United States Steel Corp. v. Astrue

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT FILED

______________ U.S. COURT OF APPEALS

ELEVENTH CIRCUIT

No. 06-15255 AUGUST 15, 2007

______________ THOMAS K. KAHN

CLERK

D.C. Docket No. 04-00065-CV-HS-S

UNITED STATES STEEL CORPORATION,

U.S. STEEL MINING COMPANY, LLC,

Plaintiffs–Appellants,

versus

MICHAEL J. ASTRUE,*

Commissioner of Social Security Administration,

Defendant–Appellee,

MICHAEL H. HOLLAND,

ELLIOT A. SEGAL,

WILLIAM P. HOBGOOD, et al.,

Intervenors.

________________________________

Appeal from the United States District Court

for the Northern District of Alabama

________________________________

(August 15, 2007)

*

Pursuant to Fed. R. App. P. 43(c), Michael J. Astrue is substituted for his predecessor, Jo

Anne B. Barnhart, as Commissioner of the Social Security Administration.

Before DUBINA and BLACK, Circuit Judges, and RESTANI,** Judge.

RESTANI, Judge:

United States Steel Corporation (“USS”) and its subsidiary, United States Steel

Mining Company (“USSM”) (collectively “Appellants”), brought this action against

the Commissioner of the Social Security Administration (“SSA”), under the Coal

Industry Retiree Health Benefit Act of 1992, 26 U.S.C. §§ 9701–08, 9711–12,

9721–22 (“Coal Act”), challenging the SSA’s assignment of various United Mine

Workers of America (“UMWA”) retirees to them for health care premium payments.

The district court granted summary judgment against Appellants on all claims. On

appeal, Appellants argue that the SSA improperly withheld requested earnings

records for certain miners, incorrectly found that another responsible coal operator

was not “in business” for purposes of the Coal Act, incorrectly applied a rebuttable

presumption in assigning three miners to Appellants, and improperly assigned to

Appellants miners who had become unassigned following the Supreme Court’s

holding in Eastern Enterprises v. Apfel, 524 U.S. 498 (1998). We AFFIRM the

district court’s order with respect to the request for earnings records, the assignment

of two of the three miners to Appellants based upon a rebuttable presumption, and the

**

Honorable Jane A. Restani, Chief Judge, United States Court of International Trade,

sitting by designation.

2

assignment of miners who became unassigned following Eastern Enterprises. We

REVERSE the district court’s judgment upholding the assignment of one of the three

miners, Lee Jones, to Appellants based upon a rebuttable presumption, and with

respect to eleven of the fifteen miners assigned to Appellants based upon a finding

that another responsible coal operator was not “in business” for purposes of the Coal

Act. We REMAND with respect to four of the fifteen miners whose employment

with the other responsible coal operator is contested.

BACKGROUND

I. The Coal Act

The Coal Act of 1992 was “the culmination of a long history involving

bituminous coal companies . . ., the United Mine Workers of America . . . , and

collective bargaining agreements between them.” Pittston Co. v. United States, 368

F.3d 385, 390 (4th Cir. 2004). In 1947, the Bituminous Coal Operators’ Association

(“BCOA”) and the UMWA negotiated the first National Bituminous Coal Wage

Agreement (“NBCWA”), creating a trust fund to provide pension plans and medical

benefits to retired coal miners and their families. Sidney Coal Co. v. SSA, 427 F.3d

336, 338 (6th Cir. 2005). In 1950, the trust fund became a multi-employer trust

which was “funded by coal operators with royalties paid in proportion to the

operators’ coal production.” Pittston, 368 F.3d at 390. The trust did not provide a

3

consistent level of benefits. Sidney, 427 F.3d at 338.

As a result, in 1974, the UMWA and the BCOA entered into another NBCWA,

replacing the prior trust fund with four separate trusts which were “funded by

royalties on coal production and premiums based on employee hours.” Pittston, 368

F.3d at 391. The 1974 NBCWA was “the first agreement between the UMWA and

the BCOA to expressly reference health benefits for retirees.” E. Enters., 524 U.S.

at 509. The trust funds, however, began to experience financial difficulties and thus,

in 1978, another agreement was made “assign[ing] responsibility to signatory coal

operators for the healthcare of all of their own current and former employees.”

Pittston, 368 F.3d at 391. Despite such actions, the trust funds continued to

experience financial difficulties and were modified again in 1988. Id.

In 1992, Congress enacted the Coal Act to preserve benefits for UMWA

retirees. E. Enters., 524 U.S. at 511–14. Specifically, the Coal Act created the United

Mine Workers of America Combined Benefit Fund (“Combined Fund”), which

provided lifetime health benefits to retirees and their dependents. Id. at 514. The

Combined Fund is financed by annual premiums assessed against coal operators who

had signed “any NBCWA or any other agreement requiring contributions to the 1950

or 1974 Benefit Plans.” Id. (citing 26 U.S.C. § 9701(b)(1), (3), § 9701(c)(1)). “The

amount owed in premiums depended on the number of retirees and dependents for

4

which each signatory operator was responsible.” Sidney, 427 F.3d at 339 (citing 26

U.S.C. § 9704(a)(1)–(3)). Any of these signatory coal operators “who ‘conducts or

derives revenue from any business activity, whether or not in the coal industry,’ may

be liable for those premiums.” E. Enters., 524 U.S. at 514 (citing 26 U.S.C.

§§ 9706(a), 9701(c)(7)). If “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.” Id. (citing 26 U.S.C.

§§ 9706(a), 9701(c)(2)(A)).

The Act instructs the SSA to assign retirees to operators using the following

formula:

1) to the operator which “was a signatory to the 1978 coal wage agreement or

any subsequent coal wage agreement,” and which “was the most recent signatory

operator to employ the coal industry retiree . . . for at least two years;”

2) if unassignable under the first step, then to the operator which “was a

signatory to the 1978 coal wage agreement or any subsequent coal wage agreement,”

and which “was the most recent signatory operator to employ the coal industry retiree

in the coal industry;” and

3) if unassignable under the first two steps, then “to the signatory operator

which employed the coal industry retiree in the coal industry for a longer period of

5

time than any other signatory operator prior to the effective date of the 1978 coal

wage agreement.” 26 U.S.C. § 9706(a).

If an eligible beneficiary cannot be assigned under any of these steps, the

beneficiary is considered “unassigned,” and his benefits are funded through asset

transfers from the 1950 National Bituminous Coal Wage Agreement Fund or the

Abandoned Mine Land Reclamation Fund. Sidney, 427 F.3d at 340 (citing 26 U.S.C.

§ 9705(a)–(b)). If the asset transfers are insufficient, then the unassigned miners’

benefits are funded though premiums assessed against all assigned operators. 26

U.S.C. §§ 9704(d).

II. The Supreme Court’s Decision in Eastern Enterprises

In Eastern Enterprises, the Supreme Court held that the third step of § 9706,

assigning retirees to operators which had signed wage agreements prior to 1974 but

had not signed the 1974 NBCWA or a subsequent coal wage agreement promising

lifetime benefits, was unconstitutional.1 E. Enters., 524 U.S. at 530, 537. A majority

of the Court concluded that such assignments were unconstitutional because they

retroactively required premium payments from coal operators that had not signed any

agreements promising lifetime benefits for their employees, and because such

1

The Supreme Court identified the 1974 NBCWA as the first coal wage agreement

promising lifetime benefits to miners. E. Enters., 524 U.S. at 509, 530, 535.

6

operators did not have sufficient notice that lifetime benefits would be required later.

Id. at 535–36. A plurality of the court concluded that such assignments amounted to

an unconstitutional taking because they “forced [such operators] to bear the expense

of lifetime health benefits for miners based on [their] activities decades before those

benefits were promised.” Id. at 537.

After the Supreme Court’s decision, the SSA invalidated all assignments to

coal operators that had not signed the 1974 NBCWA or a later agreement. Sidney,

427 F.3d at 341. The SSA then assigned those miners to operators “that had

employed the retired miners for the longest period and to whom it was constitutional

to make assignments under § 9706, i.e., only those coal operators that had signed a

1974 NBCWA or later agreement and that remained in business.” Id.

III. Factual & Procedural Background2

The current case arises from various assignments of miners to Appellants by

the SSA.

1993 Assignments

On September 28 and October 7, 8, 15, 16, and 18, 1993, SSA service centers

sent letters to Appellants assigning miners to them under the Coal Act. Each letter

2

Unless otherwise noted, the facts here are taken from the memorandum of decision of the

district court. See United States Steel Corp. v. Barnhart, No. 04-0065, 2006 U.S. Dist. LEXIS

94798, at *16–*59 (N.D. Ala. June 20, 2006). The parties do not appear to contest these facts.

7

stated that operators had thirty days upon receipt of the letter to either request further

information about the assigned miners or to request a review. The letters also stated

that if an operator requested further information about the miners, it would have thirty

days from receipt of those records to request a review of the assignment.

On October 8, 1993, Darrell Lilly (“Lilly”), the human resources manager for

USSM, sent letters to the SSA requesting the earnings records of, and the basis of

assignments for, miners assigned on September 28th. On October 26, 1993, Lilly sent

similar letters to the SSA requesting similar information concerning the October 7th

and 8th assignments. The letters from Lilly were written on USSM letterhead and

indicated that USSM was a subsidiary of USS, then referred to as USX, but did not

mention any specific miners or assignments made to USS or USSM. In response, in

letters dated February 7, 23, and 28, and March 1 and 2, 1994, the SSA sent Lilly the

earnings records for various miners assigned to Appellants.

On March 15, 1994, Lilly sent letters to the SSA stating that “we are asking

you to review the assignment per the attached list. We have not received an Itemized

Statement of Earnings for these individuals. Therefore, we must disagree with the

assignment that U.S. Steel Mining Co. is the responsibility (sic) operator.” U.S. Steel

Corp., 2006 U.S. Dist. LEXIS 94798, at *19. Although the letters referenced only

USSM, the list attached to each letter included miners assigned to both USS and

8

USSM. In response, in letters dated March 31, and April 13 and 15, 1994, the SSA

sent Lilly the requested earnings records and basis of assignment.

The letter dated March 31, 1994, however, also stated that the SSA had not

enclosed the earnings records for eight particular miners but that it would send the

information later. The records were not sent. Appellants now seek the records for

five of the eight miners listed that were assigned to USS on October 18, 1993.

1995 Assignments

On June 30 and September 20, 1995, the SSA sent notices to Appellants

assigning them additional miners. On September 29, 1995, Lilly sent a letter to the

SSA requesting the earnings records of the miners assigned to USSM on September

20th. On November 20, 1995, the SSA acknowledged receipt of the request. Lilly

replied, stating that he had intended to request the earnings records for miners

assigned to USS and USSM. The SSA responded by sending USS the records for

miners assigned to it in June, rather than September, 1995. Appellants now seek the

correct records from the SSA.

1998–2001 Assignments

The SSA again issued notices in 1998, 1999, 2000, and 2001, assigning

additional miners to Appellants. The assignments included miners who had been

initially assigned to operators that had not signed the 1974 NBCWA or any

9

subsequent coal wage agreements, and miners who had been employed longer by

Black Diamond Coal Company (“Black Diamond”) than by Appellants. Appellants

requested review of seventy-eight of these assignments. The SSA reviewed the

assignments and issued a final decision ruling that the Appellants were responsible

for some, but not all, of the miners.

Procedural History

Appellants brought the underlying suit on January 12, 2004.3 On August 5,

2005, the SSA filed a motion to dismiss, or in the alternative, for summary judgment.

Appellants responded by filing a motion for summary judgment on most counts of

their claim and also asked the court to defer consideration of counts IV, V, and VII

so that they could conduct discovery. The court granted Appellant’s motion to defer

consideration of counts IV, V, and VII. The court then granted summary judgment

to the SSA on the nondeferred counts and the deferred counts were dismissed

subsequently.

Appellants appeal on four grounds. First, Appellants argue that the SSA acted

improperly when it failed to furnish the earnings records for five miners assigned to

USSM in 1993 and for twenty-nine miners assigned to USS in September 1995.

3

The Trustees of the UMWA intervened as party defendants with respect to Appellants’

challenge of the assignment of miners affected by Eastern Enterprises.

10

Second, Appellants contest the assignment to USS of miners who had worked longer

for Black Diamond than for USS. Appellants argue that those miners should have

been assigned instead to Argyle Investments (“Argyle”), which was Black Diamond’s

parent company and which is still “in business” for purposes of the Coal Act. Third,

Appellants argue that the SSA incorrectly assigned to Appellants three miners that

they had not employed in the coal industry. Appellants essentially claim that the SSA

arbitrarily and capriciously rejected evidence submitted showing that those miners

had not worked in Appellants’ coal operations. Finally, Appellants challenge the

SSA’s assignment of miners who had become unassigned following the Supreme

Court’s holding in Eastern Enterprises.

JURISDICTION & STANDARD OF REVIEW

The court has jurisdiction under 28 U.S.C. § 1331. We review a grant of

summary judgment de novo, “applying the same standard as the district court.”

Mahon v. U.S. Dep’t of Agric., 485 F.3d 1247, 1252 (11th Cir. 2007). The summary

judgment procedure is particularly appropriate in cases such as this, “in which a

district court is asked to review a decision rendered by a federal administrative

agency.” Id. at 1253.

“[E]ven in the context of summary judgment,” however, “an agency action is

entitled to great deference.” Preserve Endangered Areas of Cobb’s History, Inc. v.

11

U.S. Army Corps of Eng’rs, 87 F.3d 1242, 1246 (11th Cir. 1996). We will uphold an

agency action unless it is contrary to law, an abuse of discretion, or arbitrary and

capricious. 5 U.S.C. § 706(2)(A). We “may not substitute [our] judgment for that of

the agency and can set aside an agency’s decision only if the agency relied on

improper factors, failed to consider important relevant factors, or committed a clear

error of judgment that lacks a rational connection between the facts found and the

choice made.” Arango v. U.S. Dep’t of the Treasury, 115 F.3d 922, 928 (11th Cir.

1997) (internal quotation marks & citations omitted).

DISCUSSION

I. Failure to Furnish Earnings Records

When a coal operator receives notice assigning beneficiaries, it “may, within

30 days of receipt of such notice, request from the [SSA] detailed information as to

the work history of the beneficiary and the basis of the assignment.” 26 U.S.C.

§ 9706(f)(1). After receiving the requested materials, the operator “may, within 30

days of receipt of the information . . ., request review of the assignment.” Id.

§ 9706(f)(2). If the operator does not request additional information, it may request

review of the assignment within 30 days from receipt of the notice of assignment. 20

C.F.R. § 422.605. When a review is completed, the SSA’s decision is final. 26

U.S.C. § 9706(f)(4). Here, Appellants claim that the SSA failed to furnish them with

12

the requested earnings records for miners on two separate occasions. They seek an

order instructing the SSA to furnish those records now.

Appellants claim that the SSA neglected to send them the requested earnings

records for five miners assigned to them in October 1993. Appellants did not produce

any copies of such a request, but instead rely upon a letter from the SSA to show that

they had made the request. The letter, dated March 31, 1994, states:

We are writing you about the miners assigned to you under the Coal

Industry Retiree Health Benefit Act of 1992. As you requested,

enclosed are the earnings record(s) and the basis for the assignment(s)

for the miner(s) for whom you requested such information.

Letter from Frank J. Hagel, Assistant Regional Commissioner, Western

Program Service Center, SSA, to USX Corporation (Mar. 31, 1994). Several

pages later, the letter continues, stating:

Below we identify the retired coal miner(s) whose earnings record(s) is

not enclosed. We will send you the earnings record(s) and the basis for

the assignment(s) later.

Id. The letter then listed the five miners in question.

Appellants argue that the latter two sentences of the letter establish that they

had requested the records at issue. The SSA argues otherwise, reasoning that its letter

does not establish that Appellants had made a timely request for records because the

SSA may have “inadvertently” included the five miners in the letter, “mistakenly

13

thinking they were a part of [Appellants’] request[s].” (Appellee’s Br. 25.)

Regardless of whether Appellants had made the request, their claims are barred by the

statute of limitations.

Because this claim for review is brought under the APA and the Coal Act does

not provide a statute of limitations, this action is barred unless filed within six years

of the final agency action. 28 U.S.C. § 2401(a); Ctr. for Biological Diversity v.

Hamilton, 453 F.3d 1331, 1334 (11th Cir. 2006) (“[When] the Act prescribes no

statute of limitations, [] the general six-year statute of limitations for suits against the

United States applies.”); USX Corp. v. Barnhart, 395 F.3d 161, 166 (3d Cir. 2004)

(recognizing a six-year statute of limitations on claims filed under the Coal Act). The

statute of limitations period begins to run once the agency has issued a “final action.”

5 U.S.C. § 704; Ga. Power Co. v. Teleport Commc’ns Atlanta, Inc., 346 F.3d 1047,

1050 (11th Cir. 2003) (“Only final agency actions can be subject to judicial review.”);

Trafalgar Capital Assocs., Inc. v. Cuomo, 159 F.3d 21, 35 (1st Cir. 1998) (referring

to the final agency action that commenced the statute of limitations). To be

considered “final,” an agency’s action: (1) “must mark the consummation of the

agency’s decisionmaking process – it must not be of a merely tentative or

interlocutory nature;” and (2) “must be one by which rights or obligations have been

determined, or from which legal consequences will flow.” Bennett v. Spear, 520 U.S.

14

154, 177–78 (1997) (internal citations & quotations omitted).

Here, the assignment of the beneficiaries to Appellants is the final agency

action for purposes of § 2401(a). First, the assignment of miners is not tentative or

interlocutory in nature, but instead is a definitive decision to attribute responsibility

for beneficiaries to operators. Second, once assignments are made, the operator must

“pay the premiums attributable to the challenged assignments or incur the penalties

for failure to make those payments,” regardless of whether the operator seeks

administrative review of the assignments. Dixie Fuel Co. v. Commn’r of SSA, 171

F.3d 1052, 1058 (6th Cir. 1999) (overturned on other grounds by Barnhart v. Peabody

Coal Co., 537 U.S. 149, 168 (2003)). Thus, the requirements to be considered a final

agency action are met here.

Appellants argue that the assignment of miners is not the relevant final agency

action. Appellants argue instead that because they seek only information regarding

the miners assigned, the relevant last action is the SSA’s failure to respond to their

request for information, and this failure to act does not constitute a final agency

action for purposes of § 2401(a). Whether Appellants seek information regarding the

assignment or seek review of the assignments, however, Appellants have suffered a

final agency action that has adversely affected them, as they have been obliged to pay

premiums since the initial assignment. See Dixie Fuel, 171 F.3d at 1058. Further,

15

a request for information regarding an assignment does not relieve Appellants of the

obligation to proceed in a timely manner. Rather, a request for information is merely

“an avenue that an assigned operator may take to obtain review of the factual basis

for the assignment of particular beneficiaries.” Id. at 1059. Thus, we hold that the

statute of limitations for Appellants’ claim ran from the date of the initial assignment.

Here, the assignment of the miners at issue in 1993 was a final agency action

that began the statute of limitations period. Appellants did not bring the current

action until 2004. Nothing occurred which arguably could have tolled the statute of

limitations for a sufficient length of time to prevent its expiration. Likewise, the

statute of limitations has run on the Appellants’ request for the records of the miners

assigned in 1995. In that instance, Appellants claim that the SSA sent them the

records for the wrong miners, and that they now seek the proper records from the

SSA. The records were sent in 1996, but Appellants did not realize until 2002 that

they had not received the proper records. Appellants should have checked the records

much earlier and have no excuse for not doing so.4 As Appellants did not bring suit

until 2004, the statute of limitations has run.

Accordingly, we affirm the district court’s grant of summary judgment against

4

We can conceive of the possibility of erroneous information misleading the assignee in

such a way that the erroneous information could not be discovered in a timely fashion, but that is

not the issue at hand.

16

Appellants on their request to order the SSA to furnish the earnings records for

certain miners assigned in 1993 and in 1995.

II. Failure to Assign Miners to Related Persons

Appellants also challenge the assignment of fifteen miners who had worked

longer for Black Diamond than for them. Appellants acknowledge that the SSA

could not have assigned these miners to Black Diamond, because it went out of

business before the initial assignments were made.5 Appellants, however, argue that

the SSA should have assigned the miners to Argyle, which was a “related person”6

to Black Diamond.

In a review decision given to Appellants, the SSA found that Argyle was Black

Diamond’s parent company and that the two were related for purposes of the Coal

Act. SSA Great Lakes Program Serv. Ctr., Coal Act Review Determination 6 (1998).

5

The Coal Act requires the SSA to “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.” 26 U.S.C. § 9706(a).

6

The Coal Act defines “related persons” as:

(i) a member of the controlled group of corporations . . . which includes such

signatory operator;

(ii) a trade or business which is under common control . . . with such signatory

operator; or

(iii) any other person who is identified as having a partnership interest or joint

venture with a signatory operator in a business within the coal industry, but only if

such business employed eligible beneficiaries, except that this clause shall not apply

to a person whose only interest is as a limited partner.

26 U.S.C. § 9701(c)(2)(A).

17

The SSA, however, held that it could not assign the miners in question to Argyle

because it was not “in business” for purposes of the Coal Act. Id. at 7. The SSA

concluded that Argyle had not been in business since 1996 because it became a

holding company, no longer paid wages to employees, sold most of its real property,

hired a real estate management company to administer its remaining parcel of rental

property, transferred the administration of its investment portfolio to a bank, and

received only “passive income” from rent and investments. Id. at 6–7. The parties

agree that Argyle was Black Diamond’s parent corporation and do not appear to

contest that Argyle and Black Diamond are “related.” Thus, the issue is whether or

not Argyle is “in business” within the meaning of the Coal Act.

Under the Coal Act, “a person shall be considered to be in business if such

person conducts or derives revenue from any business activity, whether or not in the

coal industry.” 26 U.S.C. § 9701(c)(7). We agree with our sister courts that this is

a broad definition, “including within its scope not only (1) an entity that ‘conducts’

business activity, but also (2) one who ‘derives revenue’ from business activity.”

Lindsey Coal Mining Co. v. Chater, 90 F.3d 688, 692 (3d Cir. 1996) (stating that

because “the ‘conducts’ prong is provided for separately, the ‘derives revenue’ prong

does not require the party liable under the Coal Act to itself ‘conduct’ a business

activity”); Dist. 29, United Mine Workers of Am. v. United Mine Workers of Am.

18

1992 Benefit Plan, 179 F.3d 141, 145 (4th Cir. 1999) (“The Act employs an

expansive definition of ‘in business’ that includes ‘conducting or deriving revenue

from any business activity, whether or not in the coal industry.’”) (quoting 26 U.S.C.

§ 9701(c)(7)) (emphasis removed).

There is no dispute here that Argyle is “deriving revenue.” That is, Argyle still

owns a parcel of property from which it receives rental income and has an investment

portfolio of cash and publicly traded stocks, bonds, and notes from which it receives

interest. Although Argyle is clearly deriving revenue from various sources, the SSA

argues that it is not deriving revenue from “business activities” because it transferred

the management of its rental property to a real estate management company and the

administration of its investment portfolio to a bank. The SSA essentially claims that

“business activity” does not include “passive” ownership of revenue-generating

assets, but must entail at least the management of the assets.7

The SSA’s interpretation is contrary to legislative intent. As Lindsey Coal

indicates, Congress intended for the definition of “in business” to be interpreted

broadly. Lindsey, 90 F.3d at 692. Particularly persuasive was the following

7

In finding that Argyle was not in business since 1996, the SSA focused on the fact that

Argyle has not paid wages to any employees since that time. There is no indication, however,

that the payment of wages is a determinative factor for deciding whether or not a company is “in

business” for purposes of the Act.

19

exchange between Senator Bentsen, then Chairman of the Senate Finance Committee,

and Senator Rockefeller, a principal architect of the legislation:

Mr. BENTSEN: That definition of [business activity] has

alternative tests: a company is considered to be in business if it either

conducts a business activity or “derives revenue from” a business

activity. As is apparent from the existence of the two tests, the intention

of the legislation is to define the term “in business” broadly.

....

Even in cases where a company is not considered to conduct a

business of its own, if the company has leased any of its property in

return for the right to receive royalties based on the use of the property

in a business operated by the lessee, the company would be considered

to “derive revenue from” the business activity conducted by the lessee.

Mr. ROCKEFELLER. Mr. President, again I agree with the

chairman of the Finance Committee. The language of the statute is

purposely broad. Certainly, a company would be considered to be in

business if it continued to own significant properties and has leased

some of those properties so that it may derive revenue from the business

operation of the leased properties by the lessee.

138 Cong. Rec. 34,034–35 (1992).

It appears from this that a wide variety of revenue-generating activities,

including owning and leasing property, would cause a company to be considered “in

business” within the meaning of the Act. There is no indication that Congress meant

to define certain phrases within the definition of “in business,” such as “business

activity,” narrowly. Doing so would undermine the overall broad meaning of the

statute, allowing companies to escape liability under the Act by framing their

revenue-generating activities as “passive” business activities. The legislative intent

20

to construe “in business” broadly counsels us instead to consider the ownership of

revenue-generating property, investments, and other assets as “business activity”

within the meaning of the Coal Act. See Lindsey, 90 F.3d at 692 (holding that a

company that derived revenue from leasing its property was “in business” for

purposes for the Coal Act); Dist. 29, 179 F.3d at 145 (holding that a company that

had constructive possession over its revenue-generating assets remains “in business”

within the meaning of the Act); United Mine Workers of Am. 1992 Benefit Plan v.

Rushton (In re Sunnyside Coal Co.), 146 F.3d 1273, 1279–80 (10th Cir. 1998)

(holding that a company that entered into liquidation remains in business for purposes

of the Act); Wheeling-Pittsburgh Steel Corp. v. Barnhart, 229 F. Supp. 2d 539, 553

(N.D.W. Va. 2002) (holding that a company that generated revenue from the sale of

its assets remained “in business”).

As previously stated, the parties do not contest that Argyle is still receiving

revenue from its leased property and its investment portfolio. That Argyle chose to

delegate management of its property and other assets to third parties does not relieve

it from liability for premiums owed under the Act. Thus, we hold that Argyle is “in

business” for purposes of the statute. Accordingly, we will reverse the judgment of

the district court and remand for the district court to order the SSA to rescind the

assignment to Appellants of eleven of the fifteen miners at issue that indisputably had

21

worked for Black Diamond longer than for Appellants.8

III. Rebuttable Presumption

Appellants also challenge the review decisions upholding the assignment of

three miners, Lee Jones, Victor Hribar, and Woodrow Stewart. Specifically,

Appellants assert that the SSA misapplied a rebuttable presumption that a miner was

employed in the coal industry by a signatory operator “to deny the appeal of an

operator who has shown that there are no records . . . show[ing] that the miner had

worked for that operator in the coal industry.” (Appellants’ Br. 37.)

Preliminarily, administrative agencies may establish presumptions, “as long as

there is a rational nexus between the proven facts and the presumed facts.” Cole v.

U.S. Dep’t of Agric., 33 F.3d 1263, 1267 (11th Cir. 1994); Sec’y of Labor v.

Keystone Coal Mining Corp., 151 F.3d 1096, 1100-01 (D.C. Cir. 1998) (stating that

presumptions are permissible “if there is ‘a sound and rational connection between

the proved and inferred facts’”) (quoting Chem. Mfrs. Ass’n v. Dep’t of Transp., 105

F.3d 702, 705 (D.C. Cir. 1997)). “Appellants bear ‘the heavy burden of

demonstrating that there is no rational connection between the fact proved and the

8

The SSA also claims that Appellants did not allege in their request for review, and

employment records do not support the conclusion, that four of the fifteen miners at issue,

McNeel, Knott, Kendrick and Shaw, had worked for Black Diamond. (Appellee’s Br. 34 n.14.)

The SSA argues that if the court remands this claim, it should exclude these four miners from

reconsideration. Because the district court disposed of this issue in the SSA’s favor on legal

grounds, the SSA may now address this factual issue before the district court.

22

ultimate fact to be presumed.’” USX Corp., 395 F.3d at 170 (quoting Cole, 33 F.3d

at 1267).

Here, when assigning beneficiaries to coal operators, the SSA examines its

earnings records, which identify the employers of each beneficiary but not the nature

of the employment. Instead of showing that a worker was employed specifically in

the coal industry, the SSA employs a rebuttable presumption that

a [beneficiary] who otherwise qualified for benefits under the Coal Act

was “employed in the coal industry” for purposes of 26 U.S.C. § 9706(a)

if (1) his employer was a coal mine operator that signed a national coal

wage agreement and (2) his employment occurred during the employer’s

participation in the national coal wage agreement.

Id.

We agree with our sister circuit that it is a reasonable inference that a

beneficiary’s earnings from a coal operator, which are posted to the SSA’s earnings

records, were for work in the coal industry. See id. at 172. Further, as the Third

Circuit noted, the SSA’s “rebuttable presumption is a sensible response” to the

difficulty of locating records that the worker was employed specifically in the coal

industry as the “beneficiaries’ personnel files can date back fifty to sixty years, and

even a [worker]’s own employer can have difficulty retrieving them.” Id. (citing

Panduit Corp. v. All States Plastic Mfg. Co., 744 F.2d 1564, 1581 (Fed Cir. 1984)

(“Presumptions of fact have been created to assist in certain circumstances where

23

direct proof of a matter is . . . rendered difficult.”) (overruled on other grounds by

Richardson-Merrell, Inc. v. Koller, 472 U.S. 424, 432 (1985)). Moreover, if a worker

was not employed in the coal industry, the coal operator is in a position to correct the

misapprehension. Id.

The parties here disagree on what occurs when an operator presents evidence

rebutting the presumption. Appellants claim that, like employment discrimination

cases, a presumption shifts the burden of going forward with evidence but does not

shift the burden of proof. See Chapman v. AI Transp., 229 F.3d 1012, 1024 (11th

Cir. 2000) (stating that an employer only needs to produce evidence rebutting a

presumption of discrimination, but that the burden of persuasion remains on the

employee to prove that he was a victim of intentional discrimination). According to

Appellants, the SSA can use the presumption to make the initial assignments but

cannot use the presumption to support a denial of an appeal or if an operator has

presented evidence rebutting the presumption. In contrast, the SSA claims that the

presumption can be used during the review process and that the framework for

applying rebuttable presumptions in discrimination cases does not apply to this case.

(Appellee’s Br. 49.)

We agree with the SSA and the district court that it is reasonable for the

presumption to stand during a review of an assignment. The Coal Act provides that

24

if an operator disagrees with an initial assignment, it can seek review of the

assignment by providing evidence showing a “prima facie case of error.” 26 U.S.C.

§ 9706(f)(2). Thus, it is during a review that an operator may offer sufficient

evidence to rebut the presumption.

Sufficient evidence is “the kind of evidence a reasonable mind might accept as

adequate to support a conclusion.” Conoco, Inc. v. Dir., Office of Workers’ Comp.

Programs, 194 F.3d 684, 690 (5th Cir. 1999) (quoting Noble Drilling Co. v. Drake,

795 F.2d 478, 481 (5th Cir. 1986) (abrogated on other grounds by Dir., Office of

Workers’ Comp. Programs v. Greenwich Collieries, 512 U.S. 267 (1994)). The

evidence must merely “raise[] a genuine issue of fact as to whether” the operator

employed the beneficiary in the coal industry. Chapman, 229 F.3d at 1024 (citations

& quotation marks omitted). If the operator cannot present such evidence, the

presumption stands. Once an operator presents sufficient evidence rebutting the

presumption, however, the SSA must then show that the beneficiary has worked in

the coal industry for the operator.9 See St. Mary’s Honor Ctr. v. Hicks, 509 U.S. 502,

9

The SSA does not present a convincing argument as to why the framework for applying

presumptions in discrimination cases has no utility here.

The SSA argues that this case is unlike discrimination cases for which courts developed the

framework for applying presumptions as a response to “the difficult task of discerning the

defendant’s motive.” (Appellee’s Br. 49.) The rationale for applying the presumption, however,

is similar to the rationale for applying presumptions in discrimination cases. Like discrimination

cases, the presumption here is used in response to the difficulty of locating direct evidence, i.e.,

fifty-or sixty-year-old employment records showing that an operator employed a beneficiary in

25

507–08 (1993) (stating that in employment discrimination cases, once a defendant has

rebutted the presumption that it had discriminatory motives for its actions, the

plaintiff then has the burden of persuasion to show that he was a victim of intentional

discrimination); Chapman, 229 F.3d at 1024–25 (same).

Here, the SSA apparently found that Appellants did not produce sufficient

evidence to rebut the presumption that Lee Jones, Victor Hribar, and Woodrow

Stewart worked for them in the coal industry. We review the SSA’s decisions under

an arbitrary and capricious standard.

A. Lee Jones

Appellants contend that Jones worked in an oil well warehouse rather than in

a coal mine. In support, Appellants submitted an affidavit from a USS representative

stating that he spoke with Jones’ nephew, Vincent Coleman, who spoke with his aunt,

Jones’ widow. (Dimmock Aff. ¶ 3, July 9, 1999.) She informed her nephew that she

did not recall her husband ever working in a coal mine for Appellants. (Id.) Jones’

nephew further stated that his aunt and her husband lived in Charleston, West

Virginia, during his employment with USS. (Id.) Appellants then submitted an

affidavit stating that they did not own any coal mines in Charleston, West Virginia,

the coal industry. USX, 395 F.3d at 172. Once there is actual rebutting evidence, however, it

cannot be ignored.

26

during the relevant time period. (Boskovich Aff. ¶ 4, July 9, 1999.) Appellants also

submitted a list of USS facilities from the 1950s showing that there was an oil well

warehouse in Charleston at that time and that the closest coal mine was 134 miles

away. See Barnhart, 2006 U.S. Dist. LEXIS 94798, at *57 n.15. Appellants argue

that it was not possible for Jones to have commuted to work at any of the mines that

USS owned in West Virginia, and that Jones must instead have worked at USS’ oil

well warehouse.

Upon request for review, the SSA rejected Appellants’ argument. The SSA

found that Jones worked for USS during the period at issue, that Jones had not

worked for any other coal industry employer after working for USS, and that USS

was a signatory to a coal wage agreement for the periods shown. Id. at *50. Based

on this, the SSA concluded that the Appellants were the last signatory operators still

in business to employ Jones in the coal industry under a coal wage agreement.

Despite the deferential standard with which we review decisions of the SSA,

there must be a “rational connection between the facts found and the choice made.”

Arango, 115 F.3d at 928 (citation & quotation marks omitted). Here, there is no

rational connection between the SSA’s denial and the evidence with which it was

27

presented.10 The evidence here, that Jones’ widow did not recall him ever working

in a coal mine, that Jones lived in Charleston, West Virginia, and that the closest coal

mine to Charleston was 134 miles away, supports the conclusion that Jones did not

work in the coal industry for Appellants.11 The SSA, however, did not address this

evidence but merely repeated the factors leading to the application of the

presumption. As Appellants had presented evidence to rebut SSA’s presumption, the

SSA cannot point to the presumption itself to refute the rebuttal. In so doing, the SSA

acted arbitrarily and capriciously. Accordingly, we reverse the order of the district

court and remand for the district court to order the SSA to rescind the assignment of

Jones to Appellants.

B. Victor Hribar

Appellants also claim that Hribar did not work for Appellants or a related

company in a position that would qualify for NBCWA benefits. Upon review before

the SSA, Appellants produced evidence that the Combined Fund did not have records

10

The SSA argues that employment records showing that Jones worked in an oil

warehouse rather than a coal mine would be the only evidence capable of rebutting its

presumption, but that is erroneous. As previously stated, to rebut the presumption, Appellants

must simply present “the kind of evidence a reasonable mind might accept as adequate to support

a conclusion.” Conoco, 194 F.3d at 690.

11

The SSA argues that its decision was not arbitrary and capricious because Jones “might

have commuted during this time, working a swing shift and living in close proximity to the

mines while working and returning to Charleston during [his] time off.” (Appellee’s Br. 51.)

We do not give weight to council’s post-hoc, unsubstantiated claim.

28

showing that Hribar had worked for Appellants.12 Instead, the Combined Fund had

records showing that Hribar worked for Hillman Coal & Coke during 1952, the year

that SSA records indicated that Appellants employed Hribar. Additionally,

Appellants presented evidence that one of their employees spoke to Hribar’s

daughter, who did not recall her father working for them but recalled him working for

Hillman during the time in question. Appellants also submitted statements from their

record custodians stating that they did not find any employment records indicating

that Appellants had employed Hribar. Appellants further supported their argument

with a second report generated by the SSA showing that Hribar worked for a division

of Appellants constructing bridges and high-rise office buildings.

In response, the SSA noted that a microfiche copy of a page from a USS

subsidiary’s wage report filed with the IRS for 1952 was a reliable document showing

that USS employed Hribar. The SSA further stated that although the Combined

Fund’s records showed that Hribar did not report working for Appellants with the

Fund, the Fund had Hribar’s earnings records from the fourth quarter of 1952

showing employment with Carnegie Illinois Steel Corporation, a USS subsidiary

involved in the coal industry. The SSA responded to Appellants’ production of

12

The Combined Fund apparently keeps employment records of eligible beneficiaries.

See 26 U.S.C. § 9706(c).

29

evidence, and its conclusion that Appellants employed Hribar in the coal industry was

not arbitrary or capricious. Thus, we affirm the district court’s judgment as to Hribar.

C. Woodrow Stewart

Finally, Appellants challenge the assignment of Stewart, arguing that they did

not employ him in the coal industry. Appellants submitted evidence to the SSA from

the UMWA showing that it did not have any record of Stewart’s employment with

Appellants. Additionally, Appellants submitted an affidavit from their director of

employee relations stating that they did not own any coal mines in Charleston, West

Virginia, where Appellants argue that Stewart lived for most of his life. Appellants

claim that Stewart lived in Charleston based upon his earning records showing

employment mainly by companies in Charleston. Appellants believe that Stewart

instead worked at the same oil warehouse as Jones. The SSA rejected Appellants’

contentions, noting that Stewart’s earnings records showed that he had worked for

USS.

Although this case appears close, it does not appear that the SSA committed

a clear error of judgment in denying Appellants’ appeal. While Appellants presented

an affidavit relaying Jones’ widow’s recollection stating that Jones did not work in

a coal mine for them, they did not present such evidence here. Further, Appellants

have not presented evidence that Stewart actually lived within Charleston during the

30

entire time period in question. Rather, evidence showed that Stewart did not work,

and presumably did not live, exclusively in Charleston. Given such, we affirm the

district court’s judgment that the SSA properly upheld the assignment of Stewart to

Appellants.13

IV. Miners Affected by Eastern Enterprises

Lastly, Appellants argue that the SSA improperly assigned them miners who

had been assigned previously to operators that had not been signatories to the 1974

NBCWA or any subsequent coal wage agreements. As previously discussed, the

Supreme Court held in Eastern Enterprises that the imposition of liability for

premiums upon companies who were not signatories to the 1974 NBCWA, or a

subsequent coal wage agreement, is unconstitutional. E. Enters., 524 U.S. at 537.

Miners previously assigned to such companies thus became “unassigned.” The SSA

then reassigned these miners to signatory operators who had employed them the “next

longest.” Appellants challenge this action, arguing that the literal language of the

13

With respect to Hribar and Stewart, Appellants also argue that the SSA acted arbitrarily

and capriciously by not following its prior practice of reversing assignments when the Combined

Fund informs the SSA that the work at issue “was not covered earnings.” (Appellants’ Br. 36

n.5.) Appellants, however, have provided no legal authority to support their argument, nor have

they elaborated upon the prior instances in which the SSA reversed an assignment based upon the

Combined Fund’s lack of records showing a beneficiary’s employment with an operator. (Id.)

We will not address this perfunctory and underdeveloped argument. See Flanigan’s Enters., Inc.

v. Fulton County, Ga., 242 F.3d 976, 987 n.16 (11th Cir. 2001) (holding that a party waives an

argument if the party “fail[s] to elaborate or provide any citation of authority in support” of the

argument); Ordower v. Feldman, 826 F.2d 1569, 1576 (7th Cir. 1987) (stating that an argument

made without citation to authority is insufficient to raise an issue before the court).

31

Coal Act precludes “reassignment” of the miners affected by Eastern Enterprises.

(Appellants’ Br. 43.)

As the Coal Act does not state how the SSA should handle miners who became

unassigned following Eastern Enterprises, the SSA was without guidance when it

“reassigned” miners to a “newly narrowed group of qualified coal operators.” Sidney,

427 F.3d at 346. Hence, the issue is whether the SSA permissibly construed the Coal

Act in its effort to comply with Eastern Enterprises. Id. at 346; Pittston, 368 F.3d at

402 (citing Chevron U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837, 843

(1984)).

The Fourth and Sixth Circuits have addressed this matter and held that the

“reassignment” of miners rendered unassigned following Eastern Enterprises was

proper. Pittston, 368 F.3d at 405; Sidney, 427 F.3d at 349. In Pittston, the Fourth

Circuit noted that, after Eastern Enterprises, signatory operators “include[d] only

operators that had signed a 1974 NBCWA or later agreement.” Pittston, 368 F.3d at

403. The court then reasoned that with the assignment to such operators deemed

invalid and with a new definition of who composed the “signatory operators,” the

SSA was merely following the directives of 26 U.S.C. § 9706(a) when it assigned the

beneficiaries to operators who had employed the beneficiaries the next longest. Id.

at 403–04 (“[The SSA] merely removed from the pool of possible contributors those

32

coal operators that could not constitutionally be required to contribute.”). Likewise,

in Sidney Coal Co. v. SSA, the Sixth Circuit reasoned that Eastern Enterprises merely

“held that the SSA ‘should never have assigned the retirees to Eastern in the first

place’” and that “[a]fter determining that its Eastern-type assignments were ‘invalid

from the beginning,’ the SSA began anew, assigning beneficiaries ‘to comport with

the terms of the statute as well as the Constitution.’” 427 F.3d at 347 (quoting

Pittston, 368 F.3d at 403).

The courts also found no basis in the text of § 9706(a) for leaving the miners

affected by Eastern Enterprises unassigned. Pittston held that “Section 9706(a) leaves

unassigned only those retirees who were never employed by a signatory operator that

was ‘in business’ at the enactment of the Coal Act.” Pittston, 368 F.3d at 404 n.3.

Similarly, Sidney remarked that the failure to assign a beneficiary to the responsible

coal operator would shift beneficiaries into the “unassigned” category which is

reserved “for those beneficiaries without any former employer still in business, so-

called ‘true orphans.’” Sidney, 427 F.3d at 349–50 (citing Peabody, 537 U.S. at

165–66). Meanwhile, assigning miners based on a newly defined group of eligible

operators comports with legislative intent to minimize the number of unassigned

beneficiaries. Pittston, 368 F.3d at 404; Sidney, 427 F.3d at 349.

We agree with the Fourth and Sixth Circuits that the SSA’s approach to

33

assigning miners affected by Eastern Enterprises is reasonable and comports with

both the Supreme Court’s holding and with the legislative intent of the Coal Act.14

Accordingly, we affirm the judgment of the district court in this regard.

CONCLUSION

For the foregoing reasons, we REVERSE in part, REMAND in part, and

AFFIRM in part the district court’s grant of summary judgment to the SSA. We

REVERSE the district court’s judgment upholding the SSA’s assignment to

Appellants of Lee Jones and of the eleven miners at issue who were employed

previously by Black Diamond. We REMAND for further consideration of the four

miners whose employment with Black Diamond is disputed. We AFFIRM the

remainder of the district court’s grant of summary judgment to the SSA.

14

Other courts have held similarly to Pittston and Sidney. See Elgin Nat’l Indus., Inc. v.

Barnhart, No. 04-5243, 2005 U.S. App. LEXIS 7361, at *2 (D.C. Cir. Apr. 27, 2005) (stating that

Appellant’s “argument pertaining to the reassignment of beneficiaries after Eastern Enterprises is

rejected for the reasons set forth in [Pittston]”); Wheeling-Pittsburgh, 229 F. Supp. 2d at 554

(“The Commissioner had the authority to reassign beneficiaries in response to . . . Eastern

Enterprises and, thus, did not act in an arbitrary and capricious manner but, rather, acted within

the bounds of the law.”).

34