United States District Court, District of Columbia
MICHAEL H. HOLLAND, as Trustee of the United Mine Workers of America 1992 Benefit Plan, et al., Plaintiffs,
ARCH COAL, INC., Defendant.
L. FRIEDRICH UNITED STATES DISTRICT JUDGE
Trustees of the United Mine Workers of America 1992 Benefit
Plan (1992 Plan) bring this action under the Employee
Retirement Income Security Act of 1974 (ERISA), as
amended, 29 U.S.C. §§ 1001 et seq.,
to compel defendant Arch Coal, Inc. to post security pursuant
to the Coal Industry Retiree Health Benefit Act of 1992 (Coal
Act), as amended, 26 U.S.C. §§ 9701 et
seq. The defendant argues that the Coal Act does not
require it to post security and that, in any event, the 1992
Plan already has security from another source in excess of
what the Coal Act permits. The defendant counterclaims to
recover that excess. Before the Court are the parties'
cross-motions for summary judgment on both claims.
Relevant Statutory Provisions
Coal Act was Congress's solution to decades of
contentious negotiations between employers in the coal
industry and the United Mine Workers of America
(‘UMWA') regarding the provision of employee
benefits to coal miners.” Holland v. Williams
Mountain Coal Co., No. CIV. A. 96-1405CKKJMF, 2000 WL
284298, at *1 (D.D.C. Feb. 24, 2000), aff'd, 256
F.3d 819 (D.C. Cir. 2001). Before the Coal Act, a collection of
union agreements called “NBCWAs” required coal
operators to provide benefits to their own retirees through
Individual Employer Plans and to make contributions to a
multiemployer fund that provided benefits to
“orphaned” workers whose employers had gone out
of business. Dist. 29, United Mine Workers of Am. v.
United Mine Workers of Am. 1992 Ben. Plan, 179 F.3d 141,
143 (4th Cir. 1999). But when coal operators began exiting
the industry-or, in some cases, shifting to non-union
workforces-“the number of orphaned retirees rose
rapidly, ” id., and the NBCWAs faced a
“serious financial crisis, ” Barnhart v.
Sigmon Coal Co., 534 U.S. 438, 444 (2002).
1992, Congress intervened and passed the Coal Act
“amidst a maelstrom of contract negotiations,
litigation, strike threats, a Presidential veto[, ] . . .
threats of a second veto, . . . high pressure lobbying, [and]
wide disagreements among Members of Congress.”
Id. at 445-46 (footnotes omitted). The Coal Act
“replace[d] the [previous] contract-based system with a
comprehensive statutory system.” Holland, 2000
WL 284298, at *1. And it established “three vehicles
for financing retirees' health benefits.” Dist.
29, United Mine Workers of Am., 179 F.3d at 143.
it created a “Combined Fund” that covers all
workers receiving retirement benefits under existing NBCWAs
as of July 20, 1992. Id. (citing 26 U.S.C. §
9703(f)). Second, it required operators with individual
employer plans in place as of February 1, 1993 to continue
maintaining those plans until they go out of business.
Id. (citing § 9711(a)-(b)). Third, it
established the “1992 UMWA Benefit Plan” as a
“backstop” for anyone not covered by the Combined
Fund or an individual employer plan-that is, “those who
would have been eligible under the Combined Fund but for its
cut-off date and those whose employers orphan them by going
out of business.” Id. (citing § 9712(b));
see also Bellaire Corp. v. Shalala, 995 F.Supp. 125,
130 (D.D.C. 1997) (describing the 1992 Plan as “a
safety net to provide health benefits to people who should
receive coverage under an individual employer plan but do
third vehicle-the 1992 Plan-is the subject of this lawsuit,
and its Trustees are the plaintiffs in this case. Section
9712(d) of the Coal Act places responsibility “for
financing the benefits” of the 1992 Plan on entities
called “1988 last signatory operators.” §
9712(d). Specifically, these entities must satisfy three
• “(A) The payment of a monthly per beneficiary
• (B) The provision of a security (in the form of a
bond, letter of credit, or cash escrow)[; and]
• (C) [T]he payment of an additional backstop premium
[in certain circumstances].” § 9712(d)(1)(A)-(C).
of relevance here-§ 9712 also makes “any related
person” to a 1988 last signatory operator
“jointly and severally liable with such operator for
any amount required to be paid by such operator under this
section.” § 9712(d)(4).
first question in this case is whether the joint and several
liability imposed on “related person[s]” by
§ 9712(d)(4) extends to all three of the
financing requirements set forth in §
9712(d)(1)-including the “provision of security”
in subsection (B)-or whether it is limited to the
“payment[s]” mentioned in subsections (A) and
second question is whether the obligation to provide
security-assuming such an obligation exists-is satisfied by a
letter of credit even after that letter of credit has been
drawn down and converted into cash by the 1992 Plan's
final, related question is whether the Coal Act requires the
1992 Plan to use proceeds from a called security for a
particular purpose-namely, to provide the benefits secured by
that security-or whether the 1992 Plan may treat the proceeds
as a general asset subject only to the terms ...