• View enhanced case on Westlaw
  • KeyCite this case on Westlaw
  • http://laws.findlaw.com/us/524/498.html
    Jump to cited page 522 within this case
    Cases citing this case: Supreme Court
    Cases citing this case: Circuit Courts
    Case Num. 9742 NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co ., 200 U.S. 321, 337 .

    U.S. Supreme Court

    Syllabus

    EASTERN ENTERPRISES v. APFEL, COMMISSIONER OF SOCIAL SECURITY

    ETAL . CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT

    No. 97-42.
    Argued March 4, 1998 -
    Decided June 25, 1998

    In 1946, a historic labor agreement between coal operators and the United Mine Workers of America (UMWA) led to the creation of benefit funds that provided for the medical expenses of miners and their dependents, with the precise benefits determined by UMWAappointed trustees. Those trusts served as the model for the United Mine Workers of America Welfare and Retirement Fund (1947 W&R Fund), which was established by the National Bituminous Coal Wage Agreement of 1947 (1947 NBCWA). The Fund used proceeds of a royalty on coal production to provide benefits to miners and their families, and trustees determined benefit levels and other matters. The 1950 NBCWA created a new fund (1950 W&R Fund), which used a fixed amount of royalties for benefits, gave trustees the authority to establish and adjust benefit levels so as to remain within the budgetary restraints, and did not guarantee lifetime health benefits for retirees and their dependents. The 1950 W&R Fund continued to operate with benefit levels subject to revision until the Employee Retirement Income Security Act of 1974 (ERISA) introduced specific funding and vesting requirements for pension plans. To comply with ERISA, the UMWA and the Bituminous Coal Operators' Association entered into the 1974 NBCWA, which created four new trusts. It was the first agreement to expressly reference health benefits for retirees, but it did not alter the employers' obligation to contribute a fixed amount of royalties. The new agreement did not extend the employers' liability beyond the term of the agreement. Miners who retired before 1976 were covered by the 1950 Benefit Plan and Trust (1950 Benefit Plan), and those retiring after 1975 were covered by the 1974 Benefit Plan and Trust (1974 Benefit Plan). The increase in benefits and other factors-the decline in coal production, the retirement of a generation of miners, and rapid acceleration in health care costsquickly caused financial problems for the 1950 and 1974 Benefit Plans. To ensure the Plans' solvency, the 1978 NBCWA obligated signatories to make sufficient contributions to maintain benefits as long as they were in the coal business. As the Plans continued to suffer financially, employers began to withdraw, leaving the remaining signatories to absorb the increasing cost of covering retirees left behind.

    Ultimately, Congress passed the Coal Industry Retiree Health Benefit Act of 1992 (Coal Act) to stabilize funding and provide for benefits to retirees by merging the 1950 and 1974 Benefit Plans into a new fund (Combined Fund) that provides substantially the same benefits as provided by the 1950 and 1974 Plans and is funded by premiums assessed against coal operators that signed any NBCWA or other agreement requiring contributions to the 1950 or 1974 Benefit Plans. Respondent, Commissioner of Social Security, assigns retirees to signatory coal operators according to the following allocation formula: first, to the most recent signatory to the 1978 or a subsequent NBCWA to employ the retiree in the coal industry for at least 2 years, 26 U.S.C. 9706(a)(1); second, to the most recent signatory to the 1978 or a subsequent NBCWA to employ the retiree in the coal industry, 9706(a)(2); and third, to the signatory operator that employed the retiree in the coal industry for the longest period of time prior to the effective date of the 1978 NBCWA, 9706(a)(3).

    Petitioner Eastern Enterprises (Eastern) was a signatory to every NBCWA executed between 1947 and 1964. It is "in business" within the Coal Act's meaning, although it left the coal industry in 1965, after transferring its coal operations to a subsidiary (EACC) and ultimately selling its interest in EACC to respondent Peabody Holding Company, Inc. (Peabody). Under the Coal Act, the Commissioner assigned Eastern the obligation for Combined Fund premiums respecting over 1,000 retired miners who had worked for the company before 1966. Eastern sued the Commissioner and other respondents, claiming that the Coal Act violates substantive due process and constitutes a taking in violation of the Fifth Amendment. The District Court granted respondents summary judgment, and the First Circuit affirmed.

    Held: The judgment is reversed, and the case is remanded.

    110 F. 3d 150, reversed and remanded.

    JUSTICE O'CONNOR , joined by THE CHIEF JUSTICE , JUSTICE SCALIA , and JUSTICE THOMAS , concluded: 1. The declaratory judgment and injunction petitioner seeks are an appropriate remedy for the taking alleged in this case, and it is Cite as: ____ U. S. ____ (1998)3 Syllabus within the district courts' power to award such equitable relief. The Tucker Act may require that a just compensation claim under the Takings Clause be filed in the Court of Federal Claims, but petitioner does not seek compensation from the Government. In situations analogous the one here, this Court has assumed the lack of a compensatory remedy and has granted equitable relief for Takings Clause violations without discussing the Tucker Act's applicability. See, e.g. , Babbitt v. Youpee, 519 U.S. 234, 234 -235. Pp. 17-20. 2. The Coal Act's allocation of liability to Eastern violates the Takings Clause. Pp. 20-35. (a) Economic regulation such as the Coal Act may effect a taking. United States v. Security Industrial Bank, 459 U.S. 70, 78 . The party challenging the government action bears a substantial burden, for not every destruction or injury to property by such action is a constitutional taking. A regulation's constitutionality is evaluated by examining the governmental action's "justice and fairness." See Andrus v. Allard, 444 U.S. 51, 65 . Although that inquiry does not lend itself to any set formula, three factors traditionally have informed this Court's regulatory takings analysis: "the economic impact of the regulation, its interference with reasonable investment backed expectations, and the character of the governmental action." Kaiser Aetna v. United States , 444 U.S. 164, 175 . Pp. 20-22. (b) The analysis in this case is informed by previous decisions considering the constitutionality of somewhat similar legislative schemes: Usery v. Turner Elkhorn Mining Co., 428 U.S. 1 (Black Lung Benefits Act of 1972); Connolly v. Pension Benefit Guaranty Corporation, 475 U.S. 211 (Multiemployer Pension Plan Amendments Act of 1980); and Concrete Pipe & Products of Cal., Inc. v. Construction Laborers Pension Trust for Southern Cal., 508 U.S. 602 (same). Those opinions make clear that Congress has considerable leeway to fashion economic legislation, including the power to affect contractual commitments between private parties; and that it may impose retroactive liability to some degree, particularly where it is "confined to the short and limited periods required by the practicalities of producing national legislation," Pension Benefit Guaranty Corporation v. R. A. Gray & Co., 467 U.S. 717, 731 . The decisions, however, have left open the possibility that legislation might be unconstitutional if it imposes severe retroactive liability on a limited class of parties that could not have anticipated the liability, and if the extent of that liability is substantially disproportionate to the parties' experience. Pp. 22-27. (c) The Coal Act's allocation scheme, as applied to Eastern, presents such a case, when the three traditional factors are considered. As to the economic impact, Eastern's Coal Act liability is substantial, 4EASTERN ENTERPRISES v. APFEL Syllabus and the company is clearly deprived of the $50 to $100 million it must pay to the Combined Fund. An employer's statutory liability for multiemployer plan benefits should reflect some proportionality to its experience with the plan. Concrete Pipe, supra, at 645. Eastern contributed to the 1947 and 1950 W&R Funds, but ceased its coal mining operations in 1965 and neither participated in negotiations nor agreed to make contributions in connection with the Benefit Plans established under the 1974, 1978, or subsequent NBCWA's. It is the latter agreements, however, that first suggest an industry commitment to funding lifetime health benefits for retirees and their dependents. During the years that Eastern employed miners, such benefits were far less extensive than under the 1974 NBCWA, were unvested, and were fully subject to alteration or termination. To the extent that Eastern may be able to seek indemnification from EACC or Peabody under contractual arrangements that might insure Eastern against liabilities arising out of its former coal operations, that indemnity is neither enhanced nor supplanted by the Coal Act and does not affect the availability of the declaratory relief sought here. Respondents' argument that the Coal Act moderates and mitigates the economic impact by allocating some of Eastern's former employees to signatories of the 1978 NBCWA is unavailing. That Eastern is not forced to bear the burden of lifetime benefits for all of its former employees does not mean that its liability is not a significant economic burden. For similar reasons, the Coal Act substantially interferes with Eastern's reasonable investment-backed expectations. It operates retroactively, reaching back 30 to 50 years to impose liability based on Eastern's activities between 1946 and 1965. Retroactive legislation is generally disfavored. It presents problems of unfairness because it can deprive citizens of legitimate expectations and upset settled transactions. General Motors Corp. v. Romein, 503 U.S. 181, 191 . The distance into the past that the Coal Act reaches back to impose liability on Eastern and the magnitude of that liability raise substantial fairness questions. The pre-1974 NBCWA's do not demonstrate that there was an implicit industrywide agreement to fund lifetime health benefits at the time that Eastern was involved in the coal industry. The 1947 and 1950 W&R Funds, in which Eastern participated, operated on a pay-as-you-go basis and the classes of beneficiaries were subject to the trustees' discretion. Not until 1974, when ERISA forced revisions to the 1950 W&R Fund and when Eastern was no longer in the industry, could lifetime medical benefits have been viewed as promised. Thus, the Coal Act's scheme for allocating Combined Fund premiums is not calibrated either to Eastern's past actions or to any agreement by the company. Nor would the Cite as: ____ U. S. ____ (1998)5 Syllabus Federal Government's pattern of involvement in the coal industry have given Eastern sufficient notice that lifetime health benefits might be guaranteed to retirees several decades later. Eastern's liability for such benefits also differs from coal operators' responsibility under the Black Lung Benefits Act of 1972, which spread the cost of employment-related disabilities to those who profited from the fruits of the employees' labor, Turner Elkhorn, supra, at 18. Finally, the nature of the governmental action in this case is quite unusual in that Congress' solution to the grave funding problem that it identified singles out certain employers to bear a substantial burden, based on the employers' conduct far in the past, and unrelated to any commitment that the employers made or to any injury they caused. Pp. 27-35. JUSTICE KENNEDY concluded that application of the Coal Act to Eastern would violate the proper bounds of settled due process principles. Although the Court has been hesitant to subject economic legislation to due process scrutiny as a general matter, this country's law has harbored a singular distrust of retroactive statutes, and that distrust is reflected in this Court's due process jurisprudence. For example, in Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15 , the Court held that due process requires an inquiry into whether a legislature acted in an arbitrary and irrational way when enacting a retroactive law. This formulation has been repeated in numerous recent cases, e.g., United States v. Carlton, 512 U.S. 26, 31 , which reflect the recognition that retroactive lawmaking is a particular concern because of the legislative temptation to use it as a means of retribution against unpopular groups or individuals, Landgraf v. USI Film Products, 511 U.S. 244, 266 . Because change in the legal consequences of transactions long closed can destroy the reasonable certainty and security which are the very objects of property ownership, due process protection for property must be understood to incorporate the settled tradition against retroactive laws of great severity. The instant case presents one of those rare instances where the legislature has exceeded the limits imposed by due process. The Coal Act's remedy bears no legitimate relation to the interest which the Government asserts supports the statute. The degree of retroactive effect, which is a significant determinant in a statute's constitutionality, e.g., United States v. Carlton, supra, at 32, is of unprecedented scope here, since the Coal Act created liability for events occurring 35 years ago. While the Court has upheld the imposition of liability on former employers based on past employment relationships when the remedial statutes were designed to impose an actual, measurable business cost which the employer had been able to avoid in the past, e.g., Turner Elkhorn, supra, at 19, the Coal Act does not serve this 6EASTERN ENTERPRISES v. APFEL Syllabus purpose. The beneficiaries' expectation of lifetime benefits was created by promises and agreements made long after Eastern left the coal business, and Eastern was not responsible for the perilous condition of the 1950 and 1974 Plans which jeopardized the benefits. Pp. 9-13. O' CONNOR , J., announced the judgment of the Court and delivered an opinion, in which REHNQUIST , C. J., and SCALIA and THOMAS , JJ., joined. THOMAS , J., filed a concurring opinion. KENNEDY , J., filed an opinion concurring in the judgment and dissenting in part. STEVENS , J., filed a dissenting opinion, in which SOUTER , GINSBURG , and BREYER , JJ., joined. BREYER , J., filed a dissenting opinion, in which STEVENS , SOUTER , and GINSBURG , JJ., joined.



    U.S. Supreme Court

    No. 97-42

    EASTERN ENTERPRISES, PETITIONER v. KENNETH S. APFEL, COMMISSIONER OF SOCIAL SECURITY,ET

    AL. ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT

    [June 25, 1998]

    JUSTICE THOMAS , concurring.

    JUSTICE O'CONNOR 's opinion correctly concludes that the Coal Act's imposition of retroactive liability on petitioner violates the Takings Clause. I write separately to emphasize that the Ex Post Facto Clause of the Constitution, Art. I., 9, cl. 3, even more clearly reflects the principle that "[r]etrospective laws are, indeed, generally unjust." 2 J. Story, Commentaries on the Constitution 1398, p. 272 (5th ed. 1981). Since Calder v. Bull, 3 Dall. 386 (1798), however, this Court has considered the Ex Post Facto Clause to apply only in the criminal context. I have never been convinced of the soundness of this limitation, which in Calder was principally justified because a contrary interpretation would render the Takings Clause unnecessary. See id., at 394 (opinion of Chase, J.). In an appropriate case, therefore, I would be willing to reconsider Calder and its progeny to determine whether a retroactive civil law that passes muster under our current Takings Clause jurisprudence is nonetheless unconstitutional under the Ex Post Facto Clause. Today's case, however, does present an unconstitutional taking, and I join JUSTICE O'CONNOR 's well-reasoned opinion in full.


    U.S. Supreme Court

    No. 97-42

    EASTERN ENTERPRISES, PETITIONER v. KENNETH S. APFEL, COMMISSIONER OF SOCIAL SECURITY,ET

    AL. ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT

    [June 25, 1998]

    JUSTICE STEVENS , with whom JUSTICE SOUTER , JUSTICE GINSBURG , and JUSTICE BREYER join, dissenting.

    Some appellate judges are better historians than others. With respect to the central issue resolved by the Coal Act of 1992, I am persuaded that the consensus among the circuit judges who have appraised the issue is more accurate than the views of this Court's majority. 1

    The uneasy truce between the coal operators and the miners that enabled coal production to continue during the 1950's and 1960's depended more on the value of a handshake than the fine print in written documents. During that period there was an implicit understanding on both sides of the bargaining table that the operators would provide the miners with lifetime health benefits. It was this understanding that kept the mines in operation and enabled Eastern to earn handsome profits before it transferred its coal business to a wholly-owned subsidiary in 1965.

    My understanding of this critical fact is shared by the judges of the Seventh Circuit, 2

    the Sixth Circuit, 3

    and the First Circuit. 4

    It is the same understanding that motivated the members of the Coal Commission to conclude that the operators who had employed the "orphaned miners" should share responsibility for their health benefits. 5 And it is the same understanding that led legislators in both political parties to conclude that the Coal Act of 1992 represented a fair solution to a difficult problem.

    Given the critical importance of the reasonable expectations of both the miners and the operators during the period before their implicit agreement was made explicit in 1974, I am unable to agree with the plurality's conclusion that the retroactive application of the 1992 Act is an unconstitutional "taking" of Eastern's property. Rather, it seems to me that the plurality and JUSTICE KENNEDY have substituted their judgment about what is fair for the better informed judgment of the Members of the Coal Commission and Congress. 6

    Accordingly, I conclude that, whether the provision in question is analyzed under the Takings Clause or the Due Process Clause, Eastern has not carried its burden of overcoming the presumption of constitutionality accorded to an act of Congress, by demonstrating that the provision is unsupported by the reasonable expectations of the parties in interest.


    U.S. Supreme Court

    No. 97-42

    EASTERN ENTERPRISES, PETITIONER v. KENNETH S. APFEL, COMMISSIONER OF SOCIAL SECURITY,ET

    AL. ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT

    [June 25, 1998]

    JUSTICE BREYER , with whom JUSTICE STEVENS , JUSTICE SOUTER , and JUSTICE GINSBURG join, dissenting.

    We must decide whether it is fundamentally unfair for Congress to require Eastern Enterprises to pay the health care costs of retired miners who worked for Eastern before 1965, when Eastern stopped mining coal. For many years Eastern benefited from the labor of those miners. Eastern helped to create conditions that led the miners to expect continued health care benefits for themselves and their families after they retired. And Eastern, until 1987, continued to draw sizable profits from the coal industry though a wholly owned subsidiary. For these reasons, I believe that Congress did not act unreasonably or otherwise unjustly in imposing these health care costs upon Eastern. Consequently, in my view, the statute before us is constitutional.

    I

    As a preliminary matter, I agree with JUSTICE KENNEDY , ante , at 2-9, that the plurality views this case through the wrong legal lens. The Constitution's Takings Clause does not apply. That Clause refers to the taking of "private property . . . for public use without just compensa tion." U. S. Const., Amdt. 5. As this language suggests, at the heart of the Clause lies a concern, not with preventing arbitrary or unfair government action, but with providing compensation for legitimate government action that takes "private property" to serve the "public" good.

    The "private property" upon which the Clause traditionally has focused is a specific interest in physical or intellectual property. See, e.g. , Penn Central Transp. Co. v. New York City, 438 U.S. 104, 124 (1978); Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984). It requires compensation when the government takes that property for a public purpose. See Dolan v. City of Tigard, 512 U.S. 374, 384 (1994) (Clause requires payment so that government cannot " 'forc[e] some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole' " (quoting Armstrong v. United States, 364 U.S. 40, 49 (1960))). This case involves, not an interest in physical or intellectual property, but an ordinary liability to pay money, and not to the Government, but to third parties.

    This Court has not directly held that the Takings Clause applies to the creation of this kind of liability. The Court has made clear that, not only seizures through eminent domain, but also certain "takings" through regulation can require "compensation" under the Clause. See, e.g. , Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415 (1922) ("[W]hile property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking"); Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992) (land use regulation that deprives owner of all economically beneficial use of property constitutes taking); Nollan v. California Coastal Comm'n, 483 U.S. 825 (1987) (public easement across property may constitute taking). But these precedents concern the taking of interests in physical property.

    The Court has also made clear that the Clause can apply to monetary interest generated from a fund into which a private individual has paid money. Webb's Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155 (1980). But the monetary interest at issue there arose out of the operation of a specific, separately identifiable fund of money. And the government took that interest for itself. Here there is no specific fund of money; there is only a general liability; and that liability runs, not to the Government, but to third parties. Cf., e.g. , Armstrong , supra , at 48 (Government destroyed liens "for its own advantage"); Connolly v. Pension Benefit Guaranty Corporation, 475 U.S. 211, 225 (1986) (no taking where "the Government does not physically invade or permanently appropriate any . . . assets for its own use ") (emphasis added).

    The Court in two cases has arguably acted as if the Takings Clause might apply to the creation of a general liability. Connolly , supra; Concrete Pipe & Products of Cal., Inc. v. Construction Laborers Pension Trust for Southern Cal., 508 U.S. 602 (1993). But in the first of those cases, the Court said that the Takings Clause had not been violated, in part because "the Government does not physically invade or permanently appropriate any . . . assets for its own use." Connolly , 475 U.S., at 225 . It also rejected the position that a taking occurs "whenever legislation requires one person to use his or her assets for the benefit of another." Id ., at 223. The second case basically followed the analysis of the first case. Concrete Pipe , 508 U.S., at 641 -647. And both cases rejected the claim of a Takings Clause violation. Id ., at 646-647; Connolly , supra , at 227-228.

    The dearth of Takings Clause authority is not surprising, for application of the Takings Clause here bristles with conceptual difficulties. If the Clause applies when the government simply orders A to pay B, why does it not apply when the government simply orders A to pay the government, i.e. , when it assesses a tax? Cf. In re Leckie Smokeless Coal Co. , 99 F. 3d 573, 583 (CA4 1996) (charac terizing "reachback" liability payments as a "tax"), cert. denied, 520 U. S. ___ (1997); In re Chateaugay Corp. , 53 F. 3d 478, 498 (CA2 1995) (same), cert. denied, sub nom. LTV Steel Co., Inc. v. Shalala, 516 U.S. 913 (1995). Would that Clause apply to some or to all statutes and rules that "routinely creat[e] burdens for some that directly benefit others"? Connolly , supra , at 223. Regardless, could a court apply the same kind of Takings Clause analysis when violation means the law's invalidation, rather than simply the payment of "compensation?" See First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 482 U.S. 304, 315 (1987) ("[The Takings Clause] is designed not to limit the governmental interference with property rights per se , but rather to secure compensation in the event of otherwise proper interference amounting to a taking").

    We need not face these difficulties, however, for there is no need to torture the Takings Clause to fit this case. The question involved-the potential unfairness of retroactive liability-finds a natural home in the Due Process Clause, a Fifth Amendment neighbor. That Clause says that no person shall be "deprive[d] . . . of life, liberty, or property, without due process of law." U. S. Const., Amdt. 14, 1. It safeguards citizens from arbitrary or irrational legislation. And the Due Process Clause can offer protection against legislation that is unfairly retroactive at least as readily as the Takings Clause might, for as courts have sometimes suggested, a law that is fundamentally unfair because of its retroactivity is a law which is basically arbitrary. See, e.g. , Pension Benefit Guaranty Corporation v. R. A. Gray & Co., 467 U.S. 717, 728 -730 (1984); id ., at 730 ("[R]etroactive aspects of legislation [imposing withdrawal liability on employers participating in pension plan] . . . must meet the test of due process"); id ., at 733 ("[R]etrospective civil legislation may offend due process if it is particularly harsh and oppressive") (internal quotation marks omit ted); Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 17 (1976). Cf. United States v. Carlton , 512 U.S. 26, 30 (1994) (retroactive tax provision); Welch v. Henry, 305 U.S. 134, 147 (1938) (same); National Labor Relations Board v. Guy F. Atkinson Co. , 195 F. 2d 141, 149, 151 (CA9 1952) (invalidating administrative order as "arbitrary, capricious, an abuse of discretion," see 5 U.S.C. 706(2)(A), because "[t]he inequity of . . . retroactive policy making . . . is the sort of thing our system of law abhors").

    Nor does application of the Due Process Clause automatically trigger the Takings Clause, just because the word "property" appears in both. That word appears in the midst of different phrases with somewhat different objectives, thereby permitting differences in the way in which the term is interpreted. Compare, e.g. , United States v. Martin Linen Supply Co., 430 U.S. 564 (1977) ("person" includes corporations for purposes of Fifth Amendment Double Jeopardy Clause) with Doe v. United States, 487 U.S. 201, 206 (1988) ("person" does not include a corporation for purposes of Fifth Amendment SelfIncrimination Clause).

    Insofar as the plurality avoids reliance upon the Due Process Clause for fear of resurrecting Lochner v. New York, 198 U.S. 45 (1905), and related doctrines of "substantive due process," that fear is misplaced. Cf. id ., at 75-76 (Holmes, J., dissenting); Lincoln Fed. Union v. Northwestern Iron & Metal Co., 335 U.S. 525, 535 (1949) (repudiating the " Allgeyer - Lochner - Adair - Coppage constitutional doctrine"). As the plurality points out, ante , at 32, an unfair retroactive assessment of liability upsets settled expectations, and it thereby undermines a basic objective of law itself. See, e.g. , 2 J. Story, Commentaries on the Constitution 1398 (5th ed. 1891) (criticizing retrospective laws as failing to "accord with . . . the fundamental principles of the social compact"); ibid . (retroactive legislation invalid "upon principles derived from the general nature of free governments, and the necessary limitations created thereby"); General Motors Corp. v. Romein, 503 U.S. 181, 191 (1992) ("[R]etroactive legislation . . . can deprive citizens of legitimate expectations"); Fletcher v. Peck, 6 Cranch 87, 143 (1810) (Johnson, J., concurring) (suggesting that retroactive legislation is invalid because it offends principles of natural law).

    To find that the Due Process Clause protects against this kind of fundamental unfairness-that it protects against an unfair allocation of public burdens through this kind of specially arbitrary retroactive means-is to read the Clause in light of a basic purpose: the fair application of law , which purpose hearkens back to the Magna Carta. It is not to resurrect long-discredited substantive notions of "freedom of contract." See, e.g. , Ferguson v. Skrupa, 372 U.S. 726, 729 -732 (1963).

    Thus, like the plurality I would inquire if the law before us is fundamentally unfair or unjust. Ante , at 33-35. But I would ask this question because like JUSTICE KENNEDY , I believe that, if so , the Coal Act would "deprive" Eastern of "property, without due process of law." U. S. Const., Amdt. 14, 1.

    II

    The substantive question before us is whether or not it is fundamentally unfair to require Eastern to make future payments for health care costs of retired miners and their families, on the basis of Eastern's past association with these miners. Congress might have assessed all those who now use coal, or the taxpayer, in order to pay for those retired coal miners' health benefits. But Congress, instead, imposed this liability on Eastern. Coal Industry Retiree Health Benefit Act of 1992 (Coal Act), 26 U. S. C. 9701-9722 (1994 ed. and Supp. II). The "fairness" question is, why Eastern?

    The answer cannot lie in a contractual promise to pay, for Eastern made no such contractual promise. Nor did Eastern participate in any benefit plan that made such a contractual promise, prior to its departure from the coal industry in 1965. But, as JUSTICE STEVENS points out, this case is not a civil law suit for breach of contract. It is a constitutional challenge to Congress' decision to assess a new future liability on the basis of an old employment relationship. Ante , at 2-3, n. 3 (STEVENS , J., dissenting). Unless it is fundamentally unfair and unjust, in terms of Eastern's reasonable reliance and settled expectations, to impose that liability, the Coal Act's "reachback" provision meets that challenge. See Connolly , 475 U.S., at 227 ; Concrete Pipe , 508 U.S., at 645 -646.

    I believe several features of this case demonstrate that the relationship between Eastern and the payments demanded by the Act is special enough to pass the Constitution's fundamental fairness test. That is, even though Eastern left the coal industry in 1965, the historical circumstances, taken together, prevent Eastern from showing that the Act's "reachback" liability provision so frustrates Eastern's reasonable settled expectations as to impose an unconstitutional liability. Cf. Penn Central, 438 U.S., at 127 -128.

    For one thing, the liability that the statute imposes upon Eastern extends only to miners whom Eastern itself employed. See 26 U.S.C. 9706(a) (imposing "reach-back" liability only where no presently operating coal firm which ratified 1978 or subsequent bargaining agreement ever employed the retiree, and Eastern employed the retiree longer than any other "reachback" firm). They are miners whose labor benefited Eastern when they were younger and healthier. Insofar as working conditions created a risk of future health problems for those miners, Eastern created those conditions. And these factors help to distinguish Eastern from others with respect to a later obligation to pay the health care costs that inevitably arise in old age. See, e.g. , 138 Cong. Rec. 34001 (1992) (Conference Report on Coal Act) (Coal Act assigns liability to "those companies which employed the retirees . . . and thereby benefitted from their services"); Hearings on Provisions Relating to the Health Benefits of Retired Coal Miners before the House Committee on Ways and Means, 103d Cong., 1st Sess., 8-9, 32 (1993) (hereinafter Hearings on Health Benefits); House Committee on Ways and Means, Financing UMWA Coal Miner "Orphan Retiree" Health Benefits, 103d Cong., 1st Sess., 50-51 (Comm. Print 1993) (hereinafter House Report).

    Congress has sometimes imposed liability, even "retroactive" liability, designed to prevent degradation of a natural resource, upon those who have used and benefited from it. See, e.g. , Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), 42 U.S.C. 9601 et seq. (1994 ed. and Supp. I) . That analogy, while imperfect, calls attention to the special tie between a firm and its former employee, a human resource, that helps to explain the special retroactive liability. That connection, while not by itself justifying retroactive liability here, helps to distinguish a firm like Eastern, which employed a miner but no longer makes coal, from other funding sources, say current coal producers or coal consumers, who now make or use coal but who have never employed that miner or benefited from his work.

    More importantly, the record demonstrates that Eastern, before 1965, contributed to the making of an important "promise" to the miners. That "promise," even if not contractually enforceable, led the miners to "develo[p]" a reasonable "expectation" that they would continue to receive "[retiree] medical benefits." Ante , at 34. The relevant history, outlined below, shows that industry action (including action by Eastern), combined with Federal Government action and the miners' own forbearance, produced circumstances that made it natural for the miners to believe that either industry or government (or both) would make every effort to see that they received health benefits after they retired-regardless of what terms were explicitly included in previously signed bargaining agreements.

    (1) Before the 1940's, health care for miners, insofar as it existed, was provided by "company doctors" in company towns. See, e.g. , U. S. Dept. of Interior, Report of the Coal Mines Administration, A Medical Survey of the Bituminous-Coal Industry 121, 144 (1947) (Boone Report); id ., at 131, 191, 193 (describing care as substandard and criticizing the "noticeable deficiency" in the number of doctors); Secretary of Labor's Advisory Commission on United Mine Workers of America Retiree Health Benefits, Coal Commission Report 19 (1990) (Coal Comm'n Report), App. in No. 96-1947 (CA1), p. 1350 (hereinafter App. (CA1)). By the late 1940's, health care and pension rights had become the issue for miners, a central demand in collective bargaining, and a rallying cry for those who urged a nationwide coal strike. M. Fox, United We Stand 404, 416 (1990); I. Krajcinovic, From Company Doctors to Managed Care 17, 43 (1997); C. Seltzer, Fire in the Hole 57 (1985); R. Zieger, John L. Lewis: Labor Leader 151 (1988); see also ante , at 2. John L. Lewis, head of the UMWA, urged the mine owners to " 'remove that fear' " of sudden death from " 'their minds so that they will know if that occurs . . . their families will be provided with proper insurance.' " Zieger, supra , at 153. In 1946, the workers struck. The Government seized the mines. And the Government, together with the Union, effectively imposed a managed health care agreement on the coal operators. Seltzer, supra , at 58.

    (2) The resulting 1946 "Krug-Lewis Agreement" created a Medical and Hospital Fund designed to "provide, or to arrange for the availability of, medical, hospital, and related services for the miners and their dependents." Krug Lewis Agreement 4(b), App. (CA1) 612-613. One year later, this fund was consolidated with a "Welfare and Retirement Fund" also established in 1946 (W&R Fund). 1947 National Bituminous Coal Wage Agreement (NBCWA) 150, App. (CA1) 621. Under the 1947 and successive agreements, the Fund's three trustees (union, management, and "neutral") determined the specific benefits provided under the plan. 1947 NBCWA 144, App. (CA1) 618.

    (3) Between 1947 and 1965, the benefits that the W&R Fund provided included retiree benefits quite similar to those at issue here. The bargaining agreements between the coal operators and miners (NBCWA's) and the Fund's Annual Reports make clear that the W&R Fund provided benefits to all "employees . . . , their families and dependents for medical or hospital care." 1947 NBCWA 146, App. (CA1) 619; 1950 NBCWA 60-61, App. (CA1) 639 (continuing coverage); 1951 NBCWA 50-51, App. (CA1) 648 (same); 1952 NBCWA 40-42, App. (CA1) 650-651 (same); 1955 NBCWA 34-35, App. (CA1) 655 (same); 1956 NBCWA 28-29, App. (CA1) 658 (same); 1958 NBCWA 1617, App. (CA1) 661 (same); 1964 NBCWA 4-5, App. (CA1) 668-669 (same); 1966 NBCWA 4-5, App. (CA1) 688-689 (same). The Fund's Annual Reports specified that eligible family members included miners' spouses, children, dependent parents, (and, at least after 1955) retired miners and their dependents , and widows and orphans (for a 12month period). 1955 W&R Fund Annual Report 15, 28, App. (CA1) 881, 894; 1956 W&R Fund Annual Report 1314, App. (CA1) 912-913 (also noting the "unprecedented magnitude and liberality of the Fund's Hospital and Medical Care Program"); 1958 W&R Fund Annual Report 7, App. (CA1) 943; 1959 W&R Fund Annual Report 7-8, App. (CA1) 975-976; 1960 W&R Fund Annual Report 9, App. (CA1) 1,018; 1961 W&R Fund Annual Report 16-17, App. (CA1) 1,058-1,059; 1962 W&R Fund Annual Report 1516, App. (CA1) 1,090-1,091; 1963 W&R Fund Annual Report 15-16, App. (CA1) 1,123-1,124; 1964 W&R Fund Annual Report 22-23, App. (CA1) 1,160-1,161; 1965 W&R Fund Annual Report 14, App. (CA1) 1,187. See also Hearings on Health Benefits, at 36 (suggesting retirees eligible " 'from the inception of bargained benefits.' ")

    The only significant difference between the coverage provided before 1974 and after 1974 consists of greater generosity after 1974 with respect to widows, for the earlier 12-month limitation was repealed and health benefits extended to widows' remarriage or death. See 1974 NBCWA 105, App. (CA1) 758.

    (4) In return for what the miners thought was an assurance (though not a contractual obligation) from management of continued pension and health care benefits, the Union agreed to accept mechanization of mining, a concession that meant significant layoffs and a smaller future workforce. Coal Comm'n Report 11-14, App. (CA1) 1,342-1,345 (75% decline in employment from 1950 to 1969); Krajcinovic , supra, at 4, 43-44; Seltzer , supra, at 36; see also C. Perry, Collective Bargaining and the Decline of the United Mine Workers 43 (1984) (detailing benefits of mechanization for coal operators). The President of the Southern Coal Operators' Association said in 1953 that the miners "have been promised and grown accustomed to" health benefits. App. (CA1) 2,000. Those benefits, the management's W&R Fund trustee said in 1951, covered "mine worker[s], including pensioners, and dependents . . . without limit as to duration." Id., at 1,972. This Court, too, has said that the UMWA "agreed not to oppose the rapid mechanization of the mines" in exchange for "increased wages" and "payments into the welfare fund." Mine Workers v. Pennington, 381 U.S. 657, 660 (1965); see also id ., at 698 (Goldberg, J., concurring in judgment) (improved wages, benefits, and working conditions were a " quid pro quo " for automation). Others have reached similar conclusions. The Coal Commission more recently said:

      "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."

    Coal Comm'n Report 1, App. (CA1) 1,332.

    And numerous supporters of the present law read the history as showing, for example, that the "miners went to work each day under the assumption that their health benefits would be there when they retired." 138 Cong. Rec. 20121 (1992) (Sen. Wofford); see also id ., at 20118 (Sen. Rockefeller) (Act "will see to it that the promise of health care is kept to tens of thousands of retired coal miners and their families"); id ., at 20119 (Sen. Byrd) (Coal Act will "assure . . . retired coal miners . . . that promises made to them during their working years are not now . . . reneged upon"); id ., at 20120 (Sen. Ford) (Coal Act assures that "promise made to [retirees] can be kept"); id ., at 34001 (Conference Report on Coal Act) ("Under [NBCWA's], retirees and their dependents have been promised lifetime health care benefits").

    Further, the Federal Government played a significant role in developing the expectations that these "promises" created. In 1946, as mentioned above, during a strike related to health and pension benefits, the Government seized the mines and imposed the "Krug-Lewis Agreement," which established the basic health benefits framework. Supra , at 9; see also 11 Fed. Reg. 5593 (1946) (President Truman's seizure order). In 1948, during a strike related to pension benefits, the Government again intervened to ensure continued availability of these benefits. 13 Fed. Reg. 1579 (1948) (Executive Order creating board to inquire into strike); Krajcinovic, supra , at 37-38. In later years, but before 1965, Congress provided the W&R Fund with special tax benefits, helped the Fund to build hospitals, and established health and safety standards. Brief for Respondents the UMWA Combined Benefit Fund et al. 11-12 (citing relevant statutes and record materials). This kind of government intervention explains why the President of the Southern Coal Producers' Association said, in the 1950's, that if benefits were reduced, it was

      "entirely conceivable that Congress . . . [would] step in and take over the mines, assuming responsibility for the welfare collections and payment."

    App. (CA1) 2,000.

    I repeat that the Federal Government's words and deeds, along with those of the pre-1965 industry, did not necessarily create contractually binding promises (which, had they existed, might have eliminated the need for this legislation). But in labor relations, as in human relations, one can create promises and understandings which, even in the absence of a legally enforceable contract, others reasonably expect will be honored. Indeed, in labor relations such industry-wide understandings may spell the difference between labor war and labor peace, for the parties may look to a strike, not to a court, for enforcement. It is that kind of important, mutual understanding that is at issue here. For the record shows that pre-1965 statements and other conduct led management to understand, and labor legitimately to expect, that health care benefits for retirees and their dependents would continue to be provided.

    Finally, Eastern continued to obtain profits from the coal mining industry long after 1965, for it operated a wholly owned coal-mining subsidiary, Eastern Associated Coal Corp. (EACC), until the late 1980's. Between 1966 and 1987, Eastern effectively ran EACC, sharing officers, supervising management, and receiving 100% of EACC's approximately $100 million in dividends. Brief for Petitioner 6, n. 13; App. (CA1) 2,172 (affidavit of T. Gallagher, EACC General Counsel); id., at 2,182 (Eastern Corporate Cash Manual); see also id., at 2,170-2,173 (noting Eastern's profits from, and control over, EACC); id., at 2,1782,181; id., at 2,192-2,205. Eastern officials, in their role as EACC directors, ratified the post-1965 bargaining agreements, Brief for Bituminous Coal Operators' Association, Inc., as Amicus Curiae 28, and n. 20; Brief for Respondent Peabody Holding Co., Inc., et al. 14-15, and must have remained aware of the W&R Fund's deepening financial crisis.

    Taken together, these circumstances explain why it is not fundamentally unfair for Congress to impose upon Eastern liability for the future health care costs of miners whom it long ago employed-rather than imposing that liability, for example, upon the present industry, coal consumers, or taxpayers. Each diminishes the reasonableness of Eastern's expectation that, by leaving the industry, it could fall within the Constitution's protection against unfairly retroactive liability.

    These circumstances, as elaborated by the record, mean that Eastern knew of the potential funding problems that arise in any multiemployer benefit plan, see Concrete Pipe , 508 U.S., at 637 -639, before it left the industry. Eastern knew or should have known that, in light of the structure of the benefit plan and the frequency with which coal operators went out of business, a "last man out" problem could exacerbate the health plan's funding difficulties. See, e.g. , Boone Report xvi; House Report 34; Coal Commission Report on Health Benefits of Retired Coal Miners: Hearing before the Subcommittee on Medicare and LongTerm Care of the Senate Committee on Finance, 102d Cong., 1st Sess., 15, 21 (1991) (statement of Coal Commission Vice Chairman Henry Perritt, Jr.). Eastern also knew or should have known that because of prior federal involvement, future federal intervention to solve any such problem was a serious possibility. Supra , at 12-13; see also Concrete Pipe , supra , at 645-646; Connolly , 475 U.S., at 226 -227; Usery , 428 U.S., at 15 -16. Eastern knew, by the very nature of the problem, that any legislative effort to solve such a problem could well occur many years into the future. And, most importantly, Eastern played a significant role in creating the miners' expectations that led to this legislation. Add to these circumstances the two others I have mentioned-that Eastern had benefited from the labor of the miners for whose future health care it must provide, and that Eastern remained in the industry, drawing from it substantial profits (though doing business through a subsidiary, which usually, but not always , insulates an owner from liability).

    The upshot, if I follow the form of analysis this Court used in Connolly , is that I cannot say the Government's regulation has unfairly interfered with Eastern's "distinct investment-backed expectations." See Connolly , supra , at 225-227 (analyzing "taking" in terms of three factors: (1) "economic impact"; (2) interference " 'with distinct investment-backed expectations' "; and (3) " 'character of the governmental action' " (citations omitted)). Within that framework, I could find additional support for the constitutionality of the "reachback" liability provision by adding that the "character of the governmental action" here amounts to the creation of a liability to a third party, and not a direct "taking" of an interest in physical property. And the fact that the statute here narrows Eastern's liability to those whom it employed, while explicitly preserving Eastern's rights to indemnification from others (thereby helping Eastern spread the risk of this liability), 26 U.S.C. 9706(f)(6), helps to diminish the Act's "economic impact" upon Eastern as well.

    I would put the matter more directly, however. The law imposes upon Eastern the burden of showing that the statute, because of its retroactive effect, is fundamentally unfair or unjust. The circumstances I have mentioned convince me that Eastern cannot show a sufficiently reasonable expectation that it would remain free of future health care cost liability for the workers whom it employed. Eastern has therefore failed to show that the law unfairly upset its legitimately settled expectations. Because, in my view, Eastern has not met its burden, I would uphold the "reachback" provision of the Coal Act as constitutional.


    U.S. Supreme Court

    No. 97-42

    EASTERN ENTERPRISES, PETITIONER v. KENNETH S. APFEL, COMMISSIONER OF SOCIAL SECURITY,ET

    AL. ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT

    [June 25, 1998]

    JUSTICE KENNEDY , concurring in the judgment and dis- senting in part.

    The plurality's careful assessment of the history and purpose of the statute in question demonstrates the necessity to hold it arbitrary and beyond the legitimate authority of the Government to enact. In my view, which is in full accord with many of the plurality's conclusions, the relevant portions of the Coal Industry Retiree Health Benefit Act of 1992 (Coal Act), 26 U.S.C. 9701 et seq. (1994 ed. and Supp. II), must be invalidated as contrary to essential due process principles, without regard to the Takings Clause of the Fifth Amendment. I concur in the judgment holding the Coal Act unconstitutional but disagree with the plurality's Takings Clause analysis, which, it is submitted, is incorrect and quite unnecessary for decision of the case. I must record my respectful dissent on this issue.

    I

    The final Clause of the Fifth Amendment states:

      "nor shall private property be taken for public use, without just compensation."

    U. S. Const., Amdt. 5.

    The provision is known as the Takings Clause. The con cept of a taking under the Clause has become a term of art, and my discussion begins here.

    Our cases do not support the plurality's conclusion that the Coal Act takes property. The Coal Act imposes a staggering financial burden on the petitioner, Eastern Enterprises, but it regulates the former mine owner without regard to property. It does not operate upon or alter an identified property interest, and it is not applicable to or measured by a property interest. The Coal Act does not appropriate, transfer, or encumber an estate in land ( e.g. , a lien on a particular piece of property), a valuable interest in an intangible ( e.g., intellectual property), or even a bank account or accrued interest. The law simply imposes an obligation to perform an act, the payment of benefits. The statute is indifferent as to how the regulated entity elects to comply or the property it uses to do so. To the extent it affects property interests, it does so in a manner similar to many laws; but until today, none were thought to constitute takings. To call this sort of governmental action a taking as a matter of constitutional interpretation is both imprecise and, with all due respect, unwise.

    As the role of Government expanded, our experience taught that a strict line between a taking and a regulation is difficult to discern or to maintain. This led the Court in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922), to try to span the two concepts when specific property was subjected to what the owner alleged to be excessive regulation. "The general rule at least is, that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking." Id., at 415. The quoted sentence is, of course, the genesis of the so-called regulatory takings doctrine. See Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1014 (1992) ("Prior to Justice Holmes's exposition in Pennsylvania Coal Co. v. Mahon , it was generally thought that the Takings Clause reached only a 'direct appropriation' of property or the functional equivalent of a 'practical ouster of [the owner's] possession' ") (citations omitted). Without denigrating the importance the regulatory taking concept has assumed in our law, it is fair to say it has proven difficult to explain in theory and to implement in practice. Cases attempting to decide when a regulation becomes a taking are among the most litigated and perplexing in current law. See Penn Central Transp. Co. v. New York City, 438 U.S. 104, 123 (1978) ("The question of what constitutes a 'taking' for purposes of the Fifth Amendment has proved to be a problem of considerable difficulty"); Kaiser Aetna v. United States, 444 U.S. 164, 175 (1979) (the regulatory taking question requires an "essentially ad hoc, factual inquir[y]").

    Until today, however, one constant limitation has been that in all of the cases where the regulatory taking analysis has been employed, a specific property right or interest has been at stake. After the decision in Pennsylvania Coal Co. v. Mahon, supra , we confronted cases where specific and identified properties or property rights were alleged to come within the regulatory takings prohibition: air rights for high-rise buildings, Penn Central, supra; zoning on parcels of real property, e.g., MacDonald, Sommer & Frates v. Yolo County, 477 U.S. 340 (1986), Agins v. City of Tiburon, 447 U.S. 255 (1980); trade secrets, Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984); right of access to property, e.g., PruneYard Shopping Center v. Robins, 447 U.S. 74 (1980); Kaiser Aetna , supra; right to affix on structures, Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982); right to transfer property by devise or intestacy, e.g., Hodel v. Irving, 481 U.S. 704 (1987); creation of an easement, Dolan v. City of Tigard, 512 U.S. 374 (1994); Nollan v. California Coastal Comm'n, 483 U.S. 825 (1987); right to build or improve, Lucas , supra; liens on real property, Armstrong v. United States, 364 U.S. 40 (1960); right to mine coal, Keystone Bituminous Coal Assn. v. DeBenedictis, 480 U.S. 470 (1987); right to sell personal property, Andrus v. Allard, 444 U.S. 51 (1979); and the right to extract mineral deposits, Goldblatt v. Hempstead, 369 U.S. 590 (1962); United States v. Central Eureka Mining Co., 357 U.S. 155 (1958). The regulations in the cited cases were challenged as being so excessive as to destroy, or take, a specific property interest. The plurality's opinion disregards this requirement and, by removing this constant characteristic from takings analysis, would expand an already difficult and uncertain rule to a vast category of cases not deemed, in our law, to implicate the Takings Clause.

    The difficulties in determining whether there is a taking or a regulation even where a property right or interest is identified ought to counsel against extending the regulatory takings doctrine to cases lacking this specificity. The existence of at least this outer boundary for application of the regulatory takings rule provides some necessary predictability for governmental entities. Our definition of a taking, after all, is binding on all of the States as well as the Federal Government. The plurality opinion would throw one of the most difficult and litigated areas of the law into confusion, subjecting States and municipalities to the potential of new and unforeseen claims in vast amounts. The existing category of cases involving specific property interests ought not to be obliterated by extending regulatory takings analysis to the amorphous class of cases embraced by the plurality's opinion today.

    True, the burden imposed by the Coal Act may be just as great if the Government had appropriated one of Eastern's plants, but the mechanism by which the Government injures Eastern is so unlike the act of taking specific property that it is incongruous to call the Coal Act a taking, even as that concept has been expanded by the regulatory takings principle. In the terminology of our regulatory takings analysis, the character of the governmental action renders the Coal Act not a taking of property. While the usual taking occurs when the Government physically acquires property for itself, e.g., Chicago, B. & Q. R. Co. v. Chicago, 166 U.S. 226 (1897), our regulatory takings analysis recognizes a taking may occur when property is not appropriated by the Government or is transferred to other private parties. See, e.g., United States v. Security Industrial Bank, 459 U.S. 70, 78 (1982) ("[O]ur cases show that takings analysis is not necessarily limited to outright acquisitions by the government for itself"); Loretto , supra (transfer of physical space from landlords to cable companies).

    As the range of governmental conduct subjected to takings analysis has expanded, however, we have been careful not to lose sight of the importance of identifying the property allegedly taken, lest all governmental action be subjected to examination under the constitutional prohibition against taking without just compensation, with the attendant potential for money damages. We have asked how the challenged governmental action is implemented with particular emphasis on the extent to which a specific property right is affected. See id., at 432 (physical invasion "is a government action of such a unique character that it is a taking without regard to other factors"); Hodel, supra, at 715-716 (declaring a law, which otherwise would not be a taking because of its insignificant economic impact, a taking because the character of the governmental action destroyed the right to pass property to one's heirs, a right which "has been part of the Anglo-American legal system since feudal times"); Penn Central, supra , at 124 ("A 'taking' may more readily be found when the interference with property can be characterized as a physical invasion by government, than when interference arises from some public program adjusting the benefits and burdens of economic life to promote the common good") (citation omitted). The Coal Act neither targets a specific property in terest nor depends upon any particular property for the operation of its statutory mechanisms. The liability imposed on Eastern no doubt will reduce its net worth and its total value, but this can be said of any law which has an adverse economic effect.

    The circumstance that the statute does not take money for the Government but instead makes it payable to third persons is not a factor I rely upon to show the lack of a taking. While there are instances where the Government's self-enrichment may make it all the more evident a taking has occurred, e.g., Webb's Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155 (1980); United States v. Causby, 328 U.S. 256 (1946), the Government ought not to have the capacity to give itself immunity from a takings claim by the device of requiring the transfer of property from one private owner directly to another. Cf. Hawaii Housing Authority v. Midkiff, 467 U.S. 229 (1984). At the same time, the Government's imposition of an obligation between private parties, or destruction of an existing obligation, must relate to a specific property interest to implicate the Takings Clause. For example, in United States v. Security Industrial Bank, we confronted a statute which was alleged to destroy an existing creditor's lien in certain chattels to the benefit of the debtor. We acknowledged that, given the nature of the property interest at stake, which resembled a contractual obligation, the takings challenge "fits but awkwardly into the analytic framework" of our regulatory takings analysis. 459 U.S., at 75 . We decided the analysis could apply because the property interest was a "traditional property interes[t]," though in the end the statute was found inapplicable to the lien at issue. In so holding, we relied on Louisville Joint Stock Land Bank v. Radford, 295 U.S. 555 (1935), which invalidated the Frazier-Lemke Act, because it interfered with mortgages on farms and thus worked a " 'taking of substantive rights in specific property acquired by the Bank prior to the Act.' " 459 U.S., at 77 (quoting Radford, supra, at 590, 601). Unlike the statutes at issue in Security Industrial Bank and Radford, the Coal Act does not affect an obligation relating to a specific property interest.

    If the plurality is adopting its novel and expansive concept of a taking in order to avoid making a normative judgment about the Coal Act, it fails in the attempt; for it must make the normative judgment in all events. See, e.g., ante, at 35 ("[T]he governmental action implicates fundamental principles of fairness"). The imprecision of our regulatory takings doctrine does open the door to normative considerations about the wisdom of government decisions. See, e.g., Agins v. City of Tiburon, 447 U.S., at 260 (zoning constitutes a taking if it does not "substantially advance legitimate state interests"). This sort of analysis is in uneasy tension with our basic understanding of the Takings Clause, which has not been understood to be a substantive or absolute limit on the Government's power to act. The Clause operates as a conditional limitation, permitting the Government to do what it wants so long as it pays the charge. The Clause presupposes what the Government intends to do is otherwise constitutional:

      "As its language indicates, and as the Court has frequently noted, [the Takings Clause] does not prohibit the taking of private property, but instead places a condition on the exercise of that power. This basic understanding of the Amendment makes clear that it is designed not to limit the governmental interference with property rights per se, but rather to secure compensation in the event of otherwise proper interference amounting to a taking."

    First English Evangelical Lutheran Church of Glendale v. County of Los Angeles, 482 U.S. 304, 314 -315 (1987) (emphasis and citations omitted).

    Given that the constitutionality of the Coal Act appears to turn on the legitimacy of Congress' judgment rather than on the availability of compensation, see ante, at 19 ("[I]n a case such as this one, it cannot be said that monetary relief against the Government is an available remedy"), the more appropriate constitutional analysis arises under general due process principles rather than under the Takings Clause.

    It should be acknowledged that there are passages in some of our cases on the imposition of retroactive liability for an employer's withdrawal from a pension plan which might give some support to the plurality's discussion of the Takings Clause. See Connolly v. Pension Benefit Guaranty Corporation, 475 U.S. 211, 223 (1986); Concrete Pipe & Products of Cal., Inc. v. Construction Laborers Pension Trust for Southern Cal., 508 U.S. 602, 641 (1993). In Connolly, the Court said the definition of a taking was not controlled by "any set formula," but was dependent "on ad hoc, factual inquiries into the circumstances of each particular case." 475 U.S., at 224 . The Court then applied the three-factor regulatory takings analysis set forth in Penn Central, which examines the economic impact of the regulation, the extent to which it interferes with investment-backed expectations, and the character of the governmental action. 475 U.S., at 225 . This analysis did not result in a finding of a taking. The Court, moreover, prefaced the entire takings discussion with the admonition it would be surprising to discover that there had been a taking in the instance where a due process attack had been rejected. See id., at 223; see also Concrete Pipe, supra, at 641 ("Given that [the] due process arguments are unavailing, 'it would be surprising indeed to discover' the challenged statute nonetheless violating the Takings Clause") (quoting Connolly, supra, at 223). At best, Connolly is equivocal on the question whether we should apply the regulatory takings analysis to instances like the one now before us. My reading of Connolly , and Concrete Pipe, is that we should proceed first to general due process principles, reserving takings analysis for cases where the governmental action is otherwise permissible. See Connolly, supra, at 224 ("[H]ere, the United States has taken nothing for its own use, and only has nullified a contractual provision limiting liability by imposing an additional obligation that is otherwise within the power of Congress to impose"); see also Duke Power Co. v. Carolina Environmental Study Group, Inc., 438 U.S. 59, 94 , n. 39 (1978) (upholding on due process grounds the Price-Anderson Act, 42 U.S.C. 2210 (1970 ed., Supp. V), which placed a cap on civil liability for nuclear accidents, but declining to address petitioner's request that the Act be declared a taking because compensation would be available under the Tucker Act, 28 U.S.C. 1491(a)(1) (1976 ed.)). These authorities confirm my view that the case is controlled not by the Takings Clause but by well-settled due process principles respecting retroactive laws.

    Given my view that the takings analysis is inapplicable in this case, it is unnecessary to comment upon the plurality's effort to resolve a jurisdictional question despite little briefing by the parties on a point which has divided the Courts of Appeals.

    II

    When the constitutionality of the Coal Act is tested under the Due Process Clause, it must be invalidated. Accepted principles forbidding retroactive legislation of this type are sufficient to dispose of the case.

    Although we have been hesitant to subject economic legislation to due process scrutiny as a general matter, the Court has given careful consideration to due process challenges to legislation with retroactive effects. As today's plurality opinion notes, for centuries our law has harbored a singular distrust of retroactive statutes. Ante, at 31. In the words of Chancellor Kent, "A retroactive statute would partake in its character of the mischiefs of an ex post facto law . . . ; and in every other case relating to contracts or property, it would be against every sound principle." 1 J. Kent, Commentaries on American Law *455; see also ibid. (rule against retroactive application of statutes to be "founded not only in English law, but on the principles of general jurisprudence"). Justice Story reached a similar conclusion: "Retrospective laws are, indeed, generally unjust; and, as has been forcibly said, neither accord with sound legislation nor with the fundamental principles of the social compact." 2 J. Story, Commentaries on the Constitution 1398 (1833).

    The Court's due process jurisprudence reflects this distrust. For example, in Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15 (1976), the Court held due process requires an inquiry into whether in enacting the retroactive law the legislature acted in an arbitrary and irrational way. Even though prospective economic legislation carries with it the presumption of constitutionality, "[i]t does not follow . . . that what Congress can legislate prospectively it can legislate retrospectively. The retrospective aspects of [economic] legislation, as well as the prospective aspects, must meet the test of due process, and the justifications for the latter may not suffice for the former." Id., at 1617. We have repeated this formulation in numerous recent decisions and given serious consideration to retroactivity-based due process challenges, all without questioning the validity of the underlying due process principle. United States v. Carlton, 512 U.S. 26, 31 (1994); Concrete Pipe, supra , at 636-641; General Motors Corp. v. Romein, 503 U.S. 181, 191 (1992); United States v. Sperry Corp., 493 U.S. 52, 64 (1989); United States v. Hemme, 476 U.S. 558, 567 -572 (1986); Pension Benefit Guaranty Corporation v. R. A. Gray & Co., 467 U.S. 717, 729 -730 (1984). These decisions treat due process challenges based on the retroactive character of the statutes in question as serious and meritorious, thus con firming the vitality of our legal tradition's disfavor of retroactive economic legislation. Indeed, it is no accident that the primary retroactivity precedents upon which today's plurality opinion relies in its takings analysis were grounded in due process. Ante, at 22-26 (citing Turner Elkhorn, R. A. Gray, and Concrete Pipe ).

    These cases reflect our recognition that retroactive lawmaking is a particular concern for the courts because of the legislative "tempt[ation] to use retroactive legislation as a means of retribution against unpopular groups or individuals." Landgraf v. USI Film Products, 511 U.S. 244, 266 (1994); see also Hochman, The Supreme Court and the Constitutionality of Retroactive Legislation, 73 Harv. L. Rev. 692, 693 (1960) (a retroactive law "may be passed with an exact knowledge of who will benefit from it"). If retroactive laws change the legal consequences of transactions long closed, the change can destroy the reasonable certainty and security which are the very objects of property ownership. As a consequence, due process protection for property must be understood to incorporate our settled tradition against retroactive laws of great severity. Groups targeted by retroactive laws, were they to be denied all protection, would have a justified fear that a government once formed to protect expectations now can destroy them. Both stability of investment and confidence in the constitutional system, then, are secured by due process restrictions against severe retroactive legislation.

    The case before us represents one of the rare instances where the Legislature has exceeded the limits imposed by due process. The plurality opinion demonstrates in convincing fashion that the remedy created by the Coal Act bears no legitimate relation to the interest which the Government asserts in support of the statute. Ante, at 27-34. In our tradition, the degree of retroactive effect is a significant determinant in the constitutionality of a statute. United States v. Carlton, supra, at 32; United States v. Darusmont, 449 U.S. 292, 296 -297 (1981) (per curiam); see also Dunbar v. Boston & P. R. Corp., 181 Mass. 383, 386, 63 N. E. 916, 917 (1902) (Holmes, C. J.). As the plurality explains today, in creating liability for events which occurred 35 years ago the Coal Act has a retroactive effect of unprecedented scope. Ante, at 30.

    While we have upheld the imposition of liability on former employers based on past employment relationships, the statutes at issue were remedial, designed to impose an "actual, measurable cost of [the employer's] business" which the employer had been able to avoid in the past. Turner Elkhorn , supra, at 19; accord, Concrete Pipe, supra, at 638; Romein , supra , at 191-192; R. A. Gray, supra, at 733-734. As Chancellor Kent noted, "[s]uch statutes have been held valid when clearly just and reasonable, and conducive to the general welfare, even though they might operate in a degree upon existing rights." 1 Kent, supra, at *455-*456. The Coal Act, however, does not serve this purpose. Eastern was once in the coal business and employed many of the beneficiaries, but it was not responsible for their expectation of lifetime health benefits or for the perilous financial condition of the 1950 and 1974 Plans which put the benefits in jeopardy. As the plurality opinion discusses in detail, the expectation was created by promises and agreements made long after Eastern left the coal business. Eastern was not responsible for the resulting chaos in the funding mechanism caused by other coal companies leaving the framework of the National Bituminous Coal Wage Agreement. Ante, at 31-33. This case is far outside the bounds of retroactivity permissible under our law.

    Finding a due process violation in this case is consistent with the principle that "under the deferential standard of review applied in substantive due process challenges to economic legislation there is no need for mathematical precision in the fit between justification and means." Con crete Pipe, 508 U. S. , at 639 (citing Turner Elkhorn, 428 U.S., at 19 ). Statutes may be invalidated on due process grounds only under the most egregious of circumstances. This case represents one of the rare instances in which even such a permissive standard has been violated.

    Application of the Coal Act to Eastern would violate the proper bounds of settled due process principles, and I concur in the plurality's conclusion that the judgment of the Court of Appeals must be reversed.


    Footnotes

    [ Footnote 1 ] See ante , at 33-35 (plurality opinion of O'CONNOR, J., joined by REHNQUIST, C.J., and SCALIA and THOMAS, JJ. ); ante , at 1, 11-12 (KENNEDY, concurring in judgment and dissenting in part).

    [ Footnote 2 ] "[E]very [National Bituminous Coal Wage Agreement (NBCWA)] signatory company shared some responsibility in creating a legitimate expectation among miners of lifetime health benefits. Imposing liability on companies that have profited from the retirees' labor was found rational in [ Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 18 (1976)] . . . . Every signatory company, including plaintiffs, participated in the creation and development of a multi-employer health benefit program that provided lifetime health benefits for retirees for almost fifty years. Congress could rationally have concluded that such participation led to a legitimate expectation of lifetime health benefits that should be honored under the Coal Act. Again, in this light, it would have been arbitrary to draw the line anywhere other than at all NBCWA signatories. Plaintiffs respond that it was not until the 1974 NBCWA and the 'guarantee' and 'evergreen' clauses of the 1978 NBCWA that miners were promised lifetime health benefits-promises that plaintiffs never made. Therefore, they argue, it was irrational for Congress to require contributions from pre-1974 signatories. But the fact that plaintiffs never contractually agreed to provide lifetime benefits does not rebut the rationality of finding that they contributed to the expectation of lifetime benefits. The Coal Commission and Congress found that the promise of lifetime benefits dates back to the 1940s, even though it is not explicit in any NBCWA until 1974." Davon, Inc. v. Shalala , 75 F. 3d 1114, 1124-1125 (1996) (footnote omitted).

    [ Footnote 3 ] "Blue Diamond further argues that it was irrational for Congress to impose Coal Act liability upon Blue Diamond because Blue Diamond did not promise its employees that they would receive lifetime health benefits. It is undisputed that the NBCWAs did not contain an explicit promise of lifetime benefits until the 1974 NBCWA agreement. However, several federal courts have found that [United Mine Workers of America (UMWA)] members had a legitimate expectation of lifetime benefits before the 1974 NBCWA, based on the various funds' more than 30-year history of continuous payment of benefits and the statements of coal industry officials. Davon , 75 F. 3d at 1124-25 ('Congress could rationally have concluded that such participation [in the NBCWA benefit funds] led to a legitimate expectation of lifetime benefits.'). See also Templeton Coal [ Co., Inc. v. Shalala , 882 F. Supp. 799, 825 (SD Ind. 1995)] (describing basis for lifetime benefits expectation). Congress certainly had a rational basis for concluding that all NBCWA signatories and 'me-too' operators who agreed to be bound by the NBCWAs, including Blue Diamond, contributed toward the legitimate expectations of the UMWA members." In re Blue Diamond Coal Co. ,

    [ Footnote 79 ] F. 3d 516, 522 (1996).

    [ Footnote 4 ] "[I]t is not accurate to claim that only those [signatory operators] which executed NBCWAs in or after 1974 created a legitimate expectation of lifetime health benefits for miners. Congress and the Coal Commission both reviewed the historical evidence and concluded that pre-1974 signatories had made an implicit commitment to furnish such benefits. . . . "Of course, the appellant is correct in insisting that the commitment distilled by Congress from the historical data was not made explicit in the text of those NBCWAs which were written before 1974. But Eastern reads too much into that omission. To be sure, such an implied commitment might not be enforceable in a civil suit ex contractu -but this is a constitutional challenge, not a breach of contract case. For purposes of due process review, Congress' determination that a commitment was made need not rest upon a legally enforceable promise; it is enough that Congress' conclusions as to the existence and effects of such a commitment are rational." 110 F. 3d 150, 157 (1997).

    [ Footnote 5 ] "The Commission firmly believes that the retired miners are entitled to the health care benefits that were promised and guaranteed them and that such commitments must be honored. . . . . . . . . "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. But today those expectations and commitments are in jeopardy." Secretary of Labor's Advisory Commission on United Mine Workers of America Retiree Health Benefits, Coal Commission Report (1990), quoted in App. 237a, 245a-246a.

    [ Footnote 6 ] It may well be true that the majority might have been able to fashion a wiser solution to a difficult problem. Nevertheless, as Chief Justice Hughes observed in a dissent joined by Justices Brandeis, Stone, and Cardozo: "The power committed to Congress to govern interstate commerce does not require that its government should be wise, much less that it should be perfect." Railroad Retirement Bd. v. Alton R. Co., 295 U.S. 330, 391 -392 (1935).

  • [ U.S. ]
  • [ U.S. ]
  • [ U.S. ]
  • FindLaw Career Center

      Search for Law Jobs:

        Post a Job  |  View More Jobs
    Ads by FindLaw