Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-97-05132/USCOURTS-caDC-97-05132-0/pdf.json

Nature of Suit Code: 790
Nature of Suit: Other Labor Litigation
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 5, 1998 Decided September 18, 1998

No. 97-5132

Association of Bituminous Contractors, Inc.,

Appellant

v.

Kenneth S. Apfel,

Commissioner of the Social Security Administration, et al.,

Appellees

Appeal from the United States District Court

for the District of Columbia

(93cv2304)

William H. Howe argued the cause for appellant, with

whom Richard A. Steyer and Mary Lou Smith were on the

briefs.

Sushma Soni, Attorney, United States Department of Justice, argued the cause for the federal appellee, with whom,

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Frank W. Hunger, Assistant Attorney General, Mary Lou

Leary, United States Attorney at the time the brief was filed,

and Douglas N. Letter, Litigation Counsel, were on the brief.

Peter Buscemi argued the cause for appellees United Mine

Workers of America, et al., with whom David W. Allen and

John R. Mooney were on the brief.

Before: Silberman, Tatel, and Garland, Circuit Judges.

Opinion for the Court filed by Circuit Judge Silberman.

Silberman, Circuit Judge: Appellant Association of Bituminous Contractors contends that because its members are not

in the "coal industry" as that term is used in the Coal

Industry Retiree Health Benefit Act of 1992, the Commissioner of the Social Security Administration may not assign

responsibility for coal industry retirees to its member companies. It further claims that "as applied," the Act violates its

members' Fifth Amendment due process rights. We affirm

the district court's grant of summary judgment in favor of the

Commissioner, but on somewhat different grounds than those

on which it relied.

I.

The Association of Bituminous Contractors (Association) is

a multi-employer association of contractors that specialize in

coal mine construction and related projects.1 The Association

was formed in 1968 for the purpose of negotiating and

entering into collective bargaining agreements with the United Mine Workers of America (mine workers union). Its first

agreement was known as the "Construction Work Addendum

to the National Bituminous Coal Wage Agreement of 1968";

all subsequent agreements have borne the "National Coal

__________

1 The contractors' coal construction work includes subsurface

construction of shafts, slopes, and tunnels, surface construction of

structures, such as roads, preparation plants, storage silos, office

buildings, and bathhouses, and some electrical work. Appellant

acknowledges that "[i]t is that very focus which defines the association" but claims its members sometimes work for non-coal industrial

customers as well.

Mine Construction Agreement" label (Construction Agreements). The Bituminous Contractors' coal mining producers

have their own collective bargaining association, the Bituminous Coal Operators' Association, which has negotiated a

separate series of Coal Wage Agreements (National Bituminous Coal Wage Agreements) with the mine workers union.

From the Association's inception until mid-1978, employees

and retirees of its member companies were eligible to receive

benefits from plans established pursuant to the National

Bituminous Coal Wage Agreements, including the Welfare

and Retirement Fund of 1950, the 1950 Benefit Plan, and the

1974 Benefit Plan. The Association's members never contributed to the 1950 Fund or the 1950 Plan, but pursuant to the

1974 and 1978 Construction Agreements, the Association's

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members were required to contribute to the 1974 Plan. That

obligation ended on May 31, 1978, when the Association

agreed to transfer all 1974 Plan beneficiaries whose last

employment was with a construction contractor that was a

signatory to the 1974 Construction Agreement to the newly

established Retired Construction Workers' Benefit Trust (the

Construction Trust). Those construction retirees who were

eligible to draw benefits from the 1950 Plan (workers who

retired before 1976), however, were left behind; 2 those retirees' benefits were funded by signatories to the National

Bituminous Coal Wage Agreements--the coal producers--

and not the Association's member companies even after 1978.

By the late 1980s, the continuing viability of the 1950 and

1974 Plans was in serious doubt, and this led to labor unrest.

The various causes of the health benefit funding crisis which

precipitated the Coal Act have been described before, see,

e.g., Carbon Fuel Co. v. USX Corp., 100 F.3d 1124, 1127-29

(4th Cir. 1996); Davon, Inc. v. Shalala, 75 F.3d 1114, 1117-20

(7th Cir. 1996); The Secretary of Labor's Advisory Commission on United Mine Workers of America Retiree Health

Benefits, Coal Commission Report: A Report to the Secretary of Labor and the American People (1990), and we see no

__________

2 The Association estimated that there were 130 such eligible 1950

Plan beneficiaries as of 1993.

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need to repeat them here. Suffice it to say that the Congress

found it "necessary to modify the current private health care

benefit plan structure for retirees in the coal industry to

identify persons most responsible for plan liabilities in order

to stabilize plan funding and allow for the provision of health

care benefits to such retirees." Coal Industry Retiree Health

Benefit Act of 1992, Pub. L. No. 102-486, s 19142(a)(2), 106

Stat. 3036, 3037 (1992) (codified at 26 U.S.C. s 9701 note

(1994)).

The Coal Act was intended to remedy problems with the

provision and funding of health care benefits to retirees in the

coal industry. The Act established the Combined Benefit

Fund as a new source of benefits for coal industry retiree

beneficiaries who were eligible under the 1950 and 1974

Plans, see 26 U.S.C. s 9703(f), and a Board of Trustees to

administer the Combined Funds, see 26 U.S.C. s 9702. It

also directed that the 1950 and 1974 Plans be merged into the

Combined Fund, see 26 U.S.C. s 9702(a)(2), and further

required that monies be transferred to the Combined Fund

from the 1950 Plan and certain other funds, see 26 U.S.C.

s 9705; 30 U.S.C. s 1232(h) (1994). The Combined Fund is

to be financed on an ongoing basis by annual premium

payments from "assigned operator[s]." 26 U.S.C. s 9704(a).

The Act defines "assigned operator[s]" as "the signatory

operator[s] to which liability ... is assigned under section

9706." 26 U.S.C. s 9701(c)(5). Section 9706 directs the

Commissioner of the Social Security Administration to "assign each [eligible] coal industry retiree ... to a signatory

operator which ... remains in business." 26 U.S.C.

s 9706(a). It also binds the Commissioner to a particular

assignment scheme. Beneficiaries are to be assigned to their

most recent employer of at least two years, so long as that

employer was a signatory to a 1978 or later "coal wage

agreement"; if none, to the most recent 1978 or subsequent

agreement signatory employer, without regard to the term of

employment; and last, to the pre-1978 signatory operator

still in business which employed the retiree for the longest

period. 26 U.S.C. s 9706(a)(1)-(3). All assigned operators

must be signatory operators, which the statute defines as

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"person[s] which [are] or [were] signator[ies] to a coal wage

agreement." 26 U.S.C. s 9701(c)(1). "Coal wage agreement," in turn, is defined as the National Bituminous Coal

Wage Agreement, 26 U.S.C. s 9701(b)(1)(A), or "any other

agreement entered into between an employer in the coal

industry and the United Mine Workers of America that

required or requires ... contributions to the 1950 [ ] Plan or

the 1974 [ ] Plan, or any predecessor thereof," 26 U.S.C.

s 9701(b)(1)(B)(ii).

In October 1993, the Social Security Administration began

assigning coal industry retiree beneficiaries to the Association's members. Soon after, the Combined Fund Trustees

sought to collect premium payments from the Association's

members on the basis of the Commissioner's assignments.

Within a month of the Commissioner's action, the Association

brought suit in the district court seeking a declaration that

the Act did not apply to its members and, in the alternative,

that the Act as applied to its members violated the substantive due process component of the Fifth Amendment to the

United States Constitution. The gravamen of appellant's

statutory argument, which we describe more completely below, was that the coal contractors were not "employer[s] in

the coal industry," as section 9701 of the Coal Act requires,

but were rather employers in the construction industry. The

district court, however, thought it clear that "coal industry"

included coal contractors and implied that the Coal Act

required the Commissioner to assign beneficiaries to the

Association's member companies.

Appellant's "as applied" constitutional challenge is premised on its view that its members had made a clean break

from the Benefit Plans in 1978, when the Construction Trust,

which remains viable today, was established. The Association

claims that its members had done all the mine workers union

asked it to do by transferring all beneficiaries who practicably

could be identified with its member companies from the 1974

Plan to the Construction Trust. To require its members to

contribute to the Combined Fund would force them to solve

problems that they were not responsible for creating. The

district court, however, concluded that, because appellant's

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member companies participated in and benefitted from the

Benefit Plans, for a time without contributing to their funding, they could be made part of the solution to the problem of

their underfunding without offending the Constitution. For

these reasons, the district court entered summary judgment

in favor of the Commissioner and the Combined Fund Trustees.

II.

The Association renews its statutory and constitutional

arguments on appeal. The Association claims that the Coal

Act unambiguously excludes coal construction companies

from the term "coal industry." And, it claims that even if the

statute is ambiguous, the Commissioner's interpretation of

the Coal Act is not entitled to deference because Congress

has not delegated him policymaking authority and because his

interpretation was not clearly set forth prior to this litigation.

The Association also contends that the Commissioner's interpretation is not reasonable, and that the Commissioner arbitrarily and capriciously relied on lists provided by the Combined Fund Trustees in making his assignments.

We begin with appellant's primary claim, that its members

cannot be "assigned operators" by the Coal Act's own terms.

The argument flows as follows: Section 9701(c)(5) provides

that assigned operators must be signatory operators, which

section 9701(c)(1) defines as current or former signatories to

a coal wage agreement. Section 9701(b)(1)(A) identifies the

National Bituminous Coal Wage Agreement as a "coal wage

agreement," but neither the Association nor its members are

parties to that Agreement, see s 9701(b)(3) (defining the

National Bituminous Coal Wage Agreement as a collective

bargaining agreement negotiated by the coal operators association and the mine workers union), a claim appellees do not

dispute. To be sure, section 9701(b)(1)(B) provides that "any

other agreement entered into between an employer in the

coal industry and the United Mine Workers of America that

required or requires ... the provision of health benefits to

retirees of such employer ... or contributions to the 1950 [ ]

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Plan or the 1974 [ ] Plan, or any predecessor thereof" may

also be a "coal wage agreement." But because the Association's members are employers in the construction industry,

not the coal industry, the Association contends that it escapes

section 97101(b)(1)(B)'s coverage as well. (Appellant does not

dispute that its members were required to make contributions

to the 1974 Plan by the 1974 Construction Agreement, and for

a few additional months by the 1978 Construction Agreement.)

The Association's argument, in essence, turns on the proper

construction of the phrase "employer in the coal industry."

Appellant attributes great significance to the omission of any

reference to coal construction, the Association, or the Construction Agreements from the text of the Act. Congressional

silence, appellant argues, is pregnant. Had Congress wanted

to create payment liability for construction companies under

the Act, it explicitly would have said so. The Association

contends that the "coal industry" language has a "restrictive"

meaning designed only to ensure that the Coal Act extended

to all coal production employers. (Congress, it is claimed,

was aware that some coal production companies had entered

into specialized agreements with the mine workers union and

therefore were not signatories to the National Bituminous

Coal Wage Agreement.) The Association buttresses its textual argument with the legislative history of the Coal Act,

which the Association maintains provides clear evidence that

Congress never contemplated including coal construction

companies within the Coal Act's reach. And, the Association

maintains that Congress could not possibly have thought the

Association's members to be a cause of the underfunding

problem, and accordingly could not have intended to make its

members part of the solution, because at least ten years

before legislation was even proposed, the Association's members had established the Construction Trust, through which

they claim to have taken on all of the liabilities that they

were then asked to assume from the National Bituminous

Coal Wage Agreements. Appellees, on the other hand, argue

from the same statutory text, legislative history, and legislative purpose that Congress intended the term "coal industry"

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to include coal construction companies such as the Association's members.

In determining whether appellant's or the Commissioner's

interpretation of the statutory provision should control, we

apply the familiar two-step analysis of Chevron U.S.A. Inc. v.

Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).

We ask first whether the statute has a clear meaning, and

begin that inquiry with the text. Unfortunately for appellant,

the Coal Act never defines the phrase "employer in the coal

industry." The Association's claim that the omission of any

reference to construction or related terms makes it clear that

Congress did not consider its members to be part of the coal

industry is rather far-fetched. Granted, Congress in its

"Findings and Declaration of Policy" referred only to companies that produce, transport, or use coal and made no mention

of coal construction companies. See 26 U.S.C. s 9701. But

since the congressional finding in no way purports to define

"coal industry," we do not see how it, standing alone, can

supply a clear meaning of the term. Similarly, the notion

that "coal industry" should be read to exclude coal construction companies because Congress' stated policy was to save

the benefit fund agreements to which the Association's members were not signatories is a complete non-starter. That

coal construction companies were not signatories to the

agreements creating the jeopardized funds does not mean

that Congress could not have intended to make them part of

the solution (especially when those companies were required

to contribute to those funds pursuant to separate agreements). Nor does appellant direct us to anything in the

legislative history that supports its explanation for why Congress used the term "coal industry."

We do not think that appellees, for their part, have been

able to show that the term "coal industry" clearly includes

coal construction companies either. Many of the Trusteeappellee's and the federal appellee's arguments are nothing

but mirror images of appellant's arguments. Both sides labor

ineffectually to place a clear meaning on statutory silence.

Nor do appellees advance their case by asserting that coal

construction must be included within "coal industry" because

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construction is an indispensable part of the mining and production of coal. After all, as appellant rightly points out,

under that logic construction companies would be a part of

every industry for which they construct. The district court

thought to resolve the statutory construction issue on the

basis of a description of the Association in the Keystone

Manual. But it is Congress' intent, not the Keystone Manual's, with which we are concerned. And although the district

court may well be right that it is "disingenuous" for the

Association to argue that its members are not part of the coal

industry in light of its apparent self-description to that effect

in the minutes of a committee meeting, we are aware of no

doctrine of statutory interpretation estoppel that would preclude the Association from arguing differently before this

court. Again, the relevant question is Congress' intent, not

the Association's pattern of consistency in self-description.

We think the only thing "clear" about the term "coal

industry" is that the term is ambiguous with respect to coal

construction companies. And when a statute that does not

have a clear meaning is entrusted to agency administration,

we defer to the agency's interpretation of that statute, if

reasonable, under the second step of our Chevron analysis.

Chevron, 467 U.S. at 843. The Association would have us

refuse to defer because it contends that Congress did not

delegate to the Commissioner the authority to interpret the

term "coal industry." That term is used (although not defined) in Subchapter A of the Coal Act ("Definitions of

General Applicability"), and Congress, it is asserted, did not

delegate to the Commissioner any authority over that Subchapter. But, as appellant concedes, the Commissioner is

explicitly charged with assigning eligible beneficiaries to signatory operators by section 9706 of Subchapter B. Implicit

in that direction is a delegation to the Commissioner to

determine who are the signatory operators, and the Commissioner must interpret the statute--including definitions of

general applicability--to perform that task. See Chevron,

467 U.S. at 843-44 (noting that deference is appropriate as to

both express and implied delegations); Kansas City v. Department of Housing & Urban Dev., 923 F.2d 188, 191-92

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(D.C. Cir. 1991) (same). After all, the definitions in question

are definitions of "general applicability" that explicitly extend

to the entire chapter--not, as appellant implies, to Subchapter A alone.3

The Association also claims that the Commissioner's interpretation is not entitled to deference because it was not

promulgated in a rule issued pursuant to notice and comment,

and because the Administration's internal guidelines do not

consistently define the term to reach coal contractors. But

an agency need not promulgate a legislative rule setting forth

its interpretation of a statutory term for that interpretation to

be entitled to deference--the Supreme Court has said that it

is appropriate to defer to an agency's interpretation so long

as it represents the agency's "fair and considered judgment

on the matter." Auer v. Robbins, 117 S. Ct. 905, 912 (1997).

As for the internal guidelines, we think it plain that they were

not agency utterances "that can be thought of as an authoritative departmental position." Paralyzed Veterans of Am. v.

D.C. Arena L.P., 117 F.3d 579, 587 (D.C. Cir. 1997) (quoting

Auer), cert. denied sub nom. Pollin v. Paralyzed Veterans of

Am., 118 S. Ct. 1184 (1998); cf. Appalachian Regional

Healthcare v. Shalala, 131 F.3d 1050, 1053 n.4 (D.C. Cir.

1997) (a statement by counsel in the course of an internal

quasi-adjudicatory proceeding was not a "fair and considered

judgment"). The truth of the matter is that the Commissioner had not, prior to this litigation, carefully explained why he

believes that coal contractors may be assigned responsibility

under the statute. Yet the Commissioner has consistently

made assignments to coal construction companies under the

Coal Act, and in doing so must have interpreted the Coal Act

to allow that. This litigation offers the Commissioner his

first opportunity to explain his decision. We defer to coun-

__________

3 Appellant cites our decision in Department of Treasury v.

FLRA, 837 F.2d 1163 (D.C. Cir. 1988), as authority for its assertion

that an agency's interpretation is not entitled to deference if it is an

interpretation of a "statutory provision not within the agency's

enabling statute." We do not think that Subchapter A can be

viewed as such a discrete statute, especially since Subchapter A

explicitly references the entire Act.

sel's explanation because it represents the agency's "fair and

considered judgment." Auer, 117 S. Ct. at 912; see also Tax

Analysts v. IRS, 117 F.3d 607, 613 (D.C. Cir. 1997) (deferring

to appellate counsel's explanation when letters of the IRS's

Assistant Chief Counsel denying the appellant's FOIA administrative appeals were conclusory); Church of Scientology v.

IRS, 792 F.2d 153, 164-67 (D.C. Cir. 1986) (en banc) (Silberman, J., concurring). Nor is counsel's explanation the kind of

post-hoc rationalization to which we do not defer. See, e.g.,

City of Kansas City, Mo. v. HUD, 923 F.2d 188, 192 (D.C.

Cir. 1991). The explanation offered by counsel would seem to

be the same rationale the Commissioner implicitly adopted

when making prior assignments to coal construction companies. It is not offered as an alternative or supplemental

explanation for an agency action, such as an adjudication,

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previously justified on other grounds. See SEC v. Chenery

Corp., 318 U.S. 80, 87 (1943).

Appellant understandably makes many of the same arguments it advanced in contending that the statute had a clear

meaning in arguing that the Commissioner's interpretation is

unreasonable. But we are not persuaded. The Administration's counsel explains that the Commissioner interpreted

"coal industry" to cover coal contractors because the Association's members specialize in coal mine construction, which

"directly makes coal mining possible," and because some

construction retirees were left in the 1950 Plan after the

Construction Trust was established. These notions seem

consistent with the statutory structure. Moreover, as the

Trustees' counsel points out, the Association does not bargain

with labor groups other than the mine workers union. In

addition, we note that the statutorily mandated assignment

preference scheme set forth in section 9706(a) ensures that

the construction contractors are assigned only those retirees

whom they actually employed. If an assignee disputes the

Commissioner's determination, an administrative review process is available by statute and provided for in the Commissioner's regulations. See 26 U.S.C. s 9706(f); 20 C.F.R.

s 422.605 (1998). We think that procedure further underscores the reasonableness of the Commissioner's inclusion of

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coal construction companies within the "coal industry" in that

it protects the Association's members against erroneous assignment of liability for retirees whom they never employed.4

III.

We turn to appellant's "as applied" constitutional challenge.

Appellant argued in its initial brief that the imposition of

retroactive liability on its members under the Coal Act violates their Fifth Amendment substantive due process rights

because they have assumed all the liabilities from the benefit

plans that they were asked to assume in 1978, and because

they continue to provide the health care benefits of the

agreed-upon beneficiaries through the Construction Trust

without event. The Supreme Court last Term considered

whether the application of the contribution provision of the

Coal Act to a company that had sold its coal producing

__________

4 Appellant's final attack on the reasonableness of the Commissioner's assignments to its members is that he arbitrarily relied

upon lists provided by the Trustees, without critical examination of

whether a company on that list was actually in the "coal industry."

That claim is contradicted by the record. A declaration by the

Deputy Associate Commissioner for Retirement and Survivors Insurance, Supplemental Security Income Programs, states that the

Commissioner used the Trustees' lists, but also used "other information available to SSA including: employer wage reports; coal

industry sources ...; the Keystone Coal Industry Manual; coal

company filings in court; and statements at a Congressional Hearing on the Coal Act." That declaration also asserts that the Social

Security Administration "searched its employment records back to

1946," extracted earning reports "from microfilm and electronic

records," and "checked its records of employers who had filed Form

W-2 wage reports for the past two years." The Association presents no evidence to back its claim that the Commissioner blindly

and inappropriately relied upon the Trustees' lists. Be that as it

may, the Coal Act seems to contemplate a cooperative assignment

process, directing that the Trustees "shall fully and promptly

cooperate with the Commissioner in furnishing, or assisting the

Commissioner to obtain, any information the Commissioner needs

to carry out the Commissioner's responsibilities...." 26 U.S.C.

s 9706(d)(3) (1994).

business in 1965 violated the Due Process and Takings Clauses of the Constitution. See Eastern Enters. v. Apfel, 118 S.

Ct. 2131 (1998). Four Justices (O'Connor, joined by Chief

Justice Rehnquist, and Justices Scalia and Thomas) thought

that the Coal Act as applied to Eastern Enterprises effected

an unconstitutional taking, but expressly declined to decide

Eastern's due process claim. See id. at 2137-53. Justice

Kennedy's concurrence in the judgment provided the fifth

vote to hold the Coal Act unconstitutional, but he thought

that the Act violated due process, and dissented from the

plurality's takings analysis. See id. at 2154-60 (Kennedy, J.,

concurring in the judgment and dissenting in part) (reasoning

that general imposition of liability unrelated to a specific

interest in property cannot constitute a taking). The four

remaining dissenting Justices (Breyer, joined by Stevens,

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Souter, and Ginsburg) agreed with Justice Kennedy's rejection of the plurality's takings analysis, but concluded that the

Coal Act as applied to Eastern Enterprises satisfied substantive due process. See id. at 2161-68 (Breyer, J., dissenting).

At the parties' request, we ordered supplemental briefing on

the Association's substantive due process challenge in light of

the Eastern Enterprises decision.

Appellant argues in its supplemental brief that Eastern

Enterprises "compels" the conclusion that the Coal Act is

unconstitutional as applied to its member companies. It

contends that Eastern Enterprises stands for the broad proposition that the Coal Act is unconstitutional in situations

where it imposes severe retroactive liability on a limited class

of parties that could not have anticipated the liability, and the

extent of that liability is substantially disproportionate to the

parties' experience. Its members, we are told, are in precisely such a situation; it points to the severity of the Coal Act's

economic impact on its members relative to the extent of their

participation in the benefit plans, the alleged impossibility

that its members might have expected the kind of liability

that the Coal Act eventually imposed, and the retroactive

(and thus fundamentally unfair) nature of the governmental

action involved.

We begin our analysis with a bedrock principle of constitutional adjudication--a principle which appellant either does

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not accept or is attempting to obscure. The Constitution

prohibits certain governmental action through specific clauses--clauses that, with Supreme Court interpretation, have

given rise to various and sometimes rather complex doctrines

of constitutional law. Courts do not adjudicate generalized

claims of unconstitutionality, but rather resolve constitutional

questions by applying these settled doctrines to specific constitutional claims asserted under specific constitutional clauses. Appellant's supplemental brief ignores this notion and

asserts that, because the Coal Act was held "unconstitutional"

in Eastern Enterprises, it must be "unconstitutional" here

too. Seemingly abandoning its prior due process challenge to

the statute, appellant puts forth an unidentified constitutional

claim of right, supported by an analysis that, so far as we can

tell, tracks the three-factor "test" ordinarily used to evaluate

challenges under the Takings Clause of the Fifth Amendment. See Eastern Enter., 118 S. Ct. at 2148, 2149-53

(analyzing the Coal Act pursuant to the three factors--

economic impact, interference with investment-backed expectations, and the character of the governmental action--set

forth in Connolly v. Pension Benefit Guar. Corp., 475 U.S.

211 (1986)). But the Association has never asserted a claim

under the Takings Clause in this litigation, either in the

district court or on appeal. Even if appellant had attempted,

in light of Eastern Enterprises, to switch strategies and

specifically to assert for the first time in its supplemental

brief that the Coal Act's assignment provision constitutes an

unconstitutional taking of its members' property, we would in

all likelihood have deemed the claim waived and declined to

address it. See Singleton v. Wulff, 428 U.S. 106, 120 (1976).5

__________

5 Nor would appellant have been able to come within the supervening-change-in-law exception to our ordinary waiver principle.

See, e.g., Roosevelt v. E.I. Du Pont de Nemours, 958 F.2d 416, 419

(D.C. Cir. 1992). The Eastern Enterprises plurality applied settled

takings principles to the petitioner's challenge, and did not purport

to alter the state of the law in any way. The only conceivable

change in takings jurisprudence brought about by Eastern Enterprises is that the five dissenting justices (Justice Kennedy dissented

from the takings portion of the plurality opinion) apparently believe

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We certainly will not apply a takings analysis to resolve a due

process challenge or engage in a free-wheeling, non-textual

examination of the "constitutionality" of the Coal Act.

Nevertheless, we are still obliged to determine just how the

decision in Eastern Enterprises affects the one and only

constitutional question properly before this court: namely,

whether the Coal Act as applied to the Association's members

violates the Due Process Clause. But far from controlling

the due process challenge in this case, as appellant contends,

the plurality opinion in Eastern Enterprises expressly declined to rule on the petitioner's due process challenge,

reasoning that resolution of the takings question made such a

ruling unnecessary. See Eastern Enters., 118 S. Ct. at 2153.

And although the plurality noted that "analysis of legislation

under the Takings and Due Process Clauses is correlated to

some extent," id. (citing Connolly, 475 U.S. at 223), a correlation is not an equivalency. The plurality's conclusion that the

Coal Act effected an unconstitutional taking therefore does

not answer the question whether the Act, as applied in

analogous circumstances, also violates the Due Process

Clause.

We also agree with the government that Justice Kennedy's

concurrence in the judgment is of no help in appellant's

__________

that the imposition of liability alone is not a taking of property

under the Fifth Amendment. See Eastern Enters., 118 S. Ct. at

2154-58 (Kennedy, J., concurring in the judgment and dissenting in

part); id. at 2161-63 (Breyer, J., dissenting). But even if this

development constitutes a "change" in the law (which we doubt

given that dissenting votes have no precedential authority), it would

not be a change that could possibly explain appellant's failure to

raise a takings claim below. After all, Eastern Enterprises at most

renders takings claims less attractive to litigants than they once

were because of the possibility that the five dissenters on the

takings issue could form a majority in a later case. In addition, so

obvious was the applicability of the Takings Clause to appellant's

case prior to Eastern Enterprises that the three other plaintiffs

with whom the appellant's case was consolidated below each asserted a takings claim; appellant alone rested its constitutional case

exclusively on the Due Process Clause.

efforts to cobble together a due process holding from Eastern

Enterprises ' fragmented parts. We have previously held

that the rule of Marks v. United States, 430 U.S. 188 (1977),

under which the opinion of the Justices concurring in the

judgment on the "narrowest grounds" is to be regarded as

the Court's holding, does not apply unless the narrowest

opinion represents a "common denominator of the Court's

reasoning" and "embod[ies] a position implicitly approved by

at least five Justices who support the judgment." King v.

Palmer, 950 F.2d 771, 781 (D.C. Cir. 1991). Justice Kennedy's due process analysis clearly does not meet this standard

because he alone was willing to invalidate economic legislation

on the ground that it violated the Due Process Clause. And,

as should be obvious, Justice Kennedy's due process reasoning can in no sense be thought a logical subset of the

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plurality's takings analysis. In short, the government is

correct in stating that the only binding aspect of Eastern

Enterprises is its specific result--holding the Coal Act unconstitutional as applied to Eastern Enterprises.

Thus, our basic inquiry in resolving appellant's due process

challenge remains the same after Eastern Enterprises as it

was before: 6 namely, we accord economic legislation a "presumption of constitutionality" that can be overcome only if the

challenger establishes that the legislature acted in an arbitrary and irrational way. Usery v. Turner Elkhorn Mining

Co., 428 U.S. 1, 15 (1976). The challenged legislation, moreover, is to be upheld if there is any conceivable rational basis

supporting it, whether or not the Congress had that particular basis in mind when the legislation was enacted. See FCC

v. Beach Communications, 508 U.S. 307, 315 (1993). Even

legislation with a retroactive effect may satisfy due process if

the "retroactive application of the legislation is itself justified

by a rational legislative purpose." Pension Benefit Guar.

Corp. v. R.A. Gray & Co., 467 U.S. 717, 729-30 (1984). We

think that the Coal Act, as applied to the Association's

members, passes this test for many of the same reasons that

__________

6 That is not to say that Eastern Enterprises is irrelevant to this

case. We discuss its relevance below.

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our sister circuits have articulated in upholding the Coal Act

against "as applied" due process challenges raised by various

other "coal industry" members. See, e.g., Eastern Enters. v.

Chater, 110 F.3d 150 (1st Cir. 1997), rev'd on other grounds,

118 S. Ct. 2131 (1998); Holland v. Keenan Trucking Co., 102

F.3d 736 (4th Cir. 1996); Lindsey Coal Mining Co. v. Chater,

90 F.3d 688 (3d Cir. 1996); In re Blue Diamond Coal Co., 79

F.3d 516 (6th Cir. 1996); Davon, Inc. v. Shalala, 75 F.3d 1114

(7th Cir. 1996); In re Chateaugay Corp., 53 F.3d 478 (2d Cir.

1995). Congress enacted the Coal Act to remedy the health

care benefit funding crisis with respect to coal industry

retirees, a step it thought necessary given its finding that coal

production was important to the national economic interest

and that the collapse of the retirement benefit system could

jeopardize the stability of interstate commerce. Especially in

light of the labor unrest that predated the legislation's enactment, we do not doubt that the Congress had a legitimate

purpose in passing the Coal Act.

Nor do we think that the Congress employed an irrational

means to achieve its purpose. It sought to have those

responsible for plan liabilities contribute to ensuring that

health benefits would be provided to retirees. Appellant does

not dispute that some construction retirees were not transferred to the Construction Trust in 1978; it argues only that

it is significant that its members are providing health benefits

for all agreed-upon (the vast majority of their) retirees

through the Construction Trust. Appellant explains that to

the extent that it left liabilities in the 1974 Plan, it was

because a different method of identifying beneficiaries--last

employer prior to retirement, not the Coal Act's statutory

preference scheme--was used in 1978 to move retirees from

the 1974 Plan to the Construction Trust. Whatever the

reason, the truth is that there are coal construction retirees

who are Combined Fund beneficiaries, and it is rational for

Congress to expect the Association's members to help fund

their retirement benefits in light of the declared purpose to

"identify persons most responsible for plan liabilities." The

Association, as it must, concedes that construction retirees

benefitted from the 1950 Plan, and the 1950 Fund before it,

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without any contribution from its members. Appellant explains that its members never assumed an obligation to

contribute to the 1950 Plan and were never asked to remove

beneficiaries from the 1950 Plan when the Construction Trust

was established. But it is surely rational for the Congress to

expect that the member companies' failure to contribute while

their retirees received benefits contributed to the underfunding crisis that the Plans faced in the late 1980s. Although the

coal contractors may not have been the dominant cause of

that underfunding, legislation need not burden the most

responsible party to survive rational basis review. See Holland, 102 F.3d at 742.7

Even though Eastern Enterprises does not control the

result in this case, it is surely relevant to our analysis that

both the plurality opinion and Justice Kennedy's concurrence

focused on the lack of proportionality between the Coal Act's

imposition of retroactive liability and the amount of Eastern's

participation in prior coal benefit agreements.8 Because

__________

7 Nor do we find it significant, for due process purposes, that the

legislative history does not mention the Association's participation

in the benefit plans or the creation of the Construction Trust as a

cause of the financial difficulties of the 1950 and 1974 Plans. After

all, the government can create a rational explanation ex post to

support a statute attacked on due process grounds. That being so,

we can hardly require a showing that Congress specifically identified the Association's members as a cause of the problem before it

passed the Coal Act in order to sustain the Act under rational basis

review.

8 It is true that the plurality focused on the lack of proportionality

as part of its takings analysis. But the prior cases on which the

plurality relied for its takings analysis also suggest that the Due

Process Clause imposes some minimal requirement of proportionality between an employer's actual conduct and its ultimate liability

under a multi-employer benefit plan. See Concrete Pipe & Prods.

of Calif., Inc. v. Construction Laborers Pension Trust, 508 U.S. 602,

637-39 (1993); R.A. Gray, 467 U.S. at 733. And although the

plurality did not reach the question whether the identified lack of

proportionality violated due process, that was precisely the ground

Eastern left the coal industry in 1965, the plurality and

Justice Kennedy concluded that the company could not have

been expected to anticipate the obligation to fund lifetime

retiree benefits that the Coal Act eventually imposed. In

their view, an industry commitment to provide lifetime benefits was not evident until the 1974 and 1978 agreements--

agreements which Eastern did not participate in negotiating

and which created benefit funds to which Eastern was not

required to contribute.

If the Association's members were in substantially similar

factual circumstances to Eastern, we would be compelled to

resolve the difficult question, left open by the Eastern Enterprises plurality, whether the quality and quantity of retroactive liability identified in Eastern Enterprises also violates

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the Due Process Clause. The Association's members, however, are not in substantially similar factual circumstances to

Eastern. The crucial fact upon which the Eastern Enterprises plurality and Justice Kennedy relied in concluding that

Eastern's Coal Act liability was disproportionate to its past

conduct and thus unfairly retroactive--namely, Eastern's departure from the coal industry in 1965--is absent in this

case. See Eastern Enters., 118 S. Ct. at 2151.9 The Association's members are still active members of the "coal industry" (under the Commissioner's reasonable interpretation of

that term). More to the point, the 1974 and 1978 Construction Agreements incorporated by reference the National Bituminous Coal Wage Agreements of the same years. The

plurality in Eastern Enterprises indicated that the latter

agreements, which greatly expanded benefit provisions and

__________

upon which Justice Kennedy rested his concurrence in the judgment.

9 We agree with appellant, however, that, in light of the Eastern

Enterprises decision, and contrary to the district court's conclusion

below, there can be no question that the Association's members'

Coal Act liability is in fact retroactive given that the Act attaches

new legal consequences to an employment relationship completed

before its enactment. See Eastern Enters., 118 S. Ct. at 2151

(citing Landgraf v. USI Film Prods., 511 U.S. 244, 270 (1994)).

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contained provisions designed to maintain the level of contributions during the life of the agreement (the "guarantee"

clause) and to secure contributions from employers who remain in the industry but fail to sign a subsequent agreement

(the "evergreen" clause), created an expectation of lifetime

benefits that the employers who participated in those agreements were responsible for creating. See Eastern Enters.,

118 S. Ct. at 2150; id. at 2159 (Kennedy, J., concurring in

the judgment and dissenting in part). And as appellees

point out, the 1974 agreement contained a provision expressly providing that pensioners and their dependents would

receive a health benefit card "until death" or "for life."

The clear implication of each opinion in Eastern Enterprises is that employer participation in the 1974 and 1978 agreements represents a sufficient amount of past conduct to

justify the retroactive imposition of Coal Act liability (for the

dissenting justices, of course, such participation is not even

necessary). Justice Kennedy's additional concern that liability imposed on past employment relationships be "remedial" is

also satisfied in this case because the Association's members,

unlike Eastern, withdrew from their prior commitment to

contribute to the funds at precisely the point in time (1978) at

which the benefit obligation dramatically expanded, and

therefore "contributed to the perilous financial condition of

the 1950 and 1974 plans which put the benefits in jeopardy,"

Eastern Enters., 118 S. Ct. at 2159 (Kennedy, J., concurring

in the judgment and dissenting in part). Finally, in evaluating the proportionality between the Association's members'

past conduct and their liability for 1950 Plan beneficiaries

under the Coal Act (the only liability at issue in this case), we

note again that the Association's members never contributed

to the 1950 Plan even though some of its employees were

beneficiaries of that plan. There can be little doubt that

receiving free benefits from a fund (even when a contribution

to that fund is not technically required), together with the

other conduct we have described, establishes the minimal link

between conduct and liability that the Due Process Clause

requires in order to sustain retroactive liability.

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Amici Curiae LTV Corporation and Nacco Industries urge

us to resist this conclusion, contending that participation in

the 1974 and 1978 agreements--contrary to the clear implication of each opinion in Eastern Enterprises--is not sufficient

to render retroactive liability permissible. Amici argue that

a company that participated in the 1974 and 1978 agreements

is indistinguishable from Eastern in that these agreements,

like the pre-1965 agreements signed by Eastern, do not

explicitly set forth a promise to provide lifetime benefits.

The provision guaranteeing a benefit card for life is, in

amici 's view, simply a guarantee of portable benefits that a

miner could take from employer to employer; the provision

represents no independent guarantee of specific health benefits, and is qualified by the provisions in the agreement

specifying that the signatory's obligation to fund benefits

lasts only for the term of the agreement. Because neither

the 1974 nor the 1978 agreement explicitly obligated signatories to fund benefits for life, amici conclude, employers who

participated in those agreements could not be expected to

anticipate the Coal Act's obligation to fund lifetime benefits

any more than could Eastern, which departed from the

industry in 1965.

Amici 's argument is subtle, but ultimately unpersuasive.

To begin with, amici are wrong when they insist that, if we

conclude that the Association's members are situated exactly

as was Eastern Enterprises, we must find a due process

violation. For the reasons outlined above, we think that such

a reading of Eastern Enterprises is untenable. Amici 's

argument also implies that any act of Congress that imposes

a liability inconsistent with obligations for which employers

specifically contracted is per se disproportionate and thus

violates the Due Process Clause. But it is settled law,

undisturbed by Eastern Enterprises, that "[c]ontracts, however express, cannot fetter the constitutional authority of Congress" and that "[p]arties cannot remove their transactions

from the reach of dominant constitutional power by making

contracts about them." Connolly, 475 U.S. at 223-24 (quoting Norman v. Baltimore & Ohio R. Co., 294 U.S. 240, 307-08

(1935)). If it were clear, as amici contend, that any particUSCA Case #97-5132 Document #382943 Filed: 09/18/1998 Page 21 of 23
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ipation less than an explicit and contractually binding promise

to fund lifetime benefits would render Coal Act liability in

violation of the Due Process Clause, the plurality and Justice

Kennedy certainly would not have pointed to the 1974 and

1978 agreements as important events. Significantly, the plurality viewed the 1974 and 1978 agreements as critical to its

analysis even while explicitly acknowledging that those agreements only required employers to fund benefits for the life of

the respective agreements. See Eastern Enters., 118 S. Ct.

at 2140; id. at 2152.10 The constitutionally significant feature

about these later agreements is that they made it reasonable

for participating employers to expect a similar state-imposed

duty, and thus rendered such a duty, when eventually imposed, not unfairly retroactive. That appellants could have

successfully defended a breach of contract suit seeking lifetime benefits under the 1974 agreement is of no consequence.

In rejecting appellant's constitutional challenge, we take

seriously the Eastern Enterprises plurality's cautionary

words about employing the Due Process Clause to invalidate

economic legislation, see Eastern Enters., 118 S. Ct. at 2153,

__________

10 It is true that the plurality rejected the dissent's conclusion

that the participation of the federal government in prior coal

agreements, together with statements from industry members and

members of Congress, demonstrated an implicit industry-wide

promise to fund lifetime benefits. See Eastern Enters., 118 S. Ct.

at 2152. And it was Justice Stevens in dissent who relied upon the

First Circuit's conclusion that, "[f]or 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." Id. at 2160 n.4 (Stevens, J., dissenting)

(quoting Eastern Enters., 110 F.3d 150, 157 (1st Cir. 1997)); see

also id. at 2165 (Breyer, J., dissenting). However, we think that

the plurality and the dissenters were in agreement that reasonable

expectations can be formed even in the absence of a binding

contractual promise, and disagreed only on the question whether

Eastern's participation prior to 1965 was sufficient to make reasonable the expectation of liability under the Coal Act.

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and Justice Kennedy's concession (despite his vote to hold

turn the Coal Act unconstitutional on due process grounds)

that "[s]tatutes may be invalidated on due process grounds

only under the most egregious of circumstances," id. at 2159

(Kennedy, J., concurring in the judgment and dissenting in

part). For the reasons outlined above, we think this case

does not measure up to "one of the rare circumstances in

which even such a permissive standard has been violated."

Id. Nor do we think that a remand is appropriate to permit

appellant to expand the record for purposes of demonstrating

the harsh economic effect that the Coal Act allegedly works

on its members. Nothing in Eastern Enterprises altered the

basic method of economic due process analysis. Rationality

is, as it has always been, the touchstone. Appellant has failed

to persuade us that the Coal Act's ends and means, as applied

to its members, are so arbitrary and irrational as to warrant

invalidation under the Due Process Clause.

* * * *

For the foregoing reasons, the judgment of the district

court is

Affirmed.

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