Supreme Court Review Sought in Coal Act Bankruptcy Case

TRUSTEES OF THE UNITED MINE WORKERS OF AMERICA COMBINED BENEFIT FUND AND TRUSTEES OF THE UNITED MINE WORKERS OF AMERICA 1992 BENEFIT PLAN,
Petitioners,
v.
WESTMORELAND COAL CO., ET AL.,
Respondents.

IN THE
Supreme Court of the United States

On Petition for a Writ of Certiorari to the United States Court of Appeals for the Fifth Circuit

PETITION FOR A WRIT OF CERTIORARI

John R. Mooney
Paul A. Green
MOONEY, GREEN, SAINDON, MURPHY & WELCH PC
1920 L St. NW, Suite 400
Washington, DC 20036

Bryan Killian
Counsel of Record
John C. Goodchild III
Stephanie Schuster
MORGAN, LEWIS & BOCKIUS LLP
1111 Pennsylvania Ave. NW
Washington, DC 20004
(202) 373-6191
bryan.killian@morganlewis.com

QUESTIONS PRESENTED

In the decision below, the Fifth Circuit held that the tax Anti-Injunction Act (26 U.S.C. § 7421(a)) does not withdraw jurisdiction over a debtor's effort to use Section 1114(g) of the Bankruptcy Code (11 U.S.C. §1114(g)) to restrain the assessment of premiums for two benefit plans created under the Coal Industry Retiree Health Benefit Act (“Coal Act”) (26 U.S.C. ch. 99).

The Fifth Circuit's decision warrants further review. Its holding that a bankruptcy court may exercise discretion to restrain the assessment of Coal Act premiums deepens a circuit split over the scope of the exception to the Anti-Injunction Act created by South Carolina v. Regan, 465 U.S. 367 (1984). And its holding that Coal Act premiums are not “any tax” protected by the Anti-Injunction Act deepens another split.

The questions presented are:

1. Is the South Carolina v. Regan exception to the Anti-Injunction Act available to debtors who want to avoid paying a tax for reasons unrelated to the tax's validity?

2. Are Coal Act premiums “any tax” protected by the Anti-Injunction Act?

PARTIES TO THE PROCEEDING

The Petitioners are the Trustees of the United Mine Workers of America Combined Benefit Fund (“Combined Fund”) and the Trustees of United Mine Workers of America 1992 Benefit Plan (“1992 Plan”), who, in their capacities as trustees, were appellants in the proceedings below.

• The Trustees of the Combined Fund are:

  • Michael H. Holland

  • Micheal W. Buckner

  • Michael O. McKown

  • Joseph R. Reschini

  • William P. Hobgood

  • Carl E. Van Horn

  • Gail R. Wilensky

• The Trustees of the 1992 Plan are:

  • Michael H. Holland

  • Michael O. McKown

  • Carlo Tarley

  • Joseph R. Reschini

The Respondents are the following entities, who were appellees in the proceeding below:

• Westmoreland Coal Company

• Absaloka Coal, LLC

• Baskin Resources, Inc.

• Buckingham Coal Company, LLC

• Dakota Westmoreland Corporation

• Daron Coal Company, LLC

• Harrison Resources, LLC

• Haystack Coal Company

• Oxford Conesville, LLC

• Oxford Mining Company — Kentucky, LLC

• Oxford Mining Company

• San Juan Coal Company

• San Juan Transportation Company

• Texas Westmoreland Coal Company

• WCC Land Holding Company, Inc.

• WEI — Roanake Valley, Inc.

• Western Energy Company

• Westmoreland Coal Company Asset Corp.

• Westmoreland Coal Sales Company, Inc.

• Westmoreland Energy Services New York, Inc.

• Westmoreland Energy Services, Inc

• Westmoreland Energy, LLC

• Westmoreland Kemmerer Fee Coal Holdings, LLC

• Westmoreland Kemmerer, LLC

• Westmoreland Mining LLC

• Westmoreland North Carolina Power, LLC

• Westmoreland Partners

• Westmoreland Power, Inc.

• Westmoreland Resource Partners, LP

• Westmoreland Resources GP, LLC

• Westmoreland Resources, Inc.

• Westmoreland San Juan Holdings, Inc.

• Westmoreland San Juan, LLC

• Westmoreland Texas Jewett Coal Company

• Westmoreland — Roanoke Valley, LP

• WRI Partners, Inc.

• Basin Resources, Inc.

RELATED PROCEEDINGS

In re Westmoreland Coal Company, et al., No. 18-35672 (Bankr. S.D. Tex.).

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TABLE OF CONTENTS

OPINIONS BELOW

JURISDICTION

STATUTORY PROVISIONS INVOLVED

STATEMENT

REASONS FOR GRANTING THE PETITION

CONCLUSION

PETITION APPENDIX

Fifth Circuit Opinion (8/4/20)

Bankruptcy Court Opinion (12/29/18)

Statutory Addendum

TABLE OF AUTHORITIES

CASES

Adventure Res. Inc. v. Holland, 137 F.3d 786 (4th Cir. 1998)

Adventure Res. Inc. v. Holland, 137 F.3d 786 (CA4 1998)

Aloe Energy Corp. v. Apfel, 225 F.3d 648 (CA3 2000)

In re Am. Bicycle Ass'n, 895 F.2d 1277 (CA9 1990)

Archdiocese of Wash. v. Wash. Metro. Area Transit Auth., 140 S. Ct. 1198 (2020)

Ass'n for Accessible Medicines v. James, 974 F.3d 216 (CA2 2020)

Barnhart v. Peabody Coal Co., 537 U.S. 149 (2003)

Barnhart v. Sigmon Coal Co., 534 U.S. 438 (2002)

Bob Jones Univ. v. Simon, 416 U.S. 725 (1974)

Bowles v. Russell, 551 U.S. 205 (2007)

California v. Arizona, 440 U.S. 59 (1979)

In re Chateaugay Corp., 53 F.3d 478 (CA2 1995)

In re Chateaugay Corp., 64 B.R. 990 (S.D.N.Y. 1986)

CIC Servs. LLC v. IRS, 140 S. Ct. 2737 (2020)

Cohen v. United States, 650 F.3d 717 (CADC 2011)

Commissioner v. Sunnen, 333 U.S. 591 (1948)

Confederated Tribes & Bands of Yakama Indian Nation v. ATF, 843 F.3d 810 (CA9 2016)

Direct Marketing Ass'n v. Brohl 575 U.S. 1 (2015)

Eastern Enterprises v. Apfel, 524 U.S. 498 (1996)

Eastern Enterprises v. Chater, 110 F.3d 150 (CA1 1997)

Elect. Welfare Tr. Fund v. United States, 907 F.3d 165 (CA4 2018)

Empress Casino Joliet Corp. v. Balmoral Racing Club, Inc., 651 F.3d 722 (CA7 2011)

Enochs v. Williams Packing & Nav. Co., 370 U.S. 1 (1962)

Fed. Energy Admin. v. Algonquin SNG, Inc., 426 U.S. 548 (1976)

Hibbs v. Winn, 542 U.S. 88 (2004)

Horton v. Humphrey, 146 F. Supp. 819 (D.D.C.)

Hotze v. Burwell, 784 F.3d 984 (CA5 2015)

Interfirst Bank, N.A. v. United States, 769 F.2d 299 (CA5 1985)

Judicial Watch v. Rossotti, 317 F.3d 401 (CA4 2003)

In re LaSalle Rolling Mills, Inc., 832 F.2d 390 (CA7 1987)

Laughlin v. IRS, 912 F.2d 197 (CA8 1990)

In re Leckie Smokeless Coal Co., 99 F.3d 573 (CA4 1996)

Lipke v. Lederer, 259 U.S. 557 (1922)

Milner v. Dep't of Navy, 562 U.S. 562 (2011)

Nat'l Fed'n of Indep. Bus. v. Sebelius, 567 U.S. 519 (2012)

Nat'l Tr. for Historic Pres. in the U.S. v. FDIC, 21 F.3d 469 (CADC 1994)

New Neighborhoods, Inc. v. W.V. Workers' Comp. Fund, 886 F.2d 714 (CA4 1989)

In re Pac. Lumber Co., 584 F.3d 229 (CA5 2009)

In re Pan Am. Paper Mills, Inc., 618 F.2d 159 (CA1 1980)

Phillips v. Commissioner, 283 U.S. 589 (1931)

Pittston Co. v. United States, 199 F.3d 694 (CA4 1999)

RYO Mach., LLC v. Dep't of Treasury, 696 F.3d 467 (CA6 2012)

SEC v. Credit Bancorp., Ltd., 297 F.3d 127 (CA2 2002)

South Carolina v. Regan, 465 U.S. 367 (1984)

In re Sunnyside Coal Co., 146 F.3d 1273 (CA10 1998)

In re Walter Energy, Inc., 911 F.3d 1121 (CA11 2018)

Whitfield v. United States, 543 U.S. 209 (2005)

Z Street v. Koskinen, 791 F.3d 24 (CADC 2015)

STATUTES

11 U.S.C. § 105(a)

11 U.S.C. § 362(a)

11 U.S.C. § 503(b)(1)(B)

11 U.S.C. § 1114

11 U.S.C. § 1114(a)

11 U.S.C. § 1114(e)(1)

11 U.S.C. § 1114(f)(1)(A)

11 U.S.C. § 1114(g)(1)-(3)

26 U.S.C. § 7421(a)

26 U.S.C. § 9701(c)

26 U.S.C. § 9701(c)(4)

26 U.S.C. § 9702(a)(1)

26 U.S.C. § 9702(b)

26 U.S.C. § 9703(b)(1)

26 U.S.C. § 9703(f)

26 U.S.C. § 9704

26 U.S.C. § 9704(a)

26 U.S.C. § 9704(b)

26 U.S.C. § 9705

26 U.S.C. § 9706

26 U.S.C. § 9706(a)

26 U.S.C. § 9707

26 U.S.C. § 9707(a)

26 U.S.C. § 9707(b)

26 U.S.C. § 9707(f)

26 U.S.C. § 9708

26 U.S.C. § 9711

26 U.S.C. § 9711(c)

26 U.S.C. § 9711(c)(3)

26 U.S.C. § 9712(a)(1)

26 U.S.C. § 9712(b)(2)(A)

26 U.S.C. § 9712(b)(2)(B)

26 U.S.C. § 9712(d)(1)(A)

26 U.S.C. § 9712(d)(1)(B)

26 U.S.C. § 9712(d)(3)

26 U.S.C. § 9712(d)(4)

28 U.S.C. § 157(a)

28 U.S.C. § 157(b)

28 U.S.C. § 158(a)

28 U.S.C. § 158(d)(1)

28 U.S.C. § 158(d)(2)(A)

28 U.S.C. § 158(d)(2)(A)(i)

28 U.S.C. § 158(d)(2)(A)(iii)

28 U.S.C. § 1254(1)

28 U.S.C. § 1334(a)

28 U.S.C. § 1334(b)

28 U.S.C. § 1346(a)(1)

28 U.S.C. § 2201

Act of Mar. 2, 1867

Coal Act, Pub. L. No. 102-486

Federal Tax Lien Act, Pub. L. No. 89-719

Retiree Benefits Bankruptcy Protection Act of 1988, Pub. L. No. 100-334

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PETITION FOR A WRIT OF CERTIORARI

OPINIONS BELOW

The opinion of the bankruptcy court (Pet. App. 33) is not published, but may be found at 2018 WL 6920227. The opinion of the court of appeals (Pet. App. 1) is published at 968 F.3d 526.

JURISDICTION

The bankruptcy court had jurisdiction over the debtors' cases under 28 U.S.C. § 1334(a) and in accordance with 28 U.S.C. § 157(a); the bankruptcy court had jurisdiction over the Petitioners' adversary proceeding under 28 U.S.C. § 1334(b) and in accordance with 28 U.S.C. § 157(b). When the bankruptcy court ordered judgment on the pleadings, it certified its ruling for direct appeal in accordance with 28 U.S.C. § 158(d)(2)(A)(i) and (iii). See Pet. App. 52. The court of appeals accepted the appeal and had jurisdiction under 28 U.S.C. § 158(d)(2)(A).

The judgment of the court of appeals was entered on August 4, 2020. Under this Court's March 19, 2020 order, the time for filing a petition for a writ of certiorari was extended to January 1, 2021. This Court has jurisdiction under 28 U.S.C. § 1254(1).

STATUTORY PROVISIONS INVOLVED

Relevant provisions of the tax Anti-Injunction Act (26 U.S.C. § 7421(a)), the Coal Industry Retiree Health Benefit Act of 1992 (26 U.S.C. ch. 99), and the Retiree Benefits Bankruptcy Protection Act of 1988 (11 U.S.C. § 1114) are set out in the Appendix. See Pet. App. 53-64.

STATEMENT

Amid a crisis over healthcare benefits for retired miners and their dependents, Congress passed the Coal Industry Retiree Health Benefit Act. The Act eliminated the failing, collectively bargained system for providing benefits and replaced it with a statutory system. The Act created two statutory benefit plans — the United Mine Workers of America Combined Benefit Fund and the United Mine Workers of America 1992 Benefit Plan — whose Trustees are the Petitioners here. Under the Act, “premiums” for the Combined Fund and 1992 Plan are regularly assessed on certain coal-industry employers, unless they cease operating or cease to exist.

This case comprises the jointly administered Chapter 11 bankruptcy cases of nearly three dozen affiliated debtors, some of whom had been paying Coal Act premiums before bankruptcy. Because those debtors did not cease operating or cease to exist, they were due to be assessed Coal Act premiums during bankruptcy. The debtors, however, made clear that they planned to ask the bankruptcy court to shield them from Coal Act assessments — not because the debtors believed the assessments would be invalid, but simply because the debtors wanted to conserve money.

The Petitioners countered that the tax Anti-Injunction Act (“AIA”) barred the court from granting that discretionary relief. The AIA strips federal courts of jurisdiction to “restrain[ ] the assessment or collection of any tax.” 26 U.S.C. § 7421(a). Because Coal Act premiums are taxes, debtors cannot avoid Coal Act assessments in bankruptcy. Rather, as most courts have held, Coal Act premiums may be assessed against debtors, and those assessments are paid in accordance with the Bankruptcy Code's priority rules.

The Fifth Circuit ruled for the debtors, holding the AIA inapplicable to the two types of Coal Act premiums at issue. Despite recognizing that premiums for the Combined Fund are “any tax” under the AIA, the court of appeals relied on South Carolina v. Regan, 465 U.S. 367 (1984), and held that the AIA does not bar actions by taxpayers seeking discretionary relief from undisputedly valid taxes. Next, the court of appeals held that premiums for the 1992 Plan are not “any tax” under the AIA because Congress labeled them “premiums” instead of “taxes.”

Each of the Fifth Circuit's jurisdictional holdings implicates separate circuit splits that this Court should resolve.

The lower courts are divided over the scope of the South Carolina v. Regan exception to the AIA. The Fifth, Eleventh, and D.C. Circuits interpret South Carolina v. Regan broadly and, along with the Fourth Circuit, are the only courts of appeals that have applied the South Carolina v. Regan exception to bypass the AIA. By contrast, the Sixth, Seventh, Eighth, and Ninth Circuits interpret South Carolina v. Regan narrowly and have never applied its exception to bypass the AIA. What's more, the Seventh, Eighth, and Ninth Circuits specifically hold that the AIA bars bankruptcy courts from exercising its discretionary powers to shield a debtor from a tax assessment — exactly what the Fifth Circuit allowed to happen here.

The lower courts also are divided over whether Coal Act premiums are federal taxes. The Second, Fourth, and Tenth Circuits hold that they are taxes for purposes of the AIA, the Bankruptcy Code, and other federal statutes that expressly apply to “any tax.” The Fifth and Eleventh Circuits, by contrast, hold that 1992 Plan premiums are not taxes under the AIA, reasoning that the meaning of “any tax” in the AIA is unique. The Fourth Circuit squarely rejects that reasoning and has held that the reference to “any tax” means the same thing in the AIA, in the Bankruptcy Code, and in other federal statutes.

These questions are critical to the Coal Act and bankruptcy courts and should be resolved now. The Court should grant the petition and hold both that Coal Act premiums are “any tax” under the AIA and that South Carolina v. Regan does not justify restraining the assessment of those premiums just because a debtor's reorganization may be more successful if its Coal Act obligations are extinguished.

I. Statutory Background

In the mid-twentieth century, the United Mine Workers of America secured healthcare benefits for retired coal miners. See Eastern Enterprises v. Apfel, 524 U.S. 498, 504-11 (1996) (plurality). As paying for those benefits became expensive, companies tried to avoid the costs. Some refused to sign CBAs. Some shrank and continued mining without union employees. Others stopped mining. See id. at 511; Barnhart v. Sigmon Coal Co., 534 U.S. 438, 445 (2002).

And some companies declared bankruptcy. A flashpoint was the bankruptcy of LTV Corporation, a steel and mining conglomerate. Upon filing its petition, LTV immediately stopped paying for the healthcare benefits of 78,000 retirees. LTV theorized that retirees' claims for benefits were general unsecured claims, which LTV could not pay before the claims of secured creditors and priority unsecured creditors. See In re Chateaugay Corp., 64 B.R. 990, 993 (S.D.N.Y. 1986).

As the collectively bargained system for providing lifetime healthcare benefits was collapsing, Congress stepped in and passed two laws at issue in this case. First, Congress required LTV and other Chapter 11 debtors to continue paying for their retirees' healthcare benefits during bankruptcy — in the Retiree Benefits Bankruptcy Protection Act of 1988, Pub. L. No. 100-334, § 2, 102 Stat. 610-13 (Jun. 16, 1988), codified at Sections 1114 and 1129(a)(13) of the Bankruptcy Code. Second, Congress mandated that coal employers fulfill their promises to provide healthcare benefits to retired miners — in the Coal Act, Pub. L. No. 102-486, 106 Stat. 2776, 3036-56 (Oct. 24, 1992), codified at Chapter 99 of the Internal Revenue Code.

A. Section 1114 of the Bankruptcy Code

Section 1114 governs the payment of a debtor's “retiree benefits” during a Chapter 11 bankruptcy. 11 U.S.C. § 1114(a). For these retiree benefits, Section 1114 preserves the prebankruptcy status quo by mandating that a debtor “shall timely pay * * * any retiree benefits” after filing a petition. Id. § 1114(e)(1).

Section 1114 also regulates whether, when, and how a debtor can temporarily or permanently modify its obligation to pay retiree benefits. See ibid. The Section 1114 process for modifying these obligations is highly discretionary. The debtor may submit “a proposal * * * which provides for those necessary modifications in the retiree benefits that are necessary to permit the reorganization of the debtor and assures that all creditors, the debtor and all of the affected parties are treated fairly and equitably.” Id. § 1114(f)(1)(A). If the retirees, through an authorized representative, accept the debtor's proposal, the modifications may be implemented without a court order. If the representative rejects the proposal, the court may implement the proposal by order, but only if the representative “refused to accept such proposal without good cause” and only if the court independently concludes that the proposal is fair, equitable, and “necessary to permit the reorganization of the debtor.” Id. § 1114(g)(1)-(3).

B. The Coal Act

The Coal Act eliminated the coal industry's collectively bargained system for providing healthcare benefits to covered miners. In its place, the Act created a rigid, statutory system that coal operators cannot manipulate or avoid. The two main parts of the statutory system are the unique benefits plans the Act established — the Combined Fund and the 1992 Plan.

1. The Combined Fund

The Combined Fund supersedes two collectively bargained plans that were failing before the Coal Act. See 26 U.S.C. § 9702(a)(1), (b). The beneficiaries of the Combined Fund are the retirees who were receiving benefits under those plans at the cutoff date. See id. § 9703(f). The benefits provided by the Combined Fund are “substantially the same as” the benefits provided under the collectively bargained plans. Id. § 9703(b)(1).

But, unlike the collectively bargained plans, the Combined Fund is financed entirely and solely under the Coal Act. See id. §§ 9704-9706; see also id. § 9708 (“All liability for contributions to the Combined Fund that arises on and after February 1, 1993, shall be determined exclusively under this chapter * * *. ”). The Commissioner of Social Security assigned each Combined Fund beneficiary to a “signatory operator” — often, but not always, a company that employed the beneficiary and supported the collectively bargained plans. See id. § 9706(a); see also id. § 9701(c). These “assigned operators” are assessed annual Combined Fund premiums based on the number of Combined Fund beneficiaries assigned to them. See id. §9704(a)-(b); see also Barnhart v. Peabody Coal Co., 537 U.S. 149, 153-54 (2003).

The Coal Act contains provisions to ensure that coal companies do not evade paying Combined Fund premiums. Among them is “a penalty on the failure of any assigned operator to pay any” Combined Fund premium — $100 per beneficiary per day. 26 U.S.C. § 9707(a), (b). The penalty “shall be treated in the same manner as the tax imposed by section 4980B” of the Internal Revenue Code. Id. § 9707(f).

2. The 1992 Plan

The Coal Act established the 1992 Plan as “separate” from the Combined Fund. Id. § 9712(a)(1). Whereas the Combined Fund provides benefits to retirees who were actually receiving benefits from certain collectively bargained plans as of the cutoff date, the 1992 Plan provides benefits to two different categories of retirees. One category comprises miners who were or would have been eligible for benefits under those collectively bargained plans had the miners retired in time. See id. § 9712(b)(2)(A). The second, larger category comprises “orphaned” miners, whose employers fail to provide them benefits under an individual employer plan. See id. §§ 9711, 9712(b)(2)(B).

Premiums for the 1992 Plan are assessed monthly on “last signatory operators,” which are the most recent coal industry employers of covered retirees. See 26 U.S.C. §§ 9701(c)(4), 9712(d)(1)(A), (d)(3). The magnitude of a last signatory operator's 1992 Plan premiums depends on the number of beneficiaries enrolled in the 1992 Plan who are attributable to the operator. See id. § 9712(d)(1)(A), (d)(3). Some last signatory operators pay no premiums because their retirees are covered by individual employer plans as the Coal Act requires. Those operators can be assessed 1992 Plan premiums if their individual employer plans terminate and the retirees are enrolled in the 1992 Plan as required. Whether they pay premiums or not, certain last signatory operators (called “1988 last signatory operators”) must post security, whose proceeds the 1992 Plan may collect when an operator fails to maintain an individual employer plan. Id. § 9712(d)(1)(B); see id. § 9711.

II. Case Background

1. In October 2018, Westmoreland Coal Company and 36 affiliates filed Chapter 11 petitions. Before bankruptcy, the companies had Coal Act obligations. Among those obligations, the companies paid Combined Fund premiums and 1992 Plan premiums. See Pet. App. 34, 41-42.

Like many Chapter 11 debtors, the Westmoreland debtors proposed to auction their assets. All the bidders conditioned their bids on the bankruptcy court ruling that the winner would not have successor liability for the debtors' Coal Act obligations. While some courts have approved of using Section 363(f) of the Bankruptcy Code to extinguish the Coal Act obligations of new owners while leaving the debtors' obligations in place, see, e.g., In re Leckie Smokeless Coal Co., 99 F.3d 573, 585-87 (CA4 1996), the Westmoreland debtors signaled that they intended to go further and ask the bankruptcy court to extinguish their own Coal Act obligations under Section 1114(g). See Pet. App. 5-6 & n.5.

Because the Section 1114 process moves quickly, the Petitioners instituted an adversary proceeding, asking the bankruptcy court to declare that the debtors could not use Section 1114(g) to extinguish Coal Act obligations. The bankruptcy court ruled for the debtors. The court first held that Coal Act obligations are “retiree benefits” subject to modification under Section 1114, rejecting the Petitioners' argument that Section 1114(g) applies only to negotiable contractual obligations, not to nonnegotiable statutory obligations. See Pet. App. 42-46. The court thus faced the question whether the AIA prevents the debtors and the court from using Section 1114(g) to extinguish Coal Act obligations, and the court held that Coal Act obligations are not “any tax” for purposes of the AIA. See Pet. App. 48-51. Recognizing the importance of these issues, the bankruptcy court certified its order for direct appeal to the Fifth Circuit. See Pet. App. 51-52.

While the appeal was pending, the Section 1114(g) process played out, and the Westmoreland debtors' Coal Act obligations were extinguished. See Pet. App. 6 n.5. That outcome did not moot the Petitioners' appeal, however. The debtors' confirmed plan of reorganization sets aside money to pay the Petitioners if they prevail on appeal.

2. The Fifth Circuit (Judge Costa, joined by Judges Davis and Smith) affirmed the bankruptcy court's jurisdiction, on somewhat different grounds.

For guidance on how to answer the question “whether a Coal Act premium is a 'tax' under the AIA,” the court of appeals looked to Nat'l Fed'n of Indep. Bus. v. Sebelius, 567 U.S. 519 (2012), where this Court held that the AIA did not prohibit a preassessment suit over the constitutionality of an exaction labeled a “penalty.” Pet. App. 11. From NFIB, the court of appeals concluded that an exaction must be labeled a “tax” in order to be “any tax” under the AIA: “With the AIA, form — specifically, the label Congress uses — does matter over substance.” Pet. App. 12. Notwithstanding the court's emphatic statement that “how Congress labels the exaction is key,” ibid., the court recognized that the AIA protects some non-“tax” exactions, including those that are enforced by a “tax.” See Pet. App. 13 (citing Fla. Bankers Ass'n v. U.S. Dep't of Treasury, 799 F.3d 1065 (CADC 2015) (Kavanaugh, J.), and CIC Servs., LLC v. IRS, 925 F.3d 247 (CA6 2019)).

Because “Congress called the annual exactions on signatory operators 'premiums,' not taxes,” the court of appeals held that the AIA does not protect them. Pet. App. 12. But then, the court of appeals acknowledged that the statutory penalty for failing to pay Combined Fund premiums is a tax, and so the court treated Combined Fund premiums as covered by the AIA. See id. at 14. There being no penalties for failing to pay 1992 Plan premiums, the court of appeals held that 1992 Plan premiums are not covered by the AIA. In other words, the court of appeals concluded that Combined Fund “premiums” are “any tax” protected by the AIA, but that 1992 Plan “premiums” are not, simply because the former are backed by a tax penalty while the latter are not.

The Fifth Circuit stopped short of holding that the AIA covers Combined Fund premiums. The court only assumed it because the court held that, even if they are covered, an exception to the AIA applies to Section 1114(g) motions. See Pet. App. 14-17. The court derived that exception from South Carolina v. Regan, 465 U.S. 367 (1984), where this Court held that the AIA did not bar South Carolina from filing an original-jurisdiction action in this Court to raise a Tenth Amendment challenge to an income tax assessed on private citizens. The court of appeals read South Carolina v. Regan as holding that the AIA never applies to plaintiffs who have “no alternative avenue for federal court jurisdiction.” Pet. App. 14. Because Section 1114(g) is the only mechanism for debtors to obtain discretionary relief from their obligations to pay “retiree benefits,” the court of appeals held that the AIA does not stop the Westmoreland debtors from using Section 1114(g) to extinguish their Coal Act obligations. Pet. App. 17.

REASONS FOR GRANTING THE PETITION

I. This Court's Review Is Necessary To Settle How The South Carolina v. Regan Exception Applies In The Lower Courts.

In the 35 years since this Court decided South Carolina v. Regan, the Court has never again applied its exception to the AIA and has repudiated the reasoning on which the exception was based. Meanwhile, lower courts have struggled with whether and how the South Carolina v. Regan exception applies beyond the unique facts of that case. The Sixth, Seventh, Eighth, and Ninth Circuits set a high bar for plaintiffs trying to circumvent the AIA, and three of those circuits have specifically rebuffed debtors who argued that the exception permits them to obtain discretionary relief from federal tax assessments during bankruptcy. Yet, in the decision below, the Fifth Circuit joined the Eleventh and D.C. Circuits in adopting an approach that makes it easy to circumvent the AIA's jurisdictional requirements, and two of those circuits (the Fifth and Eleventh) have permitted debtors to invoke the exception to obtain discretionary relief from federal tax assessments during bankruptcy.

A. The South Carolina v. Regan exception to the AIA is an outlier.

The AIA limits federal courts' subject-matter jurisdiction. See Bob Jones Univ. v. Simon, 416 U.S. 725, 749 (1974). The text of the AIA's jurisdictional bar is clear:

Except as provided in sections 6015(e), 6212(a) and (c), 6213(a), 6232(c), 6330(e)(1), 6331(i), 6672(c), 6694(c), 7426(a) and (b)(1), 7429(b), and 7436, no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed.

26 U.S.C. § 7421(a). Though the AIA contained no exceptions when enacted, see Act of Mar. 2, 1867, § 10, 14 Stat. 475, Congress has now listed thirteen exceptions by cross-reference. Not only that, but Congress has emphasized that litigants cannot evade the AIA's jurisdictional bar by arguing that they are not “the person against whom such tax was assessed.” See Federal Tax Lien Act, Pub. L. No. 89-719, §110(c), 80 Stat. 1144.

In South Carolina v. Regan, this Court created an additional, atextual exception to the AIA. Invoking this Court's original jurisdiction, the State of South Carolina sued the Secretary of the Treasury to challenge the constitutionality of a federal law that, the State alleged, violated the Tenth Amendment by taxing the interest earned by holders of State-issued bonds. See 465 U.S. at 371-72. The Court held that the AIA did not bar South Carolina's suit: deeming the AIA's clear text “largely irrelevant,” id. at 377, the Court inferred from legislative history, the AIA's purposes, and other extrinsic “circumstances of its enactment” that the AIA does not apply when “Congress has not provided the plaintiff with an alternative legal way to challenge the validity of a tax.” Id. at 373; see id. at 381. There being no other forum where South Carolina could challenge the validity of a tax assessed on bondholders, the Court held the AIA did not bar the State's original action. See ibid.; see also id. at 403-04 (Stevens, J., concurring in part and dissenting in part) (agreeing to create an exception to the AIA).

Four Justices, led by Justice O'Connor, opposed creating a new, atextual exception to the AIA. “The Act's language, purpose, and history should leave no doubt that Congress intended to preclude both taxpayer and nontaxpayer suits, regardless of the availability of an alternative forum.” Id. at 395 (O'Connor, J., concurring in judgment). Nevertheless, Justice O'Connor agreed that the AIA did not bar South Carolina's suit because she interpreted the AIA's reference to “any court” as meaning only lower courts. See id. at 398-99. Justice O'Connor thus concluded that the AIA does not limit this Court's original jurisdiction, avoiding the difficult constitutional question whether Congress has power to do so. See California v. Arizona, 440 U.S. 59, 66 (1979) (“It is extremely doubtful that [Congress has] the power to limit in this manner the original jurisdiction conferred upon this Court by the Constitution.”).¹

In recent years, this Court has signaled that Justice O'Connor's approach, though it failed to garner a majority at the time, has withstood the test of time. Recent decisions have repudiated the atextual underpinnings of the South Carolina v. Regan exception:

• The Court in South Carolina v. Regan derived the exception from legislative history that is “contrary to the apparent meaning of the [AIA's] language.” Interfirst Bank, N.A. v. United States, 769 F.2d 299, 307 n.13 (CA5 1985); see Nat'l Tr. for Historic Pres. in the U.S. v. FDIC, 21 F.3d 469, 472 (CADC 1994) (Wald, J., concurring) (“In Regan, the Court turned to the Tax Anti-Injunction Act's legislative history, despite the fact that the Act's language 'could scarcely be more explicit.' ” (quoting Bob Jones Univ., 416 U.S. at 736)). Now, the Court consistently holds that legislative history cannot trump clear statutory text. See, e.g., Whitfield v. United States, 543 U.S. 209, 215 (2005); Milner v. Dep't of Navy, 562 U.S. 562, 572 (2011).

• The Court in South Carolina v. Regan created the exception to the AIA's jurisdiction bar because of equitable concerns about the availability of alternative remedies. See Regan, 465 U.S. at 381 n.19. Now,the Court holds that federal courts have “no authority to create equitable exceptions to jurisdictional requirements.” Bowles v. Russell, 551 U.S. 205, 214 (2007).

As the exception's foundations have eroded, this Court has neither endorsed nor applied the South Carolina v. Regan exception outside that single case. On the contrary, the Court has minimized South Carolina v. Regan as a “unique suit” and, echoing Justice O'Connor, has construed the decision as holding that the AIA does “not bar this Court's exercise of original jurisdiction.” Hibbs v. Winn, 542 U.S. 88, 103 n.6 (2004).

This Court's decisions applying the AIA display “a cyclical pattern of allegiance to the plain meaning of the Act, followed by periods of uncertainty caused by a judicial departure from that meaning, and followed in turn by the Court's rediscovery of the Act's purpose.” Bob Jones Univ., 416 U.S. at 742. Almost every departure from the Act's text has “produced a prompt correction in course.” Id. at 743. Yet the Court has not revisited South Carolina v. Regan, the last case where the Court deemed the AIA's text “largely irrelevant.” Regan, 465 U.S. at 377. This case presents an excellent vehicle for the Court to revisit South Carolina v. Regan and address whether and how the exception the Court created in that case applies in lower courts.

B. Deepening circuit splits, the Fifth Circuit held that the South Carolina v. Regan exception applies broadly to debtors seeking discretionary relief from taxes.

Because South Carolina v. Regan is unique and its exception is so difficult to rationalize, lower courts struggle to apply it in a principled way. The courts of appeals divide into two main camps — those that apply the exception narrowly and those that apply it broadly. In the decision below, the Fifth Circuit joined the courts that apply the exception broadly.

Most courts “construe the exception very narrowly.” Judicial Watch v. Rossotti, 317 F.3d 401, 408 n.3 (CA4 2003); see In re Am. Bicycle Ass'n, 895 F.2d 1277, 1281 (CA9 1990) (requiring “strict construction of” the exception and holding that the exception does not allow bankruptcy courts to terminate a debtor's tax obligations). These courts apply the exception only to parties who, like South Carolina, challenge the validity of a tax and who have no other forum in which to raise a validity challenge. This approach is extracted verbatim from the Court's holding “that the [AIA] was not intended to bar an action where, as here, Congress has not provided the plaintiff with an alternative legal way to challenge the validity of a tax.” Regan, 465 U.S. at 373. This approach places the exception in line with due process precedents holding that Congress must give a taxpayer at least one opportunity to obtain judicial review of the validity of a tax. See Phillips v. Commissioner, 283 U.S. 589, 596-97 (1931); cf. Bob Jones Univ., 416 U.S. at 746-47 (“This is not a case in which an aggrieved party has no access at all to judicial review.”).

• The Sixth Circuit holds that the South Carolina v. Regan exception is inapplicable when plaintiffs have no objection to a tax's validity but want only “to protect themselves from lost profits.” RYO Mach., LLC v. Dep't of Treasury, 696 F.3d 467, 472 (CA6 2012).

• The Seventh Circuit holds that the exception does not apply when a bankruptcy debtor seeks “to avoid (or at least postpone) the assessment of that tax on grounds unrelated to whether the tax is lawful, due and owing.” In re LaSalle Rolling Mills, Inc., 832 F.2d 390, 393 (CA7 1987).

• The Eighth Circuit similarly declines to apply the exception when a bankruptcy trustee “does not dispute the validity of the tax.” Laughlin v. IRS, 912 F.2d 197, 199 (CA8 1990).

• And the Ninth Circuit holds that the exception cannot aid bankruptcy debtors who — like the Westmoreland debtors — “do not seek to determine the validity of the tax, but to prevent substantial harm to the debtor's reorganization plan.” Am. Bicycle Ass'n, 895 F.2d at 1281; see Confederated Tribes & Bands of Yakama Indian Nation v. ATF, 843 F.3d 810, 815 (CA9 2016).

Of the four circuits that construe the South Carolina v. Regan exception narrowly, three circuits — the Seventh, Eighth, and Ninth Circuits — specifically rejected applying the exception in bankruptcy cases, like this one, where debtors or trustees sought to avoid paying a tax for equitable reasons, not because the tax was invalid or unlawful.²

In the decision below, the Fifth Circuit rejected the narrow approach of the Sixth, Seventh, Eighth, and Ninth Circuits in favor of “view[ing] the exception more broadly.” Pet. App. 16 (emphasis added). The Fifth Circuit held that the South Carolina v. Regan exception is available whenever a taxpayer has “no alternative avenue for” seeking relief from a tax, even if the taxpayer seeks only discretionary relief from the tax and is not challenging the tax's validity. Id. at 14. In so ruling, the Fifth Circuit joined the Eleventh Circuit in holding that bankruptcy debtors seeking discretionary relief from undisputedly valid taxes may avail themselves of the exception as long as they have “no available alternative remedy” for seeking such discretionary relief. In re Walter Energy, Inc., 911 F.3d 1121, 1138 (CA11 2018). In non-bankruptcy cases, the D.C. Circuit has endorsed this broader view of the South Carolina v. Regan exception. See Cohen v. United States, 650 F.3d 717, 726 (CADC 2011) (en banc) (holding that, in light of South Carolina v. Regan, the AIA did not bar claims that could not be raised in a refund suit); Z Street v. Koskinen, 791 F.3d 24, 31-32 (CADC 2015) (same).

The Fifth Circuit tried to distinguish the contrary decisions of the Seventh, Eighth, and Ninth Circuits, see Pet. App. 16 & n.10, but the purported distinctions are superficial and unpersuasive. The Fifth Circuit characterized the other circuit's bankruptcy cases as ones where debtors and trustees tried to “enjoin the IRS from collecting undisputedly lawful taxes merely to facilitate reorganization.” Id. Indeed. Substitute “the IRS” for “the Coal Act Funds,” and that describes this case: the Westmoreland debtors asked the bankruptcy court to restrain the Funds from assessing and collecting undisputedly lawful Coal Act premiums merely to facilitate the debtors' reorganization. See Pet. App. 5-6 (quoting Section 1114(g) and explaining how the Westmoreland debtors want to eliminate their Coal Act obligations to facilitate their reorganization). Nor are the Seventh, Eighth, and Ninth Circuit decisions distinguishable because the debtors and trustees in those cases did not seek relief under Section 1114(g), “an independent statute.” Pet. App. 16 n.10. They sought relief under different Bankruptcy Code provisions, which, like Section 1114(g), give bankruptcy courts discretion to protect a debtor from a range of prebankruptcy obligations in order to promote or facilitate the debtor's reorganization. See LaSalle Rolling Mills, 832 F.2d at 392 (11 U.S.C. § 105(a)); Am. Bicycle Ass'n, 895 F.2d at 1279-80 (same); Laughlin, 912 F.2d at 198 (11 U.S.C. § 362(a)). The point is that the debtors and trustees in those cases, like the Westmoreland debtors here, sought discretionary relief in bankruptcy from obligations to pay undisputedly valid and lawful taxes.

By now, most courts of appeals have weighed in, and there is no consensus on how to apply the South Carolina v. Regan exception generally and no consensus on how to apply it in bankruptcy cases specifically.³ The Petitioners undoubtedly prevail under the narrower approaches. If South Carolina v. Regan requires a plaintiff to challenge the validity of a tax, the Westmoreland debtors cannot avail themselves of it: their Section 1114(g) motion asked the bankruptcy court to terminate their Coal Act obligations because the debtors believe paying Coal Act premiums and any penalties would be financially too burdensome, not because paying premiums and penalties would be unlawful or unconstitutional. And, if the exception applies only to original actions in this Court, as Hibbs suggests, bankruptcy debtors obviously cannot avail themselves of it.

Until this Court provides definitive guidance, lower courts will continue to fracture over how to apply the South Carolina v. Regan exception. Only this Court can end the current “period[ ] of uncertainty.” Bob Jones Univ., 416 U.S. at 742; see, e.g., Bowles, 551 U.S. at 214 (limiting two of this Court's decisions “to the extent they purport to authorize an exception to a jurisdictional rule”). The Court should therefore grant the petition.

II. This Court's Review Is Necessary To Resolve Whether 1992 Plan Premiums Are “Any Tax” Under The AIA.

The Fifth Circuit technically limited its application of the South Carolina v. Regan exception to Combined Fund premiums because, in the court's view, 1992 Plan premiums are not “any tax” for AIA purposes. See Pet. App. 11-13.⁴ The Fifth Circuit's characterization of 1992 Plan premiums deepened a 3-2 split on the question whether those premiums are “any tax” for federal statutory purposes and a 2-1 split on whether they are “any tax” for purposes of one particular federal statute — the AIA.

The Fourth Circuit holds that Coal Act premiums are “any tax” protected by the AIA because the premiums “are involuntary pecuniary burdens imposed by Congress for the public purpose of restoring financial stability to coal miners' benefit plans.” In re Leckie Smokeless Coal Co., 99 F.3d 573, 583 (CA4 1996) (citing, inter alia, In re Lorber Indus., 675 F.2d 1062, 1066 (CA9 1982)). Exactly like other federal taxes, Coal Act premiums are codified in the Internal Revenue Code. See Elect. Welfare Tr. Fund v. United States, 907 F.3d 165, 169 n.* (CA4 2018) (“It bears mentioning that the Coal Act premiums at issue in Leckie were enacted as an amendment to the Internal Revenue Code of 1986, codified in Title 26, and administered by the Secretary of the Treasury.”) (citing Leckie); see also Fed. Energy Admin. v. Algonquin SNG, Inc., 426 U.S. 548, 558 n.9 (1976) (declining to apply the AIA because the exactions were not under the Internal Revenue Code).

Following the same logic, the Fourth Circuit holds that Coal Act premiums are taxes for all federal statutory purposes. Coal Act premiums are “Federal taxes” and thus beyond the reach of the Declaratory Judgment Act, 28 U.S.C. § 2201. See Leckie, 99 F.3d at 582-85. And the Fourth Circuit holds that Coal Act premiums are “any internal revenue tax” and thus properly the subject of a tax-refund action under 28 U.S.C. § 1346(a)(1). See Pittston Co. v. United States, 199 F.3d 694, 702-04 (CA4 1999). The Fourth Circuit's holding in Pittston is especially significant, for this Court has time and again noted the close relationship between the AIA and tax-refund actions: “Because of the Anti-Injunction Act, taxes can ordinarily be challenged only after they are paid, by suing for a refund.” NFIB, 567 U.S. at 543; Enochs v. Williams Packing & Nav. Co., 370 U.S. 1, 7 (1962) (“The manifest purpose of § 7421(a) is to permit the United States to assess and collect taxes alleged to be due without judicial intervention, and to require that the legal right to the disputed sums be determined in a suit for refund.”).

The Fourth Circuit also holds that Coal Act premiums are “any tax” for purposes of Section 503(b) of the Bankruptcy Code, 11 U.S.C. § 503(b)(1)(B), which gives administrative-expense priority to “any tax” assessed against a debtor during bankruptcy. See Adventure Res. Inc. v. Holland, 137 F.3d 786, 793-95 (CA4 1998). The Second and Tenth Circuits agree. See In re Chateaugay Corp., 53 F.3d 478, 498 (CA2 1995); In re Sunnyside Coal Co., 146 F.3d 1273, 1277-80 (CA10 1998). The Second, Fourth, and Tenth Circuit's Bankruptcy Code decisions are relevant here because Section 503(b) of the Bankruptcy Code uses the exact same words as the AIA — “any tax.”

By contrast, in the decision below, the Fifth Circuit adopted a label-only test by which the AIA protects an exaction if and only if Congress explicitly labels the exaction a “tax.” See Pet. App. 11-12. Since Coal Act exactions are labeled “premiums,” not “taxes,” the Fifth Circuit concluded that the AIA does not protect Coal Act premiums. Ibid. In so ruling, the Fifth Circuit sided with the Eleventh Circuit, which reached the same conclusion in another Section 1114(g) case. See Walter, 911 F.3d at 1137-38.

The Fifth Circuit rejected the out-of-circuit decisions holding that Coal Act premiums are “any tax” for federal statutory purposes. It rejected the Fourth Circuit's AIA decision because it predates NFIB. See Pet. App. 13. And it rejected the Second, Fourth, and Tenth Circuits' decisions because they addressed whether Coal Act premiums are “any tax” under Bankruptcy Code provisions, not under the AIA. See id. at 13 n.8. Neither distinction should stand in the way of this Court's review of this important question.

This Court never has reduced the AIA to the point that an exaction's label — “tax” or something else — is the sole criterion for whether the AIA protects the exaction. Rather, the Court holds that the AIA protects exactions whenever the traditional tools of statutory interpretation indicate that Congress intended the exaction to raise revenue. Thus the Court has held that some exactions labeled “tax” are not protected by the AIA and that some exactions not labeled “tax” are protected by the AIA. See, e.g., Lipke v. Lederer, 259 U.S. 557, 562 (1922) (holding that an exaction, though labeled a “tax,” was not “any tax” under the AIA because it was in a criminal statute and intended by Congress to punish scofflaws); Horton v. Humphrey, 146 F. Supp. 819, 821 & n.5 (D.D.C.), aff'd 352 U.S. 921 (1956) (holding that the AIA protected a “special dumping duty”).

Lower courts reject the label-only test for the AIA's cousin, the Tax Injunction Act, 28 U.S.C. § 1341. See Direct Marketing Ass'n v. Brohl, 575 U.S. 1, 8 (2015) (“We assume that words used in both Acts are generally used in the same way.”); see also Enochs, 370 U.S. at 6 (“The enactment of the comparable Tax Injunction Act of 1937 * * * throws light on the proper construction to be given § 7421(a).”). Tracing precedents back to Lipke (an AIA case), the en banc Seventh Circuit held that the fact that an exaction “isn't called a tax * * * has nothing to do with any concern behind the Tax Injunction Act. 'Taxation' is unpopular these days, so taxing authorities avoid the term.” Empress Casino Joliet Corp. v. Balmoral Racing Club, Inc., 651 F.3d 722, 729 (CA7 2011) (en banc). Likewise, the Second Circuit recently acknowledged that “It may well be significant, sometimes even dispositive, that the legislature affirmatively attaches the label 'tax' to a required payment. But the legislature's silent refusal to call a tax a tax, even though it raises revenue to provide a clear general public benefit, is less significant to our inquiry.” Ass'n for Accessible Medicines v. James, 974 F.3d 216, 226 (CA2 2020).

Citing cases stretching back almost a century, NFIB didn't purport to change how to ascertain whether an exaction is “any tax” for AIA purposes. See NFIB, 567 U.S. at 544 (citing, inter alia, Bailey v. George, 259 U.S. 16 (1922)). An exaction's label always has mattered to deciding whether the exaction is “any tax,” and in NFIB, the label was practically dispositive — the word “penalty” does not connote a revenue-raising purpose. See ibid.; see also id. at 543 (“There is no immediate reason to think that a statute applying to 'any tax' would apply to a 'penalty.'”).

Here, the statutory label “premium” means the same thing as “tax,” for both connote revenue-raising. To follow NFIB, the court of appeals should have given “premium” its ordinary meaning — a meaning synonymous with “tax” when the premium is “imposed by the government for the purpose of defraying the expenses of an undertaking which it authorized.” In re Pan Am. Paper Mills, Inc., 618 F.2d 159, 162 (CA1 1980) (statutory “premiums” are “taxes”); New Neighborhoods, Inc. v. W.V. Workers' Comp. Fund, 886 F.2d 714, 716 (CA4 1989) (statutory “premiums” are “excise taxes”); cf. Hotze v. Burwell, 784 F.3d 984, 998 (CA5 2015) (“The terms 'tax' and 'assessable payment' do not present a contradiction in the use of terms.”).

The Fifth Circuit did not explain why the phrase “any tax,” which appears in the Bankruptcy Code and in many other federal statutes, means something unique in the AIA. Normally, courts presume that identical phrases in similar statutes mean the same thing. The Fourth Circuit, in fact, squarely rejects the Fifth Circuit's view that “the term 'tax' has 'different meanings in different contexts.' ” Pittston 199 F.3d at 702. The Fifth Circuit was wrong to brush off other circuits' Bankruptcy Code cases as irrelevant: the Second Circuit's decision holding that Coal Act premiums are “any tax” under the Bankruptcy Code influenced the Fourth Circuit's holding that Coal Act premiums are “any tax” under the AIA. See Leckie, 99 F.3d at 583 (“Finding the Second Circuit's reasoning persuasive, and discerning no basis for distinguishing the meaning of the word 'tax' in the Bankruptcy Code from the use of that term in the two statutes at issue before us, we adopt the Second Circuit's reasoning as our own.”) (citing Chateaugay, 53 F.3d at 498).

Even if this Court, like the Fifth Circuit, disregarded the Second, Fourth, and Tenth Circuit's decisions just because they arose in the Bankruptcy Code context, the 2-1 split between the Fourth, Fifth, and Eleventh Circuits over whether 1992 Plan premiums are “any tax” under the AIA still deserves immediate review. Historically, the Court has not delayed review of Coal Act splits. Two of the Court's three Coal Act opinions resolved 1-1 splits, and the third resolved a splitless question.5 In Coal Act cases, the Court has granted review quickly — as quickly as it does in tax cases generally — because regional differences in administration of federal tax laws are highly problematic. See Commissioner v. Sunnen, 333 U.S. 591, 599 (1948) (noting that the results of circuit splits on tax issues are “inequalities in the administration of the revenue laws, discriminatory distinctions in tax liability, and a fertile basis for litigious confusion”).

III. The Questions Presented In This Case Are Important, And This Case Is An Excellent Vehicle For Answering Them.

The story of coal miners' fight to secure lifetime healthcare benefits is a story of promises broken, not promises kept. See Eastern Enterprises, 524 U.S. at 504-15. Coal employers proved willing to do almost anything — even file bankruptcy petitions — to avoid fulfilling their promises to retirees. Congress crafted the Coal Act to ensure those promises would be broken no more. Missed payments incur penalties. See 26 U.S.C. § 9707. Operators post security that they lose if they terminate benefits. See id. §§ 9711(c)(3), 9712(d)(1)(B). Related persons, even those who aren't in the coal business, are jointly and severally liable for Coal Act obligations. See id. §§ 9704(a), 9711(c), 9712(d)(4). And perhaps most significantly, Coal Act obligations are federal taxes, and federal taxes are notoriously difficult to avoid, inside and outside of bankruptcy. See 11 U.S.C. § 503(b).

Yet, the Fifth Circuit held that Section 1114 of the Bankruptcy Code allows coal companies to use bankruptcy to escape their Coal Act obligations: “seeing no clear indication that Congress intended to carve out Coal Act obligations from section 1114's reach, we hold that section 1114 can apply to those obligations.” Pet. App. 32. The Fifth Circuit had it backwards. Section 1114 preceded the Coal Act by several years, so the Fifth Circuit held, in effect, that Section 1114 exposes a latent flaw that has undermined the Coal Act from the beginning.

This Court should not wait for a future case to answer the questions presented. Bankruptcy cases involving the AIA and the Coal Act might not last long enough to rise to a court of appeals, let alone to this Court, because of mootness concerns. Bankruptcy orders are usually appealed to a district court first; only if there's time are they appealed to a court of appeals. See 28 U.S.C. § 158(a), (d)(1). While creditors are appealing time-sensitive orders like Section 1114(g) orders, the bankruptcy court pushes the case toward conclusion. Some appellate courts hold that confirmation of a Chapter 11 plan of reorganization moots some appeals of orders issued before the plan. See generally In re Pac. Lumber Co., 584 F.3d 229, 240-43 (CA5 2009) (explaining the dubious doctrine of equitable mootness). Debtors have a head start and usually win the race; they end their bankruptcy cases before appellants end their appeals. As a result, appellate decisions on these important issues are infrequent, as are opportunities for creditors to seek this Court's review.

In 2019, the Court had a chance to review both of these questions after the Eleventh Circuit's decision in Walter. See Case No. 18-1468. That case, it turned out, was a poor vehicle because Justice Alito was recused. See Archdiocese of Wash. v. Wash. Metro. Area Transit Auth., 140 S. Ct. 1198, 1199 (2020) (Gorsuch, J., respecting the denial of certiorari) (“Because the full Court is unable to hear this case, it makes a poor candidate for our review.”).

In the decision below, the Fifth Circuit endorsed Walter and confirmed that the questions presented “are important ones the Supreme Court has not decided.” Pet. App. 8. Petitioners, retirees, and coal employers need to know how the AIA, Section 1114, and Coal Act interact. If the Court limits the South Carolina v. Regan exception to original-jurisdiction cases or to cases challenging the validity of a tax, the emerging threat to the Coal Act will be snuffed out. At the same time, the Court cannot be confident that it will have a chance to review the important questions pre-sented in a future case.

CONCLUSION

The Court should grant the petition.

Respectfully submitted,

Bryan Killian
Counsel of Record
John C. Goodchild III
Stephanie Schuster
MORGAN, LEWIS & BOCKIUS LLP
1111 Pennsylvania Ave., NW
Washington, DC 20004
(202) 373-6191 bryan.killian@morganlewis.com

John R. Mooney
Paul A. Green
MOONEY, GREEN, SAINDON, MURPHY & WELCH PC
1920 L St. NW, Suite 400
Washington, DC 20036