524 U.S. 498
Argued March 4, 1998.
Decided June 25, 1998.
498 Syllabus [FN*]
FN* The syllabus
constitutes no part of the opinion of the Court but has been prepared by
the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U.S. 321,
337, 26 S.Ct. 282, 287, 50 L.Ed. 499.
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 costs -- quickly 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.
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 2 years, 26 U.S.C. §
9706(a) (1); 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.
judgment is reversed, and the case is remanded.
F.3d 150, reversed and remanded.
O'CONNOR, joined by THE CHIEF JUSTICE, Justice SCALIA, and Justice THOMAS,
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
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,
117 S.Ct. 727, 729-730, 136 L.Ed.2d 696.
2. The Coal Act's allocation of liability to Eastern violates the Takings
Clause. Pp. 2146-2153.
Economic regulation such as the Coal Act may effect a taking.
United States v. Security Industrial Bank, 459 U.S. 70, 78, 103
S.Ct. 407, 412, 74 L.Ed.2d 235. 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, 100 S.Ct. 318, 327, 62
L.Ed.2d 210. Although
that inquiry does not lend itself to any set formula, three factors
traditionally have informed this Court's regulatory takings analysis:
"the 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, 100 S.Ct. 383, 390, 62 L.Ed.2d
332. P. 2146.
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, 96 S.Ct. 2882, 49
L.Ed.2d 752 (Black Lung Benefits Act of 1972);
Connolly v. Pension Benefit Guaranty Corporation, 475 U.S. 211, 106
S.Ct. 1018, 89 L.Ed.2d 166 (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, 113 S.Ct. 2264, 124 L.Ed.2d 539 (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 the 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, 104 S.Ct. 2709, 2719, 81 L.Ed.2d 601.
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. 2146-2149.
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, 113 S.Ct., at 2291.
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.
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, 112 S.Ct. 1105, 1112, 117 L.Ed.2d 328.
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 industry wide 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
liability for such benefits also differs from coal operators'
responsibility under the Black Lung Benefits Act of 1972, which spread the
cost of employment-related disabilities to those who profited from the
fruits of the employees' labor, Turner Elkhorn, supra, at 18, 96 S.Ct., at
2893-2894. 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
502 far in the past, and unrelated to any commitment that the
employers made or to any injury they caused.
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, 96 S.Ct. 2882, 2892, 49 L.Ed.2d 752, 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, 114 S.Ct. 2018,
2022, 129 L.Ed.2d 22, 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, 114 S.Ct. 1483, 1497-1498,
128 L.Ed.2d 229. 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, 114 S.Ct.,
at 2022-2023, 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, 96 S.Ct., at 2894, 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.
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. KENNEDY,
J., filed an opinion concurring in the judgment and dissenting in part.
STEVENS, J., filed a dissenting opinion, in which SOUTER, GINSBURG,
and BREYER, JJ., joined. BREYER, J., filed a dissenting opinion, in which
STEVENS, SOUTER, and GINSBURG, JJ., joined.
John T. Montgomery, Boston, MA, for petitioner.
S. Kneedler, Washington, DC, for federal respondents.
Buscemi, Washington, DC, for private respondents.
U.S. Supreme Court Briefs See:
WL 764448 (Pet.Brief)
WL 25533 (Resp.Brief)
WL 42602 (Resp.Brief)
WL 66038 (Reply.Brief)
WL 764427 (Amicus.Brief)
WL 764431 (Amicus.Brief)
WL 764445 (Amicus.Brief)
WL 764447 (Amicus.Brief)
WL 765589 (Amicus.Brief)
WL 781694 (Amicus.Brief)
WL 21989 (Amicus.Brief)
WL 28312 (Amicus.Brief)
WL 42750 (Amicus.Brief)
WL 42886 (Amicus.Brief)
WL 42888 (Amicus.Brief)
WL 42890 (Amicus.Brief)
WL 42891 (Amicus.Brief)
Transcript of Oral Argument See:
WL 101782 (U.S.Oral.Arg.)
O'CONNOR announced the judgment of the Court and delivered an opinion, in
which THE CHIEF JUSTICE, Justice SCALIA, and Justice THOMAS join.
this case, the Court considers a challenge under the Due Process and
Takings Clauses of the Constitution to the Coal
504 Industry Retiree Health Benefit Act of 1992 (Coal 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.
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'
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).
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 UMWA.
11 Fed.Reg. 5593 (1946).
A week of negotiations between Secretary Krug and UMWA President
John L. Lewis produced the historic Krug-Lewis Agreement that ended the
strike. See App. in No.
96-1947(CA1), p. 610 (hereinafter App. (CA1)).
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. (CA1) 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.
after the study was issued, the mines returned to private control and the
UMWA and several coal operators entered into the National Bituminous Coal
Wage Agreement of 1947 (1947 NBCWA), App. (CA1) 615, which established the
"United Mine Workers of America Welfare and Retirement Fund"
(1947 W&R Fund), modeled after the Krug-Lewis benefit trusts.
The Fund was to use the proceeds of a royalty on coal production to
provide pension and medical 506 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 NBCWA was amended on occasion, and
new NBCWA'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.
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 (1955 Annual Report) explained:
legal and financial obligations ... imposed [by the Trust Agreement], the
Fund is operated on a pay-as-you-go basis, maintaining a sound
507 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, 102 S.Ct. 1226, 1228-1229, and n. 2, 71 L.Ed.2d
419 (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 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"); 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"). [FN1] Thus, although
508 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, 102 S.Ct., at 1228-1229; 1956 Annual Report 14, App. (CA1) 913.
FN1. 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) 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.
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)
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 NBCWA,
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, 455 U.S., at 566, 102 S.Ct., at 1229.
Two of the new trusts, the UMWA 1950 Benefit Plan and Trust (1950
Benefit Plan) and the UMWA 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.
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 NBCWA 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.
a result of the broadened coverage under the 1974 NBCWA, the number of
eligible benefit recipients jumped dramatically.
See 1977 Annual Report of the UMWA Welfare 510 and Retirement
Funds 3, App. (CA1) 1253. A
1993 Report of the House Committee on Ways and Means explained:
agreement was the first NBCWA 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 for surviving spouses...."
House Committee on Ways and Means, Financing UMWA 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 NBCWA, 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 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 Plans so that
signatories would be required to contribute as long as they remained in
the coal business, regardless 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 NBCWA 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 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 NBCWA signatories who seceded from the
Benefit Plans. See 1988
NBCWA, 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.
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). 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 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 industry wide 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 industry-wide 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
NBCWA'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
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 NBCWA 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 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 Cong.
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). [FN2]
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); §
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).
FN2. The Coal Act also
established another fund, the 1992 UMWA Benefit Plan, which is not at
issue here. See 26
U.S.C. § 9712.
Commissioner of Social Security (Commissioner) calculates the premiums due
from any signatory operator based
515 on the following formula, by which retirees are assigned to
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:
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. [FN3]
FN3. 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.
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
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.
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 SEC 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.
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 UMWA 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
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.
responded by suing the Commissioner, as well as the Combined Fund and its
trustees, in the United States District Court for the District of
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).
Court of Appeals for the First Circuit affirmed. Eastern Enterprises v. Chater, 110 F.3d 150 (C.A.1 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 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."
Id., 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.
Id., at 158,
n. 5. The court also
noted the substantial dividends that Eastern had received from EACC.
Id., at 158.
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, 106 S.Ct. 1018, 1026, 89 L.Ed.2d
166 (1986): "(1) the
economic impact of the regulation on the claimant, (2) the extent to which
the regulation interferes with the claimant's reasonable investment-backed
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
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.
Courts of Appeals have also upheld the Coal Act against constitutional
challenges. [FN4] In view of
the importance of the issues raised in this case, we granted certiorari.
522 U.S. 931, 118 S.Ct. 334, 139 L.Ed.2d 259 (1997).
FN4. See, e.g.,
Holland v. Keenan Trucking Co., 102 F.3d 736, 739-742 (C.A.4 1996);
Lindsey Coal Mining Co. v. Chater, 90 F.3d 688, 693-695 (C.A.3
1996); In re Blue Diamond
Coal Co., 79 F.3d 516, 521-526 (C.A.6 1996), cert. denied, 519 U.S. 1055,
117 S.Ct. 682, 136 L.Ed.2d 608 (1997);
Davon, Inc. v. Shalala, 75 F.3d 1114, 1121-1130 (C.A.7), cert.
denied, 519 U.S. 808, 117 S.Ct. 50, 136 L.Ed.2d 14 (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, 116 S.Ct. 298, 133
L.Ed.2d 204 (1995).
We begin with a threshold jurisdictional question, raised in
the federal respondents' 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.
520 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, 104 S.Ct.
2862, 2879-2781, 81 L.Ed.2d 815 (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
2145 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, 103 S.Ct. 2961, 2967-2968,
77 L.Ed.2d 580 (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, 108 S.Ct.
2722, 2737-2738, 101 L.Ed.2d 749 (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(C.A.2), cert. denied sub nom. LTV Steel Co. v. Shalala, 516 U.S. 913, 116 S.Ct. 298, 133
L.Ed.2d 204 (1995); Southeast
Kansas Community Action Program, Inc. v. Secretary of Agriculture, 967
F.2d 1452, 1455-1456 (C.A.10 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 (C.A.9 1997); Rose
Acre Farms, Inc. v. Madigan, 956 F.2d 670, 673-674 (C.A.7 1997), cert.
denied, 506 U.S. 820, 113 S.Ct. 68, 121 L.Ed.2d 34 (1992).
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, 110 S.Ct. 914, 921-922, 108 L.Ed.2d 1
(1990); see also Monsanto, supra, at 1016, 104 S.Ct., at 2879-2880.
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., supra, 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 (C.A.D.C.), cert. denied,
522 U.S. 913, 118 S.Ct. 295, 139 L.Ed.2d 227 (1997).
Instead, as we explained in Duke Power Co. v. Carolina
Environmental Study Group, Inc., 438 U.S. 59, 71, n. 15, 98 S.Ct. 2620,
2629, n. 15, 57 L.Ed.2d 595 (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, 117 S.Ct. 727, ---- - ----, 136
L.Ed.2d 696 (1997); Hodel v.
Irving, 522 481 U.S. 704, 716-718,
107 S.Ct. 2076, 2083-2084, 95 L.Ed.2d 668 (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, 641-647, 113 S.Ct. 2264,
2289-2292, 124 L.Ed.2d 539 (1993); Connolly,
475 U.S., at 221-228, 106 S.Ct., at 1024-1028.
"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, 82 S.Ct. 1502, 1513-1514, 8
L.Ed.2d 510 (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
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, 80 S.Ct. 1563, 1569, 4 L.Ed.2d 1554
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, 103 S.Ct. 407, 412, 74
L.Ed.2d 235 (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, 98 S.Ct.
2646, 2659, 57 L.Ed.2d 631 (1978) (citation omitted),
523 economic regulation such as the Coal Act may nonetheless
effect a taking, see Security Industrial Bank, supra, at 78, 103 S.Ct., at
412. See also Calder v.
Bull, 3 Dall. 386, 388, 1 L.Ed. 648 (1798) (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 Benefit Fund]," Connolly, supra, at
222, 106 S.Ct., at 1024, 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, 43 S.Ct. 158, 160, 67
L.Ed. 322 (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, 110 S.Ct. 387,
393-394, 107 L.Ed.2d 290 (1989).
Government regulation often "curtails some potential for the
use or economic exploitation of private property," Andrus v. Allard,
444 U.S. 51, 65, 100 S.Ct. 318, 326, 62 L.Ed.2d 210 (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, 80 S.Ct., at 1568. 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, supra, at 65, 100 S.Ct., at 327.
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, 100 S.Ct.
383, 390, 62 L.Ed.2d 332 (1979) (internal quotation marks omitted).
We have identified several factors, however, that have particular
economic impact of the regulation, its interference with reasonable
investment backed expectations, and 524 the character of
the governmental action." Ibid.;
see also Connolly, supra, at 224‑225, 106 S.Ct., at 1026.
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, 96 S.Ct. 2882,
49 L.Ed.2d 752 (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, 96 S.Ct., at 2892.
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, 96 S.Ct., at
2892-2893, 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, 96 S.Ct., at 2893.
Several years later, we confronted a due process challenge to
the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), 94 Stat.
1208. See Pension Benefit Guaranty Corporation v. R.A. Gray & Co., 467
U.S. 717, 104 S.Ct. 2709, 81 L.Ed.2d 601 (1984).
The MPPAA was enacted to supplement the Employee Retirement Income
Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq., which established
the Pension Benefit Guaranty 525
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, 104 S.Ct., at 2713-2714.
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 MPPAA, 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 MPPAA applied retroactively to withdrawals within the five
months preceding the statute's enactment.
Id., at 721-725, 104 S.Ct., at 2713-2716.
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 MPPAA
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, 104 S.Ct., at 2718.
In addition, we explained, "as the [MPPAA] 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 MPPAA exemplified
526 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, 106
S.Ct. 1018, 89 L.Ed.2d 166 (1986), which presented the question whether
the Act'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, 106 S.Ct., at 1025.
"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, 106 S.Ct., at 1025. 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, 106 S.Ct., at 1025. 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 223‑224, 106 S.Ct., at 1025 (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 MPPAA did
not violate the Takings Clause. Id.,
at 225, 106 S.Ct., at 1026.
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 MPPAA
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, 106 S.Ct., at 1026.
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, 106 S.Ct., at 1026.
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, 106 S.Ct., at 1027.
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,
113 S.Ct. 2264, 124 L.Ed.2d 539 (1993).
In that case, the employer focused on the fact that its contractual
commitment to the multiemployer plan did not impose withdrawal liability. 528 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 MPPAA imposed upon it a higher liability than its
contract contemplated. 508
U.S., at 636-641, 113 S.Ct., at 2286-2289.
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, 113 S.Ct., at 2290-2291.
As to the severity of the MPPAA'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, 113 S.Ct.,
at 2291 (quoting Connolly,
supra, at 226, 106 S.Ct., at 1027).
Turning to the employer's reasonable investment-backed
expectations, we repeated our observation
in Connolly that "pension plans had long been subject to federal
regulation." 508 U.S.,
at 645, 113 S.Ct., at 2291. 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,
113 S.Ct., at 2292. 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,
113 S.Ct., at 2292 (internal quotation marks omitted).
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, 104 S.Ct., at 2719 (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'
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 2157 (KENNEDY, J., concurring in judgment and dissenting in part);
post, at 2162 (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 The UMWA Combined Benefit Fund and its
Trustees 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, 106 S.Ct., at 1024‑1025.
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 §
530 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, 102 S.Ct. 3164,
3179, 73 L.Ed.2d 868 (1982). But
our decisions upholding the MPPAA suggest that an employer's statutory
liability for multiemployer plan benefits should reflect some "proportion[ality]
to its experience with the plan."
Concrete Pipe, supra, at 645, 113 S.Ct., at 2291 (internal
quotation marks omitted); see
also Connolly, supra, at 225, 106 S.Ct., at 1026 (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
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, 113 S.Ct., at
2292 (internal quotation marks omitted);
Connolly, supra, at
227, 106 S.Ct., at 1027-1028, 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
NBCWA'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 2167, to assign liability to Eastern based on the " 'last man out'
problem" that developed after benefits were significantly expanded in
1974. During the years
531 Eastern employed miners, retirement and health benefits
were far less extensive than under the 1974 NBCWA, 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 2165-2166, a beneficiary class
that is likely to be substantial. See General Accounting Office Report, Retired Coal
Miners' Health Benefits 7 (1992) (reporting to Congress that widows
comprised 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, 106 S.Ct., at 1026.
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.
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 Cong. 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 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
We are also not persuaded by respondents' argument that the
Coal Act "moderate[s]
and mitigate[s] the economic impact" upon Eastern.
See Connolly, supra, at 225‑226, 106 S.Ct., at 1026-1027.
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 MPPAA 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, 106 S.Ct., at 1027, 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
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, 114 S.Ct. 1483,
1499, 128 L.Ed.2d 229 (1994).
is generally disfavored in the law, Bowen v. Georgetown Univ. Hospital,
488 U.S. 204, 208, 109 S.Ct. 468, 469-470, 102 L.Ed.2d 493 (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, 110 S.Ct. 1570, 1586-1587, 108 L.Ed.2d 842
(1990) (SCALIA, J., concurring).
See also, e.g., Dash v. Van Kleeck, 7 Johns. 477, 503 (N.Y.1811)
("It is a principle in the English
533 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,
"[r]etrospective 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 (1964) 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 trans., 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, 112 S.Ct. 1105, 1112, 117 L.Ed.2d 328 (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, 114 S.Ct., at 1497‑1498. In Calder v. Bull, 3 Dall. 386, 1 L.Ed. 648 (1798),
this Court held that the Ex Post Facto Clause is directed at the
retroactivity of penal legislation, while suggesting that the Takings
534 a similar safeguard against retrospective legislation
concerning property rights. See
id., 3 U.S., at 394 (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, 103 S.Ct., at 412-413. 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, 55 S.Ct. 854, 868-869,
79 L.Ed. 1593 (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, 101
S.Ct. 549, 551-552, 66 L.Ed.2d 513 (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, 106 S.Ct., at 1028 (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, supra, at 265, 114 S.Ct., at 1497
("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, industry
wide 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 NBCWA'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 agreements. See
Connolly, 475 U.S., at 230-231, 106 S.Ct., at 1029 (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, 106 S.Ct., at 1027.
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, 96
S.Ct., at 2893. 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, 96 S.Ct., at 2892-2893, 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 2161, 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
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
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, 96 S.Ct., at 2892. Our
analysis of legislation under the Takings and Due Process Clauses is
correlated to some extent, see Connolly, supra, at 223, 106 S.Ct., at
1025, 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, 83 S.Ct. 1028, 1031, 10
L.Ed.2d 93 (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, 75 S.Ct. 461, 464, 99 L.Ed. 563 (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, ---- - ----, 117 S.Ct.
2365, 2383-2384, 138 L.Ed.2d 914 (1997).
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 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.1981). Since Calder
v. Bull, 3 Dall. 386, 1 L.Ed. 648 (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., 3 U.S., 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
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.
The final Clause of the Fifth Amendment states:
private property be taken for public use, without just compensation."
U.S. Const., Amdt. 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 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,
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, 43 S.Ct. 158, 67 L.Ed. 322 (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, 43 S.Ct., at 160.
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, 112 S.Ct. 2886, 2892, 120 L.Ed.2d 798 (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 taking concept has assumed in our law, it is
fair to say it has proven 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, 98 S.Ct. 2646, 2659, 57 L.Ed.2d 631 (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, 100 S.Ct. 383,
390, 62 L.Ed.2d 332 (1979) (the regulatory taking question requires an
"essentially ad hoc, factual inquir[y]").
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, 106 S.Ct. 2561, 91 L.Ed.2d 285
(1986), Agins v. City of Tiburon, 447 U.S. 255, 100 S.Ct. 2138, 65 L.Ed.2d
106 (1980); trade secrets,
Ruckelshaus v. Monsanto Co., 467 U.S. 986, 104 S.Ct. 2862, 81 L.Ed.2d 815
(1984); right of access to
property, e.g., PruneYard Shopping Center v. Robins, 447 U.S. 74, 100 S.Ct.
2035, 64 L.Ed.2d 741 (1980); Kaiser
Aetna, supra; right to affix
on structures, Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419,
102 S.Ct. 3164, 73 L.Ed.2d 868 (1982);
right to transfer property by devise or intestacy, e.g., Hodel v.
Irving, 481 U.S. 704, 107 S.Ct. 2076, 95 L.Ed.2d 668 (1987);
creation of an easement, Dolan v. City of Tigard, 512 U.S. 374, 114
S.Ct. 2309, 129 L.Ed.2d 304 (1994); Nollan
v. California Coastal Comm'n, 483 U.S. 825, 107 S.Ct. 3141, 97 L.Ed.2d 677
(1987); right to build or improve, Lucas, supra; liens on real
property, Armstrong v. United States, 364 U.S. 40, 80 S.Ct. 1563, 4
L.Ed.2d 1554 (1960); right to
mine coal, Keystone Bituminous Coal Assn. v. DeBenedictis, 480 U.S. 470,
107 S.Ct. 1232, 94 L.Ed.2d 472 (1987);
right to sell personal property, Andrus v. Allard, 444 U.S. 51, 100
S.Ct. 318, 62 L.Ed.2d 210 (1979); and
the right to extract mineral deposits, Goldblatt v. Hempstead, 369 U.S.
590, 82 S.Ct. 987, 8 L.Ed.2d 130 (1962); United States
542 v. Central Eureka Mining Co., 357 U.S. 155, 78 S.Ct. 1097,
2 L.Ed.2d 1228 (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
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, 17 S.Ct. 581, 41 L.Ed. 979 (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, 103 S.Ct. 407, 412, 74 L.Ed.2d 235 (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
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, 102 S.Ct., at 3174 (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, 107 S.Ct., at 2082-2083 (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, 98 S.Ct., at 2659 ("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
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
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 While there are instances where the Government's self-enrichment
may make it all the more evident a taking has occurred, e.g., Webb's
Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 101 S.Ct. 446, 66
L.Ed.2d 358 (1980); United
States v. Causby, 328 U.S. 256, 66 S.Ct. 1062, 90 L.Ed. 1206 (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, 104 S.Ct. 2321, 81 L.Ed.2d 186 (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, 103 S.Ct., at 410‑411.
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, 55 S.Ct. 854, 79 L.Ed. 1593 (1935), which
invalidated the Frazier-Lemke 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, 103 S.Ct., at 411 (quoting Radford, supra, at 590, 601, 55
S.Ct., at 869). Unlike
the statutes at issue in Security Industrial Bank and Radford, the Coal
Act does not affect an obligation relating to a specific property
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 2153 ("[T]he governmental action
implicates fundamental principles
545 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, 100 S.Ct.,
at 2141 (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:
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, 107 S.Ct. 2378, 2385-2386, 96 L.Ed.2d
250 (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 2145 ("[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.
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 Corporation,
546 475 U.S. 211, 223, 106 S.Ct. 1018, 1025, 89 L.Ed.2d 166
(1986); Concrete Pipe &
Products of Cal., Inc. v. Construction Laborers Pension Trust for Southern
Cal., 508 U.S. 602, 641, 113 S.Ct. 2264, 2289, 124 L.Ed.2d 539 (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, 106 S.Ct., at 1026.
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, 106 S.Ct., at 1026.
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, 106 S.Ct., at 1025;
see also Concrete Pipe, supra, at 641, 113 S.Ct., at 2289
("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, 106
S.Ct., at 1025). 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, 106 S.Ct., at 1025 ("[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, 98 S.Ct. 2620, 2641, n. 39, 57 L.Ed.2d 595 (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
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.
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.
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 today's plurality opinion notes, for centuries our law has
harbored a singular distrust of retroactive statutes.
Ante, at 2151. 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
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 (1833).
Court's due process jurisprudence reflects this distrust.
For example, in Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15,
96 S.Ct. 2882, 2892, 49 L.Ed.2d 752 (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 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, 96 S.Ct., at 2893. 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, 114 S.Ct. 2018, 2022, 129 L.Ed.2d 22 (1994);
Concrete Pipe, supra, at 636-641, 113 S.Ct., at 2286-2289; General
Motors Corp. v. Romein, 503 U.S. 181, 191, 112 S.Ct. 1105, 1112, 117
L.Ed.2d 328 (1992); United
States v. Sperry Corp., 493 U.S. 52, 64, 110 S.Ct. 387, 396, 107 L.Ed.2d
290 (1989); United States v. Hemme, 476 U.S. 558, 567-572, 106 S.Ct.
2071, 2077-2080, 90 L.Ed.2d 538 (1986);
Pension Benefit Guaranty Corporation v. R.A. Gray & Co., 467
U.S. 717, 729-730, 104 S.Ct. 2709, 2717-2718, 81 L.Ed.2d 601 (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 today's plurality opinion relies in its takings analysis were
grounded in due process. Ante,
at 2146-2149 (citing Turner Elkhorn, R.A. Gray, and Concrete Pipe).
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, 114 S.Ct. 1483, 1497-1498, 128
L.Ed.2d 229 (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
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 2149-2152. 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, 114 S.Ct., at 2022-2023;
United States v. Darusmont, 449 U.S. 292, 296-297, 101 S.Ct. 549,
551-552, 66 L.Ed.2d 513 (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 2150.
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, 96 S.Ct., at 2894;
accord, Concrete Pipe, supra, at 638, 113 S.Ct., at 2287-2289;
Romein, supra, at 191-192, 112 S.Ct., at 1112;
R.A. Gray, supra, at 733-734, 104 S.Ct., at 2719-2720.
As Chancellor Kent noted, "[s]uch 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, supra, at
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 2151-2152. This
case is far outside the bounds of retroactivity permissible under our law.
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, 508 U.S., at 639, 113 S.Ct., at 2288 (citing Turner
Elkhorn, 428 U.S., at 19, 96 S.Ct., at 2894). 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.
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.
STEVENS, with whom Justice SOUTER, Justice GINSBURG, and Justice BREYER
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. [FN1] The uneasy
truce 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.
FN1. See ante, at 2152-2153
(plurality opinion of O'CONNOR, J., joined by REHNQUIST, C.J., and SCALIA
and THOMAS, JJ.); ante, at
2154, --- - ---- (KENNEDY, J., concurring in judgment and dissenting in
understanding of this critical fact is shared by the judges of the Seventh
Circuit, [FN2] the Sixth Circuit, [FN3] and the 552 First Circuit.
[FN4] 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
And it is
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.
[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, 96 S.Ct. 2882, 2893‑2894, 49 L.Ed.2d 752 (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 (C.A.7 1996) (footnote omitted).
"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 before the 1974 NBCWA, based on the various funds' more
than 30-year history of continuous payment of benefits and the statements
of coal industry officials. Davon, 75 F.3d at 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
(S.D.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).
FN4. "[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."
110 F.3d 150, 157 (C.A.1 1997).
FN5. "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.
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. [FN6]
FN6. 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, 55 S.Ct. 758, 780,
79 L.Ed. 1468 (1935).
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,
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 554 after they retired.
And Eastern, until 1987, continued to draw sizable profits from the
coal industry though 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.
As a preliminary
matter, I agree with Justice KENNEDY, ante, at 2154-2158, 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., Amdt. 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.
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, 98 S.Ct. 2646, 2659, 57 L.Ed.2d 631 (1978); Ruckelshaus v. Monsanto Co., 467 U.S. 986, 104 S.Ct. 2862, 81
L.Ed.2d 815 (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, 114 S.Ct. 2309,
2316, 129 L.Ed.2d 304 (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, 80
S.Ct. 1563, 1569, 4 L.Ed.2d 1554 (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 domain, 555 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, 43 S.Ct. 158,
160, 67 L.Ed. 322 (1922) ( "[W]hile 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, 112 S.Ct. 2886, 120 L.Ed.2d 798
(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, 107 S.Ct. 3141,
97 L.Ed.2d 677 (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, 101 S.Ct. 446, 66 L.Ed.2d 358
(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, 80 S.Ct., at 1569
(Government destroyed liens "for its own advantage"); Connolly
v. Pension Benefit Guaranty Corporation, 475 U.S. 211, 225, 106 S.Ct.
1018, 1026, 89 L.Ed.2d 166 (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, 113 S.Ct. 2264, 124 L.Ed.2d 539 (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, 106 S.Ct., at 1026.
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, 106 S.Ct., at 1025. The second case basically followed
the analysis of the first case. Concrete
Pipe, 508 U.S., at 641-647, 113 S.Ct., at 2289-2292.
And both cases rejected the claim of a Takings Clause violation. Id., at 646-647, 113 S.Ct., at 2291-2292;
Connolly, supra, at 227-228, 106 S.Ct., at 1027-1028.
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 (C.A.4 1996) (characterizing "reachback"
liability payments as a "tax"), cert. denied, 520 U.S. 1118, 117
S.Ct. 1251, 137 L.Ed.2d 332 (1997); In
re Chateaugay Corp., 53 F.3d 478, 498 (C.A.2 1995) (same), cert. denied,
sub nom. LTV Steel Co., Inc.
v. Shalala, 516 U.S. 913, 116 S.Ct. 298, 133 L.Ed.2d 204 (1995). Would that Clause apply to some or to all statutes and
rules that "routinely creat[e] burdens for some that directly benefit
supra, at 223, 106 S.Ct., at 1025.
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
2163 U.S. 304, 315, 107 S.Ct. 2378, 2385-2386, 96 L.Ed.2d 250
(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., Amdt. 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 which is
basically arbitrary. See,
e.g., Pension Benefit Guaranty Corporation v. R.A. Gray & Co., 467
U.S. 717, 728-730, 104 S.Ct. 2709, 2717-2718, 81 L.Ed.2d 601 (1984); id., at 730, 104 S.Ct., at 2718 ("[R]etroactive aspects
of legislation [imposing withdrawal liability on employers participating
in pension plan] ... must meet the test of due process");
id., at 733, 104 S.Ct., at 2720 ("[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, 96 S.Ct. 2882, 2893, 49 L.Ed.2d 752
(1976). Cf. United
States v. Carlton, 512 U.S. 26, 30, 114 S.Ct. 2018, 2021-2022, 129 L.Ed.2d
22 (1994) (retroactive tax provision); Welch v. Henry, 305 U.S. 134, 147,
59 S.Ct. 121, 125-126, 83 L.Ed. 87 (1938) (same);
National Labor Relations Board v. Guy F. Atkinson Co., 195 F.2d
141, 149, 151 (C.A.9 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, 97 S.Ct. 1349, 51 L.Ed.2d 642 (1977) ("person" includes
corporations for purposes of Fifth Amendment Double Jeopardy Clause) with
Doe v. United States, 487 U.S. 201, 206, 108 S.Ct. 2341, 2345, 101 L.Ed.2d
184 (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, 25 S.Ct. 539, 49 L.Ed. 937
(1905), and related doctrines of "substantive due process," that
fear is misplaced. Cf.
id., at 75-76, 25 S.Ct., at 546-547 (Holmes, J., dissenting);
Lincoln Fed. Union v. Northwestern
558 Iron & Metal Co., 335 U.S. 525, 535, 69 S.Ct. 251, 256,
93 L.Ed. 212 (1949) (repudiating the "allgeyer [v. lOuisiana, 165
u.s. 578, 17 s.cT. 427, 41 L.ED. 832 (1897)]- lochner-adair [v. united
states, 208 u.s. 161, 28 S.CT. 277, 52 l.ed. 436 (1908)]-Coppage [v.
Kansas, 236 U.S. 1, 35 S.Ct. 240, 59 L.Ed. 441 (1915)] constitutional
doctrine"). As the
plurality points out, ante, at ----, 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, 112 S.Ct. 1105, 1112, 117
L.Ed.2d 328 (1992) ("[R]etroactive legislation ... can deprive
citizens of legitimate expectations");
Fletcher v. Peck, 6 Cranch 87, 143, 3 L.Ed. 162 (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, 729-732, 83 S.Ct.
1028, 1030-1032, 10 L.Ed.2d 93 (1963).
Thus, like the
plurality I would inquire if the law before us is fundamentally unfair or
unjust. Ante, at 2152-2153.
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., Amdt. 14, § 1.
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. §§ 9701-9722 (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 2160, n. 3 (STEVENS, J., dissenting). 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, 106 S.Ct., at 1027;
Concrete Pipe, 508 U.S., at 645-646, 113 S.Ct., at 2291-2292.
I believe several
features of this case demonstrate that the relationship between Eastern
and the payments demanded by the 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 Act's "reachback" liability provision so frustrates
Eastern's reasonable settled expectations as to impose an unconstitutional
liability. Cf. Penn
Central, 438 U.S., at 127-128, 98 S.Ct., at 2660-2661.
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 "reach-back" 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 Cong. 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 UMWA 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 (CERCLA), 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 2152. 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 Bituminous-Coal Industry 121, 144
(1947) (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) (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);
I. Krajcinovic, From Company Doctors to Managed Care 17, 43 (1997);
C. Seltzer, Fire in the Hole 57 (1985);
R. Zieger, John L. Lewis: Labor Leader 151 (1988);
see also ante, at 2137.
John L. Lewis, head of the UMWA, 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.
(2) 562 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
(W&R Fund). 1947
National Bituminous Coal Wage Agreement (NBCWA) 150, App. (CA1) 621.
Under the 1947 and successive agreements, the 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 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-
2166 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) 1,018;
1961 W&R Fund Annual Report 16-17, App. (CA1) 1,058-1,059; 1962
W&R Fund Annual Report 15-16, App. (CA1) 1,090-1,091;
1963 W&R Fund Annual Report 15-16, App. (CA1) 1,123-1,124; 1964 W&R Fund Annual Report 22- 23, App. (CA1) 1,160-1,161;
1965 W&R Fund Annual Report 14, App. (CA1) 1,187.
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 12-month 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 workforce.
Coal Comm'n Report 11-14, App. (CA1) 1,342-1,345 (75% decline in
employment from 1950 to 1969); Krajcinovic, supra, at 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
President of the Southern Coal Operators' Association said in 1953 that
the miners "have been promised and grown accustomed to" health
benefits. App. (CA1)
2,000. 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 1,972. This
Court, too, has said that the UMWA "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, 85 S.Ct. 1585, 1588,
14 L.Ed.2d 626 (1965); see
also id., at 698, 85 S.Ct., at 1608 (Goldberg, J., concurring in judgment)
564 benefits, and working conditions were a "quid pro quo
" for automation).
Others have reached
similar conclusions. The
Coal Commission more recently said:
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) 1,332.
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
Cong. Rec. 20121 (1992) (Sen.
Wofford); see also id., at
20118 (Sen. Rockefeller) (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
9; 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); Krajcinovic,
565 supra, at 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 the UMWA 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
conceivable that Congress ... [would] step in and take over the mines,
assuming responsibility for the welfare collections and payment."
App. (CA1) 2,000.
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 industry-wide
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.
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. (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) 2,172 (affidavit of T. Gallagher, 566 EACC General Counsel);
id., at 2,182 (Eastern Corporate Cash Manual); see also id., at 2,170-2,173 (noting Eastern's profits from,
and control over, EACC); id.,
at 2,178-2,181; id., at 2,192-2,205.
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
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
diminishes the reasonableness of Eastern's expectation that, by leaving
the industry, it could fall within the Constitution's protection against
unfairly retroactive liability.
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, 113 S.Ct., at 2287-2288, 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 12-13; see also Concrete
Pipe, supra, at 645-646, 113 S.Ct., at 2291-2292;
Connolly, 475 U.S., at 226-227, 106 S.Ct., at 1026-1027;
Usery, 428 U.S., at 15-16,
96 S.Ct., at 2892-2893.
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).
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 investment-backed
expectations." See Connolly, supra, at 225-227, 106 S.Ct., at
1026-1027 (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 Act's
"economic impact" upon Eastern as well.
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
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.