Association of Bituminous Contractors, Inc. v. Apfel

Decision Date18 September 1998
Docket NumberNo. 97-5132,97-5132
Parties, 22 Employee Benefits Cas. 1804 ASSOCIATION OF BITUMINOUS CONTRACTORS, INC., Appellant, v. Kenneth S. APFEL, Commissioner of the Social Security Administration, et al., Appellees.
CourtU.S. Court of Appeals — District of Columbia Circuit

Appeal from the United States District Court for the District of Columbia (93cv2304).

William H. Howe argued the cause for appellant, with whom Richard A. Steyer and Mary Lou Smith were on the briefs.

Sushma Soni, Attorney, United States Department of Justice, argued the cause for the federal appellee, with whom, Frank W. Hunger, Assistant Attorney General, Mary Lou Leary, United States Attorney at the time the brief was filed, and Douglas N. Letter, Litigation Counsel, were on the brief.

Peter Buscemi argued the cause for appellees United Mine Workers of America, et al., with whom David W. Allen and John R. Mooney were on the brief.

Before: SILBERMAN, TATEL, and GARLAND, Circuit Judges.

Opinion for the Court filed by Circuit Judge SILBERMAN.

SILBERMAN, Circuit Judge:

Appellant Association of Bituminous Contractors contends that because its members are not in the "coal industry" as that term is used in the Coal Industry Retiree Health Benefit Act of 1992, the Commissioner of the Social Security Administration may not assign responsibility for coal industry retirees to its member companies. It further claims that "as applied," the Act violates its members' Fifth Amendment due process rights. We affirm the district court's grant of summary judgment in favor of the Commissioner, but on somewhat different grounds than those on which it relied. I.

The Association of Bituminous Contractors (Association) is a multi-employer association of contractors that specialize in coal mine construction and related projects. 1 The Association was formed in 1968 for the purpose of negotiating and entering into collective bargaining agreements with the United Mine Workers of America (mine workers union). Its first agreement was known as the "Construction Work Addendum to the National Bituminous Coal Wage Agreement of 1968"; all subsequent agreements have borne the "National Coal Mine Construction Agreement" label (Construction Agreements). The Bituminous Contractors' coal mining producers have their own collective bargaining association, the Bituminous Coal Operators' Association, which has negotiated a separate series of Coal Wage Agreements (National Bituminous Coal Wage Agreements) with the mine workers union.

From the Association's inception until mid-1978, employees and retirees of its member companies were eligible to receive benefits from plans established pursuant to the National Bituminous Coal Wage Agreements, including the Welfare and Retirement Fund of 1950, the 1950 Benefit Plan, and the 1974 Benefit Plan. The Association's members never contributed to the 1950 Fund or the 1950 Plan, but pursuant to the 1974 and 1978 Construction Agreements, the Association's members were required to contribute to the 1974 Plan. That obligation ended on May 31, 1978, when the Association agreed to transfer all 1974 Plan beneficiaries whose last employment was with a construction contractor that was a signatory to the 1974 Construction Agreement to the newly established Retired Construction Workers' Benefit Trust (the Construction Trust). Those construction retirees who were eligible to draw benefits from the 1950 Plan (workers who retired before 1976), however, were left behind; 2 those retirees' benefits were funded by signatories to the National Bituminous Coal Wage Agreements--the coal producers--and not the Association's member companies even after 1978.

By the late 1980s, the continuing viability of the 1950 and 1974 Plans was in serious doubt, and this led to labor unrest. The various causes of the health benefit funding crisis which precipitated the Coal Act have been described before, see, e.g., Carbon Fuel Co. v. USX Corp., 100 F.3d 1124, 1127-29 (4th Cir.1996); Davon, Inc. v. Shalala, 75 F.3d 1114, 1117-20 (7th Cir.1996); THE SECRETARY OF LABOR'S ADVISORY COMMISSION ON UNITED MINE WORKERS OF AMERICA RETIREE HEALTH BENEFITS, COAL COMMISSION REPORT: A REPORT TO THE SECRETARY OF LABOR AND THE AMERICAN PEOPLE (1990), and we see no need to repeat them here. Suffice it to say that the Congress found it "necessary to modify the current private health care benefit plan structure for retirees in the coal industry to identify persons most responsible for plan liabilities in order to stabilize plan funding and allow for the provision of health care benefits to such retirees." Coal Industry Retiree Health Benefit Act of 1992, Pub.L. No. 102-486, § 19142(a)(2), 106 Stat. 3036, 3037 (1992) (codified at 26 U.S.C. § 9701 note (1994)).

The Coal Act was intended to remedy problems with the provision and funding of health care benefits to retirees in the coal industry. The Act established the Combined Benefit Fund as a new source of benefits for coal industry retiree beneficiaries who were eligible under the 1950 and 1974 Plans, see 26 U.S.C. § 9703(f), and a Board of Trustees to administer the Combined Funds, see 26 U.S.C. § 9702. It also directed that the 1950 and 1974 Plans be merged into the Combined Fund, see 26 U.S.C. § 9702(a)(2), and further required that monies be transferred to the Combined Fund from the 1950 Plan and certain other funds, see 26 U.S.C. § 9705; 30 U.S.C. § 1232(h) (1994). The Combined Fund is to be financed on an ongoing basis by annual premium payments from "assigned operator[s]." 26 U.S.C. § 9704(a).

The Act defines "assigned operator[s]" as "the signatory operator[s] to which liability ... is assigned under section 9706." 26 U.S.C. § 9701(c)(5). Section 9706 directs the Commissioner of the Social Security Administration to "assign each [eligible] coal industry retiree ... to a signatory operator which ... remains in business." 26 U.S.C. § 9706(a). It also binds the Commissioner to a particular assignment scheme. Beneficiaries are to be assigned to their most recent employer of at least two years, so long as that employer was a signatory to a 1978 or later "coal wage agreement"; if none, to the most recent 1978 or subsequent agreement signatory employer, without regard to the term of employment; and last, to the pre-1978 signatory operator still in business which employed the retiree for the longest period. 26 U.S.C. § 9706(a)(1)-(3). All assigned operators must be signatory operators, which the statute defines as "person[s] which [are] or [were] signator[ies] to a coal wage agreement." 26 U.S.C. § 9701(c)(1). "Coal wage agreement," in turn, is defined as the National Bituminous Coal Wage Agreement, 26 U.S.C. § 9701(b)(1)(A), or "any other agreement entered into between an employer in the coal industry and the United Mine Workers of America that required or requires ... contributions to the 1950 [ ] Plan or the 1974 [ ] Plan, or any predecessor thereof," 26 U.S.C. § 9701(b)(1)(B)(ii).

In October 1993, the Social Security Administration began assigning coal industry retiree beneficiaries to the Association's members. Soon after, the Combined Fund Trustees sought to collect premium payments from the Association's members on the basis of the Commissioner's assignments. Within a month of the Commissioner's action, the Association brought suit in the district court seeking a declaration that the Act did not apply to its members and, in the alternative, that the Act as applied to its members violated the substantive due process component of the Fifth Amendment to the United States Constitution. The gravamen of appellant's statutory argument, which we describe more completely below, was that the coal contractors were not "employer[s] in the coal industry," as section 9701 of the Coal Act requires, but were rather employers in the construction industry. The district court, however, thought it clear that "coal industry" included coal contractors and implied that the Coal Act required the Commissioner to assign beneficiaries to the Association's member companies.

Appellant's "as applied" constitutional challenge is premised on its view that its members had made a clean break from the Benefit Plans in 1978, when the Construction Trust, which remains viable today, was established. The Association claims that its members had done all the mine workers union asked it to do by transferring all beneficiaries who practicably could be identified with its member companies from the 1974 Plan to the Construction Trust. To require its members to contribute to the Combined Fund would force them to solve problems that they were not responsible for creating. The district court, however, concluded that, because appellant's member companies participated in and benefitted from the Benefit Plans, for a time without contributing to their funding, they could be made part of the solution to the problem of their underfunding without offending the Constitution. For these reasons, the district court entered summary judgment in favor of the Commissioner and the Combined Fund Trustees.

II.

The Association renews its statutory and constitutional arguments on appeal. The Association claims that the Coal Act unambiguously excludes coal construction companies from the term "coal industry." And, it claims that even if the statute is ambiguous, the Commissioner's interpretation of the Coal Act is not entitled to deference because Congress has not delegated him policymaking authority and because his interpretation was not clearly set forth prior to this litigation. The Association also contends that the Commissioner's interpretation is not reasonable, and that the Commissioner arbitrarily and capriciously relied on lists provided by the Combined Fund Trustees in making his assignments.

We begin with appellant's primary claim, that its members cannot be "assigned operators" by the Coal Act's...

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