United Mine Workers of America 1974 Pension Plan asked the U.S. Supreme Court to settle a $115 million dispute related to an employer withdrawing from a multiemployer plan.
The dispute focuses on Energy West Mining Co.'s decision to withdraw from the UMWA's multiemployer pension plan, which is jointly administered by the union and the Bituminous Coal Operators Association Inc. Federal law requires an employer withdrawing from such a plan to pay its withdrawal liability.
An arbitrator supported the pension plan actuary's calculations for a $115 million payout. Energy West sued, but a U.S. District Court in Washington ruled in May 2020 that the plan's actuarial assumptions and calculations were reasonable according to ERISA guidelines.
Energy West is a subsidiary of utility company PacifiCorp. It withdrew from the union pension plan in 2015 after closing its coal mine in Huntington, Utah, according to court documents.
Energy West appealed, and the U.S. Circuit Court of Appeals for the District of Columbia reversed the lower court's ruling in July 2022.
"To calculate Energy West's withdrawal liability from the pension plan, the actuary was required to base his assumptions on the plan's actual characteristics," the three-judge appeals court panel wrote. "Because the actuary failed to do so, we reverse the judgment of the district court and remand for vacatur of the arbitration award. …When the actuary calculates Energy West's withdrawal liability, the discount rate assumption must be similar, but need not be identical, to the discount rate assumption used to calculate minimum funding."
The UMWA pension plan asked the Supreme Court on Feb. 3 to overrule the appeals court.
"To prevent drawn out fights over withdrawal, Congress shielded actuaries' determinations from second-guessing," said the pension plan's petition.
"As this Court observed when interpreting the statutory presumption of correctness and upholding it against a due-process attack," the federal law governing multiemployer pension plans "defers to the actuarial profession, treats the profession's views of acceptable standards as binding, and gives actuaries leeway to use their professional judgment within the framework of those accepted actuarial standards," the petition stated.
Because different appeals courts have issued different rulings on calculating withdrawal liability in multiemployer pension plans, the mine workers plan said the Supreme Court should set a clear standard. "Circuit conflicts over the law governing discount rates, therefore, are arguably the most important conflicts affecting withdrawal liability," the petition said.