Bellaire Corp. v. Shalala, Civil Action No. 93-183(EGS).
| Decision Date | 07 May 1997 |
| Docket Number | Civil Action No. 93-183(EGS).,Civil Action No. 93-2304(EGS).,Civil Action No. 93-944(EGS). |
| Citation | 995 F.Supp. 125 |
| Court | U.S. District Court — District of Columbia |
| Parties | BELLAIRE CORPORATION, et al., Plaintiffs, v. Donna E. SHALALA, et al., Defendants. ASSOCIATED ELECTRIC COOPERATIVE, INC., Plaintiff, v. Marty D. HUDSON, et al., Defendants. ASSOCIATION OF BITUMINOUS CONTRACTORS, INC., Plaintiff, v. Donna E. SHALALA, et al., Defendants. |
Plaintiffs, Bellaire Corporation ("Bellaire"), Allied-Signal, Inc. ("Allied"), Associated Electric Cooperative, Inc. ("AECI"), and Association of Bituminous Contractors, Inc. ("ABC"), commenced these separate lawsuits against the United States Department of Health and Human Services ("federal defendant") and the United Mine Workers of America Combined Benefit Fund and its Trustees ("Trustees") to challenge the constitutionality of the Coal Industry Retiree Health Benefit Act of 1992, 26 U.S.C. §§ 9701-9721 ("Coal Act"). The Court has consolidated these cases for the sole purpose of resolving in one Opinion the related issues raised by the parties.
Plaintiffs seek both declaratory and injunctive relief from enforcement of the Coal Act. They contend that the Coal Act violates both the substantive component of the Due Process and Takings Clauses of the Fifth Amendment,1 because it imposes on them the financial responsibility for health benefits for retired coal miners — many of whom were never employed by plaintiffs — and dependents of those miners. Defendants, on the other hand, maintain that the Coal Act represents a rational Congressional response to address an escalating health-care crisis in the coal industry.
Upon consideration of the parties' crossmotions for summary judgment, the points and authorities in support of and in opposition thereto, the arguments of counsel, and for the reasons set forth herein, the Court concludes that the Coal Act, as applied to each of the plaintiffs, does not violate either the Due Process or the Takings Clauses of the Fifth Amendment. The Court also concludes that the Secretary did not abuse her discretion in applying the Coal Act to ABC. Accordingly, defendants' motions for summary judgment shall be GRANTED, and plaintiffs' motions for summary judgment shall be DENIED.
The history of the Coal Act has been well chronicled. See, e.g., Davon, Inc. v. Shalala, 75 F.3d 1114, 1127 (7th Cir.1996), cert. denied, ___ U.S. ___, 117 S.Ct. 50, 136 L.Ed.2d 14 (1996) (No. 95-1709) and ___ U.S. ___, 117 S.Ct. 50, 136 L.Ed.2d 14 (1996) (No. 95-1751) (); 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, 116 S.Ct. 64, 133 L.Ed.2d 26 (1995) (same); In re Chateaugay Corp., 53 F.3d 478, 491 (2d Cir.1995), cert. denied, 516 U.S. 913, 116 S.Ct. 298, 133 L.Ed.2d 204 (1995) (same); Unity Real Estate Co. v. Hudson, 889 F.Supp. 818, 825 (W.D.Pa.1995) (same). Nevertheless, for the purposes of this Opinion, the Court will provide a brief summary.
Congress enacted the Coal Act to remedy a crisis in the funding of the two multiemployer health benefit plans, the United Mine Workers of America 1950 Benefit Plan and Trust ("1950 Trust") and the United Mine Workers of America 1974 Benefit Plan and Trust ("1974 Trust"), which threatened to deprive over 100,000 retired coal miners and their dependents of their promised health benefits. The 1950 and 1974 Trusts were created and funded through a series of collective bargaining agreements between the United Mine Workers of America ("UMWA") and bituminous coal operators that were represented in multiemployer collective bargaining with the UMWA by the Bituminous Coal Operators Association ("BCOA").
Since the 1940s, the agreements between the UMWA and BCOA have been known as National Bituminous Coal Wage Agreements ("NBCWAS"). These agreements governed the terms and conditions of employment in bituminous coal mines operated by BCOA members, as well as "me, too" operators.2 Each NBCWA contained provisions requiring signatory coal operators to provide health benefits for both active and retired miners and their dependents. The 1978 NBCWA established the current contractual framework for providing health benefits to UMWA retirees. This agreement also introduced a provision, commonly referred to as the "evergreen clause,"3 which specifically obligated signatory coal operators to continue making benefits contributions for as long as the NBCWA and successive NBCWAs required such contributions, regardless of whether the operators actually signed subsequent NBCWAs. See United Mine Workers of America 1974 Pension v. Pittston Co., 984 F.2d 469 (D.C.Cir.1993) ().
That agreement, and every agreement thereafter, required each signatory to provide for health benefits to retired UMWA miners, their spouses and dependents in three ways: (1) by contributing to the 1950 Trust, which provided benefits to miners who had retired before January 1, 1976, and their spouses and dependents; (2) by establishing a single employer to provide benefits to its own post-1975 retirees, their spouses and dependents; and (3) by contributing to the 1974 Trust, which provided benefits to post-1975 retirees, their spouses and dependents whose former employer was either "no longer in business," or no longer a signatory to an NBCWA. The most recent NBCWA was executed on February 1, 1988.
Despite these contractual provisions, three factors contributed to the crisis which resulted in the passage of the Coal Act. First, during the 1980s, numerous coal companies that had signed the 1978 NBCWA ceased contributing to the 1950 and 1974 Trusts, and discontinued their individual employers plans. By failing to make any further contributions, the remaining companies were forced to pay higher contributions to finance health coverage for retirees who had been abandoned by their former employees. The increased financial strain on these remaining companies created a strong incentive for them to withdraw from contributing to the Trusts. Second, numerous bituminous coal industry retirees last worked for employers that were no longer in business or that could not be traced. Third, several coal operators obtained so-called "non-conforming agreements," which allowed them to discontinue or to reduce their contributions to the 1950 and/or 1974 Trusts. Meanwhile, the increasing costs of health care resulted in greater contributions for the remaining companies.
By 1990, the 1950 and 1974 Trusts had incurred a debt of over $100 million and their funding bases were declining faster than the beneficiary population. The Trusts' ability to continue to provide health care benefits was severely jeopardized, and the issue of the provision of health care benefits had contributed to a protracted strike at the Pittston Coal Company. The resulting uncertainty and significant labor disputes and unrest threatened to disrupt coal production and the economies of several coal-producing states. Against this background, Congress enacted the Coal Act.
A mediator, appointed by the Secretary of Labor, ultimately resolved the Pittson dispute. One of the negotiated terms of the settlement provided for the creation of the Secretary of Labor's Advisory Commission on United Mine Workers of America Retiree Health Benefits (the "Coal Commission" or the "Commission"), an industry-wide commission authorized to analyze the retiree health care crisis. The Coal Commission submitted its findings to the Secretary of Labor on November 5, 1990. See Coal Commission Report: A Report to the Secretary of Labor and the American People (Nov.1990) ("Commission Report"). In its report, the Commission found that: (1) the number of coal companies making contributions to the Trusts have declined significantly; (2) the costs of health care between 1950 and 1990 had dramatically increased; and (3) the number of "orphaned"4 retirees had grown. Committee Report, at 2. Critically, the Commission also found 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.
As a means of resolving the health care crisis, the Commission recommended that the entire coal industry pay the cost of providing for the orphan retirees by the imposition of an industry-wide tax; or alternatively, that only current and former signatories to the NBCWAs be required to finance the orphans' health costs. Following the issuance of the Commission's report, Congress held hearings to consider that report. Congress ultimately enacted the Coal Act based on the alternative recommendation of the Coal Commission that current and past signatories...
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