1999 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

3-29-1999

Unity Real Estate Co v. Hudson

Precedential or Non-Precedential:

Docket 97-3234,97-3236

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Recommended Citation

"Unity Real Estate Co v. Hudson" (1999). 1999 Decisions. Paper 80.

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Volume 1 of 2 

Filed March 29, 1999 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

NOS. 97-3234 and 97-3236 

UNITY REAL ESTATE COMPANY, 

 Appellant No. 97-3234 

v. 

MARTY D. HUDSON; MICHAEL H. HOLLAND; THOMAS 

O. S. RAND; ELLIOTT A. SEGAL; CARLTON R. SICKLES; 

GAIL R. WILENSKY; WILLIAM P. HOPGOOD; TRUSTEES 

OF THE UNITED MINE WORKERS OF AMERICA 

COMBINED BENEFIT FUND; THOMAS F. CONNORS; 

ROBERTS WALLACE; TRUSTEES OF THE 1992 UNITED 

MINE WORKERS OF AMERICA BENEFIT PLAN; UNITED 

STATES OF AMERICA (Intervenor in District Court) 

 LTV Corporation (LTV), NACCO Industries, 

 Inc. (NACCO); Amicus Curiae 

BARNES AND TUCKER COMPANY, 

 Appellant No. 97-3236 

v. 

MARTY D. HUDSON, Trustee of the United Mine Workers

of America Combined Benefit Fund and Trustee of the

1992 United Mine Workers of America Benefit Plan; 

MICHAEL H. HOLLAND, Trustee of the United Mine 

Workers of America Combined Benefit Fund and Trustee 

of the 1992 United Mine Workers of America Benefit Plan; 

THOMAS O. S. RAND, Trustee of the United Mine 

Workers of America Combined Benefit Fund; ELLIOTT A. 

SEGAL, Trustee of the United Mine Workers of America 

Combined Benefit Fund; CARLTON R. SICKLES, Trustee 

of the United Mine Workers of America Combined Benefit 
Fund; GAIL R. WILENSKY, Trustee of the United Mine 

Workers of America Combined Benefit Fund; WILLIAM P. 

HOPGOOD, Trustee of the United Mine Workers of 

America Combined Benefit Fund; THOMAS F. CONNORS, 

Trustee of the 1992 United Mine Workers of America 

Benefit Plan; ROBERT G. WALLACE, Trustee of the 1992 

United Mine Workers of America Benefit Plan; UNITED

STATES OF AMERICA (Intervenor in the District Court) 

 LTV Corporation (LTV), NACCO Industries, 

 Inc. (NACCO); Amicus Curiae 

On Appeal From the United States District Court 

For the Western District of Pennsylvania 

(D.C. Civ. No. 93-cv-01802) 

District Judge: Honorable D. Brooks Smith 

Argued: November 20, 1998 

Before: BECKER, Chief Judge, ALDISERT and WEIS, 

Circuit Judges. 

(Filed March 29, 1999) 

 DAVID J. LAURENT, ESQUIRE 

 MICHAEL D. GLASS, ESQUIRE 

 Polito & Smock, P.C. 

 Suite 400 - Four Gateway Center 

 Pittsburgh, PA 15222-1207 

 ROBERT H. BORK, ESQUIRE 

 (ARGUED) 

 1150 17th Street, N.W. 

 Washington, DC 20036 

 Attorneys for Unity Real Estate Co. 

 2 
 FRANK W. HUNGER, ESQUIRE 

 Assistant Attorney General 

 LINDA L. KELLY, ESQUIRE 

 United States Attorney 

 DOUGLAS N. LETTER, ESQUIRE 

 EDWARD R. COHEN, ESQUIRE 

 (ARGUED) 

 SUSHMA SONI, ESQUIRE 

 Attorneys, Appellate Staff 

 Civil Division, Room 9014 

 United States Department of Justice 

 601 D Street, NW 

 Washington, DC 20530-0001 

 Counsel for the United States of 

 America 

 PETER BUSCEMI, ESQUIRE 

 (ARGUED) 

 JOHN MILLS BARR, ESQUIRE 

 MARGARET S. IZZO, ESQUIRE 

 Morgan, Lewis & Bockius LLP 

 1800 M Street, N.W. 

 Washington, DC 20036 

 DAVID W. ALLEN, ESQUIRE 

 Office of the General Counsel 

 UMWA Health and Retirement 

 Funds 

 4455 Connecticut Avenue, NW 

 Washington, DC 20008 

 JOHN R. MOONEY, ESQUIRE 

 MARILYN L. BAKER, ESQUIRE 

 Mooney, Green, Baker, Gibson & 

 Saindon, P.C. 

 1341 G Street, NW, Suite 700 

 Washington, DC 20005 

 3 
 RALPH A. FINIZIO, ESQUIRE 

 Houston, Harbaugh 

 Two Chatham Center, 12th Floor 

 Pittsburgh, PA 15219 

 Attorneys for UMWA Combined 

 Benefit Fund and Its Trustees and 

 UMWA 1992 Benefit Plan and its 

 Trustees 

 DONALD B. AYER, ESQUIRE 

 GREGORY B. KATSAS, ESQUIRE 

 (ARGUED) 

 Jones, Day, Reavis & Pogue 

 Metropolitan Square 

 1450 G Street, NW 

 Washington, DC 20005 

 Attorneys for Amici Curiae 

 The LTV Corporation and NACCO 

 Industries, Inc. 

OPINION OF THE COURT 

BECKER, Chief Judge. 

In Eastern Enterprises v. Apfel, 118 S. Ct. 2131 (1998), 

the Supreme Court held unconstitutional the portion of the 

1992 Coal Industry Retiree Health Benefit Act (Coal Act), 26 

U.S.C. SS 9701-9722 (1994 & Supp. II), that required 

former coal mine operators to pay for health benefits for 

retired miners and their dependents, as applied to a former 

operator who last signed a coal industry benefit agreement 

in 1964. In this case, we are asked to apply Eastern to 

former coal mine operators who were signatories to coal 

industry agreements in 1978 and thereafter. Eastern was 

decided by a sharply divided Court, and the parties

disagree as to what, if any, principles commanded a

majority. 

The plaintiffs, Unity Real Estate ("Unity") and Barnes & 

Tucker Co. ("B&T"), challenge the Coal Act as applied to 

them as both a violation of substantive due process and an 

 4 
unconstitutional uncompensated taking. Although it is an 

exceedingly close question, and we are highly sympathetic 

to plaintiffs' unfortunate situation, in which retroactively 

imposed liability operates to bind them to commitments 

they had thought satisfied when they left the coal industry, 

we conclude that the Act is constitutional as applied to 

these plaintiffs. Accordingly, their recourse must be to 

Congress rather than to the courts. 

First, we conclude, albeit with substantial hesitation, 

that the Coal Act does not violate due process. Our due 

process inquiry proceeds in two parts. We acknowledge at 

the outset that there is a gap between what the contracts 

between the union and the mining companies required and 

what the Coal Act now mandates from those former mining 

companies. Because this is a substantive due process 

challenge, we accord deference to Congress's judgments, 

based on the report and recommendations of the Coal

Commission. While reasonable minds could differ on the 

point, we are satisfied that the agreements signed by the 

plaintiffs in 1978 and thereafter promised that miners and 

their dependents would receive lifetime benefits from the 

benefit funds, and that, at all events, these agreements 

informed reasonable expectations that the benefits would 

continue for life. Similarly, we conclude that it was 

reasonable for Congress to conclude that the plaintiffs' 

withdrawal from the funds contributed to the funds'

financial instability, though the agreements themselves 

permitted withdrawal. The history of coal mining in this 

country also supports Congress's decision to step in when 

the funds that provided health benefits to retired miners 

began to falter. 

The question we must then answer is whether those 

congressional judgments provide enough of a rationale for 

closing the gap between the contracts and the needs of the 

benefit funds through the mechanism of the Coal Act. 

Consistent with our due process jurisprudence, we ask 

whether the Coal Act was a rational response to the

problems Congress identified, taking into account the Act's 

retroactivity, which is highly disfavored in our legal culture. 

In light of Congress's findings and in the context of 

extensive government regulation of the coal industry, we 

 5 
hold that it was not fundamentally unfair or unjust for 

Congress to conclude that the former coal companies

should be responsible for paying for such benefits, even if 

they were no longer contractually obligated to pay into the 

benefit funds. The retroactive scope of this enactment, 

especially as applied to plaintiff Unity (eleven years), 

approaches the edge of permissible legislative action, but 

we cannot say that the law is beyond the legislative power. 

We also decline to find a compensable taking on the

ground that the Coal Act will put the plaintiffs out of 

business, because it is contrary to the reasoning of a 

majority of the Supreme Court in Eastern. Moreover,

granting relief whenever a plaintiff could credibly argue that 

it would be driven out of business by a regulation would 

create major difficulties in evaluating the constitutionality 

of much modern legislation. We therefore decline to

construe this regulatory burden as a "categorical taking" 

analogous to the total destruction of the value of a specific 

piece of real property. 

I. Facts and Procedural History 

A. History of the Coal Act 

1. Early Agreements in the Coal Industry 

The history behind the Coal Act has often been discussed 

in the pages of the federal reporters. See, e.g. , Eastern, 118 

S. Ct. at 2137-42 (plurality). Briefly, the relevant facts are 

as follows: The coal industry has witnessed a series of 

particularly vitriolic labor disputes over the past halfcentury. In 1946, motivated principally by miners' demands 

for decent health and retirement benefits, the United Mine 

Workers of America ("UMWA") called a nationwide strike. To 

forestall industrial paralysis, President Truman nationalized 

the coal mines. Following the execution of what came to be 

known as the Krug-Lewis Agreement, the government 

relinquished control of the mines. The UMWA and the

Bituminous Coal Operators' Association ("BCOA"), a 

multiemployer group of coal producers, then executed the 

first National Bituminous Coal Wage Agreement ("NBCWA"). 

The 1947 NBCWA specified terms and conditions of 

employment in the mines and, among other things, 

 6 
extended the Krug-Lewis Agreement by providing health 

and pension benefits to miners. 

A new NBCWA signed in 1950 provided that, in exchange 

for union concessions, the BCOA would create a welfare 

and retirement fund financed by a per ton levy on coal 

mined by signatory coal producers. The 1950 Fund was 

designed to receive employer contributions and to use the 

funds to provide health benefits to current and retired 

miners (and, in certain cases, to family members). Several 

more NBCWAs were signed over the next two decades. None 

of them altered this basic benefits format, although 

beginning in 1971 the UMWA and the BCOA were given 

power over the levels of benefits provided under the 1950 

Fund, removing discretion formerly vested in the Trustees 

of the Fund. See In re Chateaugay Corp., 53 F.3d 478, 482 

(2d Cir. 1995). 

2. The 1974 Agreement 

In 1974, demographic changes that had increased the

cost of benefits, along with the passage of the Employee 

Retirement Income Security Act ("ERISA"), 29 U.S.C. S 1001 

et seq., led to a restructuring of the 1950 Fund. In its 

place, the 1974 NBCWA established four separate 

multiemployer plans, two covering pension benefits and two 

dealing with nonpension benefits. The nonpension entities 

were the 1950 Benefit Plan, which provided health benefits 

to coal workers who retired before 1976, and the 1974 

Benefit Plan, which covered those who retired on or after 

January 1, 1976. The 1974 NBCWA explicitly guaranteed 

that miners and their dependents would retain their health 

services cards--which gave them access to Plan health 

benefits--"for life." No such express warranty had appeared 

in any earlier agreement. We will discuss these changes in 

more detail below. See infra Part III. 

3. The 1978 Agreement 

In response to continued labor unrest and unresolved 

concerns over benefits, the 1978 NBCWA incorporated a 

new provision assuring health care for "orphaned" miners 

(that is, miners whose employers had abandoned either the 

coal industry or the UMWA), together with complementary 

"guarantee" and "evergreen" provisions. The "guarantee" 

 7 
clause obligated signatories to make sufficient 

contributions to maintain benefits at the negotiated levels 

during the period of agreement, whereas before there had 

been no promise to maintain any particular benefit level. 

The "evergreen" clause required signatories who continued 

to mine coal to continue making benefit contributions for as 

long as such contributions were required by future 

NBCWAs, regardless of whether a particular operator

actually signed those subsequent NBCWAs. Additionally, 

the 1978 NBCWA for the first time defined specific health 

benefits that would be covered, a practice that continued in 

later agreements. Finally, for miners leaving covered service 

on or after January 1, 1976, primary responsibility for 

retiree health care coverage was shifted from the UMWA 

multiemployer system to individual coal companies, with 

the 1974 Plan retained as an "orphan" plan for retirees 

whose former employers went out of business. 

4. The Coal Commission 

The economic problems that prompted the remedial 

measures in the 1974 and 1978 NBCWAs continued to 

plague the industry. In particular, the cost of health care 

rose steeply throughout the 1980s, the number of orphaned 

miners increased dramatically as more and more employers 

left the industry, and an aging population swelled the 

retired miners' ranks. By 1990, contributions from a 

shrinking number of coal producers proved insufficient to 

fund the four benefit plans, and those plans were awash in 

red ink. 

The UMWA struck the Pittston Coal Company for nearly 

11 months in 1989-90. The Secretary of Labor intervened, 

brokered a rapprochement, and, as part of the negotiated 

settlement, set up a commission to study the industry's 

problems and recommend ways of rejuvenating the benefit 

plans. The Coal Commission issued its report in late 1990. 

Congress's response to the commission's suggestions took 

the form of the Coal Act. The Act folded the 1950 and 1974 

Plans into a single UMWA-sponsored entity (the Combined 

Fund) and wove an elaborate tapestry designed to ensure 

that all retirees who were eligible to receive health benefits 

from the preexisting Plans would obtain them from the 

Combined Fund. The Act also created the 1992 Plan, which 

 8 
was designed to provide benefits to eligible retirees and 

their dependents who were not beneficiaries of the 

Combined Fund and who were not receiving health care 

coverage directly from former employers. 

The linchpin of the statutory scheme is contained in 

section 9706 of the Coal Act, which directs the assignment 

by the Social Security Commissioner of every eligible 

beneficiary to a "signatory operator" who is still "in 

business." The signatory operator ("SO") must have signed 

at least one NBCWA and must pay premiums to the 

Combined Fund sufficient to defray the estimated 

annualized health care costs for its assigned beneficiaries. 

See 26 U.S.C. S 9704.1 A retired miner is assigned first, if 

possible, to the SO that both signed the 1978 (or any 

subsequent) NBCWA and also employed him for at least two 

years more recently than any other SO. See id. S 9706(a)(1). 

If no SO fits that description, the retired miner is assigned 

to the 1978 (or any subsequent) SO that employed him 

most recently for any length of time. See id. S 9706(a)(2). If 

the retired miner never worked for a 1978 or subsequent 

SO that is still in business, he is assigned to the SO that 

employed him for the longest period of time. See id. 

S 9706(a)(3). 

B. The Parties 

1. Unity 

Unity is a corporation owned by members of the Jamison 

family. Unity is covered by the Coal Act as a "related 

person" to several companies--formed by members of the 

Jamison family--that were ultimately absorbed into Unity. 

One, South Union-PA, had been mining coal since 1923 

and signed the 1947 NBCWA and amendments thereto 

through 1961. South Union-WVA, which took up mining

when South Union-PA left off, signed the 1974, 1978, and 

1981 NBCWAs, although a bankruptcy court granted it

_________________________________________________________________ 

1. The law also provides that SOs must pay an additional amount, 

proportional to the number of initial assignments, to provide coverage for 

orphaned retirees. However, it has apparently not proven necessary to 

assign SOs responsibility for orphaned retirees because of the 

availability 

of other funding sources. See Eastern, 118 S. Ct. at 2142 n.3 (plurality). 

 9 
leave to reject the 1981 NBCWA in 1981. Yet another

Jamison company, Stewart Coal & Coke Co., paid into the 

UMWA benefit funds from 1949 to 1958; when it ceased 

operations, it stopped paying into the benefit funds, but its 

former employees continued to receive benefits from the 

Funds. Other related companies signed NBCWAs and paid 

into UMWA benefit funds at various times from the 1960s 

through the 1970s.2 

Unity currently owns a small commercial building and 

parking lot in Greensburg, Pennsylvania and employs two 

individuals, a corporate officer who earns $7,000 per year 

and a janitor. Its annual gross revenues are approximately 

$50,000 and its net worth is approximately $85,000. Unity 

was assigned 74 beneficiaries of the Combined Fund and 

owed the Fund, as of September 30, 1995, over $440,000 

in unpaid premiums. In addition, Unity was assigned 2 

beneficiaries of the 1992 Plan and, as of January 31, 1996, 

owed that Fund over $18,000. The assignment was based 

upon Unity's prior employment of 63 miners, who had

worked for Unity and its related companies, on average, for 

ten years.3 Unity represents that its Coal Act liabilities are 

over six times its total assets and that, if forced to pay, it 

will be bankrupted. These representations are not disputed 

by the Trustees. 

2. B&T 

B&T was assigned 1544 Combined Fund beneficiaries 

and some twenty 1992 Plan beneficiaries. B&T had been, 

_________________________________________________________________ 

2. While attempting to distance itself from liability, Unity and its 

owners 

have not ignored the benefits of close corporate relationships. Although 

we do not suggest that it acted with bad faith, we note that Unity repaid 

the Jamison family over $230,000 from promissory notes given by 

Stewart Coal & Coke, which merged with Unity in 1969 (over $150,000 

on those notes was paid in 1992 and 1993), and that Unity sheltered 

$288,000 in income from federal income tax because of net operating 

loss carryover from South Union-WVA's bankruptcy. At all events, Unity 

has never presented any legal challenge to the "related persons" 

provision of the Act, and hence its obligations must stand or fall 

regardless of how Unity was assigned the beneficiaries. 

3. Thirty miners had worked for the companies for more than ten years 

and thirteen for more than fifteen years. 

 10 
from 1905 on, engaged in large scale coal production until 

closing its last mining operation in 1986. It terminated an 

agreement to manage a mine effective January 1, 1987. At 

the peak of its coal mining operations from the 1970s to the 

1980s, B&T employed approximately 1100 UMWArepresented miners. B&T was a party to the 1971, 1974, 

1978, and 1981 NBCWAs through its membership in the

coal operators' association. Although it withdrew from the 

association prior to the 1984 NBCWA, it later agreed to be 

bound by that NBCWA on a "me-too" basis, adhering to the 

Agreement's requirements. Its participation in the NBCWA 

terminated in 1988. At that time, B&T discontinued its 

individual employer plan and its retirees were left to be 

covered by the 1974 Benefit Plan (the "orphan" plan). 

B&T's activities are currently confined to leasing its coal 

reserves, paying workers' compensation and black lung 

claims, and treating acid mine drainage from its closed 

mines. B&T claims that if it is forced to continue paying its 

Coal Act liabilities, all of its assets will be consumed in less 

than two years, and this is not in dispute. 

C. Procedural History 

The plaintiffs challenge the constitutionality of the Coal 

Act as it applies to them (S 9706(a)(1) & (2)). Both moved for 

preliminary injunctions to prevent the Trustees of the funds 

to which the plaintiffs are required to pay under the Coal 

Act from enforcing the Coal Act against them during the 

pendency of these cases. B&T withdrew its motion for a 

preliminary injunction, and the District Court granted 

Unity's motion for a preliminary injunction. The court 

rejected Unity's Due Process Clause argument but granted 

the requested interim relief on Takings Clause grounds. See 

Unity Real Estate Co. v. Hudson, 889 F. Supp. 818 (W.D. 

Pa. 1995). All parties moved for summary judgment. The 

District Court, reconsidering its views of the merits, granted 

the defendants' motions for summary judgment and denied 

Unity's and B&T's motions for summary judgment. Unity 

and B&T appeal. 

 11 
II. The Eastern Decision 

A. The Rationales 

Eastern Enterprises was involved in coal mining until 

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

was assigned liability for over 1000 miners, based on 

Eastern's status as the pre-1978 signatory for whom the 

miners had worked for the longest period of time; its total 

liability was estimated to be between $50 and $100 million. 

Eastern sued, claiming that the Coal Act was 

unconsititutional. 

Four Justices concluded that the Act was a compensable 

taking as to Eastern. In practical terms, this meant that the 

Act was unconstitutional: Compensation for the taking 

would be the return of sums required to be paid by the Act. 

Although the law did not work a physical invasion, the 

plurality noted that economic regulation can constitute a 

taking. See Eastern, 118 S. Ct. at 2146 (plurality). The 

plurality looked to three factors of particular significance in 

determining whether a taking had occurred: the economic 

impact of the regulation, its interference with reasonable 

investment-backed expectations, and the retroactive

character of the government action. See id. (plurality). 

The plurality examined several previous cases to set the 

stage for its analysis. It looked to Usery v. Turner Elkhorn 

Mining Co., 428 U.S. 1 (1976), where the Court upheld 

provisions of the Black Lung Benefits Act, which required 

coal operators to compensate miners and their survivors for 

death or disability due to mining-related black lung 

disease. The Eastern plurality explained that Usery upheld 

that law because, even though "stricter limits may apply to 

Congress' authority when legislation operates in a 

retroactive manner," holding the companies liable for black 

lung benefits was justified as a rational measure to spread 

the costs of black lung to companies that profited from the 

miners' labor. Eastern, 118 S. Ct. at 2147 (plurality). 

Next, the plurality considered Pension Benefit Guaranty 

Corp. v. R.A. Gray & Co., 467 U.S. 717 (1984), where the 

Court upheld the Multiemployer Pension Plan Amendments 

Act (MPPAA), which was enacted to supplement ERISA.

ERISA had created the Pension Benefit Guaranty 

 12 
Corporation to exercise discretionary authority to pay 

benefits when a multiemployer pension plan terminated. 

The Corporation also had authority to require employers 

who had contributed to the plan during the five years 

before its termination to pay for an amount proportional to 

their share of contributions to the plan during thatfiveyear period. As ERISA's effective date approached, many 

multiemployer pension plans were in a precarious position, 

and so Congress enacted the MPPAA, which imposed a 

payment obligation upon any employer withdrawing from 

such plans. The obligation depended on the employer's 

share of the plan's unfunded vested benefits. 

The MPPAA applied retroactively to withdrawals within 

the five months preceding its enactment. The Eastern 

plurality explained that the Court upheld the MPPAA

because retroactive liability prevented employers from 

taking advantage of a lengthy legislative process by 

withdrawing before Congress revised the law. The 

retroactivity in Gray, the Eastern plurality emphasized, was 

short, and limited to the needs generated by the delays 

inherent in the legislative process. See Eastern, 118 S. Ct. 

at 2147 (plurality). 

The plurality then reviewed Connolly v. Pension Benefit 

Guaranty Corp., 475 U.S. 211 (1986), where the MPPAA 

was again at issue, this time as the subject of a takings 

challenge. The Eastern Court explained that Connolly 

upheld the law despite the employers' expectations that 

they would not have to pay, because "legislation is not 

unlawful solely because it upsets otherwise settled

expectations." Eastern, 118 S. Ct. at 2148 (plurality). Even 

though the employers in Connolly had contractual 

agreements expressly limiting their contributions to the 

pension plan, the Court held that their express contracts 

could not impair Congress's authority. See Connolly, 475 

U.S. at 223-24. The Connolly Court noted that the MPPAA 

did not work a physical invasion. Although the economic 

impact of the law was substantial, the amount was directly 

related to the previous relationship between the employer 

and its pension plan, and therefore the economic impact 

factor did not establish that a taking had occurred. See id. 

at 225. Moreover, there was no interference with reasonable 

 13 
investment-backed expectations, because at the time the 

MPPAA was enacted, prudent employers had notice that 

pension plans were regulated and that withdrawal might 

trigger additional financial obligations. See id. at 227. 

The third time was not the charm for the MPPAA's 

challengers in Concrete Pipe & Products, Inc. v. Construction 

Laborers Pension Trust, 508 U.S. 602 (1993). In that case, 

the employer focused on the fact that its contractual 

commitment to its pension plan did not impose withdrawal 

liability. The Court rejected the claim that the contract 

made a difference and reiterated its holding that there was 

no taking as long as an employer's liability would generally 

not be " `out of proportion to its experience with the plan.' " 

Id. at 645 (quoting Connolly, 475 U.S. at 226). Although the 

employer's liability under the MPPAA exceeded ERISA's 

original cap on withdrawal liability, the Court found "no 

reasonable basis to expect that [ERISA's] legal ceiling would 

never be lifted." Id. at 646. The employer voluntarily 

negotiated a plan within ERISA's scope, making its burden 

under the MPPAA neither unfair nor unjust. See id. at 646- 

47. 

The Eastern plurality summarized this line of cases as 

follows: 

 Our opinions in Turner Elkhorn, Connolly, and Concrete 

 Pipe[ ] make clear that Congress has considerable 

 leeway to fashion economic legislation, including the 

 power to affect contractual commitments between 

 private parties. Congress also may impose retroactive 

 liability to some degree, particularly where it is 

 "confined to short and limited periods required by the 

 practicalities of producing national legislation." 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. 

Eastern, 118 S. Ct. at 2149 (plurality) (citation omitted). 

The plurality held that the Coal Act, as applied to Eastern, 

presented such an extreme case. 

 14 
On the economic impact factor of the takings test, the 

plurality found "no doubt that the Coal Act has forced a 

considerable financial burden upon Eastern," between $50 

and $100 million. Id. (plurality). The plurality referred to 

previous cases requiring that liability be proportional to a 

party's experience with the object of the challenged 

legislation. In the pension plan cases, the parties had 

voluntarily negotiated and maintained pension plans, at 

least for a while, and consequently their statutorily imposed 

liability was linked to their own conduct. See id. at 2149-50 

(plurality). Eastern did not participate in the negotiations 

for the 1974 or subsequent NBCWAs, nor did it agree to 

make contributions thereunder. "[The 1974, 1978, and 

subsequent agreements] first suggest an industry 

commitment to the funding of lifetime health benefits for 

both retirees and their family members." Id. at 2150 

(plurality). 

The plurality then concluded that the Coal Act 

substantially interfered with Eastern's reasonable 

investment-backed expectations. See id. at 2151 (plurality). 

It reasoned that retroactivity is generally disfavored in the 

law, and that the length of the period of retroactivity and 

the extent of Eastern's liability raised substantial questions 

of fairness. See id. at 2152 (plurality). Finally, the plurality 

found the nature of the government action to be quite 

unusual, because the liability imposed was substantial, 

based on conduct thirty to fifty years in the past, and 

unrelated to any commitment Eastern made or injury it 

caused. See id. at 2153 (plurality). 

The plurality declined to reach Eastern's substantive due 

process argument, although it noted that takings and due 

process analyses are often correlated. See id. (plurality); see 

also Connolly, 475 U.S. at 223. The plurality reiterated the 

Court's past concerns about using the "vague contours" of 

the due process clause to nullify laws. Eastern, 118 S. Ct. 

at 2153 (plurality) (citation omitted). Justice Thomas agreed 

with the plurality's Takings Clause analysis but wrote 

separately to reaffirm his belief that the Ex Post Facto 

Clause would also apply to Eastern's predicament. See id. 

at 2154 (Thomas, J., concurring). 

 15 
Justice Kennedy concurred in the judgment, providing 

the critical fifth vote to strike the law down as applied to 

Eastern. He found takings analysis inapplicable: "The Coal 

Act imposes a staggering financial burden on the petitioner 

. . . but it regulates the former mine owner without regard 

to property. It does not operate upon or alter an identified 

property interest, and it is not applicable to or measured by 

a property interest." Id. at 2154 (Kennedy, J., concurring). 

Instead, he emphasized the law's distaste for retroactivity 

and found that the Coal Act's extreme retroactivity violated 

due process as applied to Eastern. See id. at 2158-59 

(Kennedy, J., concurring). When the Court upheld 

retroactive legislation in the past, he noted, the statutes at 

issue were "remedial, designed to impose an actual,

measurable cost of [the employer's] business which the 

employer had been able to avoid in the past." Id. at 2159 

(Kennedy, J., concurring) (citation and internal quotation 

marks omitted) (alteration in original). Justice Kennedy 

concluded that "[s]tatutes may be invalidated on due 

process grounds only under the most egregious of 

circumstances. This case represents one of the rare

instances in which even such a permissive standard has 

been violated." Id. (Kennedy, J., concurring). 

Four Justices dissented, finding neither a taking nor a 

due process violation. 

B. Drawing Instruction from Eastern: Does It Control This 

Case? 

The splintered nature of the Court makes it difficult to 

distill a guiding principle from Eastern. There are five votes 

against the plurality's Takings Clause analysis. However, 

Justice Kennedy's substantive due process reasoning is not 

a "narrower" ground that we might take to constitute the 

controlling holding. There is a fundamental conceptual 

difference between a takings claim and a substantive due 

process claim. If the government pays just compensation, it 

may take property for public use under the Takings Clause. 

Due process protections, by contrast, define what the 

government may not require of a private party at all. It is 

the difference between a liability rule and a property rule. 

See Guido Calabresi & A. Douglas Melamed, Property Rules, 

Liability Rules, and Inalienability: One View of the 

 16 
Cathedral, 85 Harv. L. Rev. 1089 (1972); Thomas W. 

Merrill, The Economics of Public Use, 72 Cornell L. Rev. 61, 

66 (1986). To be sure, in this case the result of the two 

claims would be the same because the only potential taking 

is the imposition of a monetary obligation, but neither 

constitutional ground is a more limited version of the other. 

Amici, other former coal companies, submit that the

holding of Eastern is that employee benefits funding 

legislation is unconstitutional if it imposes substantial 

retroactive liability on selected employers, and if that 

liability is unrelated to injuries caused or promises made by 

those employers. While this may be reasonably accurate in 

a general sense, it does not provide guidance for 

determining how substantial is too substantial or how tight 

the fit between parties' past acts and the liability imposed 

on them must be. Nor does it help define an intersection 

between substantive due process and takings law, as the 

word "unconstitutional" is here being used to cover, if not 

a multitude of sins, at least two. 

Eastern, therefore, 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. See Association of 

Bituminous Contractors, Inc. v. Apfel, 156 F.3d 1246, 1254- 

55 (D.C. Cir. 1998) [ABC, Inc.] (reaching the same 

conclusion about Eastern). In addition, we are bound to 

follow the five-four vote against the takings claim in 

Eastern, although we will consider plaintiffs'"categorical 

takings" claim, not presented in Eastern, in greater detail 

infra Part IV. 

Because 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 supports our conclusion. See Eastern, 118 S. Ct. at 

2150 (plurality) ([The 1974, 1978, and subsequent 

agreements] first suggest an industry commitment to the 

funding of lifetime health benefits for both retirees and 

their family members."); id. at 2159 (Kennedy, J., 

concurring); see also id. at 2161 (Stevens, J., dissenting) 

(stating that the miners' and operators' "implicit agreement 

 17 
was made explicit in 1974"). Although we recognize that the 

Court was not presented with argument focused on post1978 signatories and thus may not have had before it all 

the available evidence about later contracts, that very 

distinction compels the conclusion that Eastern is not on 

all fours with the case before us. 

To the extent that Eastern embodies principles capable of 

broader application, we believe that due process analysis 

encompasses the relevant concerns. We must identify a set 

of calipers with which to evaluate the challenged provisions 

of the Coal Act, and we believe that the relevant 

measurement is the extent of the gap between the coal 

companies' contractual promises to the Funds and the 

requirements of the Coal Act. In making our decision, we 

first give deference to Congress's determination of the 

problem to be addressed, and then ask whether Congress's 

solution comports with fundamental principles of due 

process. 

III. Retroactivity and Due Process 

A. The Standard of Review 

The standard of review when a substantive due process 

violation is alleged is forgiving; it bars only arbitrary and 

irrational congressional action. At the same time, our legal 

system has a long-standing and well-justified distaste for 

retroactive laws, because of their heightened potential for 

unfairness. See, e.g., Eastern, 118 S. Ct. at 2158 (Kennedy, 

J., concurring) (discussing our "singular distrust of 

retroactive statutes"); Bowen v. Georgetown Univ. Hosp., 

488 U.S. 204, 208 (1988). 

The situation is not unlike that faced in Turner 

Broadcasting System, Inc. v. Federal Communications

Commission, 117 S. Ct. 1174 (1997). In Turner, a case 

involving a First Amendment challenge to Congress's

regulation of cable systems, the Court applied intermediate 

scrutiny and required substantial evidence justifying 

Congress's conclusion that regulation was necessary, but 

nonetheless emphasized the importance of deference to 

Congress: 

 18 
 Our sole obligation is "to assure that, in formulating its 

 judgments, Congress has drawn reasonable inferences 

 based on substantial evidence." . . . [S]ubstantiality is 

 to be measured in this context by a standard more 

 deferential than we accord to judgments of an 

 administrative agency. We owe Congress' findings 

 deference in part because the institution "is far better 

 equipped than the judiciary to `amass and evaluate the 

 vast amounts of data' bearing upon" legislative 

 questions. This principle has special significance in 

 cases, like this one, involving congressional judgments 

 concerning regulatory schemes of inherent complexity 

 and assessments about the likely interaction of 

 industries undergoing rapid economic and 

 technological change. Though different in degree, the 

 deference to Congress is in one respect akin to 

 deference owed to administrative agencies because of 

 their expertise. This is not the sum of the matter, 

 however. We owe Congress' findings an additional 

 measure of deference out of respect for its authority to 

 exercise the legislative power. Even in the realm of 

 First Amendment questions where Congress must base 

 its conclusions upon substantial evidence, deference 

 must be accorded to its findings as to the harm to be 

 avoided and to the remedial measures adopted for that 

 end, lest we infringe on traditional legislative authority 

 to make predictive judgments when enacting 

 nationwide regulatory policy. 

Id. at 1189 (citations omitted). 

While we are not applying a First Amendment test to this 

due process claim, we consider Turner instructive in a 

situation such as this, where both careful scrutiny of the 

retroactivity involved and deference to the legislature's 

judgments about cognizable harms and appropriate 

remedies are in order. We must decide whether sufficient 

evidence exists to support Congress's judgment that post1978 signatories of NBCWAs could justly be charged with 

responsibility for retirees' health benefits, based on the 

promises they made to coal miners and on the effects of 

their departure from the industry on the Funds. See also 

Concrete Pipe, 508 U.S. at 639 (Congress's judgment

 19 
receives deference even when its retroactive solution to a 

problem has some weaknesses). We will then evaluate

whether it was rational for Congress to legislate to close the 

gap between the coal companies' promises and their 

contractual obligations, taking into account the retroactivity 

of the law. 

B. Does the Evidence Support Congress's Conclusion that 

the Coal Companies Should Be Held Responsible? 

1. The Relationship Between Benefits and Work 

Performed by Miners 

Before we address the problems occasioned by the mass 

departure of coal companies from the industry in the 1980s 

and the expectations created by the NBCWAs, we mustfirst 

dispose of the plaintiffs' argument that the Coal Act is 

unjustified because it charges them with financial 

responsibility for non-coal-mining-related health problems.4 

The plaintiffs submit that their liability is 

disproportionate to their actual responsibility because they 

are required to pay for miners' dependents and for all 

health conditions, however unrelated to mining work. Thus, 

they conclude, their liability does not depend in any 

rational way on benefits they received from the miners' 

work in the mines. That the company may be responsible 

_________________________________________________________________ 

4. The plaintiffs further argue that there is no reasonable relationship 

between their potential liability and the former employment 

relationships; they are responsible for the miners' dependents even if the 

miners only worked for them a day. This argument is skewed. In fact, 

the miners for which the plaintiffs are responsible worked for the 

plaintiffs, on average, for many years. There is no evidence in the record 

to suggest that the plaintiffs' hypothetical ever occurred; instead, the 

evidence indicates that Congress correctly found that many beneficiaries 

were entitled to benefits based on miners' long years of service with 

particular companies. Furthermore, one day of work would not qualify a 

miner for benefits under the statute, since a miner must work for twenty 

years in the industry or be disabled in the course of employment to 

qualify for benefits. See 26 U.S.C. S 9703(f); In re Chateaugay, 53 F.3d 

at 489. In combination with the statutory scheme of assigning 

beneficiaries to the SO for whom a covered miner worked longest, this 

initial eligibility requirement guards against the disquieting result 

posited by the plaintiffs. 

 20 
for a miner's entire family does not make the burden 

unrelated to past benefits, however. While it is true that a 

miner's virility may have little to do with his productivity, 

the post-1978 agreements clearly provided for family 

coverage; when those agreements were signed, the 

companies could predict, with some actuarial reliability, 

their responsibilities for family benefits. Coverage for 

dependents was the price of labor peace, and the 

companies received a benefit from the promise of that 

coverage. See Nobel, 720 F. Supp. at 1178. 

Proportionality does not require that the burdened 

parties have physically injured the beneficiaries of a 

retroactive law. The Eastern plurality relied on a 

concatenation of circumstances to find a lack of 

proportionality: First, the benefits were not related to workrelated injuries, and, second, the benefits were not related 

to anything Eastern Enterprises ever promised. In Usery, 

the black lung benefit case, only the first factor was present 

and the law was upheld as proportional, while in Connolly 

only the second factor was present and the law was also 

upheld. Those cases demonstrate that the necessary 

proportionality may be of either type, and there is no need 

for both to be present. The argument to the contrary limits 

the coal companies' responsibility for their past actions to 

physical events. It makes more sense to recognize the 

relevance of the companies' promises and negotiations with 

the miners, especially since the NBCWAs were just as 

necessary to the companies' continued operations as

blasting or digging. 

2. Responsibility for the Funds' Instability 

The defendants argue that B&T's and Unity's liability to 

the Funds is proportional to their general experience in the 

coal industry. The companies have only been assessed 

liability based on the miners they actually employed, and 

those miners' dependents. The Eastern plurality considered 

the former employment relationship alone insufficient 

because the employers had not promised lifetime benefits, 

at least until 1974, years after Eastern left the industry. 

See Eastern, 118 S. Ct. at 2150 (plurality). Unlike Eastern, 

however, Unity and B&T, as BCOA members, at some 

points in time negotiated for and adhered to the very 

 21 
agreements that established the benefit funds at issue. Like 

the employers in Concrete Pipe and Connolly, their liability 

is linked to their voluntary negotiation of a benefit plan, 

even though Congress retroactively increased the costs of 

that negotiation. See Eastern, 118 S. Ct. at 2149-50 

(plurality). 

Moreover, it can credibly be contended that the departure 

of companies such as Unity's subsidiaries and B&T helped 

to create the financial crisis in the plans that ultimately led 

to the Coal Act. When B&T, along with several other

employers, left the industry, litigation ensued. See United 

Mine Workers v. Nobel, 720 F. Supp. 1169 (W.D. Pa. 1989), 

aff 'd, 902 F.2d 1558 (3d Cir. 1990). As a consequence, the 

B&T retirees' benefits became funded by the 1974 Plan for 

orphaned miners. After these events, the Plan had to 

borrow funds and remaining employers were required to 

increase their contribution rates to make up the shortfall. 

Similarly, when South Union-WVA declared bankruptcy, it 

informed the Funds that it was no longer in business and 

would no longer provide health benefits for its retirees. As 

Mr. Jamison contemplated when he notified the Trustees 

that South Union-WVA had shut down, see J.A. at 170, the 

1974 Fund was forced to take responsibility for those 

retirees. See Schifano v. United Mine Workers 1974 Benefit 

Plan & Trust, 655 F. Supp. 200 (N.D. W. Va. 1987) 

(litigation arising out of South Union-WVA's bankruptcy). 

Thus, the plaintiffs' acts increased the burden on the Fund, 

contributing to its overstressed state, at least to some 

degree. 

Although the Fund may, as plaintiffs argue, have been 

financially stable when the plaintiffs left the industry, it 

was surely foreseeable that departures would lead to 

instability, given the benefit funding structure under the 

NBCWAs. While the plaintiffs contend that the benefit 

funds only became unstable after the plaintiffs left the 

industry and there were changes in the contribution levels 

required from coal operators who remained in the industry, 

it was also foreseeable that those contribution levels could 

change, and it was the NBCWAs to which the plaintiffs 

adhered that initially created a system vulnerable to such 

changes. It was thus rational to conclude that operators in 

 22 
this position should bear some responsibility for the costs 

of the corrective legislation. "It is surely proper for Congress 

to legislate retrospectively to ensure that costs of a program 

are borne by the entire class of persons that Congress 

rationally believes should bear them." United States v. 

Sperry Corp., 493 U.S. 52, 65 (1989). 

The plaintiffs argue that holding them responsible for the 

benefit funds' financial instability because they left the coal 

industry would obligate every operator to remain in the 

industry no matter how unprofitable mining became, which 

amounts to an "erosion taking." We disagree, since this is 

simply a variant of the total takings claim that we reject 

below. The law does not require the plaintiffs to stay in any 

business, which was a necessary element of all the prior 

"erosion taking" cases. See, e.g., Brooks-Scanlon Co. v. 

Railroad Comm'n, 251 U.S. 396, 399 (1920) (legislature 

cannot require a company to continue doing business, 

though it may require the company to fulfill its legal 

obligations if it chooses to continue operations). Instead, 

the Coal Act merely recognizes that all acts have 

consequences, and that sometimes it is not permissible for 

a company simply to walk away, leaving its former 

employees in the lurch. 

In ABC, Inc., the Court of Appeals for the D.C. Circuit 

relied heavily on the distinction between pre-1974 

participation in the coal industry and post-1974 

participation. The court found the distinction relevant for 

two reasons: the post-1974 agreements began the explicit 

promises of lifetime benefits, a matter we take up below, 

and also created a funding structure that allowed (or even 

induced) companies to leave the industry and slough off the 

burden of their retirees' benefits on the remaining

companies. Before 1974, a company that left the industry 

did not create any obligations on the part of other

companies to increase contributions to the benefit funds, 

but after 1974 that changed. Judge Silberman reasoned 

persuasively: 

 [I]t is surely rational for the Congress to expect that the 

 member companies' failure to contribute while their 

 retirees received benefits contributed to the underlying 

 crisis that the plans faced in the late 1980s. Although 

 23 
 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. 

ABC, Inc., 156 F.3d at 1255-56. 

ABC, Inc. also found that Justice Kennedy's additional 

concern that liability imposed based on a past employment 

relationship should be "remedial" was satisfied for

employers who, unlike Eastern, withdrew from the industry 

after the 1974 agreements. Such employers "withdrew from 

their prior commitment to contribute to the funds at 

precisely the point in time . . . 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.' " Id. at 

1257 (quoting Eastern, 118 S. Ct. at 2159 (Kennedy, J., 

concurring)). 

Unlike Eastern, Unity and B&T, as BCOA members, 

participated in the negotiations that created the post-1978 

funding structure. They benefited from the NBCWAs by 

obtaining labor peace. Although the contract allowed the 

companies to unload their obligations to the retirees onto 

the Trustees, they should reasonably have anticipated that 

such a strategy would threaten the Funds and might well 

prompt a congressional response. We cannot say that it 

was irrational for Congress to charge the miners' former 

employers with the costs of their benefits, when the miners 

qualified for lifetime benefits from the Trustees because of 

their former employment (we expand on this point infra) 

and the employers' departure from the industry contributed 

to the problem confronting the Trustees. 

B&T and Unity urge that they are not responsible for 

most of the burden on the Funds. However, B&T was a

large employer, whose departure from the industry added 

over a thousand beneficiaries to the Funds' "orphans," and 

its individual impact was therefore significant. In addition, 

Unity may be held partially responsible because, though its 

individual contribution to the problem was small, the 

aggregate effects of its actions and parallel actions by other 

companies contributed to the problem. Congress may 

 24 
reasonably include all of the parties whose acts, taken 

together, gave rise to a problem, even if the individual 

contributions of each are small. Cf. Wickard v. Filburn, 317 

U.S. 111, 127-28 (1942) (applying the same reasoning to 

Congress's Commerce Clause power). 

3. The Background of Government Regulation 

We consider the background of government regulation

significant as well. The coal industry has been heavily 

regulated for decades, including the government-imposed 

1948 Krug-Lewis Agreement, which created the basic health 

benefits structure. The companies had no reasonable

expectation that the government would not expand its 

regulation of health benefits in the coal industry, given the 

history of labor unrest and government intervention. See 

136 Cong. Rec. S17814 (daily ed. Oct. 27, 1990) (statement 

of Sen. Glenn) (containing Congressional Research Service 

report on the extensive history of federal intervention into 

the health status and benefits of coal workers and into 

labor relations in the coal industry more generally).5 

The coal operators were also aware of the growing 

number of government requirements that vested benefits be 

paid, whether or not an employer was contractually 

obligated to pay for them, as the industry's response to 

ERISA indicated. The situation is thus analogous to those 

in Connolly and Concrete Pipe, in which the Court found 

that, in light of the history of federal pension regulation, 

employers could not reasonably assume after 1978 that 

their obligations to pension funds would never exceed the 

specific terms of their contracts, see Connolly, 475 U.S. at 

227, nor could they reasonably assume that Congress

would not increase the statutory cap on ERISA withdrawal 

liability, see Concrete Pipe, 508 U.S. at 646. The parties 

were well aware that pension plans could subject employers 

to retroactive liability in cases of underfunding, and could 

_________________________________________________________________ 

5. Indeed, amicus LTV was the specific target of at least one bill to 

mandate that it continue to fund health benefits for its retired miners as 

early as 1986. See 132 Cong. Rec. S9879 (daily ed. July 30, 1986) (bill 

discussed by Sens. Byrd, Dole, Durenberger, Glenn, Heinz, & Specter); 

id. at E2714 (daily ed. Aug. 1, 1986) (statement of Rep. Rahall). 

 25 
have foreseen that Congress might act similarly with 

respect to health benefits. 

4. The Contractual Language 

Turning to the expectations created by the contracts, the 

threshold question is whether we need to distinguish 

between explicit and implicit promises of lifetime benefits. 

Although the plaintiffs concentrate on explicit promises, an 

issue on which their position is strong, we think that 

explicit promises are not necessary in order to justify 

congressional action. The question is what reasonable 

expectations the coal companies' actions created. While an 

expectation cannot be reasonable without some foundation 

in the real world, an explicit representation that the 

companies would provide lifetime benefits is not required, 

since reasonable expectations may arise from a consistent 

course of conduct as well. 

Plaintiffs and amici argue that the coal companies never 

made any promises, implicit or explicit, or raised any 

expectations of lifetime benefits. They first point to the text 

of the NBCWAs, which did not themselves require the coal 

companies to provide lifetime benefits under all 

circumstances. They dissect the various contractual

provisions and characterize their import as follows: (1) the 

health card that miners received for benefits"for life" did 

not guarantee any specific benefits; (2) the"evergreen" 

clauses only referred to an employer commitment to 

continue funding benefits, but did not promise anything 

about the scope of those benefits; (3) the "evergreen" 

clauses only applied to operators who stayed in the coal 

business; (4) the contracts allowed benefits to be 

suspended or reduced; and (5) the guarantee of benefits 

lasted only through the term of the agreement. Additionally, 

an UMWA negotiatior testified in the course of other 

litigation that everything was up for renegotiation at the 

end of a contract and that the parties could have agreed to 

eliminate benefits entirely. See District 17, UMWA v. Allied 

Corp., 735 F.2d 121, 126 (4th Cir. 1984), vacated, 765 F.2d 

412 (4th Cir. 1985). 

It is true that the funding contribution requirements were 

limited to the life of the agreement, "ending when this 

 26 
Agreement is terminated," in 1978 and subsequent 

NBCWAs. Yet all of these arguments have the same 

fundamental weakness, which is that they go to the 

contract and not to the reasonable expectations that might 

have been created by the contract. The UMWA negotiator's 

testimony is a particularly strong example of this: the 

parties could have agreed to eliminate benefits in any given 

negotiation, but there was no realistic chance that they 

would. The defendants do not dispute that the contracts 

did not provide for the payments mandated by the Coal Act. 

If the contracts had so provided, the Coal Act would have 

been unnecessary. The plaintiffs' dissection of the contracts 

is a brilliant exercise, and were we deciding a case on labor 

and contract law principles the outcome would be clear in 

their favor.6 But this is not an action brought for

contractual violations. We focus our attention instead on 

what conclusions Congress might rationally draw about the 

parties' relations and expectations, and what it might fairly 

do to close the gap between the contractual obligations of 

the coal companies and the Funds' actual liabilities. 

The NBCWAs did not in themselves guarantee that the

coal companies would pay for lifetime benefits for retirees 

and their dependents. There thus is a tenable argument 

that the NBCWAs did not obligate the Trustees of the 

Funds to pay lifetime benefits, because the evolution of the 

benefit structure did not indisputably culminate in a 

lifetime guarantee. Indeed, the former coal companies have 

a number of strong arguments, and reasonable people

could well disagree about Congress's choice to impose 

liability on them. Nonetheless, we conclude that Congress 

could reasonably have reached the conclusions it did about 

the expectation of lifetime benefits and about the coal 

companies' responsibility for the situation in which the 

Funds found themselves after the changes of the 1970s and 

1980s. 

_________________________________________________________________ 

6. However, not all of these arguments are persuasive even as a matter 

of contractual interpretation. As we discuss below, after 1978 health 

benefits were specified in the contract, and that the evergreen clause and 

the health card sections of the agreement did not rescribe the other 

sections of the contract does not mean that those specifications were 

without effect. 

 27 
 a. Contractual Clarity 

The plaintiffs submit that Eastern turned on the fact that 

the relevant NBCWA provisions clearly did not provide for 

lifetime benefits. We believe that this is a subtle but 

significant "spin" on the plurality's view, which found that 

the obligations imposed on Eastern were unrelated to its 

contractual obligations. The plurality noted that, during 

Eastern's participation in the industry, retirement and 

health benefits were far less extensive than they later 

became; the benefits were also not vested. Furthermore, 

benefits were subject to alteration or termination with far 

fewer constraints than those later imposed by the shift of 

control from the Trustees to the BCOA and the UMWA. In 

fact, entire categories of beneficiaries provided for under the 

Coal Act were not part of the older NBCWAs, and"Eastern 

could not have contemplated liability for the provision of 

lifetime benefits to the widows of deceased miners." 

Eastern, 118 S. Ct. at 2150 (plurality). All these facts meant 

that there was no rational relationship between Eastern's 

past acts and its Coal Act-imposed obligations. 

If Connolly retains any force, as we think it does, the 

clarity of contractual provisions is far from dispositive. 

Connolly itself involved a contract whose limits were at least 

as clear as those in the contracts at issue here. Even 

crystalline contractual provisions, accompanied by wellestablished practice and understandings, can create

reasonable expectations extending beyond the four corners 

of a contract. Though courts may be unable to enforce 

those expectations, Congress is not so constrained. We 

believe that our position is bolstered by a careful reading of 

the Eastern plurality opinion, which did not suggest that an 

implicit promise (that is, one not clearly found in the 

contract) would be insufficient to sustain the Coal Act if 

that promise had a reasonable basis in actual practice or in 

the penumbra created by contractual promises. Instead, the 

plurality found no evidence of any implied lifetime promise. 

See Eastern, 118 S. Ct. at 2152 (plurality). Justice 

Kennedy, likewise, focused not on the clarity of the contract 

but on the lack of a connection between pre-1978 coal 

operators and retired miners' reasonable expectations and 

instability in the benefit structure. See id. at 2159 

(Kennedy, J., concurring). 

 28 
 b. Lifetime Benefits 

The plaintiffs argue that the NBCWAs never promised

"lifetime benefits," and that the miners' only reasonable 

expectation based on the NBCWAs would have been that 

any operators who remained in the coal industry and

continued to sign agreements would pay for their benefits 

indefinitely. From that perspective, the Coal Act 

retroactively transformed a series of three- or four-year 

commitments into an open-ended, decades-long obligation. 

The plaintiffs' reading of the agreements is too crabbed. 

The 1974 NBCWA has thirteen separate references to 

health service cards "for life" or "until death." Plaintiffs 

submit that this simply referred to a health card that no 

one would ever take away but that could be reduced to a 

worthless piece of paper at any time. However, not only did 

the 1978 NBCWA have sixteen separate references to 

coverage "for life" or "until death," it also refers to an 

"entitle[ment] to receive health benefits until death" in at 

least one section. 1978 NBCWA, Art. XX, at 116. The

plaintiffs submit that this reference was inextricably linked 

to the references to health service cards. We agree, but 

think that the slippage between lifetime health cards and 

lifetime health benefits counsels against the plaintiffs' 

position: The lifetime health card may just as easily be seen 

as a shorthand reference to lifetime benefits, which may be 

why the parties did not correct (in this carefully negotiated 

contract) the reference to "benefits until death."7 This 

language, synonymous with the health card language,

appears to reflect the bargaining parties' understanding 

that the lifetime provision of health benefits was an 

absolute requirement for any contract. See Nobel, 720 F. 

Supp. at 1175 (finding that the coal operators understood 

that lifetime benefit language was crucial to the ratification 

of any contract and that the BCOA therefore abandoned its 

attempt to remove such language). 

_________________________________________________________________ 

7. The plaintiffs also note that the "benefits until death" language 

appears in a provision discussing restrictions on benefits whenever the 

beneficiary exceeded the earnings limit. However, the point of the 

provision was that the beneficiaries were entitled to benefits during any 

period that they did not exceed the earnings limits until death. 

 29 
We do not rest our decision on the reference to "benefits 

until death"; rather, it is a datum supporting the overall 

conclusion that the health card was expected to guarantee 

benefits for life. The 1981 and 1984 NBCWAs continue in 

the same vein with sixteen references to coverage "for life" 

or "until death." While we appreciate the force of the 

plaintiffs' arguments to the contrary, we are persuaded that 

it would have been reasonable for miners to expect that the 

"lifetime" health card actually meant that lifetime benefits 

would be provided to anyone in possession of a health card. 

Plaintiffs nonetheless argue that the appearance of the 

phrases "for life" and "until death" in the 1974 and 

subsequent agreements does not imply any commitment to 

provide lifetime benefits. According to them, we should 

understand the lifetime health card as doing no more than 

serving the valuable administrative function of ensuring 

portability. At most, the plaintiffs argue, the possession of 

a health card merely entitles a retiree to whatever benefits, 

if any, were available under the NBCWA then in effect. The 

plaintiffs interpret "lifetime" to mean simply that, if an 

NBCWA were in place, miners could not lose their benefits 

after a fixed period of time (a problem that had arisen in 

the past when the Trustees cut off retired miners after five 

years or some other fixed period). 

This is a strained reading of the terms "for life" and "until 

death," which refer to persons (the miners and their 

dependents) and not to the continued existence of an 

NBCWA. Furthermore, this argument does not aid the 

plaintiffs much, as NBCWAs were in effect through the 

passage of the Coal Act and even to this day, although the 

plaintiffs are no longer signatories to them. There is no 

real-world difference between a lifetime guarantee and a 

guarantee that lasts while NBCWAs continue to exist, 

especially as the guarantee did not depend on any 

particular employer's continued adherence to the NBCWAs. 

The fact that NBCWAs continue is evidence that it was 

reasonable to expect them to continue, and thus that it was 

reasonable to expect that a "lifetime" guarantee, even one 

that could theoretically expire if the entire NBCWA system 

collapsed, was in reality a lifetime guarantee. Cf. D'Amico v. 

City of New York, 132 F.3d 145, 151 (2d Cir. 1998) 

 30 
(reasoning that the occurrence of an event is evidence that 

a decisionmaker was justified in predicting that event). 

The plaintiffs further point out that the 1950 and 1974 

Plans contained language stating that, if assets became 

insufficient, benefits could be suspended or reduced. The 

Plans were incorporated into the 1974, 1978, 1981, and 

1984 NBCWAs by reference. Moreover, the plaintiffs note 

that the Plans were subject to modification or amendment, 

and there were provisions that would take effect"[i]n the 

event of the termination of the 1950 Plan." The plaintiffs 

also contend that when miners received health cards, they 

were specifically told that their benefits were subject to 

amendment or termination "at any time." 1958 Annual

Report. Of course, later NBCWAs were designed to limit the 

Trustees' authority to do so, by defining the benefits to be 

provided, by establishing lifetime eligibility for a health 

card, and by eliminating the Trustees' ability to alter 

benefits without the consent of the union and the BCOA 

after 1971. 

But the NBCWAs always clearly stated that they were in 

effect for limited terms. The individual employer plans for 

health benefits that were established under the 1978 

NBCWA, like the 1950 and 1974 Plans, had the stated

purpose of providing benefits "during the term of this 

Agreement." The plaintiffs conflate the issue of whether the 

coal companies' contribution requirements were "lifetime," 

which they clearly were not under the contract, with the 

issue of whether the contracts provided for lifetime health 

benefits. The lifetime health card was intended to put an 

end to the Trustees' pre-1974 practices of cutting 

beneficiaries off if their former employers were delinquent 

in paying into the Funds or if they had received benefits for 

a set period of time. Thus, the Trustees could reasonably be 

seen as required to pay lifetime benefits to all retirees and 

their dependents in possession of a health card; the 

contractual terms had the effect of binding the Trustees to 

a lifetime commitment, although they did not of themselves 

bind the coal companies to the same commitment. 8 

_________________________________________________________________ 

8. The plaintiffs also argue that the Trustees understood that benefits 

were limited to the term of the agreement. When the 1974 NBCWA 

 31 
Despite the plaintiffs' contention that the numerous 

cases holding that "for life" means lifetime benefits were 

wrongly decided, we are unpersuaded that those cases 

lacked support for their conclusion. See, e.g., In re 

Chateaugay Corp., 945 F.2d 1205, 1210 (2d Cir. 1991); 

District 29, UMWA v. UMWA 1974 Benefit Plan & Trust, 826 

F.2d 280, 282-83 (4th Cir. 1987); Grubbs v. UMWA, 723 F. 

Supp. 123, 128 (W.D. Ark. 1989); Nobel, 720 F. Supp. at 

1178.9 The plaintiffs assert that, at all events, Eastern 

throws these cases into doubt. We disagree, because the 

Supreme Court said nothing about the Trustees' 

obligations, nor did the Court take up the post-1978 

contracts at all. 

Furthermore, contrary to the submission of the plaintiffs, 

these lower court cases did analyze the provisions of the 

contract, recognizing that the Trustees were obligated to 

provide benefits only "during the term of this agreement," 

just as the companies were only required to contribute 

during the term of the contract. Rather than ignoring this 

temporal language, the decisions found that other language 

in the contract, combined with testimony from the 

_________________________________________________________________ 

expired on December 6, 1977, the Trustees stopped providing health 

benefits to retired miners, and the subsequently negotiated 1978 NBCWA 

prohibited retroactive funding of such benefits. This is significant, but, 

given that the benefit funds were fundamentally reconfigured at the 

same time to focus on individual employers, it would have been difficult 

to deal with those few months retroactively during the transition to the 

new regime. The short gap necessitated by the delay in negotiating a new 

contract during bitter labor strife does not disprove the general promise 

of lifetime benefits in the future. 

9. UMWA Health & Retirement Funds v. Robinson, 455 U.S. 562 (1982), 

also refers to "lifetime" benefits. See id. at 565-66. The plaintiffs 

argue 

that NBCWAs were in place at all times relevant to Robinson, and so that 

case provides no basis for suggesting that benefits would be available in 

the absence of an NBCWA. However, this argument actually favors the 

defendants. We reiterate that we are not construing the contract but 

deciding what reasonable expectations it might generate. In that 

analysis, the fact that NBCWAs persisted for decades, although it was 

always possible that they would expire, favors the defendants, since the 

long history of NBCWA renegotiation makes the expectation that benefits 

would continue more reasonable. 

 32 
negotiators, obligated the Trustees to provide lifetime 

benefits. See District 29, UMWA, 826 F.2d at 282. That the 

contracts may contain contradictory language does not, as 

plaintiffs and amici contend, make any construction

requiring lifetime benefits unreasonable; instead, there was 

evidence pointing in both directions. Just as it was not 

unreasonable for courts to conclude that the contracts 

provided lifetime benefits, it was not unreasonable for 

Congress to rely on similar evidence, even though Congress 

could also reasonably have disagreed. In fact, we could 

even consider such judicial decisions, the earliest of which 

were referenced in the Coal Commission Report, as data 

justifying Congress's conclusion that lifetime benefits were 

promised, since Congress may reasonably look to the

findings of a coordinate branch. See Coal Comm'n Report at 

3, 28, 47, 55-56. 

The question, then, is not whether the health benefits are 

truly "for life" but whether the former coal companies can 

justly be associated with the promises of lifetime benefits 

that by contract run only against the Trustees. The

argument is that it was acceptable, by virtue of the 

contractual limitations, for companies to walk away and 

leave the Trustees and the companies remaining in the coal 

industry to pay the tab. And it is this underlying claim that 

we think Congress could rationally reject. In this regard, we 

reiterate that our obligation is to determine what Congress 

could reasonably have found. 

Congress certainly possessed credible evidence that

miners expected those benefits. The Coal Commission, for 

example, reported to Congress in 1990 that 

 Retired coal miners have legitimate expectations of 

 health care benefits for life; that was the promise they 

 received during their working lives and that is how 

 they planned their retirement years. That commitment 

 should be honored. 

Id. at vii. The Commission based its conclusions on

substantial evidence, including testimony from many

industry participants on both sides of the issue. Even a 

dissenting member of the Commission, who was the 

president of a coal company, acknowledged that the post- 

 33 
1978 agreements created a promise of lifetime benefits. See 

id. at 81 (statement of Commissioner Holsten). 10 Although 

the Coal Act's statutory scheme was proposed nine and two 

years, respectively, after Unity and B&T ceased to be bound 

by an NBCWA, and that is certainly a significant period of 

time, we cannot say that it is beyond the pale in light of the 

lifetime nature of the commitment at issue. 

 c. Other Contractual Provisions 

The negotiations of the 1970s took place in a changing 

legal context, as the Coal Commission's report to Congress 

recognized. ERISA made clear that employers who promised 

pension benefits were going to have to give them, and when 

the parties negotiated the 1974 and later agreements, that 

idea was certainly in mind. Moreover, starting in 1974, the 

new agreements removed the Trustees' discretion to set 

benefit levels and eligibility standards. See Coal Comm'n 

Report at 24. 

By 1977, anxiety had intensified, and the miners struck 

for nearly four months over, among other things, health 

benefit issues. The federal government intervened to settle 

the strike. The 1978 agreement introduced the "evergreen" 

_________________________________________________________________ 

10. The conclusions of the Coal Commission Report are not rendered 

suspect by Eastern; although the plurality and Justice Kennedy 

concluded that Congress could not reasonably decide that pre-1978 

signatories were responsible for creating expectations of lifetime 

benefits, 

it is notable that the Coal Commission never proposed the "super 

reachback" provision challenged in Eastern. See Eastern, 118 S. Ct. at 

2141 (plurality); Coal Comm'n Report at 61, 63, Supp. App. at 420, 422. 

The Commission's proposal provided for liability under what became 

S 9706(a)(1) and S 9706(a)(2), which only apply to post-1978 signatories, 

while S 9706(a)(3) was added late in the legislative process. See J. 

Atwood Ives, Federal Document Clearing House Congressional 

Testimony, House Ways & Means Oversight, Coal Workers Retirement 

Benefits, June 22, 1995. The Coal Commission'sfindings remain 

persuasive evidence from which Congress could conclude that signatory 

operators remaining in the coal industry after 1978 created a reasonable 

expectation of lifetime benefits among miners and their families. See also 

138 Cong. Rec. S5081, S5082 (daily ed. Apr. 8, 1992) (statement of Sen. 

Boren) (referring to the expectations created by the 1978 agreement); id. 

(statement of Sen. Dole) (same). 

 34 
and "guarantee" clauses and rearranged the benefit funds 

in major ways. See id. at 26. The evergreen clause only 

applied to companies that stayed in the coal mining

industry. As such, it has no bearing on these plaintiffs 

except insofar as it expresses an intent by the negotiators 

to keep health benefits funded, as the miners expected 

them to be, in the context of growing burdens on NBCWA 

coal operators. 

Under the guarantee clause, signatory employers 

committed to make the contributions necessary to maintain 

the contractually specified benefits throughout the term of 

the agreement, even if that required an increase in the 

contribution rates specified at the outset of the contract 

term. This was essentially a shift "from a defined 

contribution obligation, under which employers were

responsible only for a predetermined amount of royalties, to 

a form of defined benefit obligation, under which employers 

were to fund specific benefits." Eastern, 118 S. Ct. at 2140 

(plurality). The evergreen clause represented a similar effort 

by the bargaining parties to protect the funding base for 

ongoing health coverage. 

The coal companies contend that everyone recognized

that, when the contract ended, the benefits would end. The 

1978 guarantee clause guaranteed benefits and provided 

for increased contribution if necessary only "during the 

term of this Agreement." The defendants respond that the 

"end of contract/end of benefits" equation is not the end of 

the story. They argue that it was reasonable for the miners 

to expect that the contract would be replaced by another 

contract, and then another, and then another, with at least 

comparable benefits, even if the industry and its 

participants changed. After all, that is what had taken 

place for the past fifty years: the slow but steady expansion 

of benefits. The NBCWAs, they argue, were negotiated in a 

context where the miners believed that, in return for wage 

and employment concessions, they would be able to 

guarantee their futures. In fact, as noted above, the 

NBCWAs have endured for decades after the changes of the 

1970s, evidencing the reasonableness of a belief that the 

agreements would continue. 

 35 
We do not ignore the plaintiffs' history in the industry, 

which extended for many decades and ended over thirty 

years after Eastern Enterprises left the coal industry. Unity 

mined coal for 58 years and B&T for 80. Coal companies 

such as Unity and B&T received benefits from the steady 

expansion of health and retirement benefits, including wage 

concessions and union agreement to mechanization, during 

that period. Their long-term participation made it 

particularly understandable that miners would expect that 

the companies' adherence to promises of lifetime benefits in 

the NBCWAs would be honored. 

5. Conclusion 

Our review of the evidence suggests that there are several 

plausible interpretations of the events leading up to the 

Coal Act. It could well be the case that former coal 

companies are not the most responsible parties in the 

deterioration of the health of the benefit funds, but 

Congress could also rationally find that they bore 

significant responsibility in setting up a structure that 

invited operators to abandon mining and shunt the burden 

of caring for retirees on other parties. Similarly, it could be 

that the contracts did not create a lifetime benefit obligation 

on the part of the Trustees, yet Congress had substantial 

evidence to the contrary. We will defer to Congress's 

judgments on the nature of the problem before it, including 

judgments about causation and reasonable expectations. 

The next question, therefore, is whether Congress's

reasonable evaluations of the problem justified the

corrective measures it mandated in the Coal Act. 

C. Is the Coal Act a Rational Response to the Problem 

Congress Identified? 

Given that evidence exists to support Congress's 

interpretation of the history of the coal industry and the 

NBCWAs, we must ask whether that evidence is enough to 

justify a retroactive law of this scope. For the following 

reasons, we conclude that the Coal Act's retroactivity does 

not render it irrational in violation of due process. 

1. The Length of the Retroactivity 

The heart of retroactivity analysis is an evaluation of the 

 36 
extent of the burden imposed by a retroactive law in 

relation to the burdened parties' prior acts. We note as an 

initial matter that the length of the retroactivity alone is not 

dispositive in this case. The retroactivity is significantly less 

extensive than that in Eastern. We evaluate retroactivity not 

from the time the plaintiffs first signed an industry 

agreement, nor from the time the miners' right to benefits 

accrued, but rather from the end of the plaintiffs'

contractual obligations to pay for such benefits. 11 For Unity, 

that period is eleven years, and for B&T four years, because 

B&T was bound by the 1984 NBCWA until 1988. This is

substantially less time than the gap between Eastern's exit 

from the coal business and the enactment of the Coal Act, 

although, at least for Unity, it is still quite long.12 We 

conclude that this degree of retroactivity is not so extensive 

as to violate Justice Kennedy's standard, although Unity 

offers a close case.13 

_________________________________________________________________ 

11. We choose the expiration of NBCWA obligations because, although 

covered retirees may have stopped working for the plaintiffs before those 

dates, the contracts obligated the plaintiffs to continue paying for 

benefits until those contracts expired and, after 1978's evergreen clause, 

until the plaintiffs left the industry. This was not true of the relevant 

contracts in Eastern. Thus, the retroactivity extends not from the date of 

the miners' retirement but from the period during which the plaintiffs 

were free of any contractual obligation to pay for benefits. 

12. The retroactivity approved in Usery was actually much greater in 

some circumstances. The black lung law was enacted in 1969 and began 

imposing liability on employers in 1973. Yet benefits were given to 

miners who left mine work as early as 1923. See Usery, 428 U.S. at 40 

n.4 (Powell, J., concurring in part). In addition, the Comprehensive 

Environmental Response, Compensation, and Liability Act (CERCLA), 42 

U.S.C. SS 9601-9657, has an unlimited retrospective temporal reach, 

which has yet to be invalidated by any court to consider the issue. See, 

e.g., United States v. Monsanto Co., 858 F.2d 160, 173-74 (4th Cir. 

1988). 

13. We focus on Justice Kennedy's explication of the relevant due 

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

process claim. See Rappa v. New Castle County , 18 F.3d 1043, 1058-61 

(3d Cir. 1994) (where "no single approach can be said to have the 

support of a majority of the Court," then "no particular standard 

constitutes the law of the land" and lower courts are bound by the result 

as applied to "substantially identical" cases). 

 37 
Instead of relying solely on the length of the retroactivity, 

we assess the relationship of the retroactively imposed 

liability to the governmental interests asserted in its 

defense. See Eastern, 118 S. Ct. at 2159 (Kennedy, J., 

concurring) (retroactive remedies must bear "a legitimate 

relation to the interest which the Government asserts 

supports the statute"); id. at 2163 (Breyer, J., dissenting) 

("[A] law that is fundamentally unfair because of its 

retroactivity is a law which is basically arbitrary."). 

The plaintiffs argue that retroactivity has only been 

upheld in three situations: (1) where the employer 

continues to operate in the regulated industry after the 

enactment of a retroactive law; (2) when employers would 

otherwise be able to take advantage of the delays inherent 

in the legislative process; and (3) where a worker's injury or 

illness is related to his or her work. This categorization is 

unsatisfactory. The first category lacks adequate analytical 

foundation. If a law is truly retroactive, applying to conduct 

completed before the law was enacted, it would seem only 

marginally relevant that an employer kept doing what it 

had been doing before, for the liability would be based on 

past acts, not post-enactment acts; the continuation in the 

old business would not seem to justify the retroactivity. If 

it would be fundamentally unfair to make a business pay 

for its long-past acts, it would seem equally unfair to put 

that business to the choice of leaving its established 

business or paying for its long-past acts. 

We posit a different standard: Where Congress acts 

reasonably to redress an injury caused or to enforce an 

expectation created by a party, it can do so retroactively. 

The ERISA and MPPAA cases establish that Congress may 

retroactively bar employers from giving their employees 

vested pensions in multiemployer plans and then leaving 

those plans to collapse. Those cases did not examine 

whether the employers continued to operate the same kind 

of business as they did when their former employees' 

pensions became vested. Our categorization also recognizes 

that workers can be harmed not just by late-appearing 

physical consequences of their jobs but also by an 

employer's failure to live up to a long-term promise that 

formed part of the worker's reasonable expectations on the 

 38 
job. Both a promise of benefits and a job-related illness 

have a nexus to the worker's employment, as we discussed 

supra Subsection III.B.1. 

2. The Size of the Burden 

The amici (other former coal operators) call our attention 

to the size of the burden imposed, arguing that, because 

the Eastern plurality found that paying lifetime benefits 

imposed a "considerable" burden on Eastern Enterprises, 

by definition the same is true for all other entities required 

to pay benefits under the Coal Act, since the amount of the 

payment per beneficiary is the same under every part of the 

law. In Eastern, however, the total amount at issue was 

between $50 and $100 million, whereas here the total cost 

is well under $1 million to date for Unity and around $2.5 

million per year for B&T, an amount that will continue to 

decrease as beneficiaries die. Therefore, the plaintiffs are 

not in the same situation as Eastern Enterprises. 

We will not find a due process violation if the regulation 

is proportional to the harm legitimately addressed by the 

legislature. Yet the proportionality requirement will only be 

applied when the harm inflicted by the government is 

substantial enough to raise an issue as to whether a 

violation of due process has occurred. As the total absolute 

burden imposed by a statute increases, it becomes simpler 

for a court to determine that the legislature has exceeded 

the bounds of rationality, whereas a smaller burden means 

that Congress's error, if any, is less likely to justify the 

extreme sanction of invalidation on due process grounds. 

If, for example, Congress imposed a one-dollar burden on 

each member of some industry, and we concluded thatfive 

cents was the only amount that could be linked to 

Congress's asserted justification for the burden, we would 

still be disinclined to strike down the statute; the fact that 

the burden imposed was twenty times the actual cost would 

not be determinative. As the actual amount of the burden 

decreases, errors in its calculation increase in relative 

magnitude, but the leeway given to Congress in enacting 

social and economic legislation mandates that we look to 

absolute rather than relative magnitudes, so that our 

review is limited to those laws that work the most severe 

disruptions of settled expectations. 

 39 
For similar reasons, we doubt that a former coal 

company would have a credible claim of "considerable" 

burden if it were only responsible for a small number of 

beneficiaries under the Act, even if the company was in 

such dire financial straits that the liability would push it 

over the economic edge. It is the aggregate cost--the total 

size of the burden imposed--and not the per-beneficiary 

cost that is significant under our due process 

jurisprudence. While the burden in this case is certainly 

substantial, and thus we will carefully scrutinize the Coal 

Act, the burden is not dispositive in itself. We acknowledge 

that the Coal Act will put these particular plaintiffs out of 

business, but that fact is again a matter of relative burden, 

not absolute burden and, because it does not determine the 

due process issue, we reserve our discussion of this 

consideration for our analysis of the plaintiffs' takings 

challenge infra Part IV. 

3. Proportionality and Congress's Ability To Go Beyond 

Private Contracts 

As we stated above, proportionality is the proper test of 

economic impact. The burden imposed on regulated parties 

may be heavy, but the Connolly Court found that a large 

burden 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. See Connolly, 

475 U.S. at 226; see also Eastern, 118 S. Ct. at 2150-51 

(plurality) (discussing the justifications for imposing liability 

as part of the analysis of the economic impact factor). 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. Given that the situation that impelled Congress to 

enact the Coal Act contained elements of both, we believe 

that the necessary proportionality exists. 

The Coal Act bridges a gap between the contractual 

promises of coal companies and the full extent of the 

funding required to provide retired miners with lifetime 

health benefits. The Trustees and the government argue 

that the companies' extracontractual acts, signalled by 

contractual language but going beyond that language, 

justify Congress's decision to bridge that gap. The

 40 
extracontractual acts fall into two general categories: the 

instability of the pre-Coal Act benefit funding structure to 

which the former coal companies contributed, and the 

expectation of lifetime benefits created by contractual 

language combined with the parties' consistent practices. 

As we have explained, we consider these reasons sufficient 

justification for the liability imposed by the Coal Act. 

As the defendants put it, the NBCWAs made a long-term 

commitment to provide health-care benefits but only a 

short-term contractual commitment for funding.14 They 

argue persuasively that this arrangement would be silly, 

even suicidal, for the miners and the funds were it not 

made in the context of a belief that the industry would 

continue on pretty much as it had been for the past few 

decades. Given this, we think that Congress could 

reasonably conclude that it would be fair to hold the coal 

companies to the implicit part of their promise, because 

when they left the industry the explicit part lost its 

meaning. See ABC, Inc., 156 F.3d at 1255-57. 

The Eastern plurality did not reject the Connolly principle 

that government may do more than require private parties 

to live up to their contracts: 

 [C]ontracts, however express, cannot fetter the 

 constitutional authority of Congress. Contracts may 

 create rights of property, but when contracts deal with 

 a subject matter which lies within the control of 

 Congress, they have a congenital infirmity. Parties 

 cannot remove their transactions from the reach of 

 dominant constitutional power by making contracts 

 about them. 

 If the regulatory statute is otherwise within the 

 powers of Congress, therefore, its application may not 

 be defeated by private contractual provisions. For the 

 same reason, the fact that legislation disregards or 

_________________________________________________________________ 

14. This disposes of plaintiffs' contention that the guarantee clause of 

1978 would have been superfluous if there were already a lifetime 

guarantee of benefits. The guarantee clause was an attempt to insure 

that the Trustees could live up to their obligations, an attempt that 

ultimately failed. 

 41 
 destroys existing contractual rights does not always 

 transform the regulation into an illegal taking. . .. 

 [H]ere, the United States has taken nothing for its own 

 use, and only has nullified a contractual provision 

 limiting liability by imposing an additional obligation 

 that is otherwise within the power of Congress to 

 impose. 

Connolly, 475 U.S. at 223-24 (citation omitted); see also 

Eastern, 118 S. Ct. at 2148 (plurality). 

In Connolly, a contract limited the employers' obligations 

even if contributions proved insufficient to provide the 

promised benefits. The challenged legislation converted that 

defined contribution obligation to a broader defined benefit 

obligation. Congress enacted the law so that retirees could 

receive the vested benefits they had been promised and that 

they legitimately expected. The Court found a reasonable 

relation between the employers' acts and ERISA-imposed 

liability, even though the employers could not have foreseen 

a defined benefit obligation from the face of the contract. 

Here, the signatory operators created a benefit fund with a 

legal obligation to pay out more than the operators were 

required to pay in, just as in Connolly, and the Coal Act 

was Congress's attempt to close that funding gap. 

The plaintiffs distinguish Connolly by arguing that the 

problem in that case was that companies had made broad 

promises that the pension funds to which they contributed 

would pay pensions, but only obligated themselves 

contractually to pay a much smaller amount to those

pension funds. The plaintiffs claim that, in this case, the 

promises that the Funds would pay benefits were narrow, 

because those benefits could be reduced or eliminated at 

any time, and the contractual obligations were broad 

during the period of their existence. As we have discussed 

above, however, Congress decided that even though the 

coal companies' contractual obligations were not broad 

enough to sustain the Funds, their promises that the 

Funds would pay benefits--made as part of the BCOAunion negotiations--were broad. This is a reasonable 

reading of the NBCWAs, particularly given that the 1974 

NBCWA removed the Trustees' discretion to change benefit 

levels without the bargaining parties' permission and that 

 42 
the 1978 NBCWA began the practice of enumerating the 

exact health benefits to be provided. Cf. Nobel, 720 F. 

Supp. at 1180 (holding that benefits could not be reduced 

or discontinued by the Trustees despite the financial 

burden on the Trust). 

The Coal Act extended the operators' contractual 

obligations to include responsibility for the expectations 

generated and invited by the contracts. Essentially, the Act 

is Congress's attempt to do equity. We agree with the court 

in ABC, Inc., which wrote: 

 The constitutionally significant feature about these 

 later agreements is that they made it reasonable for 

 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. 

ABC, Inc., 156 F.3d at 1258. 

The plaintiffs argue that it is implausible that operators 

in an industry with "very high turnover of employers," 

Connors v. Link Coal Co., 970 F.2d 902, 903 (D.C. Cir. 

1992), would have agreed to a perpetual funding obligation 

enforceable even against operators who left the coal 

industry entirely, whether for economic reasons (high labor 

costs, competition from other fuels, and the like) as B&T 

did or because they were out of coal. We agree that it is 

unlikely that the coal companies intended to create this 

exact funding structure, although modern employment

relations often include post-retirement promises that may 

prove burdensome when conditions change for an 

employer. The crucial question, however, is whether the 

companies' actions, through the BCOA through which 

negotiations with the unions were conducted, created 

reasonable expectations about benefits and established a 

funding structure vulnerable to "dumping" retirees when 

companies left the industry. If so, Congress is not

precluded from acting to redress the harms caused by this 

situation. 

 43