On Appeal From the United States District Court For the Western District of Pennsylvania
(D.C. Civ. No. 94-cv-00143) Argued: June 3, 1996
Before: BECKER, MANSMANN, Circuit Judges, and BROTMAN, District Judge. *fn*
Lindsey Coal Mine Company Liquidating Trust ("Lindsey") maintains that it is not subject to the Coal Industry Retiree Health Benefit Act of 1992 ("Coal Act"), and, alternatively, that the Coal Act, as applied to Lindsey, violates the Due Process and Takings Clauses of the United States Constitution. It brought suit in the district court, in the nature of a declaratory judgment action, seeking judicial review of a final action of the Commissioner of Social Security *fn1 and requesting summary judgment on its claims. The district court denied Lindsey's motion for summary judgment and, instead, granted summary judgment for the defendants, the Commissioner of Social Security and the United Mine Workers of America Combined Benefit Fund. See Lindsey Coal Mining Co. Liquidating Trust v. Shalala, 901 F. Supp. 959 (W.D. Pa. 1995). The district court held (1) that the Commissioner did not abuse her discretion in determining that Lindsey was covered by the Coal Act, and (2) that the Coal Act did not offend the Due Process or Takings Clauses. Id. We affirm.
The provisions of the Coal Act and the history leading up to its enactment are already well chronicled. See, e.g., Davon, Inc. v. Shalala, 75 F.3d 1114 (7th Cir. 1996), petition for cert. filed, 64 U.S.L.W. 3741 (U.S. Apr. 22, 1996) (No. 95-1709), 64 U.S.L.W. 3742 (U.S. Apr. 23, 1996) (No. 95-1751); In re Blue Diamond Coal Co., 79 F.3d 516 (6th Cir. 1996); Barrick Gold Exploration, Inc. v. Hudson, 47 F.3d 832 (6th Cir.), cert. denied, 116 S. Ct. 64 (1995); In re Chateaugay Corp., 53 F.3d 478 (2d Cir.), cert. denied, 116 S. Ct. 298 (1995); Coal Commission Report: A Report to the Secretary of Labor and the American People 16-19 (Nov. 1990). We, therefore, will provide only a brief summary here.
Congress enacted the Coal Act, 26 U.S.C.A. Section(s) 9701-9722 (West Supp. 1995), to ensure that coal mine retirees and their dependents would continue to receive health and death benefits. Miners and their dependents had been receiving benefits under a series of agreements, stretching back to the 1940s, established by the coal industry and the miners' union. Faced with shortfalls in the trusts that provided for these benefits, Congress acted to provide adequate funding. It established, through the Coal Act, a comprehensive regime to provide benefits to retired coal workers and their dependents, funded through premiums allocated among present and former businesses in the coal industry.
The material facts in this case pertain to the history of Lindsey's structure and activities, especially over the last two decades. Incorporated in Pennsylvania in 1910, Lindsey Coal Mining Company mined coal in Pennsylvania for forty-two years. Through its membership in the Central Pennsylvania Coal Producers Association (CPCPA), Lindsey became a signatory to the 1947 National Bituminous Coal Workers Agreement (NBCWA), the 1950 NBCWA, and the February 1, 1951, amendment to the 1950 NBCWA. These agreements were negotiated with the union that represented Lindsey's miners, the United Mine Workers of America (UMWA). Lindsey contributed approximately $230,000.00 to the multi-employer benefit fund established by these NBCWAs. In 1952, Lindsey ceased its active coal mining operations and began leasing its properties, for royalties, to various coal, gas, and logging operators as well selling real estate and scrap metal.
In 1974, the shareholders of Lindsey Coal Mining Company decided, in large part for tax reasons, that it was no longer "desirable" to maintain Lindsey in its corporate form. In March 1975, noting that "time [was] of the essence," the shareholders of Lindsey entered into a trust agreement to "wind up the affairs" of the corporation as quickly as possible. The trust agreement granted to a Liquidating Trustee full corporation powers in the former assets of Lindsey Coal Mining Company, including its real estate and mineral reserves. *fn2 See Lindsey Coal Mining Co. Liquidating Trust v. Shalala, 901 F. Supp. 959, 964 (W.D. Pa. 1995).
It is now 1996, and Lindsey's liquidation has yet to be completed. In fact, liquidation is not expected to be completed for at least another two to four years, when all mineral and timber resources will have been depleted or extracted. Meanwhile, during the past twenty years, Lindsey -- through the Liquidating Trust -- has negotiated the lease of land to a shopping center complex; leased land for coal, gas, and timber extraction; sold scrap metal; and paid approximately $20,000 per year in employee wages. These activities generated significant income for Lindsey -- money that the Trust collects and distributes to the beneficiaries of the trust, the former shareholders of Lindsey Coal Mining Company.
In 1993, the Commissioner of Social Security assigned Lindsey liability for twenty-three of its former miners (or their dependents or beneficiaries) pursuant to the Coal Act, to be paid the first year at a monthly rate of $6,667.34. Although Lindsey's disputes these obligations under the Coal Act, it has made timely payments to the Combined Fund to avoid the penalties for ...