Justice O'Connor announced the judgment of the Court and delivered an opinion, in which The Chief Justice, Justice Scalia, and Justice Thomas join.
In this case, the Court considers a challenge under the Due Process and Takings Clauses of the Constitution to the Coal
For a good part of this century, employers in the coal industry have been involved in negotiations with the United Mine Workers of America (UMWA or Union) regarding the provision of employee benefits to coal miners. When petitioner Eastern Enterprises (Eastern) was formed in 1929, coal operators provided health care to their employees through a prepayment system funded by payroll deductions. Because of the rural location of most mines, medical facilities were frequently substandard, and many of the medical professionals willing to work in mining areas were "company doctors," often selected by the coal operators for reasons other than their skills or training. The health care available to coal miners and their families was deficient in many respects. In addition, the cost of company-provided services, such as housing and medical care, often consumed the bulk of miners' compensation. See generally U. S. Dept. of Interior, Report of the Coal Mines Administration, A Medical Survey of the Bituminous-Coal Industry (1947) (Boone Report); Report of United States Coal Commission, S. Doc. No. 195, 68th Cong., 2d Sess. (1925).
In the late 1930's, the UMWA began to demand changes in the manner in which essential services were provided to miners, and by 1946, the subject of miners' health care had become a critical issue in collective bargaining negotiations between the Union and bituminous coal companies. When a breakdown in those negotiations resulted in a nationwide
That agreement, described as "an almost complete victory for the miners," M. Fox, United We Stand 405 (1990), led to the creation of benefit funds, financed by royalties on coal produced and payroll deductions. The funds compensated miners and their dependents and survivors for wages lost due to disability, death, or retirement. The funds also provided for the medical expenses of miners and their dependents, with the precise benefits determined by UMWA-appointed trustees. In addition, the Krug-Lewis Agreement committed the Government to undertake a comprehensive survey of the living conditions in coal mining areas in order to assess the improvements necessary to bring those communities up to "recognized American standards." Krug-Lewis Agreement § 5, App. (CA1) 613. That study concluded that the medical needs of miners and their dependents would be more effectively served through "a broad prepayment system, based on sound actuarial principles." Boone Report 226-227.
Shortly after the study was issued, the mines returned to private control and the UMWA and several coal operators entered into the National Bituminous Coal Wage Agreement of 1947 (1947 NBCWA), App. (CA1) 615, which established the United Mine Workers of America Welfare and Retirement Fund (1947 W&R Fund), modeled after the KrugLewis benefit trusts. The Fund was to use the proceeds of a royalty on coal production to provide pension and medical
Disagreement over benefits continued, however, leading to the execution of another NBCWA in 1950, which created a new multiemployer trust, the United Mine Workers of America Welfare and Retirement Fund of 1950 (1950 W&R Fund). The 1950 W&R Fund established a 30-cents-per-ton royalty on coal produced, payable by signatory operators on a "several and not joint" basis for the duration of the 1950 Agreement. 1950 NBCWA 63, App. (CA1) 640. As with the 1947 W&R Fund, the 1950 W&R Fund was governed by three trustees chosen by the parties and vested with responsibility to determine the level of benefits. Id., at 59-61, App. (CA1) 638-639. Between 1950 and 1974, the 1950 NBCWA was amended on occasion, and new NBCWA's were adopted in 1968 and 1971. Except for increases in the amount of royalty payments, however, the terms and structure of the 1950 W&R Fund remained essentially unchanged. A 1951 amendment recognized the creation of the Bituminous Coal Operators' Association (BCOA), a multiemployer bargaining association, which became the primary representative of coal operators in negotiations with the Union. See App. (CA1) 647-648.
Under the 1950 W&R Fund, miners and their dependents were not promised specific benefits. As the 1950 W&R Fund's Annual Report for the fiscal year ending June 30, 1955, explained:
See also Mine Workers Health and Retirement Funds v. Robinson, 455 U.S. 562, 565, and n. 2 (1982). Thus, the Fund operated using a fixed amount of royalties, with the trustees having the authority to establish and adjust the level of benefits provided so as to remain within the budgetary constraints.
Subsequent annual reports of the 1950 W&R Fund reiterated that benefits were subject to change. See, e. g., 1950 W&R Fund Annual Report for the Year Ending June 30, 1956 (1956 Annual Report), p. 30, App. (CA1) 929 ("Resolutions adopted by the Trustees governing Fund Benefits— Pensions, Hospital and Medical Care, and Widows and Survivors Benefits—specifically provide that all these Benefits are subject to termination, revision, or amendment, by the Trustees in their discretion at any time"); 1950 W&R Fund Annual Report for the Year Ending June 30, 1958, pp. 20-21, App. (CA1) 955-956 ("Trustee regulations governing Benefits specifically provide that all Benefits which have been authorized are subject to termination, suspension, revision, or amendment by the Trustees in their discretion at any time. Each beneficiary is officially notified of this governing provision at the time his Benefit is authorized").
Between 1950 and 1974, the trustees often exercised their prerogative to alter the level of benefits according to the Fund's budget. In 1960, for instance, "[t]he Trustees of the Fund, recognizing their legal and fiscal obligation to soundly administer the Trust Fund, took action prior to the close of the fiscal year, to curtail the excess of expenditures over income," by "limit[ing] or terminat[ing] eligibility for [certain] Trust Fund Benefits." 1960 Annual Report 2, App. (CA1) 1011. Similar concerns prompted the trustees to reduce monthly pension benefits by 25% at one point, and to limit the range of medical and pension benefits available to miners employed by operators who did not pay the required royalties. See 1961 Annual Report 2, 11-12, App. (CA1) 1044, 1053-1054; 1963 Annual Report 13, 16, App. (CA1) 1121, 1124.
Reductions in benefits were not always acceptable to the miners, and some wildcat strikes erupted in the 1960's. See Secretary of Labor's Advisory Commission on United Mine Workers of America Retiree Health Benefits, Coal Commission Report 22-23 (1990) (Coal Comm'n Report), App. (CA1)
The 1974 NBCWA thus was the first agreement between the UMWA and the BCOA to expressly reference health benefits for retirees; prior agreements did not specifically mention retirees, and the scope of their benefits was left to the discretion of fund trustees. The 1974 NBCWA explained that it was amending previous medical benefits to provide a Health Services card for retired miners until their death, and to their widows until their death or remarriage. 1974 NBCWA 99, 105 (Summary of Principal Provisions, UMWA Health and Retirement Benefits), App. (CA1) 755, 758. Despite the expanded benefits, the 1974 NBCWA did not alter the employers' obligation to contribute only a fixed amount of royalties, nor did it extend employers' liability beyond the life of the agreement. See id., Art. XX, § (d), App. (CA1) 749.
As a result of the broadened coverage under the 1974 NBCWA, the number of eligible benefit recipients jumped dramatically. See 1977 Annual Report of the UMWA Welfare
The increase in benefits, combined with various other circumstances—such as a decline in the amount of coal produced, the retirement of a generation of miners, and rapid escalation of health care costs—quickly resulted in financial problems for the 1950 and 1974 Benefit Plans. In response, the next NBCWA, executed in 1978, assigned responsibility to signatory employers for the health care of their own active and retired employees. See 1978 NBCWA, Art. XX, § (c)(3), App. (CA1) 778. The 1974 Benefit Plan remained in effect, but only to cover retirees whose former employers were no longer in business.
To ensure the Benefit Plans' solvency, the 1978 NBCWA included a "guarantee" clause obligating signatories to make sufficient contributions to maintain benefits during that agreement, and "evergreen" clauses were incorporated into the Benefit Plans so that signatories would be required to contribute as long as they remained in the coal business, regardless of whether they signed a subsequent agreement. See id., § (h), App. (CA1) 787-788; House Report 5. As a result, the coal operators' liability to the Benefit Plans shifted from a defined contribution obligation, under which employers were responsible only for a predetermined
Despite the 1978 changes, the Benefit Plans continued to suffer financially as costs increased and employers who had signed the 1978 NBCWA withdrew from the agreement, either to continue in business with nonunion employees or to exit the coal business altogether. As more and more coal operators abandoned the Benefit Plans, the remaining signatories were forced to absorb the increasing cost of covering retirees left behind by exiting employers. A spiral soon developed, with the rising cost of participation leading more employers to withdraw from the Benefit Plans, resulting in more onerous obligations for those that remained. In 1988, the UMWA and BCOA attempted to relieve the situation by imposing withdrawal liability on NBCWA signatories who seceded from the Benefit Plans. See 1988 NBCWA, Art. XX, §§ (i) and (j), App. (CA1) 805, 828-829. Even so, by 1990, the 1950 and 1974 Benefit Plans had incurred a deficit of about $110 million, and obligations to beneficiaries were continuing to surpass revenues. See House Report 9; Coal Comm'n Report 43-44, App. (CA1) 1373-1374.
In response to unrest among miners, such as the lengthy strike that followed Pittston Coal Company's refusal to sign the 1988 NBCWA, Secretary of Labor Elizabeth Dole announced the creation of the Advisory Commission on United Mine Workers of America Retiree Health Benefits (Coal Commission or Commission). The Coal Commission was charged with "recommend[ing] a solution for ensuring that orphan retirees in the 1950 and 1974 Benefit Trusts will continue to receive promised medical care." Coal Comm'n Report 2, App. (CA1) 1333. The Commission explained that "[h]ealth care benefits are an emotional subject in the coal industry, not only because coal miners have been promised
First, the Commission recommended that Congress establish a fund financed by an industrywide fee to provide health care to orphan retirees at the level of benefits they were entitled to receive at that fund's inception. To cover the cost of medical benefits for retirees from signatories to the 1978 or subsequent NBCWA's who remained in the coal business, the Commission proposed the creation of another fund financed by the retirees' most recent employers. Id., at 61, App. (CA1) 1390. The Commission also recommended that Congress codify the "evergreen" obligation of the 1978 and subsequent NBCWA's. Id., at 63, App. (CA1) 1392.
As an alternative to imposing industrywide liability, the Commission suggested that Congress spread the cost of retirees' health benefits across "a broadened base of current and past signatories to the contracts," apparently referring to the 1978 and subsequent NBCWA's. See id., at 58, 65, App. (CA1) 1387, 1394. Not all Commission members agreed, however, that it would be fair to assign such a burden to signatories of the 1978 agreement. Four Commissioners explained that "[i]ssues of elemental fairness are involved" in imposing obligations on "respectable operators who made decisions in the past to move to different locales, invest in different technology, or pursue their business with or without respect to union presence." Id., at 85, App. (CA1) 1414 (statement of Commissioners Michael J. Mahoney,
After the Coal Commission issued its report, Congress considered several proposals to fund health benefits for UMWA retirees. At a 1991 hearing, a Senate subcommittee was advised that more than 120,000 retirees might not receive "the benefits they were promised." Coal Commission Report on Health Benefits of Retired Coal Miners: Hearing before the Subcommittee on Medicare and Long-Term Care of the Senate Committee on Finance, 102d Cong., 1st Sess., 45 (1991) (statement of BCOA Chairman Michael K. Reilly). The Coal Commission's Chairman submitted a statement urging that Congress' assistance was needed "to fulfill the promises that began in the collective bargaining process nearly 50 years ago . . . ." Id., at 306 (prepared statement of W. J. Usery, Jr.). Some Senators expressed similar concerns that retired miners might not receive the benefits promised to them. See id., at 16 (statement of Sen. Dave Durenberger) (describing issue as involving "a whole bunch of promises made to a whole lot of people back in the 1940s and 1950s when the cost consequences of those problems were totally unknown"); id., at 59 (prepared statement of Sen. Orrin G. Hatch) (stating that "miners and their families. . . were led to believe by their own union leaders and the companies for which they worked that they were guaranteed lifetime [health] benefits").
In 1992, as part of a larger bill, both Houses passed legislation based on the Coal Commission's first proposal, which required signatories to the 1978 or any subsequent NBCWA to fund their own retirees' health care costs and provided for orphan retirees' benefits through a tax on future coal production. See H. R. Conf. Rep. No. 102-461, pp. 268-295 (1992). President Bush, however, vetoed the entire bill. See H. R. Doc. No. 102-206, p. 1 (1992).
The Coal Act merged the 1950 and 1974 Benefit Plans into a new multi employer plan called the United Mine Workers of America Combined Benefit Fund (Combined Fund). See 26 U. S. C. §§ 9702(a)(1), (2).
The Commissioner of Social Security (Commissioner) calculates the premiums due from any signatory operator based
"(1) First, to the signatory operator which—
It is the application of the third prong of the allocation formula, § 9706(a)(3), to Eastern that we review in this case.
Eastern was organized as a Massachusetts business trust in 1929, under the name Eastern Gas and Fuel Associates. Its current holdings include Boston Gas Company and a barge operator. Therefore, although Eastern is no longer involved in the coal industry, it is "in business" within the meaning of the Coal Act. Until 1965, Eastern conducted extensive coal mining operations centered in West Virginia and Pennsylvania. As a signatory to each NBCWA executed between 1947 and 1964, Eastern made contributions of over $60 million to the 1947 and 1950 W&R Funds. Brief for Petitioner 6.
In 1963, Eastern decided to transfer its coal-related operations to a subsidiary, Eastern Associated Coal Corp. (EACC). The transfer was completed by the end of 1965, and was described in Eastern's federal income tax return as an agreement by EACC to assume all of Eastern's liabilities arising out of coal mining and marketing operations in exchange for Eastern's receipt of EACC's stock. EACC made similar representations in Security and Exchange Commission filings, describing itself as the successor to Eastern's coal business. See App. (CA1) 117-118. At that time, the 1950 W&R Fund had a positive balance of over $145 million. 1966 Annual Report 3, App. (CA1) 1207.
Eastern retained its stock interest in EACC through a subsidiary corporation, Coal Properties Corp. (CPC), until 1987, and it received dividends of more than $100 million from EACC during that period. See Brief for Petitioner 6, n. 13. In 1987, Eastern sold its interest in CPC to respondent Peabody Holding Company, Inc. (Peabody). Under the terms of the agreement effecting the transfer, Peabody, CPC, and EACC assumed responsibility for payments to certain benefit plans, including the "Benefit Plan for UMWA Represented Employees of EACC and Subs." App. 206a, 210a.
Following enactment of the Coal Act, the Commissioner assigned to Eastern the obligation for Combined Fund premiums respecting over 1,000 retired miners who had worked for the company before 1966, based on Eastern's status as the pre-1978 signatory operator for whom the miners had worked for the longest period of time. See 26 U. S. C. § 9706(a). Eastern's premium for a 12-month period exceeded $5 million. See Brief for Petitioner 16.
Eastern responded by suing the Commissioner, as well as the Combined Fund and its trustees, in the United States District Court for the District of Massachusetts. Eastern asserted that the Coal Act, either on its face or as applied, violates substantive due process and constitutes a taking of its property in violation of the Fifth Amendment. Eastern also challenged the Commissioner's interpretation of the Coal Act. The District Court granted summary judgment for respondents on all claims, upholding both the Commissioner's interpretation of the Coal Act and the Act's constitutionality. Eastern Enterprises v. Shalala, 942 F.Supp. 684 (Mass. 1996).
The Court of Appeals for the First Circuit affirmed. Eastern Enterprises v. Chater, 110 F.3d 150 (1997). The court rejected Eastern's challenge to the Commissioner's interpretation of the Coal Act. Addressing Eastern's substantive due process claim, the court described the Coal Act as "entitled to the most deferential level of judicial scrutiny," explaining that, "[w]here, as here, a piece of legislation is purely economic and does not abridge fundamental rights, a challenger must show that the legislature acted in an arbitrary and irrational way." Id., at 155-156 (internal quotation marks omitted). In the court's view, the retroactive liability imposed by the Act was permissible "[a]s long as the
The court analyzed Eastern's claim that the Coal Act effects an uncompensated taking under the three factors set out in Connolly v. Pension Benefit Guaranty Corporation, 475 U.S. 211, 225 (1986): "(1) the economic impact of the regulation on the claimant, (2) the extent to which the regulation interferes with the claimant's reasonable investmentbacked expectations, and (3) the nature of the governmental action." 110 F. 3d, at 160. With respect to the Act's economic impact on Eastern, the court observed that the Act "does not involve the total deprivation of an asset." Ibid. The Act's terms, the court found, "reflec[t] a sufficient degree of proportionality" because Eastern is assigned liability only for miners "whom it employed for a relevant (and relatively long) period of time," and then only if no post-1977 NBCWA signatory (or related person) can be found. Ibid. The court also rejected Eastern's contention that the Act unreasonably interferes with its investment-backed expectations, explaining that the pattern of federal intervention in the coal industry and Eastern's role in fostering an expectation of
Other Courts of Appeals have also upheld the Coal Act against constitutional challenges.
We begin with a threshold jurisdictional question, raised in the federal respondent's answer to Eastern's complaint: Whether petitioner's takings claim was properly filed in Federal District Court rather than the United States Court of Federal Claims. See App. (CA1) 40. Although the Commissioner no longer challenges the Court's adjudication of this action, see Brief for Federal Respondent 38-39, n. 30, it is appropriate that we clarify the basis of our jurisdiction over petitioner's claims.
In this case, however, Eastern does not seek compensation from the Government. Instead, Eastern requests a declaratory judgment that the Coal Act violates the Constitution and a corresponding injunction against the Commissioner's enforcement of the Act as to Eastern. Such equitable relief is arguably not within the jurisdiction of the Court of Federal Claims under the Tucker Act. See United States v. Mitchell, 463 U.S. 206, 216 (1983) (explaining that, in order for a claim to be "cognizable under the Tucker Act," it "must be one for money damages against the United States"); see also, e. g., Bowen v. Massachusetts, 487 U.S. 879, 905 (1988).
Some Courts of Appeals have accepted the view that the Tucker Act does not apply to suits seeking only equitable relief, see In re Chateaugay Corp., 53 F.3d 478, 493 (CA2), cert. denied sub nom. LTV Steel Co. v. Shalala, 516 U.S. 913 (1995); Southeast Kansas Community Action Program, Inc. v. Secretary of Agriculture, 967 F.2d 1452, 1455-1456 (CA10 1992), while others have concluded that a claim for equitable relief under the Takings Clause is hypothetical, and therefore not within the district courts' jurisdiction, until compensation has been sought and refused in the Court of Federal Claims, see Bay View, Inc. v. Ahtna, Inc., 105 F.3d 1281,
On the one hand, this Court's precedent can be read to support the latter conclusion that regardless of the nature of relief sought, the availability of a Tucker Act remedy renders premature any takings claim in federal district court. See Preseault v. ICC, 494 U.S. 1, 11 (1990); see also Monsanto, supra, at 1016. On the other hand, in a case such as this one, it cannot be said that monetary relief against the Government is an available remedy. See Brief for Federal Respondent 38-39, n. 30. The payments mandated by the Coal Act, although calculated by a Government agency, are paid to the privately operated Combined Fund. Congress could not have contemplated that the Treasury would compensate coal operators for their liability under the Act, for "[e]very dollar paid pursuant to a statute would be presumed to generate a dollar of Tucker Act compensation." In re Chateaugay Corp., 53 F. 3d, at 493. Accordingly, the "presumption of Tucker Act availability must be reversed where the challenged statute, rather than burdening real or physical property, requires a direct transfer of funds" mandated by the Government. Ibid. In that situation, a claim for compensation "would entail an utterly pointless set of activities." Student Loan Marketing Assn. v. Riley, 104 F.3d 397, 401 (CADC), cert. denied, 522 U.S. 913 (1997). Instead, as we explained in Duke Power Co. v. Carolina Environmental Study Group, Inc., 438 U.S. 59, 71, n. 15 (1978), the Declaratory Judgment Act "allows individuals threatened with a taking to seek a declaration of the constitutionality of the disputed governmental action before potentially uncompensable damages are sustained."
Moreover, in situations analogous to this case, we have assumed the lack of a compensatory remedy and have granted equitable relief for Takings Clause violations without discussing the applicability of the Tucker Act. See, e. g., Babbitt v. Youpee, 519 U.S. 234, 243-245 (1997); Hodel v. Ir-
The Takings Clause of the Fifth Amendment provides: "[N]or shall private property be taken for public use, without just compensation." The aim of the Clause is to prevent the government "from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole." Armstrong v. United States, 364 U.S. 40, 49 (1960).
This case does not present the "classi[c] taking" in which the government directly appropriates private property for its own use. See United States v. Security Industrial Bank, 459 U.S. 70, 78 (1982). Although takings problems are more commonly presented 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," Penn Central Transp. Co. v. New York City, 438 U.S. 104, 124 (1978) (citation omitted),
Of course, a party challenging governmental action as an unconstitutional taking bears a substantial burden. See United States v. Sperry Corp., 493 U.S. 52, 60 (1989). Government regulation often "curtails some potential for the use or economic exploitation of private property," Andrus v. Allard, 444 U.S. 51, 65 (1979), and "not every destruction or injury to property by governmental action has been held to be a `taking' in the constitutional sense," Armstrong, supra, at 48. In light of that understanding, the process for evaluating a regulation's constitutionality involves an examination of the "justice and fairness" of the governmental action. See Andrus, 444 U. S., at 65. That inquiry, by its nature, does not lend itself to any set formula, see ibid., and the determination whether "`justice and fairness' require that economic injuries caused by public action [must] be compensated by the government, rather than remain disproportionately concentrated on a few persons," is essentially ad hoc and fact intensive, Kaiser Aetna v. United States, 444 U.S. 164, 175 (1979) (internal quotation marks omitted). We have identified several factors, however, that have particular significance: "[T]he economic impact of the regulation, its interference with reasonable investment backed expectations, and
Our analysis in this case is informed by previous decisions considering the constitutionality of somewhat similar legislative schemes. In Usery v. Turner Elkhorn Mining Co., 428 U.S. 1 (1976), we had occasion to review provisions of the Black Lung Benefits Act of 1972, 30 U. S. C. § 901 et seq., which required coal operators to compensate certain miners and their survivors for death or disability due to black lung disease caused by employment in coal mines. Coal operators challenged the provisions of the Act relating to miners who were no longer employed in the industry, arguing that those provisions violated substantive due process by imposing "an unexpected liability for past, completed acts that were legally proper and, at least in part, unknown to be dangerous at the time." 428 U. S., at 15.
In rejecting the operators' challenge, we explained that "legislative Acts adjusting the burdens and benefits of economic life come to the Court with a presumption of constitutionality, and . . . the burden is on one complaining of a due process violation to establish that the legislature has acted in an arbitrary and irrational way." Ibid. We observed that stricter limits may apply to Congress' authority when legislation operates in a retroactive manner, id., at 16-17, but concluded that the assignment of liability for black lung benefits was "justified as a rational measure to spread the costs of the employees' disabilities to those who have profited from the fruits of their labor," id., at 18.
Several years later, we confronted a due process challenge to the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA), 94 Stat. 1208. See Pension Benefit Guaranty Corporation v. R. A. Gray & Co., 467 U.S. 717 (1984). The MPPAA was enacted to supplement ERISA, 29 U. S. C. § 1001 et seq. , which established the Pension Benefit Guaranty
Despite Congress' effort to insure multi employer plan benefits through ERISA, many multi employer plans were in a precarious financial position as the date for mandatory coverage approached. After a series of hearings and debates, Congress passed the MPPAA, which imposed a payment obligation upon any employer withdrawing from a multiemployer pension plan, the amount of which depended on the employer's share of the plan's unfunded vested benefits. The MPPAA applied retroactively to withdrawals within the five months preceding the statute's enactment. Id., at 721-725.
In Gray, an employer that had participated in a multi employer pension plan brought a due process challenge to the statutory liability stemming from its withdrawal from the plan four months before the MPPAA was enacted. Relying on our decision in Turner Elkhorn, we rejected the employer's claim. It was rational, we determined, for Congress to impose retroactive liability "to prevent employers from taking advantage of a lengthy legislative process [by] withdrawing while Congress debated necessary revisions in the statute." 467 U. S., at 731. In addition, we explained, "as the [MPPAA] progressed through the legislative process, Congress advanced the effective date chosen so that it would encompass only that retroactive time period that Congress believed would be necessary to accomplish its purposes." Ibid. Accordingly, we concluded that the MPPAA exemplified
This Court again considered the constitutionality of the MPPAA in Connolly v. Pension Benefit Guaranty Corporation, 475 U.S. 211 (1986), which presented the question whether the MPPAA's withdrawal liability provisions effected an unconstitutional taking. The action was brought by trustees of a multi employer pension plan that, under collective bargaining agreements, received contributions from employers on the basis of the hours worked by their employees. We agreed that the liability imposed by the MPPAA constituted a permanent deprivation of assets, but we rejected the notion that "such a statutory liability to a private party always constitutes an uncompensated taking prohibited by the Fifth Amendment." Id., at 222. "In the course of regulating commercial and other human affairs," we explained, "Congress routinely creates burdens for some that directly benefit others." Id., at 223. Consistent with our decisions in Gray and Turner Elkhorn, we reasoned that legislation is not unlawful solely because it upsets otherwise settled expectations.
Moreover, given our holding in Gray that the MPPAA did not violate due process, we concluded that "it would be surprising indeed to discover" that the statute effected a taking. 475 U. S., at 223. Although the employers in Connolly had contractual agreements expressly limiting their contributions to the multi employer plan, we observed that "[c]ontracts, however express, cannot fetter the constitutional authority of Congress" and "the fact that legislation disregards or destroys existing contractual rights does not always transform the regulation into an illegal taking." Id., at 223— 224 (internal quotation marks omitted). Focusing on the three factors of "particular significance"—the economic impact of the regulation, the extent to which the regulation
The governmental action at issue in Connolly was not a physical invasion of employers' assets; rather, it "safeguard[ed] the participants in multi employer pension plans by requiring a withdrawing employer to fund its share of the plan obligations incurred during its association with the plan." Ibid. In addition, although the amounts assessed under the MPPAA were substantial, we found it important that "[t]he assessment of withdrawal liability [was] not made in a vacuum, . . . but directly depend[ed] on the relationship between the employer and the plan to which it had made contributions." Ibid. Further, "a significant number of provisions in the Act . . . moderate[d] and mitigate[d] the economic impact of an individual employer's liability." Id., at 225-226. Accordingly, we found "nothing to show that the withdrawal liability actually imposed on an employer w[ould] always be out of proportion to its experience with the plan." Id., at 226. Nor did the MPPAA interfere with employers' reasonable investment-backed expectations, for, by the time of the MPPAA's enactment, "[p]rudent employers . . . had more than sufficient notice not only that pension plans were currently regulated, but also that withdrawal itself might trigger additional financial obligations." Id., at 227. For those reasons, we determined that "fairness and justice" did not require anyone other than the withdrawing employers and the remaining parties to the pension agreements to bear the burden of funding employees' vested benefits. Ibid.
We once more faced challenges to the MPPAA under the Due Process and Takings Clauses in Concrete Pipe & Products of Cal., Inc. v. Construction Laborers Pension Trust for Southern Cal., 508 U.S. 602 (1993). In that case, the employer focused on the fact that its contractual commitment to the multi employer plan did not impose withdrawal liability.
Our opinions in Turner Elkhorn, Connolly, and Concrete Pipe make clear that Congress has considerable leeway to fashion economic legislation, including the power to affect contractual commitments between private parties. Congress also may impose retroactive liability to some degree, particularly where it is "confined to short and limited periods required by the practicalities of producing national legislation." Gray, 467 U. S., at 731 (internal quotation marks omitted). Our decisions, however, have left open the possibility that legislation might be unconstitutional if it imposes severe retroactive liability on a limited class of parties
We believe that the Coal Act's allocation scheme, as applied to Eastern, presents such a case. We reach that conclusion by applying the three factors that traditionally have informed our regulatory takings analysis. Although Justice Kennedy and Justice Breyer would pursue a different course in evaluating the constitutionality of the Coal Act, they acknowledge that this Court's opinions in Connolly and Concrete Pipe indicate that the regulatory takings framework is germane to legislation of this sort. See post, at 545— 546 (Kennedy, J., concurring in judgment and dissenting in part); post, at 555-556 (Breyer, J., dissenting).
As to the first factor relevant in assessing whether a regulatory taking has occurred, economic impact, there is no doubt that the Coal Act has forced a considerable financial burden upon Eastern. The parties estimate that Eastern's cumulative payments under the Act will be on the order of $50 to $100 million. See Brief for Petitioner 2 ($100 million); Brief for Respondents UMWA Combined Benefit Fund et al. 46 ($51 million). Eastern's liability is thus substantial, and the company is clearly deprived of the amounts it must pay the Combined Fund. See Connolly, 475 U. S., at 222. The fact that the Federal Government has not specified the assets that Eastern must use to satisfy its obligation does not negate that impact. It is clear that the Act requires Eastern to turn over a dollar amount established by the Commissioner under a timetable set by the Act, with the threat of severe penalty if Eastern fails to comply. See 26 U. S. C. §§ 9704(a) and (b) (directing liable operators to pay annual premiums as computed by the Commissioner); § 9707 (imposing, with limited exceptions, a penalty of $100 per day per eligible beneficiary if payment is not made in accordance with § 9704).
Here, however, while Eastern contributed to the 1947 and 1950 W&R Funds, it ceased its coal mining operations in 1965 and neither participated in negotiations nor agreed to make contributions in connection with the Benefit Plans under the 1974, 1978, or subsequent NBCWA's. It is the latter agreements that first suggest an industry commitment to the funding of lifetime health benefits for both retirees and their family members. Although EACC continued mining coal until 1987 as a subsidiary of Eastern, Eastern's liability under the Act bears no relationship to its ownership of EACC; the Act assigns Eastern responsibility for benefits relating to miners that Eastern itself, not EACC, employed, while EACC would be assigned the responsibility for any miners that it had employed. See 26 U. S. C. § 9706(a). Thus, the Act does not purport, as Justice Breyer suggests, post, at 566, to assign liability to Eastern based on the "`last man out' problem" that developed after benefits were significantly expanded in 1974. During the years in which
It is true that Eastern may be able to seek indemnification from EACC or Peabody. But although the Act preserves Eastern's right to pursue indemnification, see 26 U. S. C. § 9706(f)(6), it does not confer any right of reimbursement. See also Conference Report on Coal Act, 138 Cong. Rec., at 34004 (explaining that the Coal Act allows parties to "enter into private litigation to enforce . . . contracts for indemnification," but "does not create new private rights of action"). Moreover, the possibility of indemnification does not alter the fact that Eastern has been assessed over $5 million in Combined Fund premiums and that its liability under the Coal Act will continue for many years. To the extent that Eastern may have entered into contractual arrangements to
We are also not persuaded by respondents' argument that the Coal Act "moderate[s] and mitigate[s] the economic impact" upon Eastern. See Connolly, 475 U. S., at 225-226. Although Eastern is not assigned the premiums for former employees who later worked for companies that signed the 1978 NBCWA, see 26 U. S. C. §§ 9706(a)(1), (2), Eastern had no control over the activities of its former employees subsequent to its departure from the coal industry in 1965. By contrast, the provisions of the MPPAA that we identified as potentially moderating the employer's liability in Connolly were generally within the employer's control. See 475 U. S., at 226, n. 8. The mere fact that Eastern is not forced to bear the burden of lifetime benefits respecting all of its former employees does not mean that the company's liability for some of those employees is not a significant economic burden.
For similar reasons, the Coal Act substantially interferes with Eastern's reasonable investment-backed expectations. The Act's beneficiary allocation scheme reaches back 30 to 50 years to impose liability against Eastern based on the company's activities between 1946 and 1965. Thus, even though the Act mandates only the payment of future health benefits, it nonetheless "attaches new legal consequences to [an employment relationship] completed before its enactment." Landgraf v. USI Film Products, 511 U.S. 244, 270 (1994).
Retroactivity is generally disfavored in the law, Bowen v. Georgetown Univ. Hospital, 488 U.S. 204, 208 (1988), in accordance with "fundamental notions of justice" that have been recognized throughout history, Kaiser Aluminum & Chemical Corp. v. Bonjorno, 494 U.S. 827, 855 (1990) (Scalia, J., concurring). See also, e. g., Dash v. Van Kleeck, 7 Johns. *477, *503 (NY 1811) ("It is a principle in the Eng-
Our Constitution expresses concern with retroactive laws through several of its provisions, including the Ex Post Facto and Takings Clauses. Landgraf, supra, at 266. In Calder v. Bull, 3 Dall. 386 (1798), this Court held that the Ex Post Facto Clause is directed at the retroactivity of penal legislation, while suggesting that the Takings Clause provides
Like those provisions, the Coal Act operates retroactively, divesting Eastern of property long after the company believed its liabilities under the 1950 W&R Fund to have been settled. And the extent of Eastern's retroactive liability is substantial and particularly far reaching. Even in areas in which retroactivity is generally tolerated, such as tax legislation, some limits have been suggested. See, e. g., United States v. Darusmont, 449 U.S. 292, 296-297 (1981) (per curiam) (noting Congress' practice of confining retroactive application of tax provisions to "short and limited periods"). The distance into the past that the Act reaches back to impose a liability on Eastern and the magnitude of that liability raise substantial questions of fairness. See Connolly, supra, at 229 O'CONNOR, J., concurring) (questioning constitutionality of imposing liability on "employers for unfunded benefits that accrued in the past under a pension plan
Respondents and their amici curiae assert that the extent of retroactive liability is justified because there was an implicit, industrywide agreement during the time that Eastern was involved in the coal industry to fund lifetime health benefits for qualifying miners and their dependents. That contention, however, is not supported by the pre-1974 NBCWA's. No contrary conclusion can be drawn from the few isolated statements of individuals involved in the coal industry, see, e. g., Brief for Respondents Peabody Holding Company, Inc., et al. 8-10, or from statements of Members of Congress while considering legislative responses to the issue of funding retiree benefits. Moreover, even though retirees received medical benefits before 1974, and perhaps developed a corresponding expectation that those benefits would continue, the Coal Act imposes liability respecting a much broader range of beneficiaries. In any event, the question is not whether miners had an expectation of lifetime benefits, but whether Eastern should bear the cost of those benefits as to miners it employed before 1966.
Eastern only participated in the 1947 and 1950 W&R Funds, which operated on a pay-as-you-go basis, and under which the degree of benefits and the classes of beneficiaries were subject to the trustees' discretion. Not until 1974, when ERISA forced revisions to the 1950 W&R Fund, could lifetime medical benefits under the multi employer agreement have been viewed as promised. Eastern was no longer in the industry when the evergreen and guarantee clauses of the 1978 and subsequent NBCWA's shifted the 1950 and 1974 Benefit Plans from a defined contribution framework to a guarantee of defined benefits, at least for the life of the
Eastern's liability also differs from coal operators' responsibility for benefits under the Black Lung Benefits Act of 1972. That legislation merely imposed "liability for the effects of disabilities bred in the past [that] is justified as a rational measure to spread the costs of the employees' disabilities to those who have profited from the fruits of their labor." Turner Elkhorn, 428 U. S., at 18. Likewise, Eastern might be responsible for employment-related health problems of all former employees whether or not the cost was foreseen at the time of employment, see id., at 16, but there is no such connection here. There is no doubt that many coal miners sacrificed their health on behalf of this country's industrial development, and we do not dispute that some members of the industry promised lifetime medical benefits to miners and their dependents during the 1970's. Nor do we, as Justice Stevens suggests, post, at 553, question Congress' policy decision that the miners are entitled to relief. But the Constitution does not permit a solution to the problem of funding miners' benefits that imposes such a disproportionate and severely retroactive burden upon Eastern.
Eastern also claims that the manner in which the Coal Act imposes liability upon it violates substantive due process. To succeed, Eastern would be required to establish that its liability under the Act is "arbitrary and irrational." Turner Elkhorn, supra, at 15. Our analysis of legislation under the Takings and Due Process Clauses is correlated to some extent, see Connolly, supra, at 223, and there is a question whether the Coal Act violates due process in light of the Act's severely retroactive impact. At the same time, this Court has expressed concerns about using the Due Process Clause to invalidate economic legislation. See Ferguson v. Skrupa, 372 U.S. 726, 731 (1963) (noting "our abandonment of the use of the `vague contours' of the Due Process Clause to nullify laws which a majority of the Court believ[e] to be economically unwise" (footnote omitted)); see also Williamson v. Lee Optical of Okla., Inc., 348 U.S. 483, 488 (1955) ("The day is gone when this Court uses the Due Process Clause . . . to strike down . . . laws, regulatory of business
In enacting the Coal Act, Congress was responding to a serious problem with the funding of health benefits for retired coal miners. While we do not question Congress' power to address that problem, the solution it crafted improperly places a severe, disproportionate, and extremely retroactive burden on Eastern. Accordingly, we conclude that the Coal Act's allocation of liability to Eastern violates the Takings Clause, and that 26 U. S. C. § 9706(a)(3) should be enjoined as applied to Eastern. The judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings.
It is so ordered.
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. 1891). 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
Justice Kennedy, concurring in the judgment and dissenting 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.
The final Clause of the Fifth Amendment states:
The provision is known as the Takings Clause. The concept of a taking under the Clause has become a term of art, and my discussion begins here.
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
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
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
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 interest 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.
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 537 ("[T]he governmental action implicates fundamental principles
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 521 ("[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 Corpo-
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.
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 532-533. 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 (5th ed. 1891).
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
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.
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 529-537. 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 532.
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, 508 U. S., at 638; Romein, supra, at 191-192; R. A. Gray, supra, at 733-734. As Chancellor Kent noted: "Such 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, Commentaries on American Law, at *455—*456. The Coal Act, however, does not serve
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." Concrete Pipe, supra, 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.
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.
My understanding of this critical fact is shared by the judges of the Seventh Circuit,
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.
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.
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
As a preliminary matter, I agree with Justice Kennedy, ante, at 539-547 (opinion concurring in judgment and dissenting in part), 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 compensation." 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
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
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) (characterizing "reachback" liability payments as a "tax"), cert. denied, 520 U.S. 1118 (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.
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 Self-Incrimination 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
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 534-537. 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.
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
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 551-552, n. 3 (dissenting opinion). 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 Coal 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 Coal 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 "reachback" 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
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, 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
(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 BituminousCoal Industry 121, 144 (1947) (hereinafter 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) (hereinafter 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) (hereinafter Krajcinovic); C. Seltzer, Fire in the Hole 57 (1985); R. Zieger, John L. Lewis: Labor Leader 151 (1988); see also ante, at 504-505. John L. Lewis, head of the United Mine Workers of America (hereinafter UMWA or Union), 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.
(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 W&R 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 16-17, 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 12-month period). 1955 W&R Fund Annual Report 15, 28, App. (CA1) 881, 894; 1956 W&R Fund Annual Report 13-14, 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
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 12month 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 work force. Coal Comm'n Report 11-14, App. (CA1) 1342-1345 (75% decline in employment from 1950 to 1969); Krajcinovic 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) 2000. 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 1972. 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,
Others have reached similar conclusions. The Coal Commission more recently said:
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) (Coal 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 561; 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
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 industrywide 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. (hereinafter 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) 2172 (affidavit of T. Gallagher,
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 multi employer 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 Long-Term 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 564-565; see also Concrete Pipe, supra, at 645-646; Connolly, 475 U. S., at 226-227; Usery, 428 U. S., at 15-16.
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 investmentbacked 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 Coal 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
Briefs of amici curiae urging affirmance were filed for the Bituminous Coal Operators' Association, Inc., by Clifford M. Sloan and Paul L. Joffe; for California Cities and Counties et al. by John R. Calhoun, John D. Echeverria, James K. Hahn, Anthony Saul Alperin, Samuel L. Jackson, Joan R. Gallo, George Rios, Louise H. Renne, Gary T. Ragghianti, and S. Shane Stark; for Cedar Coal Co. et al. by David M. Cohen; for Freeman United Coal Mining Co. by Kathryn S. Matkov; for Ohio Valley Coal Co. et al. by John G. Roberts, Jr.; and for the United Mine Workers of America by Grant Crandall.
Briefs of amici curiae were filed for Midwest Motor Express, Inc., by Hervey H. Aitken, Jr., and Roy A. Sheetz; and for Pittston Co. by A. E. Dick Howard, Stephen M. Hodges, Wade W. Massie, and Gregory B. Robertson.
"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." Eastern Enterprises v. Chater, 110 F.3d 150, 157 (1997).
. . . . .
"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.