United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 3, 2002 Decided November 8, 2002
No. 01-5069
Michael H. Holland, et al.,
Appellees
v.
National Mining Association, et al.,
Appellees
Jo Anne B. Barnhart, Commissioner,
Social Security Administration,
Appellant
Consolidated with
01-5070
Appeals from the United States District Court
for the District of Columbia
(No. 96cv01744)
---------
Jeffrey Clair, Attorney, United States Department of Jus-
tice, argued the cause for federal appellant. With him on the
briefs were Roscoe C. Howard, Jr., United States Attorney,
and Douglas N. Letter, Litigation Counsel, United States
Department of Justice.
John R. Woodrum argued the cause for appellants Nation-
al Mining Association, et al. With him on the briefs was
Margaret S. Lopez. William I. Althen entered an appear-
ance.
Stephen J. Pollak argued the cause for appellees Holland,
et al., and amicus curiae United Mine Workers of America.
With him on the briefs were John Townsend Rich, Howard
R. Rubin, and Paul A. Green. Grant F. Crandall entered an
appearance.
Before: Edwards and Rogers, Circuit Judges, and
Williams, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge Edwards.
Edwards, Circuit Judge: The Coal Industry Retiree Health
Benefit Act of 1992 ("Coal Act"), 26 U.S.C. ss 9701-9722,
requires certain coal operators to pay annual premiums for
retired coal miners' health benefits to the United Mine Work-
ers of America Combined Benefit Fund ("Fund"). 26 U.S.C.
s 9704(a). Under the Coal Act, the Commissioner of the
Social Security Administration ("Commissioner") must calcu-
late, according to a specified formula, the premiums that coal
operators must pay. 26 U.S.C. s 9704(b)(2). Calculating the
premiums requires the Commissioner to interpret the word
"reimbursements" in s 9704(b)(2)(A)(i) of the Coal Act. In
1995, several coal companies filed suit in the District Court in
the Northern District of Alabama and successfully challenged
the Commissioner's interpretation of the word "reimburse-
ments." See Nat'l Coal Ass'n v. Chater, No. CV94-H-780-S,
1995 WL 1052240 (N.D. Ala. July 20, 1995). The Eleventh
Circuit affirmed the District Court's judgment enjoining the
Commissioner to recalculate the premiums according to an
interpretation of "reimbursements" different from the one
that the Commissioner had been using. Nat'l Coal Ass'n v.
Chater, 81 F.3d 1077, 1082 (11th Cir. 1996). The Commis-
sioner recalculated the premiums according to the Eleventh
Circuit's interpretation of "reimbursements" and then applied
this revised interpretation and resulting premium recalcula-
tion nationwide, including with respect to coal operators who
were not parties in the Eleventh Circuit litigation.
The instant case arose in 1996 when the appellees, the
Trustees of the Fund, filed suit in the District Court challeng-
ing the Commissioner's nationwide implementation of the
revised interpretation of the Coal Act. The Trustees alleged
that the Commissioner violated the Administrative Procedure
Act ("APA"), 5 U.S.C. s 706(2)(A), in applying
s 9704(b)(2)(A) of the Coal Act in a manner "not in accor-
dance with law." The District Court denied the appellants'
motions to dismiss, see Holland v. Apfel, 23 F. Supp. 2d 21, 29
(D.D.C. 1998), and granted summary judgment in favor of the
Trustees, see Holland v. Apfel, No. 96-01744, Mem. Op.
(D.D.C. Feb. 25, 2000) ("Mem. Op."), reprinted in Joint
Appendix ("J.A.") at 202, 214. The District Court ordered
the Commissioner to recalculate the premium in accordance
with the Commissioner's initial, pre-Eleventh Circuit inter-
pretation of "reimbursements," but stayed its injunction
pending appeals.
Appellant Commissioner contends that the agency's nation-
wide implementation of the revised interpretation of "reim-
bursements" in the Coal Act is in "accordance with law,"
because the interpretation was mandated by the Eleventh
Circuit injunction. The Commissioner also claims that the
District Court abused its discretion in granting injunctive
relief, because the relief is inherently at odds with the
judgment of the Eleventh Circuit. Intervenors/Appellants
National Mining Association and various coal companies (col-
lectively "NMA") contend that res judicata bars this suit.
They also argue that this court should follow the Eleventh
Circuit's interpretation of "reimbursements," because it com-
ports with the plain meaning of the statute; alternatively,
NMA claimed during oral argument that, if the statute is
ambiguous, the agency's revised interpretation is entitled to
deference under Chevron U.S.A. Inc. v. Natural Resources
Defense Council, Inc., 467 U.S. 837 (1984). The Trustees, in
turn, argue that the statute unambiguously supports the
Commissioner's original interpretation of "reimbursements."
We hold that res judicata does not bar the Trustees' action
in the D.C. Circuit. The Trustees were not a party in the
litigation in the Eleventh Circuit, so they are not bound by
that judgment. Nor does the Eleventh Circuit judgment
purport to bind the Commissioner with respect to coal opera-
tors who were not party to that litigation. The Trustees'
action in the D.C. Circuit can result in a viable remedy
covering coal operators who were not covered by the injunc-
tive relief granted in the Eleventh Circuit. Therefore, the
Commissioner is not potentially subject to two conflicting
orders as a result of the instant litigation.
We further hold that the agency's nationwide application of
the Eleventh Circuit's interpretation of "reimbursements" is
not insulated from APA review by virtue of having been
undertaken in response to the Eleventh Circuit injunction.
The Commissioner was not in fact bound to recalculate the
premium for coal operators who were not party to the Elev-
enth Circuit litigation. There is thus no reason why we
cannot review the agency's decision to apply the Eleventh
Circuit's interpretation to coal operators who were not party
to the litigation.
APA review in this case is ultimately a matter of statutory
interpretation of the word "reimbursements." However, on
the record that is now before the court, it is impossible to
determine whether this case falls within the category of cases
to which Chevron deference applies. In particular, it is
unclear whether the agency, in applying the Eleventh Cir-
cuit's interpretation of the Coal Act, believed that it was
compelled to implement the interpretation nationwide, or,
rather, reasonably and voluntarily "acquiesced" in the inter-
pretation. If the agency felt effectively "coerced" into adopt-
ing the interpretation nationwide, then the agency would not
be entitled to deference under Chevron. Indeed, Chevron
would not apply at all, because the adoption would not
represent the agency's reasoned judgment on statutory mean-
ing. But if the agency voluntarily acquiesced, choosing to
implement the Eleventh Circuit's interpretation nationwide
based on the agency's own reasoning about statutory mean-
ing, then Chevron deference might be due. Since the answer
to the question whether the agency acquiesced or was coerced
is not clear from the record before us, we remand this case to
the District Court with instructions to remand the case to the
agency for clarification of the agency's position.
I. Background
A. The Coal Act
In 1992, Congress enacted the Coal Act, 26 U.S.C. ss 9701-
9722, to ensure adequate funding for the provision of health
care benefits to retired coal miners. Previously, miners'
health benefits had been provided through benefit plans
established by collective bargaining agreements between the
United Mine Workers of America ("UMWA") and the Bitumi-
nous Coal Operators' Association, an association of coal indus-
try employers. The Coal Act merged two such former benefit
plans, the 1950 UMWA Benefit Plan and the 1974 UMWA
Benefit Plan ("Plans"), into a new multi-employer plan called
the UMWA Combined Benefit Fund ("Fund"), which is fi-
nanced by annual premiums assessed against signatory coal
operators. See E. Enters. v. Apfel, 524 U.S. 498, 514 (1998)
(citing 26 U.S.C. ss 9702(a)(1), (2) and 26 U.S.C.
ss 9701(b)(1), (b)(3), (c)(1)). The Coal Act gives the Trustees
of the Fund the authority to collect premiums, spend money
for health care, and administer the Fund's benefit program.
See 26 U.S.C. ss 9702-9704.
One of the responsibilities that the Coal Act assigns the
Commissioner is that of calculating the per-beneficiary premi-
ums that coal companies are required to pay each year. See
26 U.S.C. s 9704(b). The Coal Act provides that the per-
beneficiary premium for each plan year shall be equal to:
(A) the amount determined by dividing-
(i) the aggregate amount of payments from the 1950
UMWA Benefit Plan and the 1974 UMWA Benefit
Plan for health benefits (less reimbursements but in-
cluding administrative costs) for the plan year begin-
ning July 1, 1991, for all individuals covered under
such plans for such plan year, by
(ii) the number of such individuals....
26 U.S.C. s 9704(b)(2)(A). Under this detailed formula, sig-
natory coal operators must pay to the Fund a per-beneficiary
premium that equals the average cost to the Plans of provid-
ing health benefits during the "base year" beginning July 1,
1991, minus "reimbursements" by Medicare or other federal
sources.
Prior to 1990, the Plans paid health care providers for
services directly, and then sought reasonable cost-based reim-
bursement from the Health Care Financing Administration
("HCFA"), the agency within the Social Security Administra-
tion that administers Medicare. This arrangement of negoti-
ating cost-based Medicare reimbursements led to longstand-
ing disputes between HCFA and the Plans. In 1990, HCFA
and the Plans thus entered a "risk capitation" agreement,
under which HCFA agreed to pay the Plans a monthly flat
fee (rather than the cost-based amount) to cover Medicare
responsibilities, based on the Plans' projected expenditures.
However, it turned out that the agreement set the flat fee
higher than the Medicare-covered costs that the Plans actual-
ly incurred during 1991, the first year of the agreement:
HCFA paid the Plans a flat fee of $182.3 million, and the
Plans spent only $156.8 million for Medicare-covered services,
resulting in an overpayment of $25.5 million for Medicare-
covered services. HCFA and the Plans later renegotiated
the capitation agreement to set a substantially lower flat fee
for subsequent years.
The first year of the capitation agreement was also coinci-
dentally the all-important base year to which the Coal Act
refers in setting out the calculation formula. In calculating
the premium amount that coal operators were required to pay
to the Fund under the Coal Act, the Commissioner interpret-
ed the term "reimbursements" in s 9704(b)(2)(A)(i) to mean
the $156.8 million that the Plans actually incurred in
Medicare-covered costs that year, rather than the $182.3
million that HCFA paid to the Plans under the capitation
agreement. The coal employers thus paid the Fund an
amount based on the costs to the Fund of providing benefits
for all services that year (i.e., Medicare-covered and other
services as well), minus the $156.8 million in Medicare "reim-
bursements" received from HCFA. In other words, the
Commissioner assumed that the Fund could only be "reim-
bursed" in the amount actually spent for Medicare-covered
services. The $25.5 excess may have been a temporary
windfall to the Fund, but it was not viewed as a "reimburse-
ment" for Medicare-covered service. If the Commissioner
had instead interpreted "reimbursements" to mean the $182.3
million that HCFA paid to the Plans that year, then the coal
employers would have paid the Fund $25.5 million less.
B. The Eleventh Circuit Litigation
National Coal Association ("NCA"), a trade association, and
eight coal companies brought suit under the APA in the
United States District Court for the Northern District of
Alabama, challenging the Commissioner's premium calcula-
tion and his interpretation of the term "reimbursements" in
the Coal Act. See Nat'l Coal Ass'n, 1995 WL 1052240. The
coal companies sought to enjoin the Commissioner to recalcu-
late the initial and all subsequent annual premiums consistent
with an interpretation of "reimbursements" that meant the
entire amount that HCFA paid the Plans, rather than the
portion that equaled the Plans' actual Medicare-covered costs.
The Commissioner initially moved to dismiss the complaint
for failure to join the Trustees of the Fund as a necessary
party, but the court denied the motion. The court found that
the Commissioner's interpretation of the statutory term "re-
imbursements" contradicted the plain meaning of the term,
and enjoined the Commissioner to recalculate the premium by
deducting from the Plans' health care costs the entire amount
that HCFA paid to the Plans. The Eleventh Circuit af-
firmed, agreeing that the Commissioner's interpretation was
inconsistent with the plain meaning of the statute. See Nat'l
Coal Ass'n, 81 F.3d at 1082. The Commissioner did not seek
certiorari.
The Commissioner recalculated the premium to conform to
the injunction and notified the Trustees of the recalculated
amount, which was now reduced by 10%. Although the
Eleventh Circuit's judgment did not technically bind the
Commissioner with respect to coal companies who were not
plaintiffs in the litigation, the Commissioner implemented the
new interpretation nationwide.
C. Proceedings Below
The Trustees of the Fund then filed the instant lawsuit in
the United States District Court for the District of Columbia,
claiming that the Commissioner's nationwide implementation
of the revised interpretation of the statute violated the APA.
Complaint for Declaratory and Injunctive Relief p 29, reprint-
ed in J.A. at 119, 129-30. The Trustees sought declaratory
and injunctive relief that would order the Commissioner to
adopt the initial premium calculation, which the Eleventh
Circuit had invalidated. Id., reprinted in J.A. at 130-31.
NMA, a successor to the trade association NCA, and several
coal companies, who were plaintiffs in the Eleventh Circuit
litigation, intervened as defendants.
The Commissioner and NMA moved to dismiss on grounds
of res judicata, claiming that the Trustees were bound by the
Eleventh Circuit litigation. See Holland, 23 F. Supp. 2d at
23. They also argued that agency action that has been
compelled by a court's injunctive order cannot violate the "not
in accordance with law" standard of the APA s 706(2)(A), and
thus is not subject to APA review. See id. at 26. The
District Court rejected these arguments, and also held that
the doctrine of comity did not warrant deference by the
District Court to the Eleventh Circuit's ruling. See id. at 23-
29. Then, on cross-motions for summary judgment, the
District Court granted summary judgment for the Trustees.
Mem. Op. at 13, reprinted in J.A. at 214. It reasoned that
the term "reimbursements" in the Coal Act was ambiguous
under Chevron Step One. Id. at 8, reprinted in J.A. at 209.
But under Chevron Step Two, the District Court held that,
because the Commissioner's revised interpretation was the
product of a compulsory injunction by the Eleventh Circuit
rather than of reasoned analysis, the revised interpretation
did not warrant deference. Id. at 11, reprinted in J.A. at 212.
The District Court instead appeared to "defer" to the Com-
missioner's pre-injunction interpretation of "reimburse-
ments," and issued a declaratory judgment adopting that
interpretation. See id. at 11-12, reprinted in J.A. at 212-13.
Although the District Court did not initially order any injunc-
tive relief, it later amended its judgment and ordered the
Commissioner to recalculate the premium in accordance with
the District Court's interpretation of "reimbursements."
Amended Order and Judgment, reprinted in J.A. at 235-37.
It stayed the injunction pending appeals. Id., reprinted in
J.A. at 237. The Commissioner and NMA now appeal.
II. Analysis
A. Res Judicata
The first issue presented in this appeal is whether this case
is barred by the doctrine of res judicata, which holds that "a
judgment on the merits in a prior suit bars a second suit
involving the same parties or their privies based on the same
cause of action." Parklane Hosiery Co., Inc. v. Shore, 439
U.S. 322, 326 n.5 (1979). The Trustees of the Fund, who
brought the instant case, challenge the agency's interpreta-
tion of the same provision of the Coal Act that was at issue in
the Eleventh Circuit case. The Trustees were not party to
the Eleventh Circuit litigation. The coal companies who
brought suit in the Eleventh Circuit did not attempt to join
the Trustees; and the Alabama District Court denied the
Commissioner's motion to dismiss for failure to join the
Trustees as a necessary party. "Joinder as a party, rather
than knowledge of a lawsuit and an opportunity to intervene,
is the method by which potential parties are ... bound by a
judgment or decree." Martin v. Wilks, 490 U.S. 755, 765
(1989). Not having been a party in the Eleventh Circuit
litigation, the Trustees cannot be bound by the judgment, and
thus are entitled to bring their claim.
Appellant NMA relies on a footnote in Wilks, id. at 762 n.2,
which recognizes "an exception to the general rule when, in
certain limited circumstances, a person, although not a party,
has his interests adequately represented by someone with the
same interests who is a party," to argue that, although the
Trustees were not a party to the prior litigation, they should
be bound, because their interests were adequately represent-
ed by someone with the same interests, namely the Commis-
sioner. This argument is unavailing. As the District Court
noted, this case does not fit either of the Wilks footnote's two
specified "limited circumstances" in which a nonparty may be
adequately represented by a party to prior litigation: class or
representative suits, or suits in which the nonparty exercised
control of the litigation on behalf of a party. See id.
Moreover, as the District Court correctly reasoned, see
Holland, 23 F. Supp. 2d at 26, although the Trustees in this
case advocate the same interpretation of "reimbursements" as
did the Commissioner throughout the Eleventh Circuit litiga-
tion, the Trustees and the Commissioner do not share the
same incentives. The Trustees of the Fund have a monetary
incentive to adopt a statutory interpretation that will maxim-
ize the Fund's revenues, to pay for the health care needs of
retired mine workers. The Commissioner, who has the re-
sponsibility of calculating the premium, must act impartially
and does not have a monetary incentive to adopt a particular
statutory interpretation. This disparity in incentives under-
mines NMA's claim that the Trustees were adequately repre-
sented by the Commissioner in the Eleventh Circuit. See
Cleveland County Ass'n for Gov't by the People v. Cleveland
County Bd. of Comm'rs, 142 F.3d 468, 474 (D.C. Cir. 1998)
(finding that diverging incentives prevented a party from
adequately representing another party's interests). These
disparate incentives are underscored by the fact that the
Trustees are now suing the Commissioner in this case.
Furthermore, the Eleventh Circuit judgment did not pur-
port to cover all coal companies; it covered only the coal
companies who were plaintiffs in that case. The injunction
bound the Commissioner only with respect to the calculation
of premiums for the coal operators who were individually-
named plaintiffs or members of NCA, the plaintiff trade
association. Therefore, the instant suit by the Trustees
challenging the agency's interpretation of the same provision
that was at issue in the Eleventh Circuit is not a collateral
attack on the prior judgment. Res judicata does not bar this
suit.
The Trustees' action in the D.C. Circuit can result in a
viable remedy in favor of the Trustees and against the
Commissioner, with respect to the coal operators who are not
covered by the Eleventh Circuit's injunction. Such an injunc-
tive remedy in the D.C. Circuit would not conflict with, or
purport to overturn, the Eleventh Circuit's injunction. To
the extent that the District Court was unclear or mistaken as
to the scope of its injunction, we clarify that an injunction
issued in the D.C. Circuit can bind the Commissioner only
with respect to coal companies who were not already covered
by the Eleventh Circuit's injunction. The instant case thus
does not potentially subject the Commissioner to two conflict-
ing orders, even if the two injunctions order opposing inter-
pretations of "reimbursements." It is altogether possible for
the Commissioner to calculate the premium twice, according
to the two different interpretations of "reimbursements," and
to apply the appropriate calculation to each coal operator,
depending on whether the particular coal operator was or was
not party to the Eleventh Circuit suit.
B. APA Review
In a case like the instant one, in which the District Court
reviewed an agency action under the APA, we review the
administrative action directly, according no particular defer-
ence to the judgment of the District Court. Troy Corp. v.
Browner, 120. F.3d 277, 281 (D.C. Cir. 1997); Gas Appliance
Mfrs. Assoc., Inc. v. Dep't of Energy, 998 F.2d 1041, 1045
(D.C. Cir. 1993). On an independent review of the record, we
will uphold the agency action unless we find it to be "arbi-
trary, capricious, an abuse of discretion, or otherwise not in
accordance with law." 5 U.S.C. s 706(2)(A).
Appellant Commissioner contends that the interpretation of
the Coal Act currently in force must necessarily be deemed
"in accordance with law" under s 706(2)(A) of the APA,
because that interpretation was compelled by a judicial de-
cree; the Eleventh Circuit's injunction, the Commissioner
claims, is "law" for the purpose of "not in accordance with
law" review. We may assume, arguendo, that this might
have been true had this case simply involved the agency's
interpretation of the Coal Act with respect to the coal compa-
nies who were party to the Eleventh Circuit litigation. But
this case involves the agency's separate decision to apply the
Eleventh Circuit's interpretation to coal companies who did
not have the benefit of the prior judgment. The injunction
did not technically require the premium recalculation for all
coal companies. The Commissioner concedes as much. See
Br. for Appellant Commissioner at 10, 33. In this case, the
agency action at issue is the revised interpretation of "reim-
bursements" only as it affects those coal companies not
covered by the Eleventh Circuit's injunction.
Allowing one circuit's statutory interpretation to foreclose
APA review of the question in another circuit would squelch
the circuit disagreements that can lead to Supreme Court
review. In United States v. Mendoza, 464 U.S. 154 (1984),
the Supreme Court rejected nonmutual collateral estoppel
against the government in a case in which the government
sought to litigate a constitutional issue that had been decided
in a prior litigation against a different party. "A rule allow-
ing nonmutual collateral estoppel against the Government in
such cases would substantially thwart the development of
important questions of law by freezing the first final decision
rendered on a particular legal issue[, which] would deprive
this Court of the benefit it receives from permitting several
courts of appeals to explore a difficult question before this
Court grants certiorari." Id. at 160.
The Commissioner is correct that Mendoza's principle of
inter-circuit non-acquiescence does not authorize this court to
lift the existing Eleventh Circuit injunction as to the coal
companies who were parties in the prior litigation. Circuits
may have differing interpretations of the same statutes, but
their differing interpretations are developed in different
cases, not in the same dispute. This case is not the same
dispute as the one litigated in the Eleventh Circuit. Not only
is there a different party seeking review, it is a review of a
separate agency action regulating coal companies not party to
the prior litigation. Review in this court under the APA thus
does not disturb the finality of the prior judgment. It does,
however, vindicate the authority of the circuits to rule on
statutory meaning independently of each other.
C. The Statutory Question
This case involves the construction of a statutory term
implemented by a government agency with authority to ad-
minister the statute. At issue is the meaning of the word
"reimbursements" in s 9704(b)(2)(A) of the Coal Act. In
reviewing an agency's statutory interpretation under the
APA's "not in accordance with law" standard, we adhere to
the familiar two-step test of Chevron, provided that the
conditions for such review are met. See United States v.
Mead Corp., 533 U.S. 218, 226-27 (2001) (holding that Chev-
ron deference is due only when the agency acts pursuant to
"delegated authority" and the agency action has the "force of
law"). Under Chevron, "if the intent of Congress is clear,"
this court "must give effect to the unambiguously expressed
intent of Congress." Chevron, 467 U.S. at 842-43. If "Con-
gress has not directly addressed the precise question at
issue," and the agency has acted pursuant to an express or
implied delegation of authority, the agency's statutory inter-
pretation is entitled to deference, as long it is reasonable. Id.
at 843-44.
In support of the Eleventh Circuit's holding that the plain
meaning of "reimbursements" in s 9704(b)(2) refers to the
entire amount that HCFA paid the Plans under the capitation
agreement, rather than the amount that the Plans actually
incurred in Medicare-related expenses, the court stated that
"'[r]eimburse' is defined as 'to pay back (an equivalent for
something taken, lost, or expended) to someone: repay.'
Webster's Third New International Dictionary 1914 (1986).
The ordinary meaning of the term 'reimbursement' is not
restricted by any requirement that such payments be dollar-
for-dollar what the reimbursed party payed out." Nat'l Coal
Ass'n, 81 F.3d at 1082. The Eleventh Circuit's analysis is
somewhat perplexing, because it acknowledges that "reim-
burse" means "to pay back" "an equivalent for something
expended" (emphasis added), and yet the opinion concludes
that "reimbursement" is not restricted "dollar-for-dollar [to]
what the reimbursed party payed out." If anything, the
Eleventh Circuit's opinion seems to confirm the statute's
ambiguity.
In any event, we need not ponder how this case might be
decided under Chevron until we first decide whether Chevron
deference even applies. If we could resolve this case on the
plain meaning of the statute, we would be obliged to do so.
See Chevron, 467 U.S. at 843 n.9 ("The judiciary is the final
authority on issues of statutory construction and must reject
administrative constructions which are contrary to clear con-
gressional intent. If a court, employing traditional tools of
statutory construction, ascertains that Congress had an inten-
tion on the precise question at issue, that intention is the law
and must be given effect.") (citations omitted). We can
discern no plain meaning in this case, however.
The District Court accepted the proposition that the statute
was ambiguous under Chevron's first step, see Mem. Op. at 7-
8, reprinted in J.A. at 208-09, but reasoned that the agency's
revised interpretation was not entitled to deference under
Chevron's second step, because the interpretation was
adopted pursuant to the Eleventh Circuit order, see id. at 10-
11, reprinted in J.A. at 211-12. It then appeared to "defer"
to the agency's erstwhile, pre-Eleventh Circuit interpretation,
finding it to be reasonable. See id. at 12, reprinted in J.A. at
213. The court's seeming "deference" to an interpretation
that was not even in force was incorrect, and amounted to a
substitution of the court's own judgment for the agency's
current interpretation.
The District Court's error was understandable in light of
the mixed messages from the agency as to which interpreta-
tion of the statute the agency really holds. The agency
implemented the Eleventh Circuit's interpretation nationwide,
but still seemingly believes that the Eleventh Circuit "miscon-
strued the Coal Act." See Reply Br. for Appellant Commis-
sioner at 1. On the one hand, the agency claims that the
Eleventh Circuit injunction "compelled" it to adopt the cur-
rent interpretation of "reimbursements." In this vein, the
Commissioner expresses "entire agreement" with the District
Court's interpretation. See Br. for Appellant Commissioner
at 21. On the other hand, the agency claims that it was not
bound to apply the Eleventh Circuit's interpretation nation-
wide, but voluntarily chose to do so out of a reasonable
interest in uniform administration, fairness, and practicality.
See Br. for Appellant Commissioner at 10. It is unclear
which view of the statute the agency holds. Was the agency
compelled to adopt an interpretation that it did not prefer, or
did it acquiesce voluntarily and reasonably in an interpreta-
tion that it thought reasonable?
This court cannot properly engage in Chevron's second step
analysis until we first determine whether this case is in the
class of cases to which Chevron deference can apply. Chev-
ron deference would only apply if the agency's adoption of the
Eleventh Circuit's view of "reimbursements" represented the
agency's own reasoned judgment on the meaning of the
statute. See Arizona v. Thompson, 281 F.3d 248, 254 (D.C.
Cir. 2002) ("Deference to an agency's statutory interpretation
'is only appropriate when the agency has exercised its own
judgment'....") (quoting Phillips Petroleum Co. v. FERC,
792 F.2d 1165, 1169 (D.C. Cir. 1986)); Transitional Hosps.
Corp. of Louisiana, Inc. v. Shalala, 222 F.3d 1019, 1029 (D.C.
Cir. 2000). If the agency voluntarily and reasonably "ac-
quiesced" in the Eleventh Circuit's interpretation in extend-
ing it to apply beyond those coal companies who were party
to the litigation, then the agency may be deemed to have
exercised its reasoned judgment. But if the agency applied
the Eleventh Circuit's interpretation nationwide because it
believed that it had no choice and that it was effectively
"coerced" to do so, then the agency cannot be deemed to have
exercised its reasoned judgment. Chevron deference to the
agency's interpretation would only be appropriate if the inter-
pretation of "reimbursements" currently in force indeed rep-
resents the agency's own reasoned interpretation.
An agency's "coerced" adoption of an interpretation does
not reflect the agency's choices within its delegated authority
to interpret a statute. Such an interpretation would deserve
no deference from this court, since, in this case, this court's
deference would amount to deference to the Eleventh Circuit,
not to the Commissioner. But if the agency voluntarily and
reasonably "acquiesced" in the Eleventh Circuit's interpreta-
tion, taking into account the existence of the judgment, and
reasoning that the interpretation was a permissible or reason-
able one, then the agency may be entitled to deference under
Chevron Step Two. To determine whether this case is in the
arena of Chevron, we must determine which of these two
scenarios correctly characterizes the agency's action when the
agency applied the interpretation nationwide.
We are impeded in this determination by the agency's
inconsistent, possibly self-contradictory characterization of its
own reasoning regarding its application of the Eleventh Cir-
cuit's interpretation to coal companies not before the Elev-
enth Circuit. In the Government's brief to this court, agency
counsel states that "the nationwide application of National
Coal resulted, not from overreaching by the [Eleventh Cir-
cuit], but from the Commissioner's decision to 'acquiesce' ...
and to apply the judgment nationwide." Br. for Appellant
Commissioner at 32-33. Counsel thus argues that "eminently
rational" considerations "of fairness to all Coal Act payers,
the high proportion of payers who could already claim the
benefit of the National Coal judgment, and the strong inter-
est in consistent and uniform administration of a national
statute" informed the Commissioner's decision to apply the
revised interpretation to all Coal Act payers. Id. at 33; see
also id. at 10. Counsel's arguments suggest voluntary acqui-
escence by the agency.
However, we hasten to add that mere assertion by counsel
of voluntary acquiescence, unaccompanied by an actual exer-
cise of reasoned judgment by the Commissioner, would not
suffice to entitle the agency to Chevron deference. In a
closely analogous case in the Seventh Circuit, Atchison, Tope-
ka & Santa Fe Ry. Co. v. Pena, 44 F.3d 437, 442-43 (7th Cir.
1994) (en banc), aff'd, Bhd. of Locomotive Eng'rs v. Atchison,
Topeka & Santa Fe Ry. Co., 516 U.S. 152 (1996), the court
declined to give Chevron deference to an agency's decision to
put an interpretation, which was ordered by the Ninth Cir-
cuit, into force nationwide. Judge Easterbrook's concurrence
noted that the agency's preference for a uniform administra-
tion of a statute is "a position on sound administration" and
may be wise, but is not the type of decision that deserves
deference. See Atchison, 44 F.3d at 446-47 (Easterbrook, J.,
concurring). We agree, in the sense that such a decision may
plausibly be reasonable in itself, but in a case involving the
meaning of a statutory term that the agency has delegated
authority to interpret, the agency must evince reasonableness
as to the meaning of the statute to deserve deference. Chev-
ron deference is only appropriate where the agency's action
represents its reasoned judgment about the meaning of the
statute. Even where the agency voluntarily acquiesced in
adopting the revised interpretation, if the only considerations
that constituted its reasoning in that decision were adminis-
trative concerns, such as the desirability of uniformity and the
high proportion of payers already covered by the injunction,
then Chevron deference is not appropriate.
We need not decide whether counsel's arguments on behalf
of the Commissioner in this litigation constitute an "agency
position" to which deference might be due under Chevron.
See United Seniors Ass'n v. Shalala, 182 F.3d 965, 971 (D.C.
Cir. 1999) ("Even if the legal briefs contained the first
expression of the agency's views, under the appropriate cir-
cumstances we would still accord them deference so long as
they represented the agency's 'fair and considered judgment
on the matter."') (quoting Auer v. Robbins, 519 U.S. 452, 462
(1997)); Nat'l Wildlife Fed'n v. Browner, 127 F.3d 1126, 1129
(D.C. Cir. 1997) ("The mere fact that an agency offers its
interpretation in the course of litigation does not automatical-
ly preclude deference to the agency."). In this case, the
agency's legal brief itself contains mixed expressions of the
agency's views. There is no "deference" to be given in a
situation such as this.
It is unclear from counsel's explication of agency acquies-
cence whether the Commissioner's decision to apply the new
interpretation nationwide was informed by considerations of
statutory meaning, such as a belief that the revised interpre-
tation was a permissible one. The agency has stated neither
that it purported to interpret the Coal Act when it imple-
mented the revised interpretation nationwide, nor that it
believes the interpretation currently in force to be a permissi-
ble one. Therefore, we have no way of determining whether
the agency engaged in reasoned, voluntary acquiescence.
As if to underscore this uncertainty, the record contains
some evidence that agency officials may have believed that
they had no choice but to adopt the revised interpretation.
In its opposition to the Trustees' motion for summary judg-
ment below, the Commissioner stated: "Disagreement by the
Commissioner ... with the legal rationale of the Alabama
district court does not ... afford the Commissioner license to
ignore the court's equitable decree." Federal Defendant's
Response to Plaintiff Trustees' Motion for Summary Judg-
ment, at 28, reprinted in J.A. at 191. The letter from the
Department of Health and Human Services ("DHHS"), in-
forming the Trustees of the recalculation after the Alabama
district court's injunction, states simply that the premium
"was determined in accordance with the decision of the
United States District Court for the Northern District of
Alabama in National Coal Association v. Shalala." Letter
from Harry C. Ballantyne, Chief Actuary, DHHS, to Michael
H. Holland, Chairman of the Board of Trustees p 1 (Sept. 13,
1995), reprinted in J.A. at 109. The Commissioner's brief
speaks simply of "an agency's duty to follow orders issued
against it in other litigation." Br. for Appellant Commission-
er at 22-23. Indeed, the agency's core arguments in this
appeal, that its action must be deemed to be "in accordance
with law" because it was "compelled" by a prior judicial
decree, and that it is currently "whipsawed" between two
irreconcilably conflicting decrees, bespeak the agency's belief
that it was compelled to adopt the Eleventh Circuit's inter-
pretation nationwide. In any event, it is clear that the
agency's view of the correct interpretation of the statute
differs from the one currently in effect, see Br. for Appellant
Commissioner at 1 ("[W]e believe the National Coal court
misconstrued the Coal Act...."), but it is unclear whether
the agency believes the current interpretation to be a reason-
able one.
In short, we cannot now determine whether the agency
voluntarily acquiesced in the Eleventh Circuit's interpreta-
tion, believing it to be a reasonable interpretation, or rather
believed that it had no choice but to apply the revised
interpretation nationwide. The record suggests no clear an-
swer to this question. Because we cannot resolve this matter
on the instant record, the case will be remanded to the
agency for clarification of its position on this question.
III. Conclusion
For the reasons given above, we affirm the District Court's
denial of the motion to dismiss. We vacate the District
Court's injunction insofar as it purports to bind the Commis-
sioner with respect to coal companies who had the benefit of
the Eleventh Circuit judgment. We vacate the agency's
nationwide implementation of the Eleventh Circuit's interpre-
tation, because the nationwide implementation has yet to be
appropriately justified by the agency. We reverse the Dis-
trict Court's judgment upholding the Commissioner's original
interpretation of the statute, for this matter must be ad-
dressed by the agency in the first instance. We remand the
case to the District Court with specific instructions to remand
the case to the agency for further consideration of the matter
in light of this opinion.
So ordered.