure multiemployer plan benefits
through ERISA, many multiemployer plans were in a precarious
financial position as the date for mandatory coverage approached.
After a series of hearings and debates, Congress passed the MPP AA,
which imposed a payment obligation upon any employer withdrawing
from a multiemployer pension plan, the amount of which depended on
the employer's share of the plan's unfunded vested benefits. The
MPP AA applied retroactively to withdrawals within the five months
preceding the statute's enactment.
Id., at 721-725.
In
Gray, an employer that had participated in a
multiemployer pension plan brought a due process challenge to the
statutory liability stemming from its withdrawal from the plan four
months before the MPP AA was enacted. Relying on our decision in
Turner Elkhorn, we rejected the employer's claim. It was
rational, we determined, for Congress to impose retroactive
liability "to prevent employers from taking advantage of a lengthy
legislative process [by] withdrawing while Congress debated
necessary revisions in the statute." 467 U. S., at 731. In
addition, we explained, "as the [MPP AA] progressed through the
legislative process, Congress advanced the effective date chosen so
that it would encompass only that retroactive time period that
Congress believed would be necessary to accomplish its purposes."
Ibid. Accordingly, we concluded that the MPP AA exem-
526
Opinion of O'CONNOR, J.
plified the "customary congressional practice" of enacting
"retroactive statutes confined to short and limited periods
required by the practicalities of producing national legislation."
Ibid. (internal quotation marks omitted).
This Court again considered the constitutionality of the MPPAA
in
Connolly v.
Pension Benefit Guaranty Corporation,
475 U. S. 211
(1986), which presented the question whether the MPP AA's
withdrawal liability provisions effected an unconstitutional
taking. The action was brought by trustees of a multiemployer
pension plan that, under collective bargaining agreements, received
contributions from employers on the basis of the hours worked by
their employees. We agreed that the liability imposed by the MPPAA
constituted a permanent deprivation of assets, but we rejected the
notion that "such a statutory liability to a private party always
constitutes an uncompensated taking prohibited by the Fifth
Amendment."
Id., at 222. "In the course of regulating
commercial and other human affairs," we explained, "Congress
routinely creates burdens for some that directly benefit others."
Id., at 223. Consistent with our decisions in
Gray
and
Turner Elkhorn, we reasoned that legislation is not
unlawful solely because it upsets otherwise settled
expectations.
Moreover, given our holding in
Gray that the MPPAA did
not violate due process, we concluded that "it would be surprising
indeed to discover" that the statute effected a taking. 475 U. S.,
at 223. Although the employers in
Connolly had contractual
agreements expressly limiting their contributions to the
multiemployer plan, we observed that "[c]ontracts, however express,
cannot fetter the constitutional authority of Congress" and "the
fact that legislation disregards or destroys existing contractual
rights does not always transform the regulation into an illegal
taking."
Id., at 223224 (internal quotation marks omitted).
Focusing on the three factors of "particular significance"-the
economic impact of the regulation, the extent to which the
regulation
527
interferes with investment-backed expectations, and the
character of the governmental action-we determined that the MPP AA
did not violate the Takings Clause.
I d., at 225.
The governmental action at issue in
Connolly was not a
physical invasion of employers' assets; rather, it "safeguard[ed]
the participants in multiemployer pension plans by requiring a
withdrawing employer to fund its share of the plan obligations
incurred during its association with the plan."
Ibid. In
addition, although the amounts assessed under the MPP AA were
substantial, we found it important that "[t]he assessment of
withdrawal liability [was] not made in a vacuum, ... but directly
depend[ed] on the relationship between the employer and the plan to
which it had made contributions."
Ibid. Further, "a
significant number of provisions in the Act ... moderate[d] and
mitigate[d] the economic impact of an individual employer's
liability."
Id., at 225-226. Accordingly, we found "nothing
to show that the withdrawal liability actually imposed on an
employer w[ould] always be out of proportion to its experience with
the plan."
Id., at 226. Nor did the MPPAA interfere with
employers' reasonable investment-backed expectations, for, by the
time of the MPPAA's enactment, "[p]rudent employers ... had more
than sufficient notice not only that pension plans were currently
regulated, but also that withdrawal itself might trigger additional
financial obligations."
Id., at 227. For those reasons, we
determined that "fairness and justice" did not require anyone other
than the withdrawing employers and the remaining parties to the
pension agreements to bear the burden of funding employees' vested
benefits.
Ibid.
We once more faced challenges to the MPPAA under the Due Process
and Takings Clauses in
Concrete Pipe &
Products of
Cal., Inc. v.
Construction Laborers Pension Trust for
Southern Cal., 508 U. S. 602 (1993). In
that case, the employer focused on the fact that its contractual
commitment to the multiemployer plan did not impose
withdrawalliabil-
528
Opinion of O'CONNOR, J.
ity. We first rejected the employer's substantive due process
challenge based on our decisions in
Gray and
Turner
Elkhorn, notwithstanding the employer's argument that the MPP
AA imposed upon it a higher liability than its contract
contemplated. 508 U. S., at 636-641. The claim under the Takings
Clause, meanwhile, was resolved by
Connolly. We explained
that, as in that case, the Government had not occupied or destroyed
the employer's property. 508 U. S., at 643-644. As to the severity
of the MPP AA's impact, we concluded that the employer had not
shown that its withdrawal liability was "'out of proportion to its
experience with the plan'"
Id., at 645 (quoting
Connolly,
supra, at 226). Turning to the employer's reasonable
investmentbacked expectations, we repeated our observation in
Connolly that "pension plans had long been subject to
federal regulation." 508 U. S., at 645. Moreover, although the
employer's liability under the MPPAA exceeded ERISA's original cap
on withdrawal liability, we found that there was "no reasonable
basis to expect that [ERISA's] legislative ceiling would never be
lifted."
Id., at 646. In sum, as in
Connolly, the
employer "voluntarily negotiated and maintained a pension plan
which was determined to be within the strictures of ERISA," making
the burden the MPPAA imposed upon it neither unfair nor unjust. 508
U. S., at 646-647 (internal quotation marks omitted).
Our opinions in
Turner Elkhorn, Connolly, and
Concrete Pipe make clear that Congress has considerable
leeway to fashion economic legislation, including the power to
affect contractual commitments between private parties. Congress
also may impose retroactive liability to some degree, particularly
where it is "confined to short and limited periods required by the
practicalities of producing national legislation."
Gray, 467
U. S., at 731 (internal quotation marks omitted). Our decisions,
however, have left open the possibility that legislation might be
unconstitutional if it imposes severe retroactive liability on a
limited class of parties
529
that could not have anticipated the liability, and the extent of
that liability is substantially disproportionate to the parties'
experience.
C
We believe that the Coal Act's allocation scheme, as applied to
Eastern, presents such a case. We reach that conclusion by applying
the three factors that traditionally have informed our regulatory
takings analysis. Although JusTICE KENNEDY and JUSTICE BREYER would
pursue a different course in evaluating the constitutionality of
the Coal Act, they acknowledge that this Court's opinions in
Connolly and
Concrete Pipe indicate that the
regulatory takings framework is germane to legislation of this
sort. See
post, at 545546 (KENNEDY, J., concurring in
judgment and dissenting in part);
post, at 555-556 (BREYER,
J., dissenting).
As to the first factor relevant in assessing whether a
regulatory taking has occurred, economic impact, there is no doubt
that the Coal Act has forced a considerable financial burden upon
Eastern. The parties estimate that Eastern's cumulative payments
under the Act will be on the order of $50 to $100 million. See
Brief for Petitioner 2 ($100 million); Brief for Respondents UMW A
Combined Benefit Fund et al. 46 ($51 million). Eastern's liability
is thus substantial, and the company is clearly deprived of the
amounts it must pay the Combined Fund. See
Connolly, 475 U.
S., at 222. The fact that the Federal Government has not specified
the assets that Eastern must use to satisfy its obligation does not
negate that impact. It is clear that the Act requires Eastern to
turn over a dollar amount established by the Commissioner under a
timetable set by the Act, with the threat of severe penalty if
Eastern fails to comply. See 26 U. S. C. §§ 9704(a) and (b)
(directing liable operators to pay annual premiums as computed by
the Commissioner); § 9707 (imposing, with limited exceptions, a
penalty of $100 per day per eligible beneficiary if payment is not
made in accordance with § 9704).
530
Opinion of O'CONNOR, J.
That liability is not, of course, a permanent physical
occupation of Eastern's property of the kind that we have viewed as
a
per se taking. See
Loretto v.
Teleprompter
Manhattan CATV Corp., 458 U. S. 419, 441
(1982). But our decisions upholding the MPP AA suggest that an
employer's statutory liability for multiemployer plan benefits
should reflect some "proportion[ality] to its experience with the
plan."
Concrete Pipe, 508 U. S., at 645 (internal quotation
marks omitted); see also
Connolly, supra, at 225 (noting
that employer's liability under the MPPAA "directly depend[ed] on
the relationship between the employer and the plan to which it had
made contributions"). In
Concrete Pipe and
Connolly,
the employers had "voluntarily negotiated and maintained a pension
plan which was determined to be within the strictures of ERISA,"
Concrete Pipe, supra, at 646 (internal quotation marks
omitted);
Connolly, supra, at 227, and consequently, the
statutory liability was linked to the employers' conduct.
Here, however, while Eastern contributed to the 1947 and 1950 W
&R Funds, it ceased its coal mining operations in 1965 and
neither participated in negotiations nor agreed to make
contributions in connection with the Benefit Plans under the 1974,
1978, or subsequent NBCW A's. It is the latter agreements that
first suggest an industry commitment to the funding of lifetime
health benefits for both retirees and their family members.
Although EACC continued mining coal until 1987 as a subsidiary of
Eastern, Eastern's liability under the Act bears no relationship to
its ownership of EACC; the Act assigns Eastern responsibility for
benefits relating to miners that Eastern itself, not EACC,
employed, while EACC would be assigned the responsibility for any
miners that it had employed. See 26 U. S. C. § 9706(a). Thus, the
Act does not purport, as JUSTICE BREYER suggests,
post, at
566, to assign liability to Eastern based on the "'last man out'
problem" that developed after benefits were significantly expanded
in 1974. During the years in which
531
Eastern employed miners, retirement and health benefits were far
less extensive than under the 1974 NBCW A, were unvested, and were
fully subject to alteration or termination. Before 1974, as JUSTICE
BREYER notes, Eastern could not have contemplated liability for the
provision of lifetime benefits to the widows of deceased miners,
see
post, at 562-563, a beneficiary class that is likely to
be substantial. See General Accounting Office, Human Resources
Division Report, Retired Coal Miners' Health Benefits 7 (July 1992)
(reporting to Congress that widows composed 45% of beneficiaries in
Jan. 1992); see also Brief for Petitioner 45, n. 54 (citing
affidavit that 75% of the beneficiaries assigned to Eastern are
spouses or dependent children of miners). Although Eastern at one
time employed the Combined Fund beneficiaries that it has been
assigned under the Coal Act, the correlation between Eastern and
its liability to the Combined Fund is tenuous, and the amount
assessed against Eastern resembles a calculation "made in a
vacuum." See
Connolly, supra, at 225. The company's
obligations under the Act depend solely on its roster of employees
some 30 to 50 years before the statute's enactment, without any
regard to responsibilities that Eastern accepted under any benefit
plan the company itself adopted.
It is true that Eastern may be able to seek indemnification from
EACC or Peabody. But although the Act preserves Eastern's right to
pursue indemnification, see 26 U. S. C. § 9706(f)(6), it does not
confer any right of reimbursement. See also Conference Report on
Coal Act, 138 Congo Rec., at 34004 (explaining that the Coal Act
allows parties to "enter into private litigation to enforce ...
contracts for indemnification," but "does not create new private
rights of action"). Moreover, the possibility of indemnification
does not alter the fact that Eastern has been assessed over $5
million in Combined Fund premiums and that its liability under the
Coal Act will continue for many years. To the extent that Eastern
may have entered into contractual arrangements to
532
Opinion of O'CONNOR, J.
insure itself against liabilities arising out of its former coal
operations, that indemnity is neither enhanced nor supplanted by
the Coal Act and does not affect the availability of the
declaratory relief Eastern seeks.
We are also not persuaded by respondents' argument that the Coal
Act "moderate[s] and mitigate[s] the economic impact" upon Eastern.
See
Connolly, 475 U. S., at 225-226. Although Eastern is not
assigned the premiums for former employees who later worked for
companies that signed the 1978 NBCWA, see 26 U. S. C. §§
9706(a)(1), (2), Eastern had no control over the activities of its
former employees subsequent to its departure from the coal industry
in 1965. By contrast, the provisions of the MPP AA that we
identified as potentially moderating the employer's liability in
Connolly were generally within the employer's control. See
475 U. S., at 226, n. 8. The mere fact that Eastern is not forced
to bear the burden of lifetime benefits respecting
all of
its former employees does not mean that the company's liability for
some of those employees is not a significant economic burden.
For similar reasons, the Coal Act substantially interferes with
Eastern's reasonable investment-backed expectations. The Act's
beneficiary allocation scheme reaches back 30 to 50 years to impose
liability against Eastern based on the company's activities between
1946 and 1965. Thus, even though the Act mandates only the payment
of future health benefits, it nonetheless "attaches new legal
consequences to [an employment relationship] completed before its
enactment."
Landgraf v.
USI Film Products, 511 U. S. 244, 270
(1994).
Retroactivity is generally disfavored in the law,
Bowen
v.
Georgetown Univ. Hospital, 488 U. S. 204, 208
(1988), in accordance with "fundamental notions of justice" that
have been recognized throughout history,
Kaiser Aluminum
& Chemical Corp. v.
Bonjorno, 494 U. S. 827, 855 (1990)
(SCALIA, J., concurring). See also,
e. g., Dash v.
Van
Kleeck, 7 Johns. *477, *503 (NY 1811) ("It is a principle in
the Eng-
533
lish common law, as ancient as the law itself, that a
statute, even of its omnipotent parliament, is not to have a
retrospective effect"); H. Broom, Legal Maxims 24 (8th ed. 1911)
("Retrospective laws are, as a rule, of questionable policy, and
contrary to the general principle that legislation by which the
conduct of mankind is to be regulated ought to deal with future
acts, and ought not to change the character of past transactions
carried on upon the faith of the then existing law"). In his
Commentaries on the Constitution, Justice Story reasoned:
"Retrospective laws are, indeed, generally unjust; and, as has been
forcibly said, neither accord with sound legislation nor with the
fundamental principles of the social compact." 2 J. Story,
Commentaries on the Constitution § 1398 (5th ed. 1891). A similar
principle abounds in the laws of other nations. See,
e. g.,
Gustavson Drilling (196.1,) Ltd. v.
Minister of National
Revenue, 66 D. L. R. 3d 449, 462 (Can. 1975) (discussing rule
that statutes should not be construed in a manner that would impair
existing property rights); The French Civil Code, Preliminary
Title, Art. 2, p. 2 ("Legislation only provides for the future; it
has no retroactive effect") (J. Crabb transl., rev. ed. 1995);
Aarnio, Statutory Interpretation in Finland 151, in Interpreting
Statutes: A Comparative Study (D. MacCormick & R. Summers eds.
1991) (discussing prohibition against retroactive legislation).
"Retroactive legislation," we have explained, "presents problems of
unfairness that are more serious than those posed by prospective
legislation, because it can deprive citizens of legitimate
expectations and upset settled transactions."
General Motors
Corp. v.
Romein, 503 U. S. 181, 191 (1992).
Our Constitution expresses concern with retroactive laws through
several of its provisions, including the
Ex Post Facto and
Takings Clauses.
Landgraf, supra, at 266. In
Calder
v.
Bull, 3 Dall. 386 (1798), this Court held that the
Ex
Post Facto Clause is directed at the retroactivity of penal
legislation, while suggesting that the Takings Clause provides
534
Opinion of O'CONNOR, J.
a similar safeguard against retrospective legislation concerning
property rights. See id., at 394 (opinion of Chase, J.) ("The
restraint against making any
ex post facto laws was not
considered, by the framers of the constitution, as extending to
prohibit the depriving a citizen even of a
vested right to
property; or the provision, 'that
private property
should not be taken for public use, without just compensation,' was
unnecessary"). In
Security Industrial Bank, we considered a
Takings Clause challenge to a Bankruptcy Code provision permitting
debtors to avoid certain liens, possibly including those predating
the statute's enactment. We expressed "substantial doubt whether
the retroactive destruction of the appellees' liens ... comport[ed]
with the Fifth Amendment," and therefore construed the statute as
applying only to lien interests vesting after the legislation took
effect. 459 U. S., at 78-79. Similar concerns led this Court to
strike down a bankruptcy provision as an unconstitutional taking
where it affected substantive rights acquired before the provision
was adopted.
Louisville Joint Stock Land Bank v.
Radford, 295
U. S. 555, 601-602 (1935).
Like those provisions, the Coal Act operates retroactively,
divesting Eastern of property long after the company believed its
liabilities under the 1950 W &R Fund to have been settled. And
the extent of Eastern's retroactive liability is substantial and
particularly far reaching. Even in areas in which retroactivity is
generally tolerated, such as tax legislation, some limits have been
suggested. See,
e. g., United States v.
Darusmont,
449 U. S. 292,
296-297 (1981)
(per curiam) (noting Congress' practice of
confining retroactive application of tax provisions to "short and
limited periods"). The distance into the past that the Act reaches
back to impose a liability on Eastern and the magnitude of that
liability raise substantial questions of fairness. See
Connolly, supra, at 229 (O'CONNOR, J., concurring)
(questioning constitutionality of imposing liability on "employers
for unfunded benefits that accrued in the past under a pension
plan
535
whether or not the employers had agreed to ensure that benefits
would be fully funded"); see also
Landgraf, 511 U. S., at
265 ("Elementary considerations of fairness dictate that
individuals should have an opportunity to know what the law is and
to conform their conduct accordingly; settled expectations should
not be lightly disrupted").
Respondents and their
amici curiae assert that the extent
of retroactive liability is justified because there was an
implicit, industrywide agreement during the time that Eastern was
involved in the coal industry to fund lifetime health benefits for
qualifying miners and their dependents. That contention, however,
is not supported by the pre-1974 NBCWA's. No contrary conclusion
can be drawn from the few isolated statements of individuals
involved in the coal industry, see,
e. g., Brief for
Respondents Peabody Holding Company, Inc., et al. 8-10, or from
statements of Members of Congress while considering legislative
responses to the issue of funding retiree benefits. Moreover, even
though retirees received medical benefits before 1974, and perhaps
developed a corresponding expectation that those benefits would
continue, the Coal Act imposes liability respecting a much broader
range of beneficiaries. In any event, the question is not whether
miners had an expectation of lifetime benefits, but whether Eastern
should bear the cost of those benefits as to miners it employed
before 1966.
Eastern only participated in the 1947 and 1950 W &R Funds,
which operated on a pay-as-you-go basis, and under which the degree
of benefits and the classes of beneficiaries were subject to the
trustees' discretion. Not until 1974, when ERISA forced revisions
to the 1950 W&R Fund, could lifetime medical benefits under the
multiemployer agreement have been viewed as promised. Eastern was
no longer in the industry when the evergreen and guarantee clauses
of the 1978 and subsequent NBCW A's shifted the 1950 and 1974
Benefit Plans from a defined contribution framework to a guarantee
of defined benefits, at least for the life of the
536
Opinion of O'CONNOR, J.
agreements. See
Connolly, 475 U. S., at 230-231
(O'CONNOR, J., concurring) (imposition of liability "without regard
to the extent of a particular employer's actual responsibility for
[a benefit] plan's promise of fixed benefits to employees" could
raise serious concerns under the Takings Clause). Thus, unlike the
pension withdrawal liability upheld in
Concrete Pipe and
Connolly, the Coal Act's scheme for allocation of Combined
Fund premiums is not calibrated either to Eastern's past actions or
to any agreement-implicit or otherwise-by the company. Nor would
the pattern of the Federal Government's involvement in the coal
industry have given Eastern "sufficient notice" that lifetime
health benefits might be guaranteed to retirees several decades
later. See
Connolly, supra, at 227.
Eastern's liability also differs from coal operators'
responsibility for benefits under the Black Lung Benefits Act of
1972. That legislation merely imposed "liability for the effects of
disabilities bred in the past [that] is justified as a rational
measure to spread the costs of the employees' disabilities to those
who have profited from the fruits of their labor."
Turner
Elkhorn, 428 U. S., at 18. Likewise, Eastern might be
responsible for employment-related health problems of all former
employees whether or not the cost was foreseen at the time of
employment, see id., at 16, but there is no such connection here.
There is no doubt that many coal miners sacrificed their health on
behalf of this country's industrial development, and we do not
dispute that some members of the industry promised lifetime medical
benefits to miners and their dependents during the 1970's. Nor do
we, as JUSTICE STEVENS suggests,
post, at 553, question
Congress' policy decision that the miners are entitled to relief.
But the Constitution does not permit a solution to the problem of
funding miners' benefits that imposes such a disproportionate and
severely retroactive burden upon Eastern.
537
Finally, the nature of the governmental action in this case is
quite unusual. That Congress sought a legislative remedy for what
it perceived to be a grave problem in the funding of retired coal
miners' health benefits is understandable; complex problems of that
sort typically call for a legislative solution. When, however, that
solution singles out certain employers to bear a burden that is
substantial in amount, based on the employers' conduct far in the
past, and unrelated to any commitment that the employers made or to
any injury they caused, the governmental action implicates
fundamental principles of fairness underlying the Takings Clause.
Eastern cannot be forced to bear the expense of lifetime health
benefits for miners based on its activities decades before those
benefits were promised. Accordingly, in the specific circumstances
of this case, we conclude that the Coal Act's application to
Eastern effects an unconstitutional taking.
D
Eastern also claims that the manner in which the Coal Act
imposes liability upon it violates substantive due process. To
succeed, Eastern would be required to establish that its liability
under the Act is "arbitrary and irrational."
Turner Elkhorn,
supra, at 15. Our analysis of legislation under the Takings and
Due Process Clauses is correlated to some extent, see
Connolly,
supra, at 223, and there is a question whether the Coal Act
violates due process in light of the Act's severely retroactive
impact. At the same time, this Court has expressed concerns about
using the Due Process Clause to invalidate economic legislation.
See
Ferguson v.
Skrupa, 372 U. S. 726, 731 (1963)
(noting "our abandonment of the use of the 'vague contours' of the
Due Process Clause to nullify laws which a majority of the Court
believ[e] to be economically unwise" (footnote omitted)); see also
Williamson v.
Lee Optical of Okla., Inc., 348 U. S. 483, 488 (1955)
("The day is gone when this Court uses the Due Process Clause ...
to strike down ... laws, regulatory of business
538
and industrial conditions, because they may be unwise,
improvident, or out of harmony with a particular school of
thought"). Because we have determined that the third tier of the
Coal Act's allocation scheme violates the Takings Clause as applied
to Eastern, we need not address Eastern's due process claim. Nor do
we consider the first two tiers of the Act's allocation scheme, 26
U. S. C. §§ 9706(a)(1) and (2), as the liability that has been
imposed on Eastern arises only under the third tier. Cf.
Printz v.
United States, 521 U. S. 898, 934-935
(1997).
v
In enacting the Coal Act, Congress was responding to a serious
problem with the funding of health benefits for retired coal
miners. While we do not question Congress' power to address that
problem, the solution it crafted improperly places a severe,
disproportionate, and extremely retroactive burden on Eastern.
Accordingly, we conclude that the Coal Act's allocation of
liability to Eastern violates the Takings Clause, and that 26 U. S.
C. § 9706(a)(3) should be enjoined as applied to Eastern. The
judgment of the Court of Appeals is reversed, and the case is
remanded for further proceedings.
It is so ordered.
JUSTICE THOMAS, concurring.
JUSTICE O'CONNOR'S opinion correctly concludes that the Coal
Act's imposition of retroactive liability on petitioner violates
the Takings Clause. I write separately to emphasize that the
Ex
Post Facto Clause of the Constitution, Art. I, § 9, cl. 3, even
more clearly reflects the principle that "[r]etrospective laws are,
indeed, generally unjust." 2 J. Story, Commentaries on the
Constitution § 1398, p. 272 (5th ed. 1891). Since
Calder v.
Bull, 3 Dall. 386 (1798), however, this Court has considered
the
Ex Post Facto Clause to apply only in the criminal
context. I have never been convinced of the soundness of this
limitation, which in
Calder was
539
principally justified because a contrary interpretation would
render the Takings Clause unnecessary. See id., at 394 (opinion of
Chase, J.). In an appropriate case, therefore, I would be willing
to reconsider
Calder and its progeny to determine whether a
retroactive civil law that passes muster under our current Takings
Clause jurisprudence is nonetheless unconstitutional under the
Ex Post Facto Clause. Today's case, however, does present an
unconstitutional taking, and I join JUSTICE O'CONNOR'S
well-reasoned opinion in full.
JUSTICE KENNEDY, concurring in the judgment and dissenting in
part.
The plurality's careful assessment of the history and purpose of
the statute in question demonstrates the necessity to hold it
arbitrary and beyond the legitimate authority of the Government to
enact. In my view, which is in full accord with many of the
plurality's conclusions, the relevant portions of the Coal Industry
Retiree Health Benefit Act of 1992 (Coal Act), 26 U. S. C. § 9701
et seq. (1994 ed. and Supp. II), must be invalidated as
contrary to essential due process principles, without regard to the
Takings Clause of the Fifth Amendment. I concur in the judgment
holding the Coal Act unconstitutional but disagree with the
plurality's Takings Clause analysis, which, it is submitted, is
incorrect and quite unnecessary for decision of the case. I must
record my respectful dissent on this issue.
I
The final Clause of the Fifth Amendment states:
"[N]or shall private property be taken for public use, without
just compensation." U. S. Const., Arndt. 5.
The provision is known as the Takings Clause. The concept of a
taking under the Clause has become a term of art, and my discussion
begins here.
540
Opinion of KENNEDY, J.
Our cases do not support the plurality's conclusion that the
Coal Act takes property. The Coal Act imposes a staggering
financial burden on the petitioner, Eastern Enterprises, but it
regulates the former mine owner without regard to property. It does
not operate upon or alter an identified property interest, and it
is not applicable to or measured by a property interest. The Coal
Act does not appropriate, transfer, or encumber an estate in land
(e. g., a lien on a particular piece of property), a valuable
interest in an intangible (e. g., intellectual property), or even a
bank account or accrued interest. The law simply imposes an
obligation to perform an act, the payment of benefits. The statute
is indifferent as to how the regulated entity elects to comply or
the property it uses to do so. To the extent it affects property
interests, it does so in a manner similar to many laws; but until
today, none were thought to constitute takings. To call this sort
of governmental action a taking as a matter of constitutional
interpretation is both imprecise and, with all due respect,
unwise.
As the role of Government expanded, our experience taught that a
strict line between a taking and a regulation is difficult to
discern or to maintain. This led the Court in
Pennsylvania Coal
Co. v.
Mahon, 260 U. S. 393 (1922), to
try to span the two concepts when specific property was subjected
to what the owner alleged to be excessive regulation. "The general
rule at least is, that while property may be regulated to a certain
extent, if regulation goes too far it will be recognized as a
taking."
Id., at 415. The quoted sentence is, of course, the
genesis of the so-called regulatory takings doctrine. See
Lucas v.
South Carolina Coastal Council, 505 U. S. 1003, 1014
(1992) ("Prior to Justice Holmes's exposition in
Pennsylvania
Coal Co. v.
Mahon, it was generally thought that the
Takings Clause reached only a 'direct appropriation' of property or
the functional equivalent of a 'practical ouster of [the owner's]
possession'" (citations omitted)). Without denigrating the
importance the
541
regulatory takings concept has assumed in our law, it is fair to
say it has proved difficult to explain in theory and to implement
in practice. Cases attempting to decide when a regulation becomes a
taking are among the most litigated and perplexing in current law.
See
Penn Central Transp. Co. v.
New York City,
438 U. S. 104,
123 (1978) ("The question of what constitutes a 'taking' for
purposes of the Fifth Amendment has proved to be a problem of
considerable difficulty");
Kaiser Aetna v.
United
States, 444 U. S.
164, 175 (1979) (the regulatory taking question requires an
"essentially ad hoc, factual inquir[yJ").
Until today, however, one constant limitation has been that in
all of the cases where the regulatory taking analysis has been
employed, a specific property right or interest has been at stake.
After the decision in
Pennsylvania Coal Co. v.
Mahon,
supra, we confronted cases where specific and identified
properties or property rights were alleged to come within the
regulatory takings prohibition: air rights for high-rise buildings,
Penn Central, supra; zoning on parcels of real property,
e. g., MacDonald, Sommer &
Frates v.
Yolo
County, 477 U. S.
340 (1986);
Agins v.
City of Tiburon, 447 U. S. 255 (1980);
trade secrets,
Ruckelshaus v.
Monsanto Co., 467 U. S. 986 (1984);
right of access to property,
e. g., PruneYard Shopping
Center v.
Robins, 447 U. S. 74 (1980);
Kaiser Aetna, supra; right to affix on structures,
Loretto v.
Teleprompter Manhattan CATV Corp.,
458 U. S. 419
(1982); right to transfer property by devise or intestacy,
e.
g., Hodel v.
Irving, 481 U. S. 704 (1987);
creation of an easement,
Dolan v.
City of Tigard,
512 U. S. 374
(1994);
Nollan v.
California Coastal Comm'n, 483 U. S. 825 (1987);
right to build or improve,
Lucas, supra; liens on real
property,
Armstrong v.
United States, 364 U. S. 40 (1960); right
to mine coal,
Keystone Bituminous Coal Assn. v.
DeBenedictis, 480 U. S. 470 (1987);
right to sell personal property,
Andrus v.
Allard,
444 U. S. 51
(1979); and the right to extract mineral deposits,
Goldblatt
v.
Hempstead, 369 U. S. 590 (1962);
United States
542
Opinion of KENNEDY, J.
v.
Central Eureka Mining Co., 357 U. S. 155 (1958). The
regulations in the cited cases were challenged as being so
excessive as to destroy, or take, a specific property interest. The
plurality's opinion disregards this requirement and, by removing
this constant characteristic from takings analysis, would expand an
already difficult and uncertain rule to a vast category of cases
not deemed, in our law, to implicate the Takings Clause.
The difficulties in determining whether there is a taking or a
regulation even where a property right or interest is identified
ought to counsel against extending the regulatory takings doctrine
to cases lacking this specificity. The existence of at least this
outer boundary for application of the regulatory takings rule
provides some necessary predictability for governmental entities.
Our definition of a taking, after all, is binding on all of the
States as well as the Federal Government. The plurality opinion
would throw one of the most difficult and litigated areas of the
law into confusion, subjecting States and municipalities to the
potential of new and unforeseen claims in vast amounts. The
existing category of cases involving specific property interests
ought not to be obliterated by extending regulatory takings
analysis to the amorphous class of cases embraced by the
plurality's opinion today.
True, the burden imposed by the Coal Act may be just as great if
the Government had appropriated one of Eastern's plants, but the
mechanism by which the Government injures Eastern is so unlike the
act of taking specific property that it is incongruous to call the
Coal Act a taking, even as that concept has been expanded by the
regulatory takings principle. In the terminology of our regulatory
takings analysis, the character of the governmental action renders
the Coal Act not a taking of property. While the usual taking
occurs when the government physically acquires property for itself,
e. g., Chicago, B. & Q.
R. Co. v.
Chicago,
166 U. S. 226
(1897), our regulatory takings analysis recognizes a taking may
occur when property is not appropriated by the government
543
or is transferred to other private parties. See,
e. g.,
United States v.
Security Industrial Bank, 459 U. S. 70, 78 (1982)
("[O]ur cases show that takings analysis is not necessarily limited
to outright acquisitions by the government for itself");
Loretto, supra (transfer of physical space from landlords to
cable companies).
As the range of governmental conduct subjected to takings
analysis has expanded, however, we have been careful not to lose
sight of the importance of identifying the property allegedly
taken, lest all governmental action be subjected to examination
under the constitutional prohibition against taking without just
compensation, with the attendant potential for money damages. We
have asked how the challenged governmental action is implemented
with particular emphasis on the extent to which a specific property
right is affected. See id., at 432 (physical invasion "is a
government action of such a unique character that it is a taking
without regard to other factors");
Hodel, supra, at 715-716
(declaring a law, which otherwise would not be a taking because of
its insignificant economic impact, a taking because the character
of the governmental action destroyed the right to pass property to
one's heirs, a right which "has been part of the Anglo-American
legal system since feudal times");
Penn Central, supra, at
124 ("A 'taking' may more readily be found when the interference
with property can be characterized as a physical invasion by
government, than when interference arises from some public program
adjusting the benefits and burdens of economic life to promote the
common good" (citation omitted)). The Coal Act neither targets a
specific property interest nor depends upon any particular property
for the operation of its statutory mechanisms. The liability
imposed on Eastern no doubt will reduce its net worth and its total
value, but this can be said of any law which has an adverse
economic effect.
The circumstance that the statute does not take money for the
Government but instead makes it payable to third persons is not a
factor I rely upon to show the lack of a taking.
544
Opinion of KENNEDY, J.
While there are instances where the Government's selfenrichment
may make it all the more evident a taking has occurred,
e. g.,
Webb's Fabulous Pharmacies, Inc. v.
Beckwith, 449 U. S. 155 (1980);
United States v.
Causby, 328 U. S. 256 (1946), the
Government ought not to have the capacity to give itself immunity
from a takings claim by the device of requiring the transfer of
property from one private owner directly to another. Cf.
Hawaii
Housing Authority v.
Midkiff, 467 U. S. 229 (1984). At
the same time, the Government's imposition of an obligation between
private parties, or destruction of an existing obligation, must
relate to a specific property interest to implicate the Takings
Clause. For example, in
United States v.
Security
Industrial Bank, we confronted a statute which was alleged to
destroy an existing creditor's lien in certain chattels to the
benefit of the debtor. We acknowledged that, given the nature of
the property interest at stake, which resembled a contractual
obligation, the takings challenge "fits but awkwardly into the
analytic framework" of our regulatory takings analysis. 459 U. S.,
at 75. We decided the analysis could apply because the property
interest was a "traditional property interes[t]," though in the end
the statute was found inapplicable to the lien at issue. In so
holding, we relied on
Louisville Joint Stock Land Bank v.
Radford, 295
U. S. 555 (1935), which invalidated the Frazier-Lemke
Farm-Mortgage Act, because it interfered with mortgages on farms
and thus worked a "'taking of substantive rights in specific
property acquired by the Bank prior to'" the Act. 459 U. S., at 77
(quoting
Radford, supra, at 590, 601). Unlike the statutes
at issue in
Security Industrial Bank and
Radford, the
Coal Act does not affect an obligation relating to a specific
property interest.
If the plurality is adopting its novel and expansive concept of
a taking in order to avoid making a normative judgment about the
Coal Act, it fails in the attempt; for it must make the normative
judgment in all events. See,
e. g., ante, at 537 ("[T]he
governmental action implicates fundamental princi-
545
pIes of fairness"). The imprecision of our regulatory takings
doctrine does open the door to normative considerations about the
wisdom of government decisions. See,
e. g., Agins v.
City
of Tiburon, 447 U. S., at 260 (zoning constitutes a taking if
it does not "substantially advance legitimate state interests").
This sort of analysis is in uneasy tension with our basic
understanding of the Takings Clause, which has not been understood
to be a substantive or absolute limit on the government's power to
act. The Clause operates as a conditional limitation, permitting
the government to do what it wants so long as it pays the charge.
The Clause presupposes what the government intends to do is
otherwise constitutional:
"As its language indicates, and as the Court has frequently
noted, [the Takings Clause] does not prohibit the taking of private
property, but instead places a condition on the exercise of that
power. This basic understanding of the Amendment makes clear that
it is designed not to limit the governmental interference with
property rights per se, but rather to secure compensation in the
event of otherwise proper interference amounting to a taking."
First English Evangelical Lutheran Church of Glendale v.
County of Los Angeles, 482 U. S. 304, 314-315
(1987) (emphasis and citations omitted).
Given that the constitutionality of the Coal Act appears to turn
on the legitimacy of Congress' judgment rather than on the
availability of compensation, see
ante, at 521 ("[I]n a case
such as this one, it cannot be said that monetary relief against
the Government is an available remedy"), the more appropriate
constitutional analysis arises under general due process principles
rather than under the Takings Clause.
It should be acknowledged that there are passages in some of our
cases on the imposition of retroactive liability for an employer's
withdrawal from a pension plan which might give some support to the
plurality's discussion of the Takings Clause. See
Connolly
v.
Pension Benefit Guaranty Corpo-
546
Opinion of KENNEDY, J.
ration, 475
U. S. 211, 223 (1986);
Concrete Pipe &
Products
of Cal., Inc. v.
Construction Laborers Pension Trust for
Southern Cal., 508 U. S. 602, 641
(1993). In
Connolly, the Court said the definition of a
taking was not controlled by "any set formula," but was dependent
"on ad hoc, factual inquiries into the circumstances of each
particular case." 475 U. S., at 224. The Court then applied the
three-factor regulatory takings analysis set forth in
Penn
Central, which examines the economic impact of the regulation,
the extent to which it interferes with investment-backed
expectations, and the character of the governmental action. 475 U.
S., at 225. This analysis did not result in a finding of a taking.
The Court, moreover, prefaced the entire takings discussion with
the admonition it would be surprising to discover that there had
been a taking in the instance where a due process attack had been
rejected. See
id., at 223; see also
Concrete Pipe,
supra, at 641 ("Given that [the] due process arguments are
unavailing, 'it would be surprising indeed to discover' the
challenged statute nonetheless violating the Takings Clause")
(quoting
Connolly, supra, at 223). At best,
Connolly
is equivocal on the question whether we should apply the regulatory
takings analysis to instances like the one now before us. My
reading of
Connolly, and
Concrete Pipe, is that we
should proceed first to general due process principles, reserving
takings analysis for cases where the governmental action is
otherwise permissible. See
Connolly, supra, at 224 ("[H]ere,
the United States has taken nothing for its own use, and only has
nullified a contractual provision limiting liability by imposing an
additional obligation that is otherwise within the power of
Congress to impose"); see also
Duke Power Co. v.
Carolina
Environmental Study Group, Inc., 438 U. S. 59, 94, n. 39
(1978) (upholding on due process grounds the Price-Anderson Act, 42
U. S. C. § 2210 (1970 ed., Supp. V), which placed a cap on civil
liability for nuclear accidents, but declining to address
petitioner's request that the Act be declared a taking because
compensation would be available under the Tucker Act, 28 U. S. C. §
1491(a)(1) (1976
547
ed.)). These authorities confirm my view that the case is
controlled not by the Takings Clause but by well-settled due
process principles respecting retroactive laws.
Given my view that the takings analysis is inapplicable in this
case, it is unnecessary to comment upon the plurality's effort to
resolve a jurisdictional question despite little briefing by the
parties on a point which has divided the Courts of Appeals.
II
When the constitutionality of the Coal Act is tested under the
Due Process Clause, it must be invalidated. Accepted principles
forbidding retroactive legislation of this type are sufficient to
dispose of the case.
Although we have been hesitant to subject economic legislation
to due process scrutiny as a general matter, the Court has given
careful consideration to due process challenges to legislation with
retroactive effects. As to day's plurality opinion notes, for
centuries our law has harbored a singular distrust of retroactive
statutes.
Ante, at 532-533. In the words of Chancellor Kent:
"A retroactive statute would partake in its character of the
mischiefs of an
ex post facto law ... ; and in every other
case relating to contracts or property, it would be against every
sound principle." 1 J. Kent, Commentaries on American Law *455; see
also ibid. (rule against retroactive application of statutes to be
"founded not only in English law, but on the principles of general
jurisprudence"). Justice Story reached a similar conclusion:
"Retrospective laws are, indeed, generally unjust; and, as has been
forcibly said, neither accord with sound legislation nor with the
fundamental principles of the social compact." 2 J. Story,
Commentaries on the Constitution § 1398 (5th ed. 1891).
The Court's due process jurisprudence reflects this distrust.
For example, in
Usery v.
Turner Elkhorn Mining Co.,
428 U. S. 1, 15
(1976), the Court held due process requires an inquiry into whether
in enacting the retroactive law the legislature acted in an
arbitrary and irrational way. Even though prospective economic
legislation carries with it
548
Opinion of KENNEDY, J.
the presumption of constitutionality, "[i]t does not follow ...
that what Congress can legislate prospectively it can legislate
retrospectively. The retrospective aspects of [economic]
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."
Id., at 16-17. We have repeated
this formulation in numerous recent decisions and given serious
consideration to retroactivity-based due process challenges, all
without questioning the validity of the underlying due process
principle.
United States v.
Carlton, 512 U. S. 26, 31 (1994);
Concrete Pipe, supra, at 636-641;
General Motors
Corp. v.
Romein, 503 U. S. 181, 191
(1992);
United States v.
Sperry Corp., 493 U. S. 52, 64 (1989);
United States v.
Hemme, 476 U. S. 558, 567-572
(1986);
Pension Benefit Guaranty Corporation v.
R. A.
Gray &
Co., 467 U. S. 717, 729-730
(1984). These decisions treat due process challenges based on the
retroactive character of the statutes in question as serious and
meritorious, thus confirming the vitality of our legal tradition's
disfavor of retroactive economic legislation. Indeed, it is no
accident that the primary retroactivity precedents upon which to
day's plurality opinion relies in its takings analysis were
grounded in due process.
Ante, at 524-528 (citing
Turner
Elkhorn, R. A. Gray, and
Concrete Pipe).
These cases reflect our recognition that retroactive lawmaking
is a particular concern for the courts because of the legislative
"tempt[ation] to use retroactive legislation as a means of
retribution against unpopular groups or individuals."
Landgraf v.
USI Film Products, 511 U. S. 244, 266
(1994); see also Hochman, The Supreme Court and the
Constitutionality of Retroactive Legislation, 73 Harv. L. Rev. 692,
693 (1960) (a retroactive law "may be passed with an exact
knowledge of who will benefit from it"). If retroactive laws change
the legal consequences of transactions long closed, the change can
destroy the reasonable certainty and security which are the very
objects of property ownership.
549
As a consequence, due process protection for property must be
understood to incorporate our settled tradition against retroactive
laws of great severity. Groups targeted by retroactive laws, were
they to be denied all protection, would have a justified fear that
a government once formed to protect expectations now can destroy
them. Both stability of investment and confidence in the
constitutional system, then, are secured by due process
restrictions against severe retroactive legislation.
The case before us represents one of the rare instances where
the Legislature has exceeded the limits imposed by due process. The
plurality opinion demonstrates in convincing fashion that the
remedy created by the Coal Act bears no legitimate relation to the
interest which the Government asserts in support of the statute.
Ante, at 529-537. In our tradition, the degree of
retroactive effect is a significant determinant in the
constitutionality of a statute.
United States v.
Carlton,
supra, at 32;
United States v.
Darusmont,
449 U. S. 292,
296-297 (1981)
(per curiam); see also
Dunbar v.
Boston &
P. R. Corp., 181 Mass. 383, 386, 63 N.
E. 916, 917 (1902) (Holmes, C. J.). As the plurality explains
today, in creating liability for events which occurred 35 years ago
the Coal Act has a retroactive effect of unprecedented scope.
Ante, at 532.
While we have upheld the imposition of liability on former
employers based on past employment relationships, the statutes at
issue were remedial, designed to impose an "actual, measurable cost
of [the employer's] business" which the employer had been able to
avoid in the past.
Turner Elkhorn, supra, at 19; accord,
Concrete Pipe, 508 U. S., at 638;
Romein, supra, at
191-192;
R. A. Gray, supra, at 733-734. As Chancellor Kent
noted: "Such statutes have been held valid when clearly just and
reasonable, and conducive to the general welfare, even though they
might operate in a degree upon existing rights." 1 Kent,
Commentaries on American Law, at *455-*456. The Coal Act, however,
does not serve
550
this purpose. Eastern was once in the coal business and employed
many of the beneficiaries, but it was not responsible for their
expectation of lifetime health benefits or for the perilous
financial condition of the 1950 and 1974 plans which put the
benefits in jeopardy. As the plurality opinion discusses in detail,
the expectation was created by promises and agreements made long
after Eastern left the coal business. Eastern was not responsible
for the resulting chaos in the funding mechanism caused by other
coal companies leaving the framework of the National Bituminous
Coal Wage Agreement.
Ante, at 535-536. This case is far
outside the bounds of retroactivity permissible under our law.
Finding a due process violation in this case is consistent with
the principle that "under the deferential standard of review
applied in substantive due process challenges to economic
legislation there is no need for mathematical precision in the fit
between justification and means."
Concrete Pipe, supra, at
639 (citing
Turner Elkhorn, 428 U. S., at 19). Statutes may
be invalidated on due process grounds only under the most egregious
of circumstances. This case represents one of the rare instances in
which even such a permissive standard has been violated.
Application of the Coal Act to Eastern would violate the proper
bounds of settled due process principles, and I concur in the
plurality's conclusion that the judgment of the Court of Appeals
must be reversed.
JUSTICE STEVENS, with whom JUSTICE SOUTER, JUSTICE GINSBURG, and
JUSTICE BREYER join, dissenting.
Some appellate judges are better historians than others.
With respect to the central issue resolved by the Coal Act of
1992, I am persuaded that the consensus among the Circuit Judges
who have appraised the issue is more accurate than the views of
this Court's majority.l The uneasy truce
1 See
ante, at 535-536 (plurality opinion of O'CONNOR,
J., joined by REHNQUIST, C. J., and SCALIA and THOMAS, JJ.);
ante, at 539, 549 and this page (KENNEDY, J., concurring in
judgment and dissenting in part).
551
between the coal operators and the miners that enabled coal
production to continue during the 1950's and 1960's depended more
on the value of a handshake than the fine print in written
documents. During that period there was an implicit understanding
on both sides of the bargaining table that the operators would
provide the miners with lifetime health benefits. It was this
understanding that kept the mines in operation and enabled Eastern
to earn handsome profits before it transferred its coal business to
a wholly owned subsidiary in 1965.
My understanding of this critical fact is shared by the judges
of the Seventh Circuit,2 the Sixth Circuit,3 and the
2"[E]very [National Bituminous Coal Wage Agreement (NBCWA)]
signatory company shared some responsibility in creating a
legitimate expectation among miners of lifetime health benefits.
Imposing liability on companies that have profited from the
retirees' labor was found rational in
[Usery v.
Turner
Elkhorn Mining Co., 428 U. S. 1, 18 (1976)]
.... Every signatory company, including plaintiffs, participated in
the creation and development of a multi-employer health benefit
program that provided lifetime health benefits for retirees for
almost fifty years. Congress could rationally have concluded that
such participation led to a legitimate expectation of lifetime
health benefits that should be honored under the Coal Act. Again,
in this light, it would have been arbitrary to draw the line
anywhere other than at all NBCWA signatories. Plaintiffs respond
that it was not until the 1974 NBCWA and the 'guarantee' and
'evergreen' clauses of the 1978 NBCWA that miners were promised
lifetime health benefits-promises that plaintiffs never made.
Therefore, they argue, it was irrational for Congress to require
contributions from pre-1974 signatories. But the 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."
Davon, Inc. v.
Shalala, 75 F.3d
1114, 1124-1125 (1996) (footnote omitted).
3 "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
[United Mine Workers of America (UMWA)] members had a legitimate
expectation of lifetime benefits be-
552
First Circuit.4 It is the same understanding that motivated the
members of the Coal Commission to conclude that the operators who
had employed the "orphaned miners" should share responsibility for
their health benefits.5 And it is
fore 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, 75 F.3d
1124-25 ('Congress could rationally have concluded that such
participation [in the NBCWA benefit funds] led to a legitimate
expectation of lifetime benefits.').
See also Templeton Coal
[Co., Inc. v.
Shalala, 882 F. Supp. 799, 825 (SD Ind.
1995)] (describing basis for lifetime benefits expectation).
Congress certainly had a rational basis for concluding that all
NBCWA signatories and 'me-too' operators who agreed to be bound by
the NBCWAs, including Blue Diamond, contributed toward the
legitimate expectations of the UMWA members."
In re Blue
Diamond Coal Co.,
79 F.3d
516, 522 (1996).
4 "[I]t is not accurate to claim that only those [signatory
operators] which executed NBCWAs in or after 1974 created a
legitimate expectation of lifetime health benefits for miners.
Congress and the Coal Commission both reviewed the historical
evidence and concluded that pre-1974 signatories had made an
implicit commitment to furnish such benefits ....
"Of course, the appellant is correct in insisting that the
commitment distilled by Congress from the historical data was not
made explicit in the text of those NBCWAs which were written before
1974. But Eastern reads too much into that omission. To be sure,
such an implied commitment might not be enforceable in a civil suit
ex contractu-but this is a constitutional challenge, not a
breach of contract case. For purposes of due process review,
Congress' determination that a commitment was made need not rest
upon a legally enforceable promise; it is enough that Congress'
conclusions as to the existence and effects of such a commitment
are rational."
Eastern Enterprises v.
Chater,
110 F.3d
150, 157 (1997).
5 "The Commission firmly believes that the retired miners are
entitled to the health care benefits that were promised and
guaranteed them and that such commitments must be honored ....
"Retired coal miners have legitimate expectations of health care
benefits for life; that was the promise they received during their
working lives and that is how they planned their retirement years.
That commitment should be honored. But today those expectations and
commitments are in jeopardy." Secretary of Labor's Advisory
Commission on United Mine Workers of America Retiree Health
Benefits, Coal Commission Report (1990), quoted in App. 237a,
245a-246a.
553
the same understanding that led legislators in both political
parties to conclude that the Coal Act of 1992 represented a fair
solution to a difficult problem.
Given the critical importance of the reasonable expectations of
both the miners and the operators during the period before their
implicit agreement was made explicit in 1974, I am unable to agree
with the plurality's conclusion that the retroactive application of
the 1992 Act is an unconstitutional "taking" of Eastern's property.
Rather, it seems to me that the plurality and JUSTICE KENNEDY have
substituted their judgment about what is fair for the better
informed judgment of the members of the Coal Commission and
Congress.6
Accordingly, I conclude that, whether the provision in question
is analyzed under the Takings Clause or the Due Process Clause,
Eastern has not carried its burden of overcoming the presumption of
constitutionality accorded to an Act of Congress, by demonstrating
that the provision is unsupported by the reasonable expectations of
the parties in interest.
JUSTICE BREYER, with whom JUSTICE STEVENS, JUSTICE SOUTER, and
JUSTICE GINSBURG join, dissenting.
We must decide whether it is fundamentally unfair for Congress
to require Eastern Enterprises to pay the health care costs of
retired miners who worked for Eastern before 1965, when Eastern
stopped mining coal. For many years Eastern benefited from the
labor of those miners. Eastern helped to create conditions that led
the miners to expect continued health care benefits for themselves
and their families
6 It may well be true that the majority might have been able to
fashion a wiser solution to a difficult problem. Nevertheless, as
Chief Justice Hughes observed in a dissent joined by Justices
Brandeis, Stone, and Cardozo: "The power committed to Congress to
govern interstate commerce does not require that its government
should be wise, much less that it should be perfect."
Railroad
Retirement Bd. v.
Alton R. Co., 295 U. S. 330, 391-392
(1935).
554
after they retired. And Eastern, until 1987, continued to draw
sizable profits from the coal industry through a wholly owned
subsidiary. For these reasons, I believe that Congress did not act
unreasonably or otherwise unjustly in imposing these health care
costs upon Eastern. Consequently, in my view, the statute before us
is constitutional.
I
As a preliminary matter, I agree with JUSTICE KENNEDY,
ante, at 539-547 (opinion concurring in judgment and
dissenting in part), that the plurality views this case through the
wrong legal lens. The Constitution's Takings Clause does not apply.
That Clause refers to the taking of "private property ... for
public use, without just compensation." U. S. Const., Arndt. 5. As
this language suggests, at the heart of the Clause lies a concern,
not with preventing arbitrary or unfair government action, but with
providing
compensation for legitimate government action that
takes "private property" to serve the "public" good.
The "private property" upon which the Clause traditionally has
focused is a specific interest in physical or intellectual
property. See,
e. g., Penn Central Transp. Co. v.
New
York City, 438 U.
S. 104, 124 (1978);
Ruckelshaus v.
Monsanto Co.,
467 U. S. 986
(1984). It requires compensation when the government takes that
property for a public purpose. See
Dolan v.
City of
Tigard, 512 U. S.
374, 384 (1994) (Clause requires payment so that government
cannot "'forc[e] some people alone to bear public burdens which, in
all fairness and justice, should be borne by the public as a
whole'" (quoting
Armstrong v.
United States, 364 U. S. 40, 49 (1960))).
This case involves not an interest in physical or intellectual
property, but an ordinary liability to pay money, and not to the
Government, but to third parties.
This Court has not directly held that the Takings Clause applies
to the creation of this kind of liability. The Court has made clear
that not only seizures through eminent do-
555
main but also certain "takings" through regulation can require
"compensation" under the Clause. See,
e. g., Pennsylvania Coal
Co. v.
Mahon, 260 U. S. 393, 415 (1922)
("[WJhile property may be regulated to a certain extent, if
regulation goes too far it will be recognized as a taking");
Lucas v.
South Carolina Coastal Council, 505 U. S. 1003 (1992)
(land-use regulation that deprives owner of all economically
beneficial use of property constitutes taking);
Nollan v.
California Coastal Comm'n, 483 U. S. 825 (1987)
(public easement across property may constitute taking). But these
precedents concern the taking of interests in
physical
property.
The Court has also made clear that the Clause can apply to
monetary interest generated from a fund into which a private
individual has paid money.
Webb's Fabulous Pharmacies, Inc.
v.
Beckwith, 449 U. S. 155 (1980). But
the monetary interest at issue there arose out of the operation of
a specific, separately identifiable fund of money. And the
government took that interest for itself. Here there is no specific
fund of money; there is only a general liability; and that
liability runs not to the Government, but to third parties. Cf.,
e. g., Armstrong, supra, at 48 (Government destroyed liens
"for its own advantage");
Connolly v.
Pension Benefit
Guaranty Corporation, 475 U. S. 211, 225 (1986)
(no taking where "the Government does not physically invade or
permanently appropriate any ... assets
for its own use"
(emphasis added)).
The Court in two cases has arguably acted
as if the
Takings Clause might apply to the creation of a general liability.
Connolly, supra; Concrete Pipe &
Products of Cal.,
Inc. v.
Construction Laborers Pension Trust for Southern
Cal., 508 U. S. 602 (1993). But in the first of those cases,
the Court said that the Takings Clause had
not been
violated, in part because "the Government does not physically
invade or permanently appropriate any ... assets for its own use."
Connolly, 475 U. S., at 225. It also rejected the position
that a
556
taking occurs "whenever legislation requires one person to use
his or her assets for the benefit of another."
Id., at 223.
The second case basically followed the analysis of the first case.
Concrete Pipe, 508 U. S., at 641-647. And both cases
rejected the claim of a Takings Clause violation.
Id., at 646
647; Connolly, supra, at 227-228.
The dearth of Takings Clause authority is not surprising, for
application of the Takings Clause here bristles with conceptual
difficulties. If the Clause applies when the government simply
orders A to pay B, why does it not apply when the government simply
orders A to pay the government, i.
e., when it assesses a
tax? Cf.
In re Leckie Smokeless Coal Co.,
99 F.3d
573, 583 (CA4 1996) (characterizing "reachback" liability
payments as a "tax"), cert. denied, 520 U. S. 1118
(1997); In re
Chateaugay Corp., 53 F.3d
478, 498
(CA2 1995) (same), cert. denied
sub nom. LTV
Steel Co., Inc. v.
Shalala, 516 U. S. 913 (1995). Would
that Clause apply to some or to all statutes and rules that
"routinely creat[e] burdens for some that directly benefit others"?
Connolly, supra, at 223. Regardless, could a court apply the
same kind of Takings Clause analysis when violation means the law's
invalidation, rather than simply the payment of "compensation?" See
First English Evangelical Lutheran Church of Glendale v.
County of Los Angeles, 482 U. S. 304, 315 (1987)
("[The Takings Clause] is designed not to limit the governmental
interference with property rights
per se, but rather to
secure
compensation in the event of otherwise proper
interference amounting to a taking").
We need not face these difficulties, however, for there is no
need to torture the Takings Clause to fit this case. The question
involved-the potential unfairness of retroactive liability-finds a
natural home in the Due Process Clause, a Fifth Amendment neighbor.
That Clause says that no person shall be "deprive[d] ... of life,
liberty, or property, without due process of law." U. S. Const.,
Arndt. 14, § 1. It safeguards citizens from arbitrary or irrational
legislation.
557
And the Due Process Clause can offer protection against
legislation that is unfairly retroactive at least as readily as the
Takings Clause might, for as courts have sometimes suggested, a law
that is fundamentally unfair because of its retroactivity is a law
that is basically arbitrary. See,
e. g., Pension Benefit
Guaranty Corporation v.
R. A. Gray &
Co., 467
U. S. 717, 728-730 (1984); id., at 730 ("[R]etroactive aspects of
legislation [imposing withdrawal liability on employers
participating in pension plan] must meet the test of due process");
id., at 733 ("[R]etrospective civil legislation may offend due
process if it is particularly harsh and oppressive" (internal
quotation marks omitted));
Usery v.
Turner Elkhorn Mining
Co., 428 U. S.
1, 17 (1976). Cf.
United States v.
Carlton,
512 U. S. 26, 30
(1994) (retroactive tax provision);
Welch v.
Henry,
305 U. S. 134,
147 (1938) (same);
National Labor Relations Board v.
Guy
F. Atkinson Co., 195 F.2d
141, 149,
151 (CA9 1952) (invalidating administrative
order as "arbitrary, capricious, an abuse of discretion," see 5 U.
S. C. § 706(2)(A), because "[t]he inequity of ... retroactive
policy making ... is the sort of thing our system of law
abhors").
Nor does application of the Due Process Clause automatically
trigger the Takings Clause, just because the word "property"
appears in both. That word appears in the midst of different
phrases with somewhat different objectives, thereby permitting
differences in the way in which the term is interpreted. Compare,
e. g., United States v.
Martin Linen Supply Co.,
430 U. S. 564
(1977) ("person" includes corporations for purposes of Fifth
Amendment Double Jeopardy Clause), with
Doe v.
United
States, 487 U. S.
201, 206 (1988) ("person" does not include a corporation for
purposes of Fifth Amendment Self-Incrimination Clause).
Insofar as the plurality avoids reliance upon the Due Process
Clause for fear of resurrecting
Lochner v.
New York,
198 U. S. 45
(1905), and related doctrines of "substantive due process," that
fear is misplaced. Cf. id., at 75-76 (Holmes, J., dissenting);
Lincoln Fed. Union v.
Northwestern
558
Iron &
Metal Co., 335 U. S. 525, 535 (1949)
(repudiating the
"Allgeyer- Lochner- Adair-Coppage
constitutional doctrine"). As the plurality points out,
ante, at 533, an unfair retroactive assessment of liability
upsets settled expectations, and it thereby undermines a basic
objective of law itself. See,
e. g., 2 J. Story,
Commentaries on the Constitution § 1398 (5th ed. 1891) (criticizing
retrospective laws as failing to "accord with ... the fundamental
principles of the social compact");
ibid. (retroactive
legislation invalid "upon principles derived from the general
nature of free governments, and the necessary limitations created
thereby");
General Motors Corp. v.
Romein, 503 U. S. 181, 191 (1992)
("Retroactive legislation ... can deprive citizens of legitimate
expectations");
Fletcher v.
Peck, 6 Cranch 87, 143
(1810) (Johnson, J., concurring) (suggesting that retroactive
legislation is invalid because it offends principles of natural
law).
To find that the Due Process Clause protects against this kind
of fundamental unfairness-that it protects against an unfair
allocation of public burdens through this kind of specially
arbitrary retroactive means-is to read the Clause in light of a
basic purpose: the
fair application of law, which purpose
hearkens back to the Magna Carta. It is not to resurrect
long-discredited substantive notions of "freedom of contract." See,
e. g., Ferguson v.
Skrupa, 372 U. S. 726, 729732
(1963).
Thus, like the plurality I would inquire if the law before us is
fundamentally unfair or unjust.
Ante, at 534-537. But I
would ask this question because, like JUSTICE KENNEDY, I believe
that,
if so, the Coal Act would "deprive" Eastern of
"property, without due process of law." U. S. Const., Arndt. 14, §
1.
II
The substantive question before us is whether or not it is
fundamentally unfair to require Eastern to make
future
payments for health care costs of retired miners and their
families, on the basis of Eastern's
past association with
these
559
miners. Congress might have assessed all those who now use coal,
or the taxpayer, in order to pay for those retired coal miners'
health benefits. But Congress, instead, imposed this liability on
Eastern. Coal Industry Retiree Health Benefit Act of 1992 (Coal
Act), 26 U. S. C. §§ 97019722 (1994 ed. and Supp. II). The
"fairness" question is, why Eastern?
The answer cannot lie in a contractual promise to pay, for
Eastern made no such contractual promise. Nor did Eastern
participate in any benefit plan that made such a contractual
promise, prior to its departure from the coal industry in 1965.
But, as JUSTICE STEVENS points out, this case is not a civil law
suit for breach of contract. It is a constitutional challenge to
Congress' decision to assess a new future liability on the basis of
an old employment relationship.
Ante, at 551-552, n. 3
(dissenting opinion). Unless it is fundamentally unfair and unjust,
in terms of Eastern's reasonable reliance and settled expectations,
to impose that liability, the Coal Act's "reachback" provision
meets that challenge. See
Connolly, 475 U. S., at 227;
Concrete Pipe, 508 U. S., at 645-646.
I believe several features of this case demonstrate that the
relationship between Eastern and the payments demanded by the Coal
Act is special enough to pass the Constitution's fundamental
fairness test. That is, even though Eastern left the coal industry
in 1965, the historical circumstances, taken together, prevent
Eastern from showing that the Coal Act's "reachback" liability
provision so frustrates Eastern's reasonable settled expectations
as to impose an unconstitutionalliability. Cf.
Penn Central,
438 U. S., at 127-128.
For one thing, the liability that the statute imposes upon
Eastern extends only to miners whom Eastern itself employed. See 26
U. S. C. § 9706(a) (imposing "reachback" liability only where no
presently operating coal firm which ratified 1978 or subsequent
bargaining agreement ever employed the retiree, and Eastern
employed the retiree longer than
560
any other "reachback" firm). They are miners whose labor
benefited Eastern when they were younger and healthier. Insofar as
working conditions created a risk of future health problems for
those miners, Eastern created those conditions. And these factors
help to distinguish Eastern from others with respect to a later
obligation to pay the health care costs that inevitably arise in
old age. See,
e. g., 138 Congo Rec. 34001 (1992) (Conference
Report on Coal Act) (Coal Act assigns liability to "those companies
which employed the retirees ... and thereby benefitted from their
services"); Hearings on Provisions Relating to the Health Benefits
of Retired Coal Miners before the House Committee on Ways and
Means, 103d Cong., 1st Sess., 8-9, 32 (1993) (hereinafter Hearings
on Health Benefits); House Committee on Ways and Means, Financing
UMW A Coal Miner "Orphan Retiree" Health Benefits, 103d Cong., 1st
Sess., 50-51 (Comm. Print 1993) (hereinafter House Report).
Congress has sometimes imposed liability, even "retroactive"
liability, designed to prevent degradation of a natural resource,
upon those who have used and benefited from it. See,
e. g.,
Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, 42 U. S. C. § 9601
et seq. (1994 ed. and Supp.
I). That analogy, while imperfect, calls attention to the special
tie between a firm and its former employee, a human resource, that
helps to explain the special retroactive liability. That
connection, while not by itself justifying retroactive liability
here, helps to distinguish a firm like Eastern, which employed a
miner but no longer makes coal, from other funding sources, say,
current coal producers or coal consumers, who now make or use coal
but who have never employed that miner or benefited from his
work.
More importantly, the record demonstrates that Eastern, before
1965, contributed to the making of an important "promise" to the
miners. That "promise," even if not contractually enforceable, led
the miners to "develo[p]" a reasonable "expectation" that they
would continue to receive
561
"[retiree] medical benefits."
Ante, at 535. The relevant
history, outlined below, shows that industry action (including
action by Eastern), combined with Federal Government action and the
miners' own forbearance, produced circumstances that made it
natural for the miners to believe that either industry or
Government (or both) would make every effort to see that they
received health benefits after they retired-regardless of what
terms were explicitly included in previously signed bargaining
agreements.
(1) Before the 1940's, health care for miners, insofar as it
existed, was provided by "company doctors" in company towns. See,
e. g., U. S. Dept. of Interior, Report of the Coal Mines
Administration, A Medical Survey of the BituminousCoal Industry
121, 144 (1947) (hereinafter Boone Report); id., at 131, 191, 193
(describing care as substandard and criticizing the "noticeable
deficiency" in the number of doctors); Secretary of Labor's
Advisory Commission on United Mine Workers of America Retiree
Health Benefits, Coal Commission Report 19 (1990) (hereinafter Coal
Comm'n Report), App. in No. 96-1947 (CA1), p. 1350 (hereinafter
App. (CA1)). By the late 1940's, health care and pension rights had
become
the issue for miners, a central demand in collective
bargaining, and a rallying cry for those who urged a nationwide
coal strike. M. Fox, United We Stand 404, 416 (1990); 1.
Krajcinovic, From Company Doctors to Managed Care 17, 43 (1997)
(hereinafter Krajcinovic); C. Seltzer, Fire in the Hole 57 (1985);
R. Zieger, John L. Lewis: Labor Leader 151 (1988); see also
ante, at 504-505. John L. Lewis, head of the United Mine
Workers of America (hereinafter UMWA or Union), urged the mine
owners to "'remove that fear'" of sudden death from "'their minds
so that they will know if that occurs ... their families will be
provided with proper insurance.' " Zieger,
supra, at 153. In
1946, the workers struck. The Government seized the mines. And the
Government, together with the Union, effectively imposed a managed
health care agreement on the coal operators. Seltzer,
supra,
at 58.
562
(2) The resulting 1946 "Krug- Lewis Agreement" created a Medical
and Hospital Fund designed to "provide, or to arrange for the
availability of, medical, hospital, and related services for the
miners and their dependents." Krug-Lewis Agreement § 4(b), App.
(CA1) 612-613. One year later, this fund was consolidated with a
"Welfare and Retirement Fund" also established in 1946 (hereinafter
W &R Fund). 1947 National Bituminous Coal Wage Agreement
(hereinafter NBCWA) 150, App. (CA1) 621. Under the 1947 and
successive agreements, the W &R Fund's three trustees (union,
management, and "neutral") determined the specific benefits
provided under the plan. 1947 NBCWA 144, App. (CA1) 618.
(3) Between 1947 and 1965, the benefits that the W &R Fund
provided included retiree benefits quite similar to those at issue
here. The bargaining agreements between the coal operators and
miners (NBCWA's) and the W&R Fund's Annual Reports make clear
that the W&R Fund provided benefits to all "employees ... ,
their families and dependents for medical or hospital care." 1947
NBCWA 146, App. (CA1) 619; 1950 NBCWA 60-61, App. (CA1) 639
(continuing coverage); 1951 NBCWA 50-51, App. (CA1) 648 (same);
1952 NBCWA 40-42, App. (CA1) 650-651 (same); 1955 NBCWA 34-35, App.
(CA1) 655 (same); 1956 NBCWA 28-29, App. (CA1) 658 (same); 1958
NBCWA 16-17, App. (CA1) 661 (same); 1964 NBCWA 4-5, App. (CA1)
668-669 (same); 1966 NBCWA 4-5, App. (CA1) 688-689 (same). The
Fund's Annual Reports specified that eligible family members
included miners' spouses, children, dependent parents, and (at
least after 1955)
retired miners and their dependents, and
widows and orphans (for a 12-month period). 1955 W&R Fund
Annual Report 15, 28, App. (CA1) 881, 894; 1956 W&R Fund Annual
Report 13-14, App. (CA1) 912-913 (also noting the "unprecedented
magnitude and liberality of the Fund's Hospital and Medical Care
Program"); 1958 W &R Fund Annual Report 7, App. (CA1) 943; 1959
W &R Fund Annual Report
563
7-8, App. (CA1) 975-976; 1960 W &R Fund Annual Report 9,
App. (CA1) 1018; 1961 W&R Fund Annual Report 16-17, App. (CA1)
1058-1059; 1962 W&R Fund Annual Report 1516, App. (CA1)
1090-1091; 1963 W&R Fund Annual Report 15-16, App. (CA1)
1123-1124; 1964 W&R Fund Annual Report 22-23, App. (CA1)
1160-1161; 1965 W&R Fund Annual Report 14, App. (CA1) 1187. See
also Hearings on Health Benefits, at 36 (suggesting retirees
eligible" 'from the inception of bargained benefits' ").
The only significant difference between the coverage provided
before 1974 and after 1974 consists of greater generosity after
1974 with respect to widows, for the earlier 12month limitation was
repealed and health benefits extended to widows' remarriage or
death. See 1974 NBCWA 105, App. (CA1) 758.
(4) In return for what the miners thought was an assurance
(though not a contractual obligation) from management of continued
pension and health care benefits, the Union agreed to accept
mechanization of mining, a concession that meant significant
layoffs and a smaller future work force. Coal Comm'n Report 11-14,
App. (CA1) 1342-1345 (75% decline in employment from 1950 to 1969);
Krajcinovic 4, 43-44; Seltzer,
supra, at 36; see also C.
Perry, Collective Bargaining and the Decline of the United Mine
Workers 43 (1984) (detailing benefits of mechanization for coal
operators). The president of the Southern Coal Operators'
Association said in 1953 that the miners "have been promised and
grown accustomed to" health benefits. App. (CA1) 2000. Those
benefits, the management's W&R Fund trustee said in 1951,
covered "mine worker[s], including pensioners, and dependents ...
without limit as to duration."
Id., at 1972. This Court,
too, has said that the UMW A "agreed not to oppose the rapid
mechanization of the mines" in exchange for "increased wages" and
"payments into the welfare fund."
Mine Workers v.
Pennington, 381 U. S. 657, 660
(1965); see also
id., at 698 (Goldberg, J., concurring in
judgment) (improved wages,
564
benefits, and working conditions were a
"quid pro quo"
for automation).
Others have reached similar conclusions. The Coal Com-
mission more recently said:
"Retired coal miners have legitimate expectations of health care
benefits for life; that was the promise they received during their
working lives and that is how they planned their retirement years.
That commitment should be honored." Coal Comm'n Report 1, App.
(CA1) 1332.
And numerous supporters of the present law read the history as
showing, for example, that the "miners went to work each day under
the assumption that their health benefits would be there when they
retired." 138 Congo Rec. 20121 (1992) (Sen. Wofford); see also id.,
at 20118 (Sen. Rockefeller) (Coal Act "will see to it that the
promise of health care is kept to tens of thousands of retired coal
miners and their families"); id., at 20119 (Sen. Byrd) (Coal Act
will "assure ... retired coal miners ... that promises made to them
during their working years are not now ... reneged upon"); id., at
20120 (Sen. Ford) (Coal Act assures that "promise made to
[retirees] can be kept"); id., at 34001 (Conference Report on Coal
Act) ("Under [NBCWA's], retirees and their dependents have been
promised lifetime health care benefits").
Further, the Federal Government played a significant role in
developing the expectations that these "promises" created. In 1946,
as mentioned above, during a strike related to health and pension
benefits, the Government seized the mines and imposed the
"Krug-Lewis Agreement," which established the basic health benefits
framework.
Supra, at 561; see also 11 Fed. Reg. 5593 (1946)
(President Truman's seizure order). In 1948, during a strike
related to pension benefits, the Government again intervened to
ensure continued availability of these benefits. 13 Fed. Reg. 1579
(1948) (Executive Order creating board to inquire into strike);
Kraj-
565
cinovic 37-38. In later years, but before 1965, Congress
provided the W&R Fund with special tax benefits, helped the
Fund to build hospitals, and established health and safety
standards. Brief for Respondents UMW A Combined Benefit Fund et al.
11-12 (citing relevant statutes and record materials). This kind of
Government intervention explains why the president of the Southern
Coal Producers' Association said, in the 1950's, that if benefits
were reduced, it was
"entirely conceivable that Congress [would] step in and take
over the mines, assuming responsibility for the welfare collections
and payment." App. (CA1) 2000.
I repeat that the Federal Government's words and deeds, along
with those of the pre-1965 industry, did not necessarily create
contractually binding promises (which, had they existed, might have
eliminated the need for this legislation). But in labor relations,
as in human relations, one can create promises and understandings
which, even in the absence of a legally enforceable contract,
others reasonably expect will be honored. Indeed, in labor
relations such industrywide understandings may spell the difference
between labor war and labor peace, for the parties may look to a
strike, not to a court, for enforcement. It is that kind of
important, mutual understanding that is at issue here. For the
record shows that pre-1965 statements and other conduct led
management to understand, and labor legitimately to expect, that
health care benefits for retirees and their dependents would
continue to be provided.
Finally, Eastern continued to obtain profits from the coal
mining industry long after 1965, for it operated a wholly owned
coal-mining subsidiary, Eastern Associated Coal Corp. (hereinafter
EACC), until the late 1980's. Between 1966 and 1987, Eastern
effectively ran EACC, sharing officers, supervising management, and
receiving 100% of EACC's approximately $100 million in dividends.
Brief for Petitioner 6, n. 13; App. (CA1) 2172 (affidavit of T.
Gallagher,
566
EACC General Counsel); id., at 2182 (Eastern Corporate Cash
Manual); see also id., at 2170-2173 (noting Eastern's profits from,
and control over, EACC); id., at 2178-2181; id., at 2192-2205.
Eastern officials, in their role as EACC directors, ratified the
post-1965 bargaining agreements, Brief for Bituminous Coal
Operators' Association, Inc., as
Amicus Curiae 28, and n.
20; Brief for Respondent Peabody Holding Co., Inc., et al. 14-15,
and must have remained aware of the W &R Fund's deepening
financial crisis.
Taken together, these circumstances explain why it is not
fundamentally unfair for Congress to impose upon Eastern liability
for the future health care costs of miners whom it long ago
employed-rather than imposing that liability, for example, upon the
present industry, coal consumers, or taxpayers. Each diminishes the
reasonableness of Eastern's expectation that, by leaving the
industry, it could fall within the Constitution's protection
against unfairly retroactive liability.
These circumstances, as elaborated by the record, mean that
Eastern knew of the potential funding problems that arise in any
multiemployer benefit plan, see
Concrete Pipe, 508 U. S., at
637-639, before it left the industry. Eastern knew or should have
known that, in light of the structure of the benefit plan and the
frequency with which coal operators went out of business, a "last
man out" problem could exacerbate the health plan's funding
difficulties. See,
e. g., Boone Report xvi; House Report 34;
Coal Commission Report on Health Benefits of Retired Coal Miners:
Hearing before the Subcommittee on Medicare and Long-Term Care of
the Senate Committee on Finance, 102d Cong., 1st Sess., 15, 21
(1991) (statement of Coal Commission Vice Chairman Henry Perritt,
Jr.). Eastern also knew or should have known that because of prior
federal involvement, future federal intervention to solve any such
problem was a serious possibility.
Supra, at 564-565; see
also
Concrete Pipe, supra, at 645-646;
Connolly, 475
U. S., at 226-227;
Usery, 428 U. S., at 15-16.
567
Eastern knew, by the very nature of the problem, that any
legislative effort to solve such a problem could well occur many
years into the future. And, most importantly, Eastern played a
significant role in creating the miners' expectations that led to
this legislation. Add to these circumstances the two others I have
mentioned-that Eastern had benefited from the labor of the miners
for whose future health care it must provide, and that Eastern
remained in the industry, drawing from it substantial profits
(though doing business through a subsidiary, which usually,
but
not always, insulates an owner from liability).
The upshot, if I follow the form of analysis this Court used in
Connolly, is that I cannot say the Government's regulation
has unfairly interfered with Eastern's "distinct investmentbacked
expectations." See
Connolly, supra, at 225-227 (analyzing
"taking" in terms of three factors: (1) "economic impact"; (2)
interference "'with distinct investment-backed expectations'''; and
(3) "'character of the governmental action'" (citations omitted)).
Within that framework, I could find additional support for the
constitutionality of the "reachback" liability provision by adding
that the "character of the governmental action" here amounts to the
creation of a liability to a third party, and not a direct "taking"
of an interest in physical property. And the fact that the statute
here narrows Eastern's liability to those whom it employed, while
explicitly preserving Eastern's rights to indemnification from
others (thereby helping Eastern spread the risk of this liability),
26 U. S. C. § 9706(f)(6), helps to diminish the Coal Act's
"economic impact" upon Eastern as well.
I would put the matter more directly, however. The law imposes
upon Eastern the burden of showing that the statute, because of its
retroactive effect, is fundamentally unfair or unjust. The
circumstances I have mentioned convince me that Eastern cannot show
a sufficiently reasonable expectation that it would remain free of
future health care cost liability for the workers whom it employed.
Eastern has
568
therefore failed to show that the law unfairly upset its
legitimately settled expectations. Because, in my view, Eastern has
not met its burden, I would uphold the "reachback" provision of the
Coal Act as constitutional.
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