Subject: S7-04-23: Webform Comments from Anonymous
From: Anonymous
Affiliation:

Oct. 29, 2023

The Proposed Rule Disrupts Contractual Expectations - 

The proposed amendments to the SEC's custody rules, if adopted,
would impose significant new requirements on registered investment
advisers (RIAs) who custody digital assets on behalf of clients. While
protecting client assets is undoubtedly important, the SEC should be
mindful that imposing retroactive requirements on existing custody
relationships risks undermining established contractual expectations
and industry practices.

Several courts have cautioned that "retroactive legislation
presents problems of unfairness" by upsetting expectations based
on prior law. Landgraf v. USI Film Prods., 511 U.S. 244, 265 (1994).
As the Supreme Court explained, "[e]lementary considerations of
fairness dictate that individuals should have an opportunity to know
what the law is and to conform their conduct accordingly." Id. at
265. Similarly, in Eastern Enterprises v. Apfel, 524 U.S. 498 (1998),
a plurality of the Court noted that regulatory legislation may be
"unconstitutional if it imposes severe retroactive liability on a
limited class of parties that could not have anticipated the
liability." Id. at 528–29.

Here, RIAs and qualified custodians entered into custody agreements
under a prior regulatory regime that did not expressly govern digital
assets. The SEC has not previously clarified that its custody rules
apply to digital assets. Yet the proposed amendments would
retroactively impose significant new requirements on RIAs who believed
they were complying with their custody obligations. This upsets
reasonable expectations based on the SEC's prior guidance.

---------------------------------------------------------The full text
of Eastern Enterprises v. Apfel follows for your
consideration:----------------------------------------------------
Eastern Enterprises
v.
Apfel
U.S.Jun 25, 1998
524 U.S. 498 (1998)
524 U.S. 498118 S. Ct. 2131

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 UMWA-appointed
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 costs — quickly 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 two 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
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 to 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. 519-522.
2. The Coal Act's allocation of liability to Eastern violates the
Takings Clause. Pp. 522-537.
(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. 522-524.
(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 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. 524-529.
(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, 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 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. 529-537.
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 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. 547-550.
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, post, p. 538. KENNEDY,
J., filed an opinion concurring in the judgment and dissenting in
part, post, p. 539. STEVENS, J. filed a dissenting opinion, in which
SOUTER, GINSBURG, and BREYER, JJ., joined, post, p. 550. BREYER, J.,
filed a dissenting opinion, in which STEVENS, SOUTER, and GINSBURG,
JJ., joined, post, p. 553. 

John T. Montgomery argued the cause for petitioner. With him on the
briefs were John H. Mason and L. William Law.

Deputy Solicitor General Kneedler argued the cause for the federal
respondent. With him on the brief were Solicitor General Waxman,
Assistant Attorney General Hunger, Paul R. Q. Wolfson, Douglas N.
Letter, and Sushma Soni.

Peter Buscemi argued the cause for respondents UMWA Combined Benefit
Fund et al. With him on the brief were Stanley F. Lechner, David
Lubitz, John R. Mooney, Paul A. Green, and David W. Allen. Kenneth A.
Sweder filed a brief for respondents Peabody Holding Co., Inc., et al.

Briefs of amici curiae urging reversal were filed for AlliedSignal
Inc. et al. by Donald B. Ayer, Jonathan C. Rose, James E. Gauch, and
Gregory G. Katsas; for Davon, Inc., by John W. Fischer II; for Pardee
Curtin Lumber Co. et al. by Arthur Newbold, Ethan D. Fogel, and Andrew
S. Miller; for Unity Real Estate Co. et al. by Robert H. Bork, David
J. Laurent, Patrick M. McSweeney, William B. Ellis, and John L.
Marshall; and for the Washington Legal Foundation by Timothy S.
Bishop, Daniel J. Popeo, and Paul D. Kamenar.
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.

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 Industry Retiree
Health Benefit Act of 1992 (Coal Act or Act), 26 U.S.C. § 9701-9722
(1994 ed. and Supp. II), which establishes a mechanism for funding
health care benefits for retirees from the coal industry and their
dependents. We conclude that the Coal Act, as applied to petitioner
Eastern Enterprises, effects an unconstitutional taking.

I A
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 strike, President Truman issued an Executive
order directing Secretary of the Interior Julius Krug to take
possession of all bituminous coal mines and to negotiate
"appropriate changes in the terms and conditions of
employment" of miners with the UMWA. 11 Fed. Reg. 5593 (1946). A
week of negotiations between Secretary Krug and UMWA President John L.
Lewis produced the historic Krug-Lewis Agreement that ended the
strike. See App. in No. 96-1947 (CA1), p. 610 (hereinafter App.
(CA1)).

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
Krug-Lewis benefit trusts. The Fund was to use the proceeds of a
royalty on coal production to provide pension and medical benefits to
miners and their families. The 1947 NBCWA did not specify the benefits
to which miners and their dependents were entitled. Instead, three
trustees appointed by the parties were given authority to determine
"coverage and eligibility, priorities among classes of benefits,
amounts of benefits, methods of providing or arranging for provisions
for benefits, investment of trust funds, and all other related
matters." 1947 NBCWA 146, App. (CA1) 619.

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:

"Under the legal and financial obligations . . . imposed [by the
Trust Agreement], the Fund is operated on a pay-as-you-go basis,
maintaining a sound relationship between revenues and expenditures.
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. No vested interest in the Fund extends to any
beneficiary." Id., at 3-4, App. (CA1) 869-870.
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 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"). Thus, although persons involved in the coal
industry may have made occasional statements intimating that the 1950
W R; Fund promised lifetime health benefits, see App. (CA1) 1899,
1971-1972, it is Clear that the 1950 W R; Fund did not, by its terms,
guarantee lifetime health benefits for retirees and their dependents.
In fact, as to widows of miners, the 1950 W R; Fund expressly limited
health benefits to the time period during which widows would also
receive death benefits. See, e.g., Robinson, supra, at 565-566; 1956
Annual Report 14, App. (CA1) V913.

See also 1950 W R; Fund Annual Report for the Year Ending June 30,
1959, pp. 27-28, App. (CA1) 995-996; 1950 W R; Fund Annual Report for
the Year Ending June 30, 1960 (1960 Annual Report), pp. 19-20, App.
(CA1) 1028-1029; 1950 W R; Fund Annual Report for the Year Ending June
30, 1961 (1961 Annual Report), p. 5, App. (CA1) 1047; 1950 W R; Fund
Annual Report for the Year Ending June 30, 1962, p. 5, App. (CA1)
1080; 1950 W R; Fund Annual Report for the Year Ending June 30, 1963
(1963 Annual Report), p. 5, App. (CA1) 1113; 1950 W R; Fund Annual
Report for the Year Ending June 30, 1964, p. 8, App. (CA1) 1146; 1950
W R; Fund Annual Report for the Year Ending June 30, 1965, p. 18, App.
(CA1) 1191; 1950 W R; Fund Annual Report for the Year Ending June 30,
1966 (1966 Annual Report), p. 19, App. (CA1) 1223.

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) 1352-1353. Nonetheless, the 1950 W R;
Fund continued to provide benefits on a "pay-as-you-go"
basis, with the level of benefits fully subject to revision, until the
Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §
1001 et seq., introduced specific funding and vesting requirements for
pension plans. To comply with ERISA, the UMWA and the BCOA entered
into a new agreement, the 1974 NBCWA, which created four trusts,
funded by royalties on coal production and premiums based on hours
worked by miners, to replace the 1950 W R; Fund. See Robinson, supra,
at 566. Two of the new trusts, the UMWA 1950 Benefit Plan and Trust
(1950 Benefit Plan) and the UMWA 1974 Benefit Plan and Trust (1974
Benefit Plan), provided nonpension benefits, including medical
benefits. Miners who retired before January 1, 1976, and their
dependents were covered by the 1950 Benefit Plan, while active miners
and those who retired after 1975 were covered by the 1974 Benefit
Plan.

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 and Retirement Funds 3, App. (CA1) 1253. A
1993 Report of the House Committee on Ways and Means explained:

"The 1974 agreement was the first NBCWA to mention retiree health
benefits. As part of a substantial liberalization of benefits and
eligibility under both the pension and health plans, the 1974 contract
provided lifetime health benefits for retirees, disabled mine workers,
and spouses, and extended the benefits to surviving spouses . . .
.." House Committee on Ways and Means, Financing UMWA Coal Miner
"Orphan Retiree" Health Benefits, 103d Cong., 1st Sess., 4
(Comm. Print 1993) (House Report).
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 amount of
royalties, to a form of defined benefit obligation, under which
employers were to fund specific benefits.

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.

B
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 and guaranteed health care benefits for
life, but also because coal miners in their labor contracts have
traded lower pensions over the years for better health care
benefits." Coal Comm'n Report, Executive Summary vii, App.
(CA1) 1324. The Commission agreed that "a statutory obligation to
contribute to the plans should be imposed on current and former
signatories to the [NBCWA]," but disagreed about "whether
the entire [coal] industry should contribute to the resolution of the
problem of orphan retirees." Id., at vii-viii, App. (CA1)
1324-1325. Therefore, the Commission proposed two alternative funding
plans for Congress' consideration.

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, Carl J. Schramm, Arlene Holen,
Richard M. Holsten); see also id., at 81-82, App. (CA1) 1410-1411
(statement of Commissioner Richard M. Holsten).

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). 

Congress responded by passing the Coal Act, a modified version of the
Coal Commission's alternative funding plan. In the Act, Congress
purported "to identify persons most responsible for [1950 and
1974 Benefit Plan] liabilities in order to stabilize plan funding and
allow for the provision of health care benefits to . . .
retirees." § 19142(a)(2), 106 Stat. 3037, note following 26
U.S.C. § 9701; see also 138 Cong. Rec. 34001 (1992) (Conference
Report on Coal Act) (explaining that, under the Coal Act, "those
companies which employed the retirees in question, and thereby
benefitted from their services, will be assigned responsibility for
providing the health care benefits promised in their various
collective bargaining agreements").

The Coal Act merged the 1950 and 1974 Benefit Plans into a new
multiemployer plan called the United Mine Workers of America Combined
Benefit Fund (Combined Fund). See 26 U.S.C. § 9702(a)(1), (2). The
Combined Fund provides "substantially the same" health
benefits to retirees and their dependents that they were receiving
under the 1950 and 1974 Benefit Plans. See §§ 9703(b)(1), (f). It is
financed by annual premiums assessed against "signatory coal
operators," i.e., coal operators that signed any NBCWA or any
other agreement requiring contributions to the 1950 or 1974 Benefit
Plans. See §§ 9701(b)(1), (3); § 9701(c)(1). Any signatory operator
who "conducts or derives revenue from any business activity,
whether or not in the coal industry," may be liable for those
premiums. §§ 9706(a), 9701(c)(7). Where a signatory is no longer
involved in any business activity, premiums may be levied against
"related person[s]," including successors in interest and
businesses or corporations under common control. §§ 9706(a),
9701(c)(2)(A).

The Coal Act also established another fund, the 1992 UMWA Benefit
Plan, which is not at issue here. See 26 U.S.C. § 9712.

The Commissioner of Social Security (Commissioner) calculates the
premiums due from any signatory operator based on the following
formula, by which retirees are assigned to particular operators:

"For purposes of this chapter, the Commissioner of Social
Security shall . . . assign each coal industry retiree who is an
eligible beneficiary to a signatory operator which (or any related
person with respect to which) remains in business in the following
order:
"(1) First, to the signatory operator which —

"(A) was a signatory to the 1978 coal wage agreement or any
subsequent coal wage agreement, and
"(B) was the most recent signatory operator to employ the coal
industry retiree in the coal industry for at least 2 years.
"(2) Second, if the retiree is not assigned under paragraph (1),
to the signatory operator which —
"(A) was a signatory to the 1978 coal wage agreement or any
subsequent coal wage agreement, and
"(B) was the most recent signatory operator to employ the coal
industry retiree in the coal industry.
"(3) Third, if the retiree is not assigned under paragraph (1) or
(2), to the signatory operator which employed the coal industry
retiree in the coal industry for a longer period of time than any
other signatory operator prior to the effective date of the 1978 coal
wage agreement." § 9706(a).
It is the application of the third prong of the allocation formula, §
9706(a)(3), to Eastern that we review in this case. 

The Coal Act also provides for an allocation of liability for
unassigned beneficiaries. See 26 U.S.C. § 9704(d). That liability,
however, has thus far been covered through the transfer of funds from
other sources. See § 9705; 30 U.S.C. § 1232(h). This case presents
no question regarding the assignment to Eastern of liability for any
retirees other than its own former employees.

II A
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) 117-18. 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. As of June 30, 1987, the 1950
and 1974 Benefit Plans reported surplus assets, totaling over $33
million. House Report 9.

B
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 retroactive application is supported by a
legitimate legislative purpose furthered by rational means," for
"judgments about the wisdom of such legislation remain within the
exclusive province of the legislative and executive branches."
Id., at 156 (internal quotation marks omitted). The court concluded
that Congress' purpose in enacting the Coal Act was legitimate
and that Eastern's obligations under the Act are rationally
related to those objectives, because Eastern's execution of
pre-1974 NBCWA's contributed to miners' expectations of
lifetime health benefits. Id., at 157. The court rejected
Eastern's argument that costs of retiree health benefits should
be borne by post-1974 coal operators, reasoning that Eastern's
proposal would require coal operators to fund health benefits for
miners whom the operators had never employed. Id., at 158, n. 5. The
court also noted the substantial dividends that Eastern had received
from EACC. Id., at 158.

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 investment-backed 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 lifetime health
benefits meant that Eastern "had every reason to anticipate that
it might be called upon to bear some of the financial burden that this
expectation engendered." Id., at 161. Finally, in assessing the
nature of the challenged governmental action, the court determined
that the Coal Act does not result in the physical invasion or
permanent appropriation of Eastern's property, but merely
"adjusts the benefits and burdens of economic life to promote the
common good." Ibid. (internal quotation marks omitted). The court
also noted that the premiums are disbursed to the privately operated
Combined Fund, not to a government entity. For those reasons, the
court concluded, "there is no basis whatever for [Eastern's]
claim that the [Coal Act] transgresses the Takings Clause." Ibid.

Other Courts of Appeals have also upheld the Coal Act against
constitutional challenges. In view of the importance of the issues
raised in this case, we granted certiorari. 522 U.S. 931 (1997).

See, e.g., Holland v. Keenan Trucking Co., 102 F.3d 736, 739 742 (CA4
1996); Lindsey Coal Mining Co. v. Chater, 90 F.3d 688, 693-695 (CA3
1996); In re Blue Diamond Coal Co., 79 F.3d 516, 521 526 (CA6 1996),
cert. denied, 519 U.S. 1055 (1997); Davon, Inc. v. Shalala, 75 F.3d
1114, 1121-1130 (CA7), cert. denied, 519 U.S. 808 (1996); In re
Chateaugay Corp., 53 F.3d 478, 486-496 (CA2), cert. denied sub nom.
LTV Steel Co. v. Shalala, 516 U.S. 913 (1995).

III
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. 

Under the Tucker Act, 28 U.S.C. § 1491(a)(1), the Court of Federal
Claims has exclusive jurisdiction to render judgment upon any claim
against the United States for money damages exceeding $10,000 that is
"founded either upon the Constitution, or any Act of Congress or
any regulation of an executive department, or upon any express or
implied contract with the United States, or for liquidated or
unliquidated damages in cases not sounding in tort." Accordingly,
a claim for just compensation under the Takings Clause must be brought
to the Court of Federal Claims in the first instance, unless Congress
has withdrawn the Tucker Act grant of jurisdiction in the relevant
statute. See, e.g., Ruckelshaus v. Monsanto Co., 467 U.S. 986,
1016-1019 (1984).

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, 1286 (CA9 1997); Rose Acre Farms,
Inc. v. Madigan, 956 F.2d 670, 673-674 (CA7), cert. denied, 506 U.S.
820 (1992).

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. Irving, 481 U.S. 704, 716 718 (1987). Without
addressing the basis of this Court's jurisdiction, we have also
upheld similar statutory schemes against Takings Clause challenges.
See Concrete Pipe Products of Cal., Inc. v. Construction Laborers
Pension Trust for Southern Cal., 508 U.S. 602, 641-647 (1993);
Connolly, 475 U.S., at 221 228. "While we are not bound by
previous exercises of jurisdiction in cases in which our power to act
was not questioned but was passed sub silentio, neither should we
disregard the implications of an exercise of judicial authority
assumed to be proper" in previous cases. Brown Shoe Co. v. United
States, 370 U.S. 294, 307 (1962) (citations omitted). Based on the
nature of the taking alleged in this case, we conclude that the
declaratory judgment and injunction sought by petitioner constitute an
appropriate remedy under the circumstances, and that it is within the
district courts' power to award such equitable relief.

IV A
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), economic regulation such as the
Coal Act may nonetheless effect a taking, see Security Industrial
Bank, supra, at 78. See also Calder v. Bull, 3 Dall. 386, 388 (1798)
(opinion of Chase, J.) ("It is against all reason and
justice" to presume that the legislature has been entrusted with
the power to enact "a law that takes property from A. and gives
it to B"). By operation of the Act, Eastern is "permanently
deprived of those assets necessary to satisfy its statutory
obligation, not to the Government, but to [the Combined Fund],"
Connolly, supra, at 222, and "a strong public desire to improve
the public condition is not enough to warrant achieving the desire by
a shorter cut than the constitutional way of paying for the
change," Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 416
(1922).

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 the character of the governmental action."
Ibid. ; see also Connolly, supra, at 224-225.

B
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
Corporation (PBGC) to administer an insurance program for vested
pension benefits. For a temporary period, the PBGC had discretionary
authority to pay benefits upon the termination of multiemployer
pension plans, after which insurance coverage would become mandatory.
If the PBGC exercised that authority, employers who had contributed to
the plan during the five years before its termination faced liability
for an amount proportional to their share of contributions to the plan
during that period. See 467 U.S., at 720-721.

Despite Congress' effort to insure multiemployer plan benefits
through ERISA, many multiemployer 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 multiemployer 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 the "customary congressional practice"
of enacting "retroactive statutes confined to short and limited
periods required by the practicalities of producing national
legislation." Ibid. (internal quotation marks omitted).

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 withdrawal liability
provisions effected an unconstitutional taking. The action was brought
by trustees of a multiemployer 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 multiemployer 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 interferes with
investment-backed expectations, and the character of the governmental
action — we determined that the MPPAA did not violate the Takings
Clause. Id., at 225.

The governmental action at issue in Connolly was not a physical
invasion of employers' assets; rather, it "safeguard[ed] the
participants in multiemployer 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 multiemployer plan did not impose
withdrawal liability. We first rejected the employer's
substantive due process challenge based on our decisions in Gray and
Turner Elkhorn, notwithstanding the employer's argument that the
MPPAA imposed upon it a higher liability than its contract
contemplated. 508 U.S., at 636-641. The claim under the Takings
Clause, meanwhile, was resolved by Connolly. We explained that, as in
that case, the Government had not occupied or destroyed the
employer's property. 508 U.S., at 643-644. As to the severity of
the MPPAA's impact, we concluded that the employer had not shown
that its withdrawal liability was "`out of proportion to its
experience with the plan'" Id., at 645 (quoting Connolly,
supra, at 226). Turning to the employer's reasonable
investment-backed expectations, we repeated our observation in
Connolly that "pension plans had long been subject to federal
regulation." 508 U.S., at 645. Moreover, although the
employer's liability under the MPPAA exceeded ERISA's
original cap on withdrawal liability, we found that there was "no
reasonable basis to expect that [ERISA's] legislative ceiling
would never be lifted." Id., at 646. In sum, as in Connolly, the
employer "voluntarily negotiated and maintained a pension plan
which was determined to be within the strictures of ERISA,"
making the burden the MPPAA imposed upon it neither unfair nor unjust.
508 U.S., at 646-647 (internal quotation marks omitted).

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 that could not have
anticipated the liability, and the extent of that liability is
substantially disproportionate to the parties' experience.

C
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). 

That liability is not, of course, a permanent physical occupation of
Eastern's property of the kind that we have viewed as a per se
taking. See Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S.
419, 441 (1982). But our decisions upholding the MPPAA suggest that an
employer's statutory liability for multiemployer plan benefits
should reflect some "proportion[ality] to its experience with the
plan." Concrete Pipe, 508 U.S., at 645 (internal quotation marks
omitted); see also Connolly, supra, at 225 (noting that
employer's liability under the MPPAA "directly depend[ed] on
the relationship between the employer and the plan to which it had
made contributions"). In Concrete Pipe and Connolly, the
employers had "voluntarily negotiated and maintained a pension
plan which was determined to be within the strictures of ERISA,"
Concrete Pipe, supra, at 646 (internal quotation marks omitted);
Connolly, supra, at 227, and consequently, the statutory liability was
linked to the employers' conduct.

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 Eastern
employed miners, retirement and health benefits were far less
extensive than under the 1974 NBCWA, were unvested, and were fully
subject to alteration or termination. Before 1974, as Justice Breyer
notes, Eastern could not have contemplated liability for the provision
of lifetime benefits to the widows of deceased miners, see post, at
562-563, a beneficiary class that is likely to be substantial. See
General Accounting Office Human Resources Division Report, Retired
Coal Miners' Health Benefits 7 (July 1992) (reporting to Congress
that widows composed 45% of beneficiaries in Jan. 1992); see also
Brief for Petitioner 45, n. 54 (citing affidavit that 75% of the
beneficiaries assigned to Eastern are spouses or dependent children of
miners). Although Eastern at one time employed the Combined Fund
beneficiaries that it has been assigned under the Coal Act, the
correlation between Eastern and its liability to the Combined Fund is
tenuous, and the amount assessed against Eastern resembles a
calculation "made in a vacuum." See Connolly, supra, at 225.
The company's obligations under the Act depend solely on its
roster of employees some 30 to 50 years before the statute's
enactment, without any regard to responsibilities that Eastern
accepted under any benefit plan the company itself adopted.

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 insure itself
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 Eastern seeks.

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 (N Y 1811) ("It is a principle in
the English common law, as ancient as the law itself, that a statute,
even of its omnipotent parliament, is not to have a retrospective
effect"); H. Broom, Legal Maxims 24 (8th ed. 1911)
("Retrospective laws are, as a rule, of questionable policy, and
contrary to the general principle that legislation by which the
conduct of mankind is to be regulated ought to deal with future acts,
and ought not to change the character of past transactions carried on
upon the faith of the then existing law"). In his Commentaries on
the Constitution, Justice Story reasoned: "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). A similar principle abounds in the laws of
other nations. See, e.g., Gustavson Drilling (1964) Ltd. v. Minister
of National Revenue, 66 D. L. R.3d 449, 462 (Can. 1975) (discussing
rule that statutes should not be construed in a manner that would
impair existing property rights); The French Civil Code, Preliminary
Title, Art. 2, p. 2 ("Legislation only provides for the future;
it has no retroactive effect") (J. Crabb transl., rev. ed. 1995);
Aarnio, Statutory Interpretation in Finland 151, in Interpreting
Statutes: A Comparative Study (D. MacCormick R. Summers eds. 1991)
(discussing prohibition against retroactive legislation).
"Retroactive legislation," we have explained, "presents
problems of unfairness that are more serious than those posed by
prospective legislation, because it can deprive citizens of legitimate
expectations and upset settled transactions." General Motors
Corp. v. Romein, 503 U.S. 181, 191 (1992).

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 a similar safeguard against retrospective
legislation concerning property rights. See id., at 394 (Opinion of
Chase, J.) ("The restraint against making any ex post facto laws
was not considered, by the framers of the constitution, as extending
to prohibit the depriving a citizen even of a vested right to
property; or the provision, `that private property should not be taken
for public use, without just compensation,' was
unnecessary"). In Security Industrial Bank, we considered a
Takings Clause challenge to a Bankruptcy Code provision permitting
debtors to avoid certain liens, possibly including those predating the
statute's enactment. We expressed "substantial doubt whether
the retroactive destruction of the appellees' liens . . .
comport[ed] with the Fifth Amendment," and therefore construed
the statute as applying only to lien interests vesting after the
legislation took effect. 459 U.S., at 78-79. Similar concerns led this
Court to strike down a bankruptcy provision as an unconstitutional
taking where it affected substantive rights acquired before the
provision was adopted. Louisville Joint Stock Land Bank v. Radford,
295 U.S. 555, 601 602 (1935).

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 whether or not the employers
had agreed to ensure that benefits would be fully funded"); see
also Landgraf, 511 U.S., at 265 ("Elementary considerations of
fairness dictate that individuals should have an opportunity to know
what the law is and to conform their conduct accordingly; settled
expectations should not be lightly disrupted").

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
multiemployer 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 agreements. See Connolly, 475
U.S., at 230-231 (O'Connor, J., concurring) (imposition of
liability "without regard to the extent of a particular
employer's actual responsibility for [a benefit] plan's
promise of fixed benefits to employees" could raise serious
concerns under the Takings Clause). Thus, unlike the pension
withdrawal liability upheld in Concrete Pipe and Connolly, the Coal
Act's scheme for allocation of Combined Fund premiums is not
calibrated either to Eastern's past actions or to any agreement
— implicit or otherwise — by the company. Nor would the pattern of
the Federal Government's involvement in the coal industry have
given Eastern "sufficient notice" that lifetime health
benefits might be guaranteed to retirees several decades later. See
Connolly, supra, at 227.

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. 

Finally, the nature of the governmental action in this case is quite
unusual. That Congress sought a legislative remedy for what it
perceived to be a grave problem in the funding of retired coal
miners' health benefits is understandable; complex problems of
that sort typically call for a legislative solution. When, however,
that solution singles out certain employers to bear a burden that is
substantial in amount, based on the employers' conduct far in the
past, and unrelated to any commitment that the employers made or to
any injury they caused, the governmental action implicates fundamental
principles of fairness underlying the Takings Clause. Eastern cannot
be forced to bear the expense of lifetime health benefits for miners
based on its activities decades before those benefits were promised.
Accordingly, in the specific circumstances of this case, we conclude
that the Coal Act's application to Eastern effects an
unconstitutional taking.

D
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 and industrial conditions, because they may be
unwise, improvident, or out of harmony with a particular school of
thought"). Because we have determined that the third tier of the
Coal Act's allocation scheme violates the Takings Clause as
applied to Eastern, we need not address Eastern's due process
claim. Nor do we consider the first two tiers of the Act's
allocation scheme, 26 U.S.C. § 9706(a)(1) and (2), as the liability
that has been imposed on Eastern arises only under the third tier. Cf.
Printz v. United States, 521 U.S. 898, 934-935 (1997).

V
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. 1991). 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.

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.

I
The final Clause of the Fifth Amendment states:

"[N]or 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 concept 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 takings concept has assumed
in our law, it is fair to say it has proved 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
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. 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 Farm-Mortgage 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 537 ("[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 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 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 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 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 16-17. 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
confirming 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 524-528 (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
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: "[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, Commentaries on American Law, 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 535-536. 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." 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.
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.

See ante, at 535-536 (plurality opinion of O'Connor, J., joined
by Rehnquist, C.J., and Scalia and Thomas, JJ. ); ante, at 539, 549
and (Kennedy, J., concurring in judgment and dissenting in part).

My understanding of this critical fact is shared by the judges of the
Seventh Circuit, the Sixth Circuit, and the First Circuit. 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.
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.

"[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).

"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., 79 F.3d 516, 522 (1996).

"[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."
Eastern Enterprises v. Chater, 110 F.3d 150, 157 (1997).

"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. . . .
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.

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).

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.

.. . . .
"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.
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 through 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
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 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) (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.
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 that 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 omitted)); 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 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 Iron Metal Co., 335 U.S. 525, 535 (1949)
(repudiating the " Allgeyer- Lochner- Adair- Coppage
constitutional doctrine"). As the plurality points out, ante, at
533, 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) ("Retroactive 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 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.

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 551-552, n. 3 (opinion 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 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 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, 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 535. 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 504-505. 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 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 7-8, App. (CA1) 975-976; 1960 W R; Fund Annual
Report 9, App. (CA1) 1018; 1961 W R; Fund Annual Report 16-17, App.
(CA1) 1058-1059; 1962 W R; Fund Annual Report 15-16, App. (CA1)
1090-1091; 1963 W R; Fund Annual Report 15-16, App. (CA1) 1123-1124;
1964 W R; Fund Annual Report 22-23, App. (CA1) 1160-1161; 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) 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, 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) 1332.
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 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
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) 2000.
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) 2172 (affidavit of T. Gallagher, EACC
General Counsel); id., at 2182 (Eastern Corporate Cash Manual); see
also id., at 2170-2173 (noting Eastern's profits from, and
control over, EACC); id., at 2178-2181; id., at 2192 2205. 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 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.
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.