2002 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

9-24-2002

Shenango Inc v. Comm Social Security

Precedential or Non-Precedential: Precedential

Docket No. 00-2525

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PRECEDENTIAL 

 Filed September 24, 2002 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

No. 00-2525 

SHENANGO INCORPORATED; STELCO USA, INC.; 

STELCO COAL COMPANY; MUELLER INDUSTRIES, INC., 

 Appellants 

v. 

KENNETH S. APFEL, COMMISSIONER OF SOCIAL 

SECURITY; MICHAEL H. HOLLAND; WILLIAM P. 

HOBGOOD; MARTY D. HUDSON; THOMAS O.S. RAND; 

ELLIOT A. SEGAL; CARL E. VANHORN; GAIL R. 

WILENSKY, Trustees of the United Mine Worker of 

America Combined Benefit Fund 

On Appeal from the United States District Court 

for the Western District of Pennsylvania 

(Civil Action No. 99-1035) 

District Judge: Hon. Robert J. Cindrich 

Argued: September 19, 2001 

Before: SLOVITER, NYGAARD and McKEE, Circuit Judges. 

(Filed: September 24, 2002) 

 DAVID J. LAURENT, ESQ. 

 (Argued) 

 Babst, Calland, Clemens and 

 Zomnir, P.C. 

 Two Gateway Center 

 Pittsburgh, PA 15222 

 Attorney for Appellants 

 

 PETER BUSCEMI, ESQ. 

 (Argued) 

 Morgan, Lewis & Bockius LLP 

 1111 Pennsylvania Avenue, N.W. 

 Washington, D.C. 20004 

 JOHN R. MOONEY, ESQ. 

 ELIZABETH A. SAINDON, ESQ. 

 Mooney, Green, Gleason, 

 Baker, Gibson & Saindon, P.C. 

 1920 L. Street, N.W., Suite 400 

 Washington, D.C. 20036 

 DAVID W. ALLEN, ESQ. 

 Office of the General Counsel 

 UMWA Health and Retirement 

 Funds 

 2121 K. Street, N.W. 
 Washington, D.C. 20037 

 Attorneys for Appellees, Trustees 

 of the UMWA Combined Benefit 

 Funds 

 DAVID W. OGDEN, ESQ. 

 Assistant Attorney General 

 HARRY LITMAN, ESQ. 

 United States Attorney 

 MARK B. STERN, ESQ. 

 JEFFREY CLAIR, ESQ. (Argued) 

 Attorneys, Civil Division 

 Room 9536, Department of Justice 

 601 "D" Street, NW 

 Washington, D.C. 20530 

 Attorneys for the Federal Appellee, 

 Commissioner of Social Security 

OPINION OF THE COURT 

McKEE, Circuit Judge. 

Shenango, Inc., Stelco USA, Inc., Stelco Coal Co. and 

Mueller Industries (hereinafter collectively referred to as the 

"Companies") challenge the Commissioner of Social 

Security’s assignment of responsibility for health care 

 2 

 

premiums of approximately 70 retired miners and their 

qualified dependents pursuant to the Coal Industry Retiree 

Health Benefit Act of 1992 (the "Coal Act"), 26 U.S.C. 

SS 9701-9722. The Companies argue that the Act is 

unconstitutional as applied to them pursuant to Eastern 

Enterprises v. Apfel, 524 U.S. 498 (1988). For the reasons 

that follow, we conclude that the assignments are not 

unconstitutional as applied, and that the district court did 

not err in dismissing the Companies’ challenge to the 

assignments. However, before we explain our reason, it will 

be helpful to explain the historical background and context 

of this dispute. 

I. THE COAL ACT 

The Coal Act was enacted in 1992 "to ensure that retired 

coal miners and their dependents would continue to receive 

the health and death benefits they had been receiving since 

the 1940s pursuant to a series of collective bargaining 

agreements." Anker Energy Corp. v. Consolidation Coal Co., 

177 F.3d 161, 163-64 (3d Cir. 1999). Because the origins 

and history of the Coal Act are set forth in great detail in 

the Supreme Court’s opinion in Eastern Enterprises, as well 

as in our opinions in Unity Real Estate v. Hudson, 178 F.3d 

649 (3d. Cir. 1999), and Anker Energy, we need not repeat 

it here. Rather, we offer the following narrative from our 

opinion in Anker Energy as background for our analysis: 

 In 1947, the United Mine Workers of America 

 ("UMWA") and the Bituminous Coal Operators’ 
 Association ("BCOA") agreed upon the first of a series of 

 National Bituminous Coal Wage Agreements ("NBCWA" 

 or "wage agreement"), which specified the terms and 

 conditions of employment and provided health and 

 pension benefits for miners. The 1947 NBCWA 

 established the United Mine Workers of America 

 Welfare and Retirement Fund [W&R Fund], which used 

 the proceeds of a royalty on coal production to provide 

 pension and medical benefits for miners and their 

 families. The 1947 NBCWA did not specify the benefits 

 to which miners and their families were entitled, 

 instead leaving this task to three trustees in charge of 

 the Fund. In 1950 the union and the industry 

 3 

 

 association agreed upon a new NBCWA that created a 

 new Fund financed by a per ton levy on coal mined by 

 signatory operators. Like the 1947 Fund, the 1950 

 version did not promise specific benefits, and the 

 benefits were always subject to cancellation or change. 

 This system did not change significantly until 1974 

 when, to comply with the newly enacted [Employee 

 Retirement Income Security Act], the UMWA and the 

 BCOA negotiated a new wage agreement that created 

 four trusts funded by royalties on coal production and 

 premiums based on hours worked by miners. Under 

 the new agreement, the 1950 Benefit Plan covered 

 miners who retired before January 1, 1976, and their 

 dependents, while the 1974 Benefit Plan covered 

 miners who retired after 1975 and their dependents. 

 Both Plans provided nonpension benefits, including 

 medical benefits. 

 The 1974 NBCWA explained that it was amending the 

 previous system to provide health benefits for retired 

 miners "for life," and to their widows until death or 

 remarriage. Because of this broadened coverage the 

 number of eligible benefit recipients increased 

 dramatically, and the Plans began losing money. 

 In response, the 1978 NBCWA assigned responsibility 

 to signatory employers for the health care of their own 

 active and retired employees. The 1978 agreement also 

 restricted the 1974 Plan so that it would provide health 

 benefits only for "orphaned" retirees, those whose last 

 employer had gone out of business or otherwise ceased 

 contributing to the Plans. To ensure the Plans’ 

 solvency, the 1978 NBCWA included a "guarantee" 

 clause that obligated signatories to make sufficient 

 contributions to maintain benefits during that 

 agreement, and the union and operators amended the 

 Plans to include "evergreen clauses" that required 

 signatories to contribute to the Plans if they remained 

 in the coal business even if they never signed another 

 wage agreement. 

 Despite the 1978 NBCWA and subsequent attempts 
 to improve the Plans, they continued to lose money 

 4 

 

 because of the increase in beneficiaries, the escalating 

 costs of health care, and the flood of signatory 

 companies abandoning the Plans. In 1992 Congress 

 responded by passing the Coal Act. 

177 F.3d at 164-165. 

In enacting the Coal Act, Congress declared that the Act 

was intended to remedy problems with funding retiree 

health benefits in the coal industry, to allow for sufficient 

operating assets for the health benefit plans, and to provide 

for the continuation of a privately funded and self-sufficient 

program for the delivery of health care benefits to retired 

miners and their dependents. Pub.L. No. 102-486, 

S 19142(b), 106 Stat. 3036, 3037 (1992), 26 U.S.C. S 9701 

note. Accordingly, the Act required certain benefit plans 

previously established under the UMWA collective 

bargaining agreements to be merged into a new plan-- the 

United Mine Workers of America Combined Benefit Fund.1 

26 U.S.C. S 9702(a). The Combined Fund provides health 

and death benefits to retired coal miners and dependents 

who, as of July 20, 1992, were eligible to receive, and were 

receiving, benefits under the UMWA 1950 or 1974 benefit 

plans. 26 U.S.C. SS 9703(a), (b)(1), (c), (e) & (f). Benefits paid 

through the Combined Fund are funded in part by 

premiums imposed on "signatory coal operators," i.e., 

certain coal operators that employed an eligible beneficiary 

and had signed a collective bargaining agreement between 

the UMWA and BCOA, a multiemployer group of coal 

producers, or other "related persons" connected to the 

_________________________________________________________________ 

1. The Combined Fund is one of three components formulated by 

Congress to achieve the purposes of the Coal Act. The second component 

is the mandated continuation of individual employer health plans 

maintained by signatories to the 1978 and later NBCWAs. 26 U.S.C. 

S 9711. The third component is the 1992 Plan which provides benefits 

for persons who, but for the enactment of the Coal Act, would have been 

eligible to receive benefits from the UMWA 1950 or 1974 benefit plans, 

but who are not eligible for benefits from the Combined Fund. It also 

provides benefits for persons who are entitled to receive benefits directly 

from their former employers but who do not in fact receive such benefits. 

26 U.S.C. S 9712. The second and third components are not implicated 

in this appeal. We are only concerned with the Combined Fund. 

 5 

 

signatory operator by common ownership or control. See 26 

U.S.C. SS 9701(c)(1) & (c)(2), 9704, 9706. 

The Act directs the Commissioner of Social Security 2 to 

assign each individual beneficiary to one of these signatory 

coal operators or its "related person." The assignment is 

determined by the length of the beneficiary’s service, the 
date of service, and whether the employer signed national 

collective bargaining agreements with the UMWA in 1978 or 

later. 26 U.S.C. S 9706(a). The Act establishes a three tier 

mechanism for making assignments that we have described 

as the "linchpin" of the Coal Act’s statutory scheme. Unity 

Real Estate Co. v. Hudson, 178 F.3d at 654. The Act 

provides in relevant part: 

 (a) In general.--For purposes of this chapter, the 

 Commissioner of Social Security shall, before October 

 1, 1993, assign each coal industry retiree who is an 

 eligible beneficiary to a signatory operator which (or 

 any related person with respect to which) remains in 

 business in the following order: 

 (1) First, to the signatory operator which-- 

 (A) was a signatory to the 1978 coal wage 

 agreement or any subsequent coal wage agreement, 

 and 

 (B) was the most recent signatory operator to 

 employ the coal industry retiree in the coal 

 industry for at least 2 years. 

 (2) Second, if the retiree is not assigned under 

 paragraph (1), to the signatory operator which-- 

 (A) was a signatory to the 1978 coal wage 

 agreement or any subsequent coal wage agreement, 

 and 

_________________________________________________________________ 

2. Originally, the Coal Act provided that the Secretary of Health and 

Human Services would be responsible for the assignment of Combined 

Fund beneficiaries. The Secretary delegated this task to the 

Commissioner of Social Security. In 1994, Congress transferred the 

statutory responsibility directly to the Commissioner. See Social Security 

Independence and Program Improvements Act of 1994, Pub.L.No. 10-3- 

296, SS 105(a)(2)(A), 108(h)(9)(A), 108 Stat. 1472, 1487-88 (1994). 

 6 

 

 (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. 

26 U.S.C. S 9706(a)(1), (2) & (3). Once the Commissioner 

makes the assignment under S 9706, the assignee must 

then pay the annual premiums to the Combined Fund 

based on the amounts required to provide health and death 

benefits for the assigned beneficiaries. 
If a miner or his3 dependents cannot be assigned under 

this scheme, his benefits are funded by either asset 

transfers from one of the Combined Fund’s predecessor 

benefit plans, see 26 U.S.C. S 9705(a)), transfers from the 

U.S. Treasury’s Abandoned Mine Land Reclamation Fund, 

see 26 U.S.C. S 9705(b), 30 U.S.C. S 1232(h); or, if those 

sources are insufficient or unavailable, an additional 

unassigned -- or "orphaned" -- retiree premium that the 

Act imposed on all signatory operators. See 26 U.S.C. 

SS 9704(d), 9705(a)(3)(B), 9705(b)(2). 

The Coal Act also contains several provisions that, taken 

together, treat a commonly controlled group of related 

corporations as a single employer for purposes of liability 

under the statute. Pursuant to those provisions, the 

original employer and a wide range of affiliated companies 

or successors are potentially liable for premiums on miners’ 

benefits under the Act. The Commissioner can assign 

responsibility for paying premiums for a miner’s benefits 

either to a mine operator that actually employed an eligible 

beneficiary and signed a collective bargaining agreement 

between the UMWA and the BCOA ("signatory operator"), or 

to any "related person." 26 U.S.C. S 9706(a). The Act defines 

_________________________________________________________________ 

3. Inasmuch as it is highly unlikely that any women were employed as 

miners during the relevant period, we will use the masculine pronouns 

in referring to all miners. 

 7 

 

"related person" to include all members of a commonly 

controlled group of corporations including the signatory, 

other businesses under common control with the signatory, 

and subsequent successors in interest to any of those 

affiliated entities. 26 U.S.C. S 9701(c)(2)(A)). A "controlled 

group" is in turn defined as a group of companies in which 

a common parent or concentration of individual economic 

interests owns or controls more than 50% of each of the 

affiliated companies. See 26 U.S.C. S 9701(c)(2)(A), 

incorporating by reference 26 U.S.C. S 52(a) & (b), which in 

turn incorporates by reference 26 U.S.C. S 15563(a). The 

determination of which entities are "related persons" under 

the Coal Act turns on an entity’s status with regard to the 

miner or the miner’s employer as of July 20, 1992. 26 

U.S.C. S 9701(c)(2)(B). 

"Related persons" have broad and shared responsibility 

for premiums. Under the Act, any company within the 

commonly controlled group may be treated as having 

employed a related signatory’s miners. 26 U.S.C.S 9706(b). 

In addition, related persons are "jointly and severally liable 

for any premium required to be paid" by its affiliated 

signatory operator. 26 U.S.C. S 9704(a). Congress 

instructed the Commissioner to promptly assign miners to 

various companies according to this three tiered scheme 

promptly after the Coat Act’s 1992 enactment. The statute 

states: "For purposes of this chapter, the Commissioner of 
Social Security shall, before October 1, 1993, assign each 

coal industry retiree who is an eligible beneficiary to a 

signatory operator . . . ." 26 U.S.C. S 9706(a). 

II. THE COMMISSIONER’S ORIGINAL ASSIGNMENTS 

The Companies were collectively assigned responsibility 

for premiums for approximately 70 miners and qualifying 

dependents pursuant to the third tier of the assignment 

scheme. 26 U.S.C. S 9706(a)(3). The Companies did not 

employ any of the miners thus assigned. Rather, the 

Commissioner assigned the miners based upon the 

Companies’ relationships to other entities that had 

employed the miners.4 

_________________________________________________________________ 

4. The exact relationship between each plaintiff and its related entities is 

as follows: 

 8 

 

The Commissioner originally assigned liability on the 

grounds that the Companies were "related" to a nowdefunct employer that had signed a pre-1974 NBCWA. 

Specifically, Mueller was assigned liability with respect to 

employees of Joanne Coal because Joanne Coal signed a 

1964 wage agreement. Then, Joanne Coal merged with 

Sharon Steel which subsequently merged with Mueller. 

Shenango received assignments with respect to employees 

of Lucerne Coke, an employer that signed a 1971 wage 

agreement and later merged with Shenango. Stelco USA 

and Stelco Coal received assignments with respect to 

employees of Mather Colliers because Mather signed a 1959 

wage agreement. Stelco Coal mined coal under the name of 

"Mather". Stelco USA and Stelco Coal are commonly owned. 

The Commissioner’s assignments to Stelco Coal and 

Shenango were made before October 1, 1993. The 

assignments to Mueller Industries, Inc., were made 

sometime after that date. 

The Companies concede that they are "related persons" 

as defined in the Act, 26 U.S.C. S 9701(c)(2)(A). They 

_________________________________________________________________ 

Shenango merged with Lucerne Coke Co. sometime after 1971. 

Lucerne last signed an NBCWA in 1971. That agreement expired in 

November, 1974. Lucerne employed the miners assigned to Shenango, 

but Lucerne is no longer in business. However, as of July 20, 1992, 

Shenango was related, via its parent company, to Aloe Coal Co. which 

signed NBCWAs in 1974 and later. 

Stelco Coal Co. mined coal under the name of Mather Collieries, which 

permanently ceased operating sometime before 1964. Stelco USA, Inc., is 

commonly owned with Stelco Coal Co. Mather signed several NBCWAs. 

It signed the last one in 1959. Mather employed the miners assigned to 

Stelco Coal and Stelco USA. As of July 20, 1992, Stelco Coal and Stelco 

USA were related to Pikeville Coal Company, which signed the 1974 and 

subsequent NBCWAs. 
In December, 1980, Mueller Industries, Inc., merged with Sharon Steel 

Corp., Sharon had previously merged with Joanne Coal Co., and Joanne 

Coal continued mining until approximately 1969. Joanne Coal last 

signed a NBCWA in 1964. Joanne Coal employed the miners assigned to 

Mueller. As of July 20, 1992, Mueller was related to Carpentertown Coal 

& Coke Co., and to United States Fuel Co. Carpentertown Coal signed 

the 1978 NBCWA and later NBCWAs. 

 9 

 

concede that they are related to the coal companies that 

actually employed the miners assigned to the Companies, 

signed pre-1974 NBCWAs and that are now out of 

business. They also concede that they are related to the 

coal companies that employed an entirely different set of 

miners and that signed post-1974 NBCWAs. The 

Companies differentiate between these two groups by 

referring to them as "Pre-1974 Signatories" and "Post-1974 

Signatories." 

III. EASTERN ENTERPRISES AND THE 

COMMISSIONER’S RESPONSE 

As is often the case under the Coal Act, the challenge to 

the Commissioner’s assignments here rests in large part 

upon our interpretation of Eastern Enterprises . The Court 

there considered the constitutionality of the Coal Act as 

applied to Eastern. That company had mined coal until 

1965, and signed every NBCWA from 1947 until 1964. The 

Commissioner assigned Eastern liability for over 1000 

miners pursuant to 26 U.S.C. S 9706(a)(3), based upon 

Eastern’s status as the pre-1978 signatory operator for 

whom the miners had worked the longest. The total liability 

for those assignments was estimated to be between $50 

and $100 million. Eastern sued claiming that S 9706(a)(3) 

was unconstitutional as applied to it because the Act’s 

imposition of liability violated the Due Process and Takings 

Clauses of the Fifth Amendment. 

A four-justice plurality of the Supreme Court agreed that 

the Act violated the Takings Clause as applied to Eastern 

Enterprises. Eastern Enterprises, 524 U.S. at 537. While 

recognizing that a takings analysis is "essentially ad hoc 

and fact intensive," the plurality nonetheless identified 

three factors that are usually significant to assessing a 

Takings challenge under the Fifth Amendment: "the 

economic impact of the regulation, its interference with 

investment backed expectations, and the character of the 

governmental action." Id. at 523-524 (quoting Kaiser Aetna 

v. United States, 444 U.S. 164, 175 (1979)). The plurality 

then reviewed cases involving legislative schemes similar to 

the Coal Act; viz., the Black Lung Benefits Act and the 

Multiemployer Pension Plan Amendments Act ("MPPAA") 

 10 

 

which was enacted to supplement the Employee Retirement 
Income Security Act ("ERISA"). The justices concluded that 

those cases established: 

 Congress has considerable leeway to fashion economic 

 legislation, including the power to affect contractual 

 commitments between private parties. Congress may 

 also impose retroactive liability to some degree, 

 particularly where it is confined to short and limited 

 periods required by the practicalities of producing 

 national legislation. 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 that could not have 

 anticipated the liability, and the extent of that liability is 

 substantially disproportionate to the parties’ experience. 

Id. at 528-529 (citation and internal quotations omitted) 

(emphasis added). 

Applying these principles to Eastern Enterprises, the 

plurality first focused on the economic impact of the Act 

and found that it placed a "considerable financial burden" 

on that company. Id. at 529. The financial burden was not 

a "permanent physical occupation of Eastern’s property of 

the kind [usually] viewed as a per se taking[.]" However, the 

plurality noted that the Court’s decisions upholding the 

MPPAA "suggest that an employer’s statutory liability for 

multiemployer pension plans should reflect some 

proportionality to its experience with the plan." Id. at 530 

(citation and internal quotations omitted). The plurality 

concluded that this proportionality was lacking insofar as 

the Coal Act was applied to Eastern. Eastern had 

contributed to the 1947 and 1950 W&R Funds, but"it [had] 

ceased it coal mining operations in 1965 and neither 

participated in negotiations nor agreed to make 

contributions in connection with the 1974, 1978, or 

subsequent NBCWAs." Id. This was significant because 

those latter agreements were the "first [to] suggest an 

industry commitment to funding lifetime health benefits for 

both retirees and their family members." Id . Thus, because 

Eastern had neither contemplated liability for lifetime 

benefits to miners nor contributed to the miners’ 

expectations of lifetime benefits, the plurality found that 

 11 

 

"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." Id. at 531 (citation and internal quotations 

omitted). 

The assignments to Eastern faired no better when the 

plurality considered the second and third factors it had 

culled from the Court’s Takings Clause jurisprudence. The 

Act’s "substantial and particularly far reaching" retroactivity5 

interfered with Eastern’s reasonable investment backed 

expectations. Id. at 534. The plurality reasoned that a coal 

industry employer could not have contemplated liability for 
lifetime benefits to miners until those provisions were 

included in the 1974 NBCWA. Therefore, "the Coal Act’s 

scheme for allocation of Combined Fund premiums[was] 

not calibrated either to Eastern’s past actions or to any 

agreement -- implicit or otherwise -- by the company." Id. 

at 536. Finally, the plurality found that the "nature of 

governmental action . . . is quite unusual," and"implicates 

fundamental principles of fairness underlying the Takings 

Clause," because it "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." Id. at 537. 

Inasmuch as each of the three factors weighed against 

sustaining the "taking," the plurality concluded that the 

assignment to Eastern under the Act was unconstitutional. 

Justice Kennedy, who provided the fifth vote striking 

down the application of the Act as to Eastern, disagreed 

with the plurality’s analysis, but found that the Act’s 

retroactivity violated due process. Id. at 539-50. He applied 

an "arbitrary and irrational" standard of review, Id. at 547, 

_________________________________________________________________ 

5. Coal Act assignments operate retroactively because they require an 

assignee to use current funds to provide benefits for miners after the 

assignee believed its liability to the miners had been settled. See Eastern 

Enterprises, at 534 (O’Connor, J.) ("[T]he 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."). 

 12 

 

and focused on the fact that Eastern Enterprises had not 

signed a 1974 or later NBCWA. He concluded: 

 Eastern was once in the coal business and employed 

 many of the beneficiaries, but it was not responsible 

 for their expectation of lifetime benefits or for the 

 perilous condition of the 1950 and 1974 plans which 

 put the benefits in jeopardy. As the plurality 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. This case is far 

 outside the bounds of retroactivity permissible under our 

 law. 

Id. at 550 (emphasis added). 

The four dissenting justices agreed with Justice Kennedy 

that the application of the Act did not violate the Takings 

Clause, but disagreed with his view that the Act violated 

due process. Id. at 556-67. 

We have previously noted the "splintered nature" of the 
Court’s decision, and remarked that it is "difficult to distill 

a guiding principle from Eastern." Unity Real Estate Co., 

178 F.3d at 658. However, as recited above, both the 

plurality and Justice Kennedy focused on one fact which 

each considered significant. The 1974, 1978 and 

subsequent NBCWAs were the first wage agreements 

containing a commitment to fund lifetime health benefits 

for retired miners and their dependents. Eastern 

Enterprises had not signed either the 1974 or the 1978 

NBCWAs. Therefore, it could not have contemplated 

contributing to the miners’ expectation of lifetime health 

benefits. See Anker Energy Corp. v. Consolidation Coal Co., 

177 F.3d at 172 ("[A]nalysis of the decisions in Eastern 

Enterprises leads us to the conclusion that a majority of the 

Court would find the Act unconstitutional when applied to 

an employer that did not agree to the 1974 or subsequent 

NBCWAs, while application of the Act to a signatory to the 

1974 or subsequent wage agreement would be an entirely 

different matter."); see also, Association of Bituminous 

 13 

 

Contractors, Inc. v. Apfel, 156 F.3d 1246, 1257 (D. C. Cir. 

1998)("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")). 

After Eastern Enterprises, the Commissioner undertook a 

comprehensive review of all assignments that had 

previously been made under S 9706(a)(3), including those 

made to the Companies. The Commissioner reasoned that, 

under Eastern Enterprises, if neither the original employer 

nor related persons had signed the 1974 or later NBCWAs, 

the assignment could not be distinguished from Eastern 

Enterprises. Accordingly, the Commissioner, on his own 

initiative, voided hundreds of assignments that were based 

solely on an employer or related person’s participation in a 

pre-1974 NBCWA. 

However, the Commissioner also concluded that Eastern 

Enterprises allowed miners to be assigned to coal 

companies that where part of a controlled group of 

corporations that included entities that had signed post1974 NBCWAs. These assignments were deemed to be 

materially different from the assignments in Eastern 

Enterprises. The plaintiff in Eastern was not statutorily 

related to another company that had signed 1974 and later 

NBCWAs. The Commissioner therefore concluded that 

Eastern did not address circumstances in which the 

assignee is related to both the original employer and 

another, affiliated company that signed collective 

bargaining agreements promising lifetime care. Accordingly, 

the Commissioner rejected the Companies’ requests to 

vacate their assignments of the miners employed by the 

Pre-1974 Signatories. 
IV. DISTRICT COURT PROCEEDINGS 

On June 30, 1999, the Companies filed a five Count 

complaint against the Commissioner and the Trustees of 

the Combined Fund. In Count I, the Companies alleged that 

the Commissioner’s refusal to vacate the Coal Act 

 14 

 

assignments of liability for miners employed by the Pre1974 Signatories was unlawful under Eastern Enterprises. 

In Counts II and III, the Companies alleged that the Coal 

Act violates the Takings and Due Process Clauses of the 

Fifth Amendment as it applies to them. In Count IV, the 

Companies challenged the Commissioner’s authority to 

make any assignments after September 30, 1993. In Count 

V, the Companies argued that because the Commissioner’s 

assignments should be vacated for the reasons stated in 

the preceding four Counts, the Combined Fund is obligated 

to return all premium payments together with interest. 

After engaging in an excellent and well-reasoned analysis, 

the district court granted the Commissioner’s motion to 

dismiss Counts I through IV. Thereafter, the parties 

submitted their Joint Statement of Position informing the 

district court that the parties agreed that, given its 

dismissal of Counts I through IV, Count V was moot. 

Accordingly, the district court dismissed Count V as moot, 

and this appeal followed.6 

V. DISCUSSION 

The Companies assert two basic arguments. First, they 

argue that their position is essentially identical to the 

position of the plaintiff in Eastern Enterprises insofar as the 

Pre-1974 Signatories are concerned. The Companies claim 

that the Commissioner therefore violated the Due Process 

Clause in assigning them miners employed by the Pre-1974 

Signatories. Second, they argue that the Commissioner 

exceeded his authority under S 9706(a) because he made 

some assignments after October 1,1993; the "cutoff" that 

Congress mandated in the Act. We will address each 

argument separately. 

_________________________________________________________________ 

6. We review de novo the district court’s decision as to the 

constitutionality of the Coal Act as applied to the Companies. Anker 

Energy Co. v. Consolidation Coal Co., 177 F.3d at 169. Although the 

district court granted the Commissioner’s motion to dismiss under Fed. 

R. Civ. P. 12(b)(6), the parties apparently submitted documents outside 

the pleadings themselves; therefore the appropriate standard of review is 

the same as that for a motion for summary judgment, i.e., plenary 

review. Smith v. Johns-Manville Corp., 795 F.2d 301, 306 (3d Cir. 1986). 

 15 

 

A. Are the Companies in a Substantially Identical 

Position to Eastern Enterprises? 
As noted earlier, no single rationale emerges from the 

decision in Eastern Enterprises. Accordingly, " ‘the holding 

of the Court may be viewed as that position taken by those 

Members who concurred in the judgment on the narrowest 

grounds.’ " Marks v. United States, 430 U.S. 188, 193 

(1977)(quoting Gregg v. Georgia, 428 U.S. 153, 169 n.15 

(1976)). The Marks rule is only applicable where "one 

opinion can be meaningfully regarded as ‘narrower’ than 

another" and can "represent a common denominator of the 

Court’s reasoning." Rappa v. New Castle County, 18 F.3d 

1043, 1057 (3d Cir. 1994)(quoting King v. Palmer , 950 F.2d 

771, 781 (D.C. Cir. 1991)(en banc). "[W]here approaches 

differ, no particular standard is binding on an inferior court 

because none has received the support of a majority of the 

Supreme Court." Anker Energy Corp., at 170 (citing Rappa 

v. New Castle County, 18 F.3d at 1058). 

In Unity Real Estate, we stated that "Justice Kennedy’s 

substantive due process reasoning is not a ‘narrower’ 

ground that we might take to constitute the controlling 

holding." 178 F.3d at 658. Consequently, the only binding 

aspect of the fragmented decision in Eastern Enterprises is 

its "specific result," i.e., the Act is unconstitutional as 

applied to Eastern Enterprises. Anker Energy Corp., at 170 

(citing Association of Bituminous Contractors, Inc. v. Apfel, 

156 F.3d 1246, 1255 (D.C. Cir. 1998)). Or, as we said in 

Unity Real Estate: "Eastern . . . mandates judgment for the 

plaintiffs only if they stand in a substantially identical 

position to Eastern Enterprises with respect to both the 

plurality and Justice Kennedy’s concurrence." 7 178 F.3d at 

659. 

Earlier, we noted that the Companies concede that under 

the Coal Act, they are "related persons" to two sets of 

entities, which they call the "Pre-1974 Signatories" and the 

"Post-1974 Signatories." Because of their"related person" 

_________________________________________________________________ 

7. We also held in Unity Real Estate that because of the concurrence and 

dissent in Eastern Enterprises, "we are bound to follow the five-four vote 

against the takings claim. . . ." 178 F.3d at 659; see also Anker Energy 

Corp., at 170 n.3. 

 16 

 

status to the Post-1974 Signatories, the Companies were 

assigned premium liability for miners employed by the Pre1974 Signatories. 

The Companies concede that any assignments of Coal Act 

liability based on their status of being related persons to 

Post-1974 Signatories are constitutionally valid. Companies’ 

Br. at 8. However, the Companies argue that they"stand in 

a substantially identical position to Eastern [regarding the 

pre-1974 Signatories] because, as in Eastern , all of the 

disputed miners worked for signatory operators who last 

signed [NBCWAs] before 1974." Id. at 9. In the Companies’ 

view, the Pre-1974 Signatories and the Post-1974 
Signatories are two discrete sets of entities that must be 

viewed differently under Eastern Enterprises. Therefore, 

according to the Companies, the constitutionality of the 

Coal Act as applied to any particular member of a 

controlled group of corporations depends upon whether the 

particular member signed a 1974 or later NBCWA, not 

upon whether any other member of the group did so. The 

Companies rely upon our decision in Unity Real Estate in 

claiming that their substantial identity to the Pre-1974 

Signatories places them (the Companies) in the shoes of 

Eastern Enterprises, and the Commissioner’s assignments 

of the miners employed by the Pre-1974 Signatories was 

therefore unconstitutional as to them. 

The Companies make no other constitutional challenge to 

the assignments regarding the Pre-1974 Signatories. 

Therefore, their "as applied" constitutional challenge turns 

on whether they are in a "substantially identical position to 

Eastern Enterprises" with regard to assignments of the Pre1974 Signatories. We hold that the circumstances here are 

not substantially equivalent to the circumstances in 

Eastern Enterprises, and the Commissioner’s assignment of 

the Pre-1974 Signatories was therefore not a violation of the 

Fifth Amendment. A closer examination of Eastern 

Enterprises shows why. 

Eastern Enterprises began operations in 1929 and it 

mined coal in West Virginia and Pennsylvania until 1965. 

Eastern, 524 U.S. at 516. In that capacity, it was a 

signatory to each NBCWA executed between 1947 and 1964 

and made contributions of over $60 million to the 1947 and 

 17 

 

1950 welfare and retirement funds. Id. In 1963, Eastern 

decided to spin-off its coal operations to a subsidiary, 

Eastern Associated Coal Corp. ("EACC"). Id. The spin-off 

was completed by 1965, but Eastern retained its stock 

interest in EACC through a subsidiary corporation, Coal 

Properties Corp. ("CPC") until 1987, and it received 

dividends of more than $100 million from EACC during 

that period. Id. 

After 1965, Eastern ceased coal mining operations and 

was not a signatory to the 1974 NBCWA, (which, as noted, 

was the first wage agreement to suggest an industry-wide 

commitment to funding lifetime health benefits to miners 

and their dependents), or to any subsequent NBCWAs. Id. 

at 530. EACC signed the 1974 NBCWA as well as 

subsequent ones. However, in 1987, Eastern sold its 

interest in CPC to Peabody Holding Co., Inc. Id . at 516. As 

a consequence of that sale to that unrelated, third party, 

Eastern had divested itself of all of its interests in its EACC 

subsidiary five years before the enactment of the Coal Act. 

After the enactment of the Coal Act, the Commissioner 

assigned Eastern the obligation for Combined Fund 

premiums for over 1,000 retired miners who had worked for 

Eastern before 1966, based on Eastern’s status as the pre- 
1978 signatory operator for whom the miners had worked 

the longest as prescribed by S 9706(a)(3). Id. at 517. 

Eastern was not assigned responsibility for any miners who 

had been employed by EACC. Id. at 530. 

From this recitation of the facts in Eastern, it is obvious 

that the Companies are not in a "substantially identical 

position to Eastern." Eastern was assigned premium 

liability under the Coal Act solely because it employed the 

assigned miners. Inasmuch as Eastern never signed a wage 

agreement committing to lifetime health benefits, it could 

not be charged with the cost of furnishing those benefits. 

See Id. at 531 ("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."). Eastern did not involve 

liability under the Coal Act’s "related person" provisions. In 

contrast, the Companies’ liability here arises from their 

 18 

 

relationship to "related person" subsidiaries that signed a 

NBCWA in 1974 or thereafter. The Commissioner concluded 

that the nexus between the Companies and those related 

parties was sufficient to assign liability for miners’ lifetime 

benefits even though none of the Companies signed a wage 

agreement obligating them to do so. 

The Companies attempt to find shelter under the 

umbrella of Eastern Enterprises by stressing that Eastern 

also had a subsidiary, EACC, that signed a post-1974 

NBCWA, and arguing that Eastern’s relationship with EACC 

was not sufficient to sustain the Commissioner’s 

assignments of Coal Act liability to Eastern. Companies’ Br. 

at 15-16. However, that argument ignores a critical 

distinction. Eastern divested itself of EACC in 1987, five 

years before the enactment of the Coal Act. The Coal Act 

provides that where ostensibly related companies remain in 

business, the question of whether they are "related 

persons" within the meaning of the statute is determined 

with respect to their relationship as of a date shortly before 

the Act’s enactment -- July 20, 1992. 26 U.S.C. 

S 9701(c)(2)(B). Because Eastern sold EACC before that 

date, EACC was not a "related person" to Eastern under the 

Act. Therefore, premium liability could not have been 

imposed on Eastern as a related person to EACC. 

We have twice before held that liability based upon the 

Act’s related person provisions removes an assignee from 

the shelter of Eastern Enterprises. In Unity, we upheld the 

constitutionality of the Coal Act as applied to a company 

that was a related person to both a pre-1974 NBCWA 

signatory and a post-1974 signatory. At the time the 

Commissioner made the premium assignments, Unity Real 

Estate Company was a small corporation closely-held by 

members of the Jamison family. Unity owned only a small 

commercial building and a parking lot. It never mined coal 

and never signed a coal wage agreement. Nonetheless, the 
assignments to it were valid under the Coal Act because it 

was a related person to several, defunct coal mining 

companies that ultimately merged into Unity. Among those 

companies were South Union-PA and South Union-WVA. 

South Union-PA had mined coal since 1923 and signed 

NBCWAs from 1947 through 1961. South Union-WVA 

 19 

 

began mining coal when South Union-PA stopped and it 

signed the 1974, 1978 and 1981 NBCWAs.8 

The Commissioner assigned Combined Fund premium 

liability to Unity for the miners formerly employed by all of 

Unity’s related person entities pursuant to SS 9706(a)(1) & 

(2), and Unity challenged the assignment relying on 

Eastern. After a comprehensive analysis of the various 

opinions in Eastern, we upheld the Coal Act as applied to 

Unity and sustained all of the assignments, including 

assignments of those miners who had worked for South 

Union-PA. As noted earlier, South Union-PA had not signed 

a NBCWA in 1974 or thereafter. The critical distinction 

between Unity/the Jamison family and Eastern Enterprises 

was that Eastern never signed a 1974 or subsequent 

NBCWA and was not a related person to any entity that 

had. Unity, however was tethered to the commitment of 

lifetime benefits through South Union-WVA, its related 

person. That coal company had made such a commitment 

in the 1974, 1978 and 1981 NBCWAs. In affirming Unity’s 

liability we stated: 

 [b]ecause the plaintiffs signed NBCWAs in 1974 and 

 thereafter, they are factually distinguishable 

 from Eastern Enterprises. Language in the plurality 

 and the concurrence suggesting that expectations 

 fundamentally changed after 1974 support our 

 conclusions. 

178 F.3d at 659. That distinction "compell[ed] the 

conclusion that Eastern is not on all fours with the case 

before us." Id. 

Similarly, in Anker we upheld the Act’s application to 

Anker coal via a related person that was a post-1974 

signatory operator. We held that Anker’s related person had 

agreed to the terms of the 1974, 1978, 1981 and 1984 

NBCWAs and that "factually distinguish[ed] Anker’s 

situation from that of Eastern Enterprises and compell[ed] 

a finding that the Act [was] constitutional[as applied to 

Anker]." 177 F.3d at 172. There, from 1967 until 1982, 

Consolidation Coal had contracted with King Knob Coal for 

_________________________________________________________________ 

8. A bankruptcy court granted it leave to reject the 1981 NBCWA. 

 20 

 

King Knob to mine coal on Consolidation’s property. As part 
of this arrangement, King Knob agreed that its employees 

would be UMWA members and that it would be a signatory 

to the then current NBCWAs. To achieve that end, King 

Knob signed "me too" agreements in 1974, 1978, 1981 and 

1984.9 

An affiliate of Anker acquired King Knob in 1975 and the 

relationship between Consolidation and King Knob 

continued until Consolidation canceled its contract with 

King Knob in 1982. In 1994 and 1995, the Commissioner 

informed Anker that it was a related person to King Knob 

and assigned premium liability to Anker for King Knob’s 

retired miners. Anker sued alleging that under Eastern 

Enterprises the Commissioner’s assignments were 

unconstitutional as applied to it. 

Relying on Unity, we upheld the assignment. We 

concluded that Anker’s related person had agreed to be 

bound by the terms of the post-1974 NBCWA’s. 

Accordingly, Anker’s situation "[fell] outside the specific 

holding of Eastern Enterprises." Id . at 172. 

Here, not to be deterred by the wealth of precedent 

(seemingly on point) against them, the Companies press on 

and argue that Unity imposes a limitation on related person 

liability that precludes consideration of the bargaining 

history of any company other than the assigned miners’ 

actual employer. They argue that because the assignments 

in Unity were made pursuant to SS 9706(a)(1) and (2), Unity 

was treated as if it stood in the shoes of the signatory 

operators who employed the miners and who had signed all 

of the NBCWAs through 1978. Therefore, the Companies 

claim that Unity requires that we treat them as if they too 

_________________________________________________________________ 

9. A "me too" agreement is an agreement between an employer who is 

not a member of the BCOA but who agrees with the UMWA to be bound 

by the terms of the NBCWA. Anker, 177 F.3d at 166-7. A "me too" 

agreement has terms identical to the terms of the respective NBCWA. 

There is no legal distinction between the NBCWA itself, and the 

corresponding "me too" agreement insofar as the employer’s rights and 

obligations are concerned. Id. at 172 n.4. Thus, the "distinction" between 

a NBCWA signatory and a "me too" signatory is not a difference for 

purposes of our Coal Act analysis. Id. 

 21 

 

stand in the shoes of the signatory operators who employed 

the assigned miners. Based upon their insistence that they 

stand in the shoes of the Pre-1974 Signatories who actually 

employed the assigned miners, the Companies claim that 

premium liability assignments are unconstitutional as 

applied under Eastern Enterprises because the Pre-1974 

Signatories neither committed to paying lifetime benefits, 

nor contributed to any such expectation on the part of the 

assigned miners. 

However, this argument is based upon a misreading of 

Unity. Unity was not treated as if it stood in the shoes of a 
signatory operator who signed a post-1974 NBCWA. Unity 

was treated as a "related person" to pre-1974 signatories 

and at least one post-1974 signatory and it was assigned 

liability for miners who had worked for pre-1974 signatories 

because of that "related person" status. The Companies are 

in exactly the same position here. 

The Companies also argue that because the assignments 

were made pursuant to 9706(a)(3), the fact that they have 

related persons who signed 1974 and later NBCWAs is 

irrelevant because only the bargaining history of the Pre1974 Signatories can be considered in determining the 

constitutionality of the assignments. This argument also 

allows them to again claim to stand in the shoes of Eastern 

Enterprises. It is based upon a document in the record 

signed by a man named "Ray Worley." Worley writes: 

 The Coal Act does not permit us to impute a related 

 company’s signatory status to that of a signatory 

 operator; that is, a pre-1978 signatory cannot be 

 treated as a 1978 (or later) signatory simply because its 

 parent or "sister" company is a 1978 (or later) 

 signatory. 

App. at 178. In the Companies’ view, the Commissioner and 

the Combined Fund Trustees have violated this "policy" 

because they claim that the Commissioner’s and the 

Combined Fund Trustees’ theory that they are liable for the 

premiums of the miners employed by the Pre-1974 

Signatories effectively treats the Pre-1974 Signatories as if 

they were Post-1974 Signatories. That is, they have 

imputed the signatory status of the Post-1974 Signatories 

 22 

 

to the Pre-1974 Signatories. Moreover, the Companies 

argue this "imputation of signatory status" theory suggests 

that the assignments originally made were improper. In the 

Companies’ view, all miners who have been assigned under 

S 9706(a)(3), should have been assigned, or should be 

reassigned, under either SS 9706(a)(1) or (2) if the pre-1978 

operator who employed them had a related person who 

signed a 1978 or later NBCWA. 

We disagree. In the first place, the Companies have never 

claimed that the original assignments of the miners 

employed by the Pre-1974 Signatories were incorrect under 

the S 9706(a) statutory assignment scheme. 10 Second, we 

reject the Companies’ claim that Worley’s memo is an 

admission by the Commissioner that the signatory status of 

one related person cannot be imputed to another. Reply Br. 

at 10. The Companies do not identify Worley’s position with 

the Social Security Administration, they do not claim that 

Worley was speaking for the Commissioner and they do not 

tell us the purpose of Worley’s memo. Third, and perhaps 

most importantly, Worley’s memo appears to speak to the 

original assignment of beneficiaries procedures under 

S 9706(a). It does not appear to have anything to do with 

the related person provisions of the Act.11 Accordingly, the 
Companies’ "obligations must stand or fall regardless of 

how [it] was assigned the beneficiaries." Unity, at 655 n.2. 

Our rejection of the Companies’ attempt to analogize 

their circumstances to the facts in Eastern Enterprises does 

_________________________________________________________________ 

10. The Coal Act provides that if an assigned operator believes that 

beneficiaries have erroneously been assigned to it, the operator can 

obtain information about the beneficiaries from the Commissioner and 

seek review of the assignments. 20 C.F.R. S 9706(f); see also 20 C.F.R. 

SS 422.601-607. The burden is on the assigned operator to make out a 

prima facie case that the assignments were in error. See 20 C.F.R. 

S 422.605. If the Commissioner finds that the assignments were in error, 

he or she can declare them void and reassign the beneficiaries to the 

appropriate signatory operator or related person. 26 U.S.C. 

S 9706(f)(3)(A). If the Commissioner finds that the assignments are not in 

error, he or she must notify the assigned operator. The Commissioner’s 

determination is final. 26 U.S.C. S 9706(f)(3)(B). 

11. As we noted at the outset, the Companies are not challenging the 

constitutionality of the related person provisions. 

 23 

 

not end our inquiry. In Eastern, the plurality also noted 

that the Court’s prior decisions 

 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 the extent of that liability 

 is substantially disproportionate to the parties’ 

 experience. 

Eastern, at 528-529 (O’Connor, J.). In recognition of that 

possibility, and the possibility that "Eastern embodies 

principles capable of broader application," we required an 

additional level of substantive due process analysis to 

determine if the assignments to the Companies are 

constitutional as applied in Unity.12 178 F.3d at 659. That 

additional level of analysis measures "the extent of the gap 

between the coal companies’ contractual promises to the 

Funds and the requirements of the Coal Act." Id. 

In Unity, we stated that the standard of review when a 

due process violation is alleged "is forgiving; it bars only 

arbitrary and irrational congressional action." Id. In Unity 

we began our analysis with an extensive review of the 

available evidence. We noted that Congress’ findings in 

enacting the Coal Act that the coal industry had created a 

reasonable expectation that miners would have lifetime 

benefits, and that the coal companies were responsible for 

the deterioration of miners’ Benefit Plans, were"reasonable 

evaluations of the problem." Id. at 670. 

We next concluded that the Act’s retroactivity did not 

mean that the legislation was irrational or a violation of due 

process. Id. In reaching that conclusion we recognized that 
"[t]he heart of retroactivity analysis is an evaluation of the 

extent of the burden imposed by a retroactive law in 

_________________________________________________________________ 

12. While the Eastern Enterprise plurality’s cautionary note that 

legislation might be unconstitutional if it is severely retroactive and 

substantially disproportionate was made in the course of its Taking 

Clause analysis, the admonition is applicable to a substantive due 

process analysis because, as the plurality noted,"[o]ur analysis of 

legislation under the Takings and Due Process Clauses is correlated to 

some extent." 524 U.S. at 537 (plurality) (citing Connolly v. Pension 

Benefit Guaranty Corp., 475 U.S. 211, 223 (1986)). 

 24 

 

relation to the burdened parties’ prior acts[.]" We held that 

"[w]here Congress acts reasonably to redress an injury 

caused or to enforce an expectation created by a party, it 

can do so retroactively." Id. at 670, 671. In Unity, the 

period between the coal company’s contractual undertaking 

to pay for benefits to the date of the passing of the Coal Act 

was eleven years. Id. at 670.13 Although that period was 

"quite long," we concluded that it was "not so extensive as 

to violate Justice Kennedy’s standard, although Unity offers 

a close case." Id.14 Even though we concluded that the time 

frame was not unreasonably long, we were nonetheless 

aware of the considerable financial burden that can result 

from an assignment of liability under the Act.15 

Finally, we addressed the proportionality issue and found 

sufficient proportionality to sustain the constitutionality of 

the Act.16 That conclusion was, in large part, driven by the 

underlying conclusion that the burdens imposed under the 

Act are justified by the industry’s past conduct and the 

reasonable expectations of lifetime benefits it created. We 

further concluded that the industry’s conduct in creating a 

_________________________________________________________________ 

13. The Coal Act was passed in 1992 and South Union-WVA, Unity’s 

related person, last signed a NBCWA in 1981. 

14. In Unity, we relied on Justice Kennedy’s "explication of the relevant 

due process principles because the plurality did not reach Eastern’s due 

process claim." 178 F.3d at 670 n.13. 

15. Eastern Enterprises’ estimated liability was between $50 and $100 

million. 524 U.S. at 529. Unity alleged that its estimated Coal Act 

liabilities were over six times its total assets and that if the assignments 

were upheld, it would be bankrupted. 178 F.3d at 655. At the time 

Unity’s appeal was before us, Unity’s total payments were under $1 

million. Id. at 671. Significantly, the Companies do not contend that the 

assignments will force them into bankruptcy. In fact, they have not 

bothered to supply us with an estimate of their total potential liability. 

16. A statute will not violate substantive due process where the burden 

imposed is "proportional to the harm legitimately addressed by the 

legislature." Unity, at 671. A statute is not unconstitutional "if the 

liability actually imposed is not out of proportion to the claimant’s prior 

experience with the object of the legislation." Id. at 672. "Prior experience 
can consist of conduct that creates reasonable expectations about the 

object of the legislation or conduct that creates the problems that 

impelled the legislature to act." Id. 

 25 

 

benefit fund obligated to pay out more monies than the 

operators were required to provide, and the industry’s 

conduct in creating the problem of underfunding, was 

exacerbated by coal companies fleeing the coal industry to 

avoid further contributions to the fund. Id. at 673. 

Essentially, then, we reasoned that the Act was"Congress’ 

attempt to do equity." Id. at 672. Accordingly, we concluded 

that the Coal Act did not violate substantive due process. 

Congress was, after all, entitled to remedy the problems 

caused by the companies’ conduct. Given the importance of 

the coal industry, Congress could certainly respond to a 

benefits funding structure "vulnerable to ‘dumping’ retirees 

when companies left the industry." Id. at 673. The Coal Act 

"is targeted to address the problem of insufficient resources 

in the benefit funds and . . . it puts the burden on those 

who, in Congress’s reasonable judgment, should bear it." 

Id. at 674. 

At oral argument, counsel for the Companies stated that 

the Companies’ "related person" Post-1974 Signatories last 

signed NBCWAs in 1988. That is only four years from the 

time the Post-1974 Signatories’ contractual obligations to 

the Funds ceased as the effective date of the Act was 1992. 

That is significantly less time than the eleven years we 

found acceptable in Unity.17 Accordingly, we reject the 

Companies’ proportionality attack on the Commissioner’s 

assignments.18 

B. Can the Commissioner Make Original Assignments 

After October 1, 1993?19 

_________________________________________________________________ 

17. We also applied Unity’s due process analysis in Anker and found no 

retroactivity problems in the eight years between the time when Anker’s 

"related person," King Knob, last agreed in a"me too" agreement to be 

bound by an NBCWA and the passage of the Coal Act. Anker, 177 F.3d 

at 173. 

18. After this case was argued, the Supreme Court decided Barnhart v. 

Sigmon Coal Co., 534 U.S. 438 (2002). The issue for adjudication in 

Sigmon was a question of statutory construction centering on whether 

the Coal Act permits the Commissioner to assign retired miners to 

successors in interest of out-of-business signatory operators. It has no 

bearing on the issues presented here. 

19. The district court rejected the Companies’ argument that certain 

assignments should be voided because they were made after October 1, 

 26 

 

The Companies argue in the alternative that, even if the 

Commissioner’s assignments are constitutional, some of the 
assignments are nevertheless invalid because they were 

made on or after October 1, 1993.20,21 This argument is 

grounded upon 26 U.S.C. S 9706(a) which states that the 

Commissioner "shall, before October 1, 1993, 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. . . ." (emphasis 

added). The Companies contend that "shall" means "shall." 

Accordingly, argue the Companies, since Congress explicitly 

mandated the Commissioner to make all Coal Act 

assignments by a date certain, any initial assignments 

made after that October 1, 1993 are invalid.22 

The Companies’ position is supported by Dixie Fuel Co. v. 

Commissioner of Social Security, 171 F.3d 1052 (6th Cir. 

1999). There, the Court of Appeals for the Sixth Circuit held 

that the plain language of the statute, the statutory scheme 

for assigning beneficiaries and the legislative history all 

demonstrate that "the intent of Congress is clearly 

expressed in the statute. The October 1, 1993 date is a 

deadline." Id. at 1064. 

_________________________________________________________________ 

1993. The standard of review in cases of statutory construction is 

plenary. Pfeiffer v. Marion Center Area School District, 917 F.2d 779, 781 

(3d Cir. 1990). 

20. The Companies’ complaint acknowledges that the assignments to 

Stelco Coal and Shenango were made before October 1, 1993. App. at 

29, 31. Therefore, this portion of our analysis does not apply to either of 

those entities. 

21. The Supreme Court has granted certiorari in two cases on this same 

issue. Peabody Coal Co. v. Massanari, ___ F.3d ___, 2001 WL 857197 

(6th Cir. 2001), cert. granted by Barnhart v. Peabody Coal Co., ___ U.S. 

___, 122 S.Ct. 918 (2002)( No. 01-705), and Bellaire Corp. v. Massanari, 

___ F.3d ___, 2001 WL 856962 (6th Cir. 2001), cert. granted by Holland 

v. Bellaire Corp., ___ U.S. ___, 122 S.Ct. 918 (2002)(No. 01-715). 

22. The Companies "do not challenge the Commissioner’s authority to 

reassign miners after September 30, 1993, i.e., to take miners who were 

assigned incorrectly before September 30, 1993, and correctly reassign 

them after September 30, 1993 as provided for in Section 9706(f)(3)." 

Companies Br. at 23 n.4. 

 27 

 

Nevertheless, we disagree. We are persuaded by the 

analysis of the Court of Appeals for the Fourth Circuit in 

Holland v. Pardee Coal Co., 269 F.3d 424 (4th Cir. 2001). 

That is the only other case that has addressed the effect of 

the October 1, 1993 deadline, and we believe it is better 

reasoned than Dixie Fuel. In Pardee Coal , the Commissioner 

determined that Pardee was a signatory operator and 

assigned it premium liability for a number of retired miners 

and their spouses. Because several of the retired miners 

were assigned to Pardee after October 1, 1993, Pardee 

denied that it was liable to the Combined Fund for those 

premiums because they were made after the supposed 
statutory cut-off date. The district court agreed with Pardee 

and held that the post-October 1, 1993 assignments were 

void as a matter of law. However, applying "well-settled 

principles of statutory construction," the court of appeals 

examined the text of the Act, the context in which it was 

enacted, its structure and its legislative history, and found 

no indication of congressional intent to establish October 1, 

1993 as a "jurisdictional deadline, rendering void all 

beneficiary assignments made by the [Commissioner] after 

that date." 269 F.3d 437. Our inquiry leads us to the same 

result. 

Admittedly, "shall" is generally mandatory when used in 

a statute. See, e.g., United States v. Monsanto , 491 U.S. 

600, 607 (1989) ("Congress could not have chosen stronger 

words [than ‘shall order forfeiture’] to express its intent that 

forfeiture is mandatory. . . ."). However, a statutory 

deadline does not, by itself, establish that Congress 

intended to strip an agency’s authority to act after the 

deadline has passed. In Brock v. Pierce County , 476 U.S. 

253 (1986), the Court had to decide if Congress intended to 

prevent the Secretary of Labor from recovering misused 

funds under the Comprehensive Employment and Training 

Act ("CETA") after the expiration of a statutory deadline in 

that Act. The relevant provision of CETA stated that the 

Secretary "shall" issue a final determination regarding 

misuse of CETA funds within 120 days after receiving a 

complaint alleging misuse. Id. at 254-55. The Secretary 

disallowed Pierce County’s expenditure of approximately 

$500,000 of CETA funds after an investigation disclosed 

that the funds had not been used appropriately. The county 

 28 

 

challenged the Secretary’s determination in court alleging 

that the Secretary had no authority because his 

determination had been made after the 120 day period had 

expired. 

A unanimous Supreme Court disagreed. The Court held 

that "the mere use of the word ‘shall’ . . ., standing alone, 

is not enough to remove the Secretary’s power to act after 

120 days." Id. at 262. The Court was"most reluctant to 

conclude that every failure of an agency to observe a 

procedural requirement voids subsequent agency action, 

especially when important public rights are at stake." Id. at 

260. Rather, the Court concluded that "the normal indicia 

of congressional intent" should be used to determine 

whether an agency has authority to act despite the 

expiration of a statutory deadline. Therefore, we can not 

satisfactorily resolve that question by focusing upon a 

single word in a statute, even when that word appears to be 

as conclusive of congressional intent as "shall" appears to 

be. Id. at 262 n.9. 

We find the Court’s reasoning in United States v. James 

Daniel Good Real Property, 510 U.S. 43 (1993), dispositive 

here. There, the Court addressed, inter alia, the issue of 

whether a civil forfeiture action, filed within the statute of 
limitations, but without complying with other statutory 

timing directives, must be dismissed. In finding that the 

timing did not compel dismissal so long as the action was 

filed within the statute of limitations, the Court noted that 

"many statutory requisitions intended for the guide of 

officers in the conduct of business devolved upon them . . . 

do not limit their power or render its exercise in disregard 

of the requisitions ineffectual." Id. at 63 (quoting French v. 

Edwards, 80 U. S. (13 Wall.) 506, 511 (1872)). 

Consequently, "if a statute does not specify a consequence 

for noncompliance with statutory timing provisions, the 

federal courts will not in the ordinary course impose their 

own coercive sanction." 510 U. S. at 63 (citations omitted) 

(emphasis added). No such consequence is included in the 

Coal Act. 

Moreover, we addressed this issue of statutory 

interpretation in Southwestern Pennsylvania Growth 

Alliance v. Browner, 121 F.3d 106, 113-115 (3d Cir. 1997). 

 29 

 

We were there concerned with whether the Environmental 

Protection Agency’s failure to act on a Clean Air petition 

within the statutory time frame deprived the agency of 

authority to take action on the petition. Relying heavily on 

Brock v. Pierce County, we held that a statute stating that 

an agency "shall" complete action by a certain time does 

not divest the agency of jurisdiction to act unless there is 

some additional indication in the statute of a congressional 

intent to bar further agency action. 

Our review of the Coal Act discloses no further indication 

of congressional intent to deprive the Commissioner of the 

authority to make original assignments after October 1, 

1993. Congress’ failure to specify any consequences if the 

Secretary does not make assignments by the purported 

drop dead date is quite telling.23 Moreover, Brock v. Pierce 

County was decided six years before Congress passed the 

Coal Act. Accordingly, we must presume that Congress 

knew that its instruction that the Commissioner"shall" 

make assignments before October 1, 1993, would not by 

itself divest the Commissioner of jurisdiction to act after 

that date. See United States v. Wells, 519 U.S. 482, 485 

(1997) ("[W]e presume that Congress expects its statutes to 

be read in conformity with this Court’s precedents[.]"). 

Congress would have specified consequences for failing to 

assign by a drop dead date or explicitly stated that the 

Secretary’s authority to assign terminated after that date if 

Congress had intended to abruptly end the Secretary’s 

authority to make original assignments after October 1, 

1993. 

Congress has been this explicit in a number of other 

statutes. See, e.g., 42 U.S.C. S 1396n(h) (application for 

waiver of Medicaid requirements must be deemed approved 

if Secretary of Health and Human Services does not issue 

a decision within 90 days); 49 U.S.C. S 15910(c) (providing 

that Surface Transportation Board investigative proceeding 
is dismissed automatically if not concluded within three 

years). 

_________________________________________________________________ 

23. See In re TWA, 96 F.3d 687, 690 (3d Cir. 1996), referring to a 

statutory time bar in the Bankruptcy Code as a "drop dead date." 

 30 

 

The Companies argue that the Act does provide a 

consequence for not assigning a miner before October 1, 

1993 because after that date the miner becomes an 

"unassigned miner" and is placed in the orphan retiree 

pool. However, that is not enough to conclude that the 

Secretary no longer has authority to assign after October 1, 

1993. It is simply a safety net insuring that miners who are 

not assigned will not thereby be denied the benefits they 

are entitled to. We see no language in the Act, and the 

Companies direct us to none, that would forge a link 

between unassigned status and the Commissioner’s failure 

to complete the assignment process by October 1, 1993. 

In addition, the Act’s administrative review provisions 

suggest that Congress did not intend to limit the 

Commissioner’s authority to make assignments after 

October 1, 1993. The Coal Act gives coal companies the 

right to an administrative review of an assignment decision 

and further provides that if the Commissioner concludes 

that an initial decision was erroneous, the Commissioner 

must review the beneficiary’s record and reassign the miner 

accordingly. 26 U.S.C. S 9706(f)(3). Although a coal 

operator’s request for a review must be submitted to the 

Commissioner within a specified time frame, the Act does 

not impose any time limitations on the Commissioner’s 

review process.24 This strongly suggests that Congress 

expected that beneficiary reassignments would be made 

after October 1, 1993. However, if October 1, 1993 is the 

drop dead date the Companies claim, the Commissioner 

would have no authority to make a new assignment even 

though the initial assignment resulted from factual error, a 

misreading of the statute, or administrative misfeasance. 

Although it can be argued that the October 1, 1993 cutoff 

only applies to original assignments, not those made as a 

result of the administrative review process, nothing in the 

text of the Act allows us to draw such a distinction. 

_________________________________________________________________ 

24. An assigned operator may, within 30 days of receiving notice with 

respect to a particular beneficiary, request information as to his work 

history. See 26 U.S.C. S 9706(f)(1). After receiving the information, the 

assigned operator has an additional 30 days in which to request review 

of the assignment. See 26 U.S.C. S 9706(f)(2). 

 31 

 

In addition, we can infer no congressional intent to bar 

agency action after October 1, 1993, from the purpose and 

structure of the Coal Act. As we noted earlier, the Coal Act 
was enacted in 1992 "to ensure that retired coal miners 

and their dependents would continue to receive the health 

and death benefits they had been receiving since the 1940s 

pursuant to a series of collective bargaining agreements." 

Anker, at 163-64. The Act was bottomed on Congress’ 

explicit finding that 

 in order to secure the stability of interstate commerce, 

 it is 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. 

26 U.S.C. S 9701 note (emphasis added). Congress was 

attempting to "insure that every reasonable effort is made 

to locate a responsible party to provide the benefits before 

the costs are passed to other signatory companies which 

have never had any connection to the individual[.]" 138 

Cong. Rec. S17604 (daily ed. Oct. 8, 1992). Thus, the 

Conference Committee Report declared that the Act’s 

"overriding purpose is to find and designate a specific 

obligor for as many beneficiaries in the [Benefit] Plans as 

possible." Id. The conferees further stated their "inten[tion] 

that the largest possible number of beneficiaries in the 

[Benefit] Plans be assigned to a specific or designated 

company[,]" and "that the number of unassigned 

beneficiaries is kept to an absolute minimum." Id. at 

S17605. 

In short, the Coal Act’s key objective is to ensure that the 

costs of providing retirement benefits will, so far as 

possible, be borne by the private parties most responsible 

for creating retired miners’ expectations of lifetime health 

benefits. Consequently, the Act broadly imposes liability on 

original signatories and a broad class of related business 

entities. Cutting off the Commissioner’s authority to make 

assignments after October 1, 1993, would surely frustrate 

that objective. If the Commissioner cannot make 

assignments beyond that date, otherwise assignable 

beneficiaries would be retained in the orphan retiree pool 

 32 

 

and benefits would paid from federal funds. 30 U.S.C. 

S 1232(h) and 26 U.S.C. S 9705(b). Moreover, if those 

transfers are inadequate, orphan retiree costs will be 

imposed on other private parties through the imposition of 

the unassigned beneficiary premium. See 26 U.S.C. 

S 9704(d).25 Those other private parties would have no 

substantive connection or nexus to the unassigned 

beneficiary, and would certainly not be responsible for 

creating any expectation of lifetime benefits. 

Thus, reading "shall" to invalidate post-October 1, 1993 

assignments would eviscerate a program intended to 

impose funding burdens on the most responsible parties 

and shift funding burdens to the government or to other 

companies with no connection to the beneficiaries assigned 
to those companies. We are thus reminded of the situation 

in Brock v. Pierce County, where the Court was reluctant to 

find that a statutory deadline barred agency action because 

"public rights [were] at stake" and the"public fisc" was 

implicated. 476 U.S. at 260, 262. Such a result here would 

also result in a financial windfall to some operators at the 

expense of those operators whose assignments were 

completed before October 1, 1993 because the former 

would be relieved of paying for miners’ expectations that 

they or their related entities helped create. 

Finally, putting aside the intricacies of statutory 

interpretation and legislative history, we reach the same 

result by employing that all too often overlooked tool: 

practical common sense. Interpreting the October 1, 1993 

date as a cutoff results in a time frame that would make 

the action Congress required of the Commissioner 

impossible. It would thereby frustrate the very 

congressional purpose the Act sought to further. The Coal 

Act became law in October of 1992. The Commissioner 

therefore had to review the records of, and assign premium 

responsibility for, roughly 65,000 miners by October 1, 

1993. Holland v. Pardee Coal Co., 269 F.3d at 432 n.9. "To 

_________________________________________________________________ 

25. The government submits that these costs could amount to millions 

of dollars in additional liability. According to the government, nearly 

10,000 beneficiary assignments were made after October 1, 1993. 

Government’s Br. at 48. 

 33 

 

assign those miners, the agency had to search each miner’s 

records, and reconstruct his employment history, and then 

match that history against the lists of signatory coal 

operators." Id. This Gordian knot was significantly 

tightened by Congress’ failure to appropriate funds until 

July 2, 1993 -- less than 80 days before the statutory date 

of October 1, 1993. It would therefore have been as close to 

impossible as any administrative task can get for the 

Commissioner to complete the 65,000 by October 1, 1993. 

Accordingly, we cannot agree that the Commissioner was 

powerless to make original assignments after October 1, 

1993.26 Thus, as the Court stated in Regions Hosp. v. 

Shalala, 522 U.S. 448, 459 n.3 (1998), "The Secretary’s 

failure to meet the deadline, a not uncommon occurrence 

when heavy loads are thrust on administrators, does not 

mean that the official lacked power to act beyond it." 

_________________________________________________________________ 

26. The House Committee on Ways and Means, in a Committee Print 

issued on September 3, 1993, only four weeks before the effective date 

of the Coal Act reinforces this point. The Committee Print reads: 

 SSA anticipated that checking the [employment] records would be 

 very-time consuming. Most beneficiaries are associated with the 

 1950 Benefit Fund, and therefore with miners who retired before 

 1976. Social Security records are not computerized for work history 

 prior to 1978. Linking an individual’s work history to a specific 
 employer will thus require searching through microfilm records and 

 entering the information by hand into the computer system. 

 Preliminary estimates by the SSA suggest that it would take 

 approximately 150 work years just to retrieve the microfilm records. 

 This does not include the additional work involved in determining the 

 assignment to an employer. On a routine basis, SSA has 140 

 technicians specially trained to work with the microfilm records, 

 which are difficult to decipher. Extra resources would be needed to 

 complete the assignments by the October 1, 1993 target date. 

Financing UMWA Coal Miner "Orphan Retiree" Health Benefits, House 

Committee of Ways and Means (Sept. 3, 1993), at 64-65 (emphasis 

added). However, Congress did not appropriate any"extra resources" to 

the Commissioner between September 3, 1993 and October 1, 1993. 

Therefore, Congress could not possibly have intended that the 

Commissioner would complete the entire assignment process by October 

1, 1993. 

 34 

 

VI. 

Accordingly, for all of the above reasons, we will affirm 

the judgment of the district court.27 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

_________________________________________________________________ 

27. Because we have found that the Coal Act is constitutional as applied 

to the Companies, we need not address the Companies’ argument that 

the Commissioner’s refusal to revoke their assignments in the wake of 

Eastern Enterprises was arbitrary, capricious, an abuse of discretion or 

otherwise not in accordance with law in violation of the Administrative 

Procedure Act, 5 U.S.C. S 705(2)(A). In addition, because we have found 

that the Commissioner has the authority to make original assignments 

after October 1, 1993, we need not address the Companies’ argument 

that they are entitled to a refund of premiums they are paid. 

 35