No. 00-1307 

In the Supreme Court of the United States 

WALTER A. HALTER, ACTING COMMISSIONER OF 
SOCIAL SECURITY, PETITIONER 

v. 

SIGMON COAL COMPANY, INC., ET AL. 

ON PETITION FOR A WRIT OF CERTIORARI 
TO THE UNITED STATES COURT OF APPEALS 
FOR THE FOURTH CIRCUIT 

REPLY BRIEF FOR THE PETITIONER 

BARBARA D. UNDERWOOD 

Acting Solicitor General 

Counsel of Record 
Department of Justice 
Washington, D.C. 20530-0001 
(202) 514-2217 

TABLE OF AUTHORITIES 

Cases: Page 

Aloe Energy Corp. v. Apfel, No. 99-3915 (3d Cir. June 

20, 2000), petition for cert. pending, No. 00-725 ............... 

1, 2 

Johnson v. United States, 120 S. Ct. 1795 (2000) ............. 

3 

R.G. Johnson Co. v. Apfel, 172 F.3d 890 (D.C. Cir. 

1999) ......................................................................................... 

1, 2 

Statutes: 

Coal Industry Retiree Health Benefit Act of 1992, 

26 U.S.C. 9701 et seq. ............................................................. 

1, 2 

26 U.S.C. 9701(c)(2) ........................................................... 

2 

26 U.S.C. 9701(c)(2)(A) ..................................................... 

2, 3 

26 U.S.C. 9705(a)(3) .......................................................... 

6 

26 U.S.C. 9711(g)(2) .......................................................... 

4 

Energy Policy Act of 1992, Pub. L. No. 102-486, 

§ 19142, 106 Stat. 3037 .......................................................... 

6 

30 U.S.C. 1232(h)(1) .................................................................. 

6 

Miscellaneous: 

138 Cong. Rec. (1992): 

p. 32,080 ................................................................................... 

5 

p. 34,002 ................................................................................... 
5 

p. 34,033 ................................................................................... 4 

(I) 

In the Supreme Court of the United States 

No. 00-1307 

WALTER A. HALTER, ACTING COMMISSIONER OF 
SOCIAL SECURITY, PETITIONER 

v. 

SIGMON COAL COMPANY, INC., ET AL. 

ON PETITION FOR A WRIT OF CERTIORARI 
TO THE UNITED STATES COURT OF APPEALS 
FOR THE FOURTH CIRCUIT 

REPLY BRIEF FOR THE PETITIONER 

Respondents do not dispute that the Fourth Circuit’s 
decision in this case—holding that the Coal Industry 
Retiree Health Benefit Act of 1992 (Coal Act), 26 
U.S.C. 9701 et seq., does not grant the Commissioner of 
Social Security the authority to assign liability for a 
retired miner’s health benefits to the direct successor of 
the signatory operator that actually employed the 
miner (Pet. App. 26a)—conflicts directly with the deci- 
sion of the D.C. Circuit in R.G. Johnson Co. v. Apfel, 
172 F.3d 890 (1999), and that of the Third Circuit in 
Aloe Energy Corp. v. Apfel, No. 99-3915 (June 20, 
2000), petition for cert. pending, No. 00-725. Rather, 
respondents argue that (1) the decision of the court of 
appeals is correct; (2) the Coal Act was the product of 
delicate legislative compromise that should not be 

(1) 

2 

altered by a broad reading of its terms; and (3) the issue 
is not significant enough to warrant this Court’s review. 
Each submission is without merit. 

1. Respondents argue (Br. in Opp. 6) that the court 
of appeals correctly ruled that a direct successor of a 
signatory operator that employed a retired miner who 
is a beneficiary of the UMWA Combined Benefit Fund 
(Combined Fund) may not be held responsible for that 
miner’s health-care benefits, even though a more dis- 
tantly related direct successor of a related corporation 
within the same control group as a signatory operator 
may be held so responsible. Respondents fail to ex- 
plain, however, why Congress would have wanted the 
Coal Act to be read to accomplish such a strange 
outcome. It was precisely the strangeness of that 
reading of the Coal Act’s related-person definition in 
26 U.S.C. 9701(c)(2) that led the D.C. Circuit in R.G. 
Johnson to conclude that the statute should be more 
sensibly construed to permit the imposition of liability 
on direct successors to signatory operators. See R.G. 
Johnson, 172 F.3d at 8 

94-89 

5. . 

1 

1 Although the D.C. Circuit concluded that the plain language 
of the Coal Act does not support such direct-successor responsibil- 
ity for financing health-care benefits, see R.G. Johnson, 172 F.3d 
at 894, it also concluded that Section 9701(c)(2)(A) presented the 
unusual case in which the plain language of the statute is not a 
reliable indicator of Congress’s intent, see id. at 895. The Third 
Circuit in Aloe adopted the same reasoning. See 00-725 Pet. App. 
7a-8a (Aloe Energy Corp. v. Halter, supra) (reprinting court of ap- 
peals’ decision in Aloe). In our view, the plain language of the Coal 
Act does support (or at least does not preclude) direct-successor 
liability. First, Section 9701(c)(2)(A) states that a person shall be 
considered to be a “related person to a signatory operator” (and 
therefore potentially responsible for the benefits of persons em- 
ployed by that signatory operator) if it is a “related person” to, 
among other entities, a member of the controlled group of corpora- 

3 

Respondents suggest (Br. in Opp. 6 n.5) that Con- 
gress might have precluded direct-successor liability 
because it wanted to promote the buying and selling of 
companies free of Coal Act liabilities. Respondents 
point to nothing in the text or legislative history to 
suggest that this was one of Congress’s objectives in 
enacting the Coal Act, however, and the suggestion is 
implausible. As amicus curiae Combined Fund points 
out (Br. 7), the shifting of corporate forms to avoid 
liability for miners’ health-care benefits was one of the 
very practices that caused the crisis in financing of the 
predecessor UMWA Benefit Trusts and led Congress 
to intervene by passage of the Coal Act. Simply by 
selling its business to a new corporate entity, a 
signatory operator would be able to foist responsibility 
for its own employees’ benefits on the government and, 
potentially, other signatory operators. See pp. 5-7, 
infra. As Judge Murnaghan observed in dissent below, 
there is no reason to conclude “that Congress intended 

tions that includes the signatory operator. But since a signatory 
operator is a member of the control group that includes itself, its 
own direct successor is a related person to it, under the Coal Act’s 
definition of “related person.” Second, while Section 9701(c)(2)(A) 
provides that certain entities “shall be considered to be a related 
person,” it does not provide that all other entities shall not be 
considered to be so related, and thus does not preclude the Com- 
missioner from looking to general principles of direct successorship 
in the law to assign responsibility for a signatory operator’s 
beneficiaries to its direct successor. We do agree with the D.C. 
Circuit and the Third Circuit, however, that broader principles of 
effectuating legislative intent support direct-successor responsibil- 
ity as well. Cf. Johnson v. United States, 120 S. Ct. 1795, 1804 n.9 
(2000) (reiterating that “statutes should receive a sensible con- 
struction, such as will effectuate the legislative intention, and, if 
possible, so as to avoid an unjust or absurd conclusion”). 

4 

to promote the exact practice that necessitated legis- 
lative action in the first place.” Pet. App. 42a.2 

2. Respondents further argue (Br. in Opp. 8-13) that 
the Coal Act is the product of a delicate legislative 
compromise after a contentious lawmaking process and 
so the Court should be reluctant to read broadly its 
terms imposing financial responsibility. It is true that 
the process of framing the Coal Act was difficult, as 
Congress sought to balance various interests and 
choose among divergent proposals for a remedy to the 
crisis in funding miners’ health-care benefits. Nothing 
in the legislative record suggests, however, that there 
was any significant disagreement in Congress about the 
particular issue in this case, viz., financial responsibility 
of direct successors to signatory operators. Senator 
Rockefeller, the principal sponsor of the Coal Act, 
explained on the floor of the Senate that the Coal Act’s 
provision for responsibility of related persons included 
responsibility for direct successors to signatory opera- 
tors, see 138 Cong. Rec. 34,033 (1992), and no one con- 
tradicted his statement. Similarly, no one contradicted 
the explanation inserted into the record by Senator 
Wallop that, “because of complex corporate structures 
which are often found in the coal industry, the number 
of entities made jointly and severally liable for a 

2 Indeed, it is difficult to understand how the Coal Act could 
have promoted such an objective in any event. The Act can have 
no impact on sales that occurred before its operative date, because 
those transactions were negotiated and completed before the 
imposition of statutory liability. As for post-enactment transac- 
tions, Congress has expressly dealt with the disincentives posed by 
Coal Act liabilities in provisions empowering companies to transfer 
those liabilities by contract, provided that the selling company 
remains the guarantor of premium payments. See 26 U.S.C. 
9711(g)(2). 

5 

signatory operator’s obligations under the definition of 
related persons is intentionally very broad.” Id. at 
34,002. 

3 

3. Finally, respondents argue (Br. in Opp. 14) that 
the issue of successor liability is not significant enough 
to warrant certiorari because the issue concerns only 
which among several private entities will be responsi- 
ble for a miner’s health-care benefits. As a factual 
matter, that submission is incorrect. As respondents 
note (id. at 15 n.12), in the case of a beneficiary of the 
Combined Fund who is deemed “unassigned” because 
no former employer or related person liable under the 
statutory definition could be identified, health-care 
benefits are financed at the outset by government funds 
(if such funds are available) transferred from interest 
earned on the Department of the Interior’s Abandoned 

3 Respondents note (Br. in Opp. 12-13) that Representative 
Rostenkowski remarked on the floor of the House of Representa- 
tives that the House’s conferees were uneasy with various pro- 
visions in the Coal Act, including “numerous inequities among the 
companies that will be required to pay for these benefits,” but had 
acquiesced in those perceived inequities in order to secure passage 
of the comprehensive energy policy legislation before Congress. 
Representative Rostenkowski identified specific concerns about 
various provisions in the Coal Act, including provisions that 
imposed responsibility for miners’ benefits on companies that, he 
believed, had either discharged their obligation for those miners’ 
benefits (such as companies that had paid withdrawal liability to 
the old UMWA Benefit Trusts) or had only a tenuous connection to 
the miners (such as companies that only leased property to a 
mining operator). See 138 Cong. Rec. 32,080 (1992). Representa- 
tive Rostenkowski nowhere indicated, however, that the Coal 
Act’s approach to direct-successor liability was one of the “inequi- 
ties” that he perceived. 

6 

Mine Reclamation (AMR) Fund.4 Thus, the effect of the 
court of appeals’ decision is to foist the cost of financing 
the health-care benefits of retired miners and their 
dependents on to the public fisc. That result is contrary 
to Congress’s intent that the Combined Fund be estab- 
lished as a private entity with funding from private 
sources. See Pet. 4; Energy Policy Act of 1992, Pub. L. 
No. 102-486, § 19142, 106 Stat. 3037. 

Second, as amicus curiae Combined Fund points out 
(Br. 9), if AMR funds are unavailable or exhausted, 
then responsibility for unassigned beneficiaries is 
placed on all signatory operators (or their related 
persons) in a pro rata fashion. The court of appeals’ 
decision thus has the potential to recreate the very 
conditions that led to the Coal Act’s enactment— 
responsibility for “orphaned” retirees (whose em- 
ployers had dissolved or left the coal industry) being 
forced on a dwindling number of coal companies that 
had chosen not to avoid their responsibilities to their 
own employees and had remained in the coal business. 
If that process continues, the situation could ultimately 
impair the financial stability of the Combined Fund. 
And while the Social Security Administration (SSA) 
has not been able to obtain a precise count of the 
number of assignments that will be affected by the 
decision below (see Pet. 14 n.4; Br. in Opp. 16), SSA 
believes that that number is substantial, perhaps in the 
thousands. That potential impact is sufficient to 
warrant this Court’s resolution of the conflict in the 

4 Transfers from interest on the AMR Fund to the Combined 
Fund are authorized only for fiscal years beginning on or after 
October 1, 1995. Before that date, the benefits of unassigned bene- 
ficiaries were paid in the first instance out of funds transferred 
from the predecessor UMWA Benefit Trusts, not the AMR Fund. 
See 26 U.S.C. 9705(a)(3); 30 U.S.C. 1232(h)(1). 

7 

circuits on the issue of responsibility for Coal Act 
benefits of a direct successor to a signatory operator.5 

* * * * * 

For the foregoing reasons, and for those set forth in 
the petition, the petition for a writ of certiorari should 
be held pending the disposition of the petition for a writ 
of certiorari in Aloe Energy Corp. v. Apfel, No. 00-725, 
and then disposed of as appropriate in light of the 
disposition of that case. 

Respectfully submitted. 

BARBARA D. UNDERWOOD 

Acting Solicitor General 

APRIL 2001 

5 As we stated in the petition (at 15), we do not oppose the 
private party’s request for this Court’s review in Aloe Energy 
Corp. v. Halter, No. 00-725, which was filed before our petition in 
this case and which raises the same issue. The Court should there- 
fore hold this petition pending its disposition of Aloe.