Arch Coal, Inc. v. Hugler

• Decision Date: 16 March 2017
• Docket Number: Civil Action No. 16–669 (JDB)
• Citation: 242 F.Supp.3d 13
• Parties: ARCH COAL, INC., Plaintiff, v. Edward HUGLER, Acting Secretary of Labor, and U.S. Department of Labor. Defendants.
• Court: U.S. District Court — District of Columbia

242 F.Supp.3d 13

ARCH COAL, INC., Plaintiff,

v.Edward HUGLER, Acting Secretary of Labor,¹ and U.S. Department of Labor. Defendants.

Civil Action No. 16–669 (JDB)

United States District Court, District of Columbia.

Signed March 16, 2017

Laura Metcoff Klaus, Mark Elliott Solomons, Greenberg Traurig, LLP, Washington, DC, for Plaintiff.

Bailey Wilson Heaps, U.S. Department of Justice, Washington, DC, for Defendants.

MEMORANDUM OPINION

JOHN D. BATES, United States District Judge

The Office of Workers' Compensation Programs within the Department of Labor is charged with determining the "Responsible Operator" liable for a worker's black lung

benefits claim. The process has several steps, the first of which is the District Director's initial determination of the Responsible Operator. The Department issued a guidance document—Bulletin No. 16–01—instructing District Directors to make an initial determination that Arch Coal, Inc. (the plaintiff), is the Responsible Operator for certain miners who previously were employees of three subsidiaries that were once owned by Arch Coal but later were sold to a now-bankrupt company, Patriot Coal.

Arch Coal argues that this Bulletin is unlawful because it contradicts the Black Lung

Benefits Act's liability rules, 30 U.S.C. § 932(i), because it is a rule that the Department did not promulgate in accordance with the Administrative Procedure Act, 5 U.S.C. § 553(b), because it violates the APA's prohibition on retroactive rulemaking, and because the Department has acted arbitrarily and capriciously by not following its own self-insurance regulations. The Department, on the other hand, maintains that this Court has no jurisdiction because Congress has created an exclusive administrative adjudication process that can only be appealed to the circuit court. Alternately, it argues that Arch Coal has failed to state a claim because there is not yet a final agency action.² The Court will grant the Department's motion to dismiss for lack of jurisdiction and will not reach the Department's failure to state a claim argument.

BACKGROUND

I. STATUTORY AND REGULATORY BACKGROUND

The Black Lung

Benefits Act, 30 U.S.C. § 901 et seq. ,"provid[es] benefits to coal miners who are totally disabled by pneumoconiosis, also known as black lung disease, and to the surviving dependents of miners who died of the disease." Nat'l Mining Ass'n v. Dep't of Labor , 292 F.3d 849, 854 (D.C. Cir. 2002) (per curiam). Black lung disease is a "severe, and frequently crippling, chronic respiratory impairment ... caused by long-term inhalation of coal dust." Usery v. Turner Elkhorn Mining Co. , 428 U.S. 1, 6, 96 S.Ct. 2882, 49 L.Ed.2d 752 (1976).

Generally, a miner's most recent employer is responsible for paying claims to miners who become disabled or died due to employment in that operator's mine. See 20 C.F.R. § 725.494. The miner must have been employed by that operator for at least one year, and the operator must be capable of paying the claim. See id. §§ 725.494(c), (e), 725.495. The Department imposes various obligations on mine operators to ensure that they are able to pay these claims. An operator may choose to qualify as a self-insurer or it may purchase commercial insurance. See 30 U.S.C. §§ 932(b), 933(a). For a mine to self-insure, it must obtain Departmental approval and meet the Department's requirements—including posting a surety bond or other security—to guarantee that the mine operator can pay future liability. See id. ; 20 C.F.R. §§ 725.606(a), 726.109, 726.115. When there is no operator able to pay the claim, or if the Responsible Operator fails to pay, the Black Lung Disability Trust Fund provides payment. 26 U.S.C. § 9501(d)(1) ; 30 U.S.C. § 934(b)(1)(A)–(B) ; see also Regulations Implementing the Federal Coal Mine Health & Safety Act of 1969, as Amended 65 Fed. Reg. 79,920, 79,924 (Dec. 20, 2000). The Trust Fund is administered by the Department, and financed by an excise tax on coal. See 26 U.S.C. §§ 4121, 9501.

The Act lays out a process for adjudicating miners' claims and determining the Responsible Operator. This adjudication process largely adopts the procedures outlined in the Longshore and Harbor Workers' Compensation Act, 33 U.S.C. §§ 901 – 950. See 30 U.S.C. § 932(a) (incorporating provisions of the Longshore Act into the BLBA). To seek benefits, a worker files a claim with the applicable District Director for the Office of Workers' Compensation Programs. See 33 U.S.C. § 919 ; 20 C.F.R. § 725.401. The District Director then investigates the claim and makes a preliminary determination of the miner's eligibility and of the Responsible Operator. See 20 C.F.R. §§ 725.401 –23. These determinations are explained in a "proposed decision and order." Id. § 725.418. The claimant and Responsible Operator may then acquiesce to the proposed decision, or may request a hearing before an Administrative Law Judge. See id. § 725.419; 33 U.S.C. § 919(c), (d) ; see also 20 C.F.R. §§ 725.450 –83 (detailing hearing procedures before the ALJ). If the parties request a hearing, the ALJ makes a de novo determination of the Responsible Operator's liability. See 20 C.F.R. § 725.455(a) ; Pyro Mining Co. v. Slaton , 879 F.2d 187, 190 (6th Cir. 1989). In that hearing, the District Director "bears the burden of proof that the responsible operator is potentially liable." Ark. Coals, Inc. v. Lawson , 739 F.3d 309, 313 (6th Cir. 2014) (citing 20 C.F.R. § 725.495(b), (d) ).

The parties may then seek review of the ALJ's decision by a panel of the Benefits Review Board. 33 U.S.C. § 921(b). The panel's decision can then be appealed to the Board en banc , or to a federal court of appeals. See id. §§ 921(b)(5), (c) ; 20 C.F.R. § 802.407(b).

II. FACTUAL AND PROCEDURAL BACKGROUND

Arch Coal is a mining corporation that was formed in 1997. Compl. [ECF No. 1] ¶ 26. It received the Department's authorization to self-insure against its future black lung

benefits liability. Id. ¶ 25, 28. Arch Coal's self-insurance covered the future liability of three wholly-owned subsidiaries: Hobet Mining, Inc., Apogee Coal Company, and Catenary Coal Company. See

id. ¶¶ 28–29. In 2005, Arch Coal sold the three subsidiaries to Magnum Coal Company. Id. ¶ 29. According to Arch Coal, the purchase agreement stated that Magnum would assume all liability for the three subsidiaries. Id. ¶ 30. In 2008, another mining company, Patriot Coal, acquired the three subsidiaries, along with their liability for future black lung benefits claims. See

id. ¶ 32. The Department approved Patriot Coal's self-insurance plan. Id. ¶¶ 34–35.

In May 2015, Patriot Coal declared bankruptcy (for the second time). Id. ¶¶ 36–37. The bankruptcy court approved the sale of the three subsidiaries to other companies in October 2015, but that sale did not transfer Patriot Coal's black lung

benefits liability to the purchasers. See

id. ¶¶ 38–40.

In November 2015, the Department issued Bulletin No. 16–01 to "provide guidance for district office staff in adjudicating claims in which the miner's last coal-mine employment of at least one year was with one of the 50 subsidiary companies that have been affected by the Patriot Coal Corporation bankruptcy." Bulletin No. 16–01 [ECF No. 10–2] at 1. The 50 subsidiaries include the three at issue here. See id. at 2–3. The Bulletin explains that the purchasers of Patriot Coal's mining operations are not liable for future claims, "except for those miners who continue to work for" the purchasers. Id. at 1. The Bulletin notes that "Patriot was authorized to self-insure its federal black lung

liabilities as well as the liabilities of its subsidiaries" in certain states, and also carried some commercial insurance. Id. at 1. The Bulletin therefore outlines "[p]rocedures for handling newly filed claims." Id. at 2. In relevant part, it states that, for the three subsidiaries at issue here, staff must "[d]etermine whether the claim is covered by Arch Coal's self-insurance or an Arch Coal commercial insurance policy." Id. at 3. "If commercial coverage can be identified," notice of the claim must be sent "to the appropriate carrier." Id. Where "no commercial insurance can be identified, and the miner's employment falls within a period of Arch Coal's self-insurance," which "generally requires that the miner last worked for the subsidiary before January 1, 2006," notice of the claim must be sent to Arch Coal. Id.

Pursuant to the Bulletin, District Directors around the country made preliminary determinations that Arch Coal was the Responsible Operator for numerous claims. Compl. ¶¶ 56–57. At the time the complaint was filed in April 2016, this was 70 claims; at oral argument in January 2017, Arch Coal updated this number to 175 claims. See id. ¶ 57. The District Directors' determinations required Arch Coal to appear in administrative proceedings to object to this designation and defend against the claims. Arch Coal estimates that defending against these claims costs approximately $10,000 per claim, on average. Id. ¶ 59.

In response to the District Directors' determinations, Arch Coal filed this action in April 2016. The Department then moved to dismiss. After full briefing, the Court held a hearing on January 26, 2017.

LEGAL STANDARD

The government has moved to dismiss for lack of subject matter jurisdiction and failure to state a claim. See Fed. R. Civ. P. 12(b)(1), (b)(6). "[I]n passing on a motion to dismiss ... on the ground of lack of jurisdiction over the subject matter ..., the allegations of the complaint should be construed favorably to the pleader." Scheuer v. Rhodes , 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974), abrogated on other grounds by Harlow v. Fitzgerald , 457 U.S. 800, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982). Likewise, when considering a motion to dismiss for failure to state a claim, a court presumes the truth of the complaint's factual allegations. Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). However, when...