to provide lifetime health benefits." Barrick Gold, 823 F. Supp. at 1406.
In this Court's view, AECI's argument against contributing to the 1992 Benefit Fund is essentially the same as its argument against contributing to the Combined Fund, and for the same reasons, the requirement that AECI contribute to the 1992 Benefit Fund is rational and reasonable. Thus, the Court concludes that the Coal Act does not violate the substantive due process rights of AECI because the liabilities imposed upon AECI are rationally related to AECI's status as a signatory to the 1988 NBCWA.
Relying on the same cases as the other plaintiffs (Bellaire, Allied, and AECI), ABC also argues that the application of the Coal Act to it violates due process. ABC notes that, of all the cases addressing the constitutionality of the Coal Act, none have addressed a challenge by a non-coal miner operator that ceased participation in the UMWA Benefit Funds with the agreement of the UMWA and BCOA and removed all ascertainable liabilities attributable to it from the UMWA Benefit Funds. ABC argues that there is no comparable way that ABC members bear responsibility for the plan's liabilities. When the Retired Construction Workers Benefit Trust ("RCWBT") was created in 1978, the beneficiaries of the 1974 Benefit Trust attributable to ABC's members left the UMWA plan. ABC argues that it had nothing to do with the condition of the Trusts when the Coal Act was enacted.
Federal defendant and Trustees argue that during the period from 1968 to 1978, employees of ABC companies were eligible for health and medical benefits from the 1950 Trust, and after 1974, from the 1974 Trust. For the first six years of this period, ABC was not required to finance the health and medical benefits. During the 1974 negotiations, however, ABC was solicited by UMWA and BCOA to pay direct contributions, on an hourly basis, for ABC employees receiving benefits. As a result, ABC did pay until June 1978, when it established its own fund for mine workers. Federal defendant and Trustees argue that ABC should not be allowed to continue to get a "free ride."
For the reasons previously articulated, with respect to Bellaire, Allied, and AECI, the Court concludes that the Coal Act does not violate ABC's due process rights. ABC's members received benefits from the Trusts and, in fact, it is undisputed that for a period of time, ABC's members received those benefits even though ABC's members were not required to make contributions. The Coal Act represents a rational, reasonable response on the part of Congress to address a health care crisis in the coal industry where retired workers' lifetime health benefits were in jeopardy. While certainly no one company is solely responsible for the condition of the Trusts which precipitated the enactment of the Coal Act, Congress determined that the enormity of the problem required the assistance of all companies who had been affiliated with the Trusts. Those companies include ABC, and hence, ABC's due process argument must fail.
B. Takings Clause
Bellaire and Allied also argue that the Coal Act, which requires them to make monetary contributions to benefits funds, violates the Takings Clause of the Fifth Amendment. The Takings Clause prohibits the government from taking private property for public use without paying the former owner just compensation. U.S. Const. amend. V. This clause is "designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole." Armstrong v. United States, 364 U.S. 40, 49, 4 L. Ed. 2d 1554, 80 S. Ct. 1563 (1960).
1. Subject Matter Jurisdiction
As a preliminary matter, the federal defendant notes that a substantial question exists as to whether this Court has jurisdiction over plaintiffs' taking challenge where the Tucker Act, 28 U.S.C. § 1491(a),
provides an adequate process for seeking just compensation. Under the Tucker Act "takings claims against the Federal Government are premature until a property owner has availed itself of the process provided by the Tucker Act." Railway Labor Executives' Ass'n v. United States, 300 U.S. App. D.C. 142, 987 F.2d 806, 816 (D.C. Cir. 1993)(quoting Williamson Co. Regional Planning Commission v. Hamilton, 473 U.S. 172, 195, 87 L. Ed. 2d 126, 105 S. Ct. 3108 (1985)). Moreover, pursuant to the Tucker Act, exclusive jurisdiction is conferred on the Court of Federal Claims, if the amount in controversy is at least $ 10,000. Id. The defendants concede, however, that Bellaire and Allied are seeking only declaratory relief, not money damages.
This issue was previously raised in In re Chateaugay Corp., 163 B.R. 955 (S.D.N.Y. 1993), aff'd, 53 F.3d 478 (2d Cir. 1995), and the court's discussion provides meaningful guidance on this issue. There, the court concluded that the district court had jurisdiction over the takings claim because, (1) plaintiffs were not seeking money damages, but rather a declaratory judgment that the Coal Act is unconstitutional; (2) the Court of Claims did not have jurisdiction to hear claims against parties other than the United States, and since the Trustees were necessary parties to the litigation, the Court of Claims would be without jurisdiction to award full relief in that case; and (3) plaintiffs' takings claim was indistinguishable from its due process claim, and the Court of Claims would not have jurisdiction over the due process claim.
Like plaintiffs in In re Chateaugay Corp., Bellaire and Allied are not seeking monetary damages, but rather declaratory relief. However, in view of precedent in this circuit, this fact alone will not provide this Court with jurisdiction. In Railway Labor Executives', 300 U.S. App. D.C. 142, 987 F.2d 806 (D.C. Cir. 1993), a group of unions sought a declaratory judgment that rulings by the ICC modifying the terms of a collective bargaining agreement violated the Takings Clause. This circuit held that even though the plaintiffs made no claim for monetary damages, the action was within the exclusive jurisdiction of the Court of Claims. Railway, 987 F.2d at 815-16.
This case is distinguishable from Railway. Like In re Chateaugay Corp., but unlike Railway, the Trustees are necessary parties to this lawsuit. See Fed. R. Civ. P. 19(a).
Thus, because the Court of Claims does not have jurisdiction to hear claims against private parties, the Court of Claims would be without jurisdiction to hear the challenges raised in this action. See Kennedy v. United States, 19 Cl. Ct. 69, 75-76 (Cl. Ct. 1989) ("If the relief sought is against others than the United States, the suit as to them must be ignored as beyond the jurisdiction of the Court [of Claims]. . . . Furthermore, if the maintenance of a suit against private parties is a prerequisite to the prosecution of the suit against the United States, the suit must be dismissed." (citing United States v. Sherwood, 312 U.S. 584, 588, 85 L. Ed. 1058, 61 S. Ct. 767 (1941))).
Another distinction is that the Railway Labor Executives' decision was made within the context of respondent's modification of terms of the petitioner's collective bargaining agreements, where, in this case, plaintiffs challenge a statute mandating monetary contributions to benefits funds.
The Court also notes that the Supreme Court, when addressing challenges to similar economic legislation statutes, has considered takings challenges in situations where the plaintiffs did not first seek compensation in the Court of Claims. See, e.g., Concrete Pipe & Prods. v. Construction Laborers Pension Trust, 508 U.S. 602, 640-47, 124 L. Ed. 2d 539, 113 S. Ct. 2264 (1993); Connolly v. Pension Benefit Guar. Corp., 475 U.S. 211, 221-28, 89 L. Ed. 2d 166, 106 S. Ct. 1018 (1986). The Court further notes that plaintiffs' "takings claim is indistinguishable from their due process claim." In re Chateaugay Corp., 163 B.R. at 959.
2. Does the Coal Act Effect a "Taking" in violation of the Fifth Amendment
In addition to claiming that the Coal Act violates the Due Process Clause of the Fifth Amendment, Bellaire and Allied argue that the Coal Act violates the Takings Clause of the Fifth Amendment. Before addressing Bellaire and Allied's arguments, the Court notes that "given that [plaintiff's] due process arguments are unavailing, 'it would be surprising indeed to discover' the challenged statute nonetheless violating the Takings Clause." Concrete Pipe, 508 U.S. at 641 (citing Connolly, 475 U.S. at 223). The Court further notes that all federal courts, with the exception of one, have concluded that the Coal Act does not violate the Takings Clause. See, e.g., Davon, Inc. v. Shalala, 75 F.3d 1114, 1127 (7th Cir. 1996), certs. denied, 117 S. Ct. 50, 136 L. Ed. 2d 14 (U.S. 1996) and 117 S. Ct. 50, 136 L. Ed. 2d 14 (U.S. 1996) (holding that the Coal Act does not violate the Takings Clause); Lindsey Coal Mining Co. v. Chater, 90 F.3d 688 (3d Cir. 1996)(same); In re Blue Diamond Coal Co., 79 F.3d 516, 523 (6th Cir. 1996)(same); Barrick Gold Exploration, Inc. v. Hudson, 47 F.3d 832 (6th Cir.), cert. denied, 516 U.S. 813, 133 L. Ed. 2d 26, 116 S. Ct. 64 (1995)(same); In re Chateaugay Corp., 53 F.3d 478, 491 (2d Cir. 1995), cert. denied, 516 U.S. 913, 116 S. Ct. 298 (1995)(same). But see Unity Real Estate Co. v. Hudson, 889 F. Supp. 818, 825 (W.D. Pa. 1995)(plaintiff proved to the court's satisfaction that if it were required to make the payments to the Combined Fund, the company would be driven into bankruptcy).
The parties agree that the appropriate standard to determine whether economic legislation violates the Takings Clause is based upon "ad hoc, factual inquires into the circumstances of each particular case." Connolly v. Pension Guaranty Benefit Corp., 475 U.S. 211, 224, 89 L. Ed. 2d 166, 106 S. Ct. 1018 (1986); see also Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1015, 120 L. Ed. 2d 798, 112 S. Ct. 2886 (1992). The Supreme Court has identified three factors to be "of particular significance" to this inquiry: "(1) the economic impact of the regulation on the claimant; (2) the extent to which the regulation has interfered with distinct investment-backed expectations; and (3) the character of the governmental action." Connolly, 475 U.S. at 225 (quoting Penn Central Transp. Co. v. New York City, 438 U.S. 104, 124, 57 L. Ed. 2d 631, 98 S. Ct. 2646 (1978)).
a. Character of the Governmental Action
In determining whether the Coal Act violates the Takings Clause, the Court first addresses the third Connolly factor, the character or nature of the governmental action. With respect to this factor, Bellaire and Allied claim that the Coal Act divests them of each and every right associated with the property that it requires them to turn over to the Combined Fund. They also claim that the Coal Act benefits only a closed, and extremely narrow, class of individuals -- not retirees generally, or mineworkers generally, or even retired mineworkers generally, but only retired mineworkers once represented by UMWA and receiving health benefits as of a specified preenactement date. This fact, Bellaire and Allied argue, violates a bedrock principle of takings jurisprudence -- that a statute cannot "take property from A and give it to B." Calder v. Bull, 3 U.S. (3 Dall.) 386, 388, 1 L. Ed. 648 (1798).
As an example of this principle, Bellaire and Allied cite Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 67 L. Ed. 322, 43 S. Ct. 158 (1922), in which the Supreme Court held that Pennsylvania's Kohler Act effected a taking because that statute "merely involved a balancing of the private economic interests of coal companies against the private interests of the surface owners." Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470, 487, 94 L. Ed. 2d 472, 107 S. Ct. 1232 (1987) (discussing Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 67 L. Ed. 322, 43 S. Ct. 158 (1922)). Bellaire and Allied argue that, like the Kohler Act, the Coal Act is unsupported by the broader health and safety justifications held to weigh against the existence of a taking in Keystone. Bellaire and Allied conclude that the existence of a taking in this case follows a fortiori from Pennsylvania Coal : if a legislature cannot effect an uncompensated, purely economic transfer from coal companies to surface owners, then it surely cannot effect an uncompensated, purely economic transfer from coal companies who once signed a particular agreement to retired miners who are receiving benefits from a particular fund.
The Court disagrees with Bellaire and Allied that the nature of the governmental action supports their claim that the Coal Act violates the Takings Clause. First, the Court finds Bellaire and Allied's attempt to analogize this case to Pennsylvania Coal unpersuasive. Bellaire and Allied ignore the similarities between the nature of the governmental action in MPPAA and the Coal Act when they attempt to portray the Coal Act as implementing a private economic transfer between NBCWA signatories and retired miners prohibited by the Takings Clause in Pennsylvania Coal.
Second, this case does not involve the physical occupation of plaintiffs' property -- an area where courts have been more likely to find a taking. See Keystone Bituminous Coal Ass'n v. DeBenedictis, 480 U.S. 470, 488 n.18, 94 L. Ed. 2d 472, 107 S. Ct. 1232 (1987)("It is well settled that a taking may more readily be found when the interference with property can be characterized as a physical invasion by the government, . . . than when interference arises from some public program adjusting the benefits and burdens of economic life to promote the common good." (quoting Penn Central, 438 U.S. at 124)).
The governmental action at issue here requires assigned operators to pay a share of the costs for the provision of health care benefits to UMWA retirees. The Coal Act does not result in a physical invasion on any of plaintiffs' property. Rather, the Coal Act represents a reasonable Congressional response to a health care crisis in the coal industry which threatened to deprive retirees of their promised lifetime benefits. Thus, the first factor, the nature of the governmental action at issue, weighs against a judicial finding of an unconstitutional "taking."
b. Severity of Economic Impact
In determining whether the Coal Act violates the Takings Clause, the Court must also evaluate the economic impact of the regulation on Bellaire and Allied. Bellaire and Allied claim that the Coal Act requires total payments to the Combined Fund of $ 110 million and $ 50 million, after-tax, respectively. This figure is based on Bellaire and Allied's estimation that they will have to provide benefits to 1400 and 770 "orphans," respectively. Bellaire argues that this figure represents over nine times the value of the benefits it had contracted to provide.
Federal defendant and Trustees concede that, as with the MPPAA withdrawal liability provisions, "there is no doubt that the [Coal Act] completely deprives an employer of whatever amount of money it is obligated to pay to fulfill its statutory liability." Connolly, 475 U.S. at 225. They contend, however, that Bellaire and Allied's liability under the Coal Act is "not made in a vacuum." Id. They note that each assigned operator's liability to the Combined Fund depends on the number of its former employees who are receiving benefits from the Fund. They further note that while operators may have to bear some of the costs of providing benefits to orphans whose former employers are no longer in business, the Coal Act contains provisions that substantially reduce -- and might even eliminate -- this burden.
The Court agrees that Bellaire and Allied's costs may be offset. The Act requires the transfer of $ 210 million a year for each of the first three plan years from the overfunded 1950 UMWA Pension Plan to the Combined Fund. 26 U.S.C. § 9705(a)(1). The Act also provides for the interest from the Abandoned Mine Reclamation Fund (AMR) to be transferred to the Combined Fund until the year 2004. 30 U.S.C. § 1232(b), (h). The Act mandates that all but the first $ 70 million of this amount be used to offset the assigned operators' costs for providing benefits to orphan retirees. Id. § 9705(a)(3)(B). The Combined Fund estimates that these pension fund and AMR Fund transfers will be sufficient to pay for the benefits of all of the unassigned beneficiaries in the Combined Fund. Federal defendant and Trustees note, however, that even if these funds do not cover all orphan benefits, the funds will reduce the liabilities owed by Bellaire and Allied.
In assessing the severity of the economic impact between the plan and the employer's liability, the Court must examine the extent to which the liability imposed on the employer will be "out of proportion to its experience with the plan." Connolly, 475 U.S. at 226; see also In re Chateaugay Corp., 53 F.3d at 494 ("Where a regulation mandates contributions to a benefit fund, the proper yardstick of economic impact is that of proportionality.").
In the Court's view, this factor also weighs against finding an unconstitutional "taking" for two reasons. First, plaintiffs' liability is not out of proportion to its past experience with the Trusts. As the court in In re Chateaugay Corp. stated:
The employment relationship supplies the rational link by which [Plaintiffs'] premiums are tied to its past experience with the benefit plans. As with other signatory operators, the size of [Plaintiffs'] annual contribution depends entirely on the number of its former employees receiving benefits from the Combined Fund. By thus mooring a given company's funding obligations to a legitimate measure of its prior benefit from the UMWA health care system, the Coal Act rationally apportions future financial responsibility according to past participation. Consequently, we are not confronted with a case of Congress "forcing some people alone to bear the public burdens which, in all fairness and justice should be borne by the public as a whole."
53 F.3d at 494 (citing Penn Central, 438 U.S. at 123-124). Second, the Coal Act, as in Connolly, has provided a built-in mechanism, by way of the transfers, to offset the costs of providing health care to orphans.
c. Reasonable Investment-Backed Expectations
In determining whether the Coal Act violates the Takings Clause, the Court must also evaluate "the extent to which the regulation has interfered with distinct investment-back expectations." Connolly, 475 U.S. at 225. With regard to this factor, Bellaire and Allied first argue that their expectations rest on the express terms of the NBCWAs that they signed and on judicial interpretations of those agreements. Bellaire and Allied argue that health benefit obligations expired with the expiration of the underlying term. They contend that they satisfied all their NBCWA obligations under those agreements.
The Supreme Court addressed this precise argument in Connolly. The Supreme Court explained that:
Contracts . . . 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 power of Congress, therefore, its application may not be defeated by private contractual provisions. For the same reason, the fact that legislation disregards or destroys existing contractual rights does not always transform the regulation into an illegal taking.