Opinion ID: 3010175
Heading Depth: 2
Heading Rank: 3

Heading: In Business

Text: Lindsey also contends that is not covered by the Coal Act because it is no longer in business under the statute. The Coal Act provides that a signatory operator is in business if such person [1] conducts or [2] derives revenue from any business activity, whether or not in the coal industry. 29 U.S.C. 9701(c)(7). Lindsey concedes, as it must, that the trust derives substantial revenues from the former assets of Lindsey Coal Mining Company. It maintains, however, that it is not in business because its activities are insufficient to rise to the level of business activity. We hold that the Commissioner did not abuse her discretion in determining that Lindsey remained in business for purposes of the Coal Act. The Commission relied on a record which shows that Lindsey, as a liquidating trust, has generated substantial income from leasing and sales ventures, the same activities it conducted for its last twenty-two years as a corporation. Since beginning its liquidation, Lindsey has (1) negotiated the lease of land to a shopping center complex; (2) entered into four coal leases permitting other companies to mine coal on trust property in exchange for royalties; (3) signed at least 13 agreements for the harvesting of timber on trust property; (4) derived royalties from six natural gas leases; (5) sold scrap metal; and (6) employed a part-time secretary at approximately $20,000 per year. These activities generated almost $300,000 in income and capital gains for Lindsey in 1992 alone. This list of for-profit business endeavors could support a decision by the Commissioner that Lindsey was itself conduct[ing] business activity. Lindsey's own conduct is not necessary, however, to sustain the Commissioner's determination that it is in business for purposes of the Coal Act. The statutory definition of in business is broad, including within its scope not only (1) an entity that conducts business activity, but also (2) one who derives revenue from business activity. See 26 U.S.C.A. 9701(c)(7). Because the conducts prong is provided for separately, the derives revenue prong does not require the party liable under the Coal Act to itself conduct a business activity. Otherwise, the derives revenue option would be surplusage, which cannot have been Congress's intent. By the statute's own terms, then, someone other than the signatory operator may be the one engaging in the business activity. In Lindsey's case, the companies conducting the mining and harvesting operations pursuant to its leases with Lindsey are certainly engaging in business activities. And Lindsey cannot contest that it is deriving revenue from these business activities. Thus, Lindsey is covered by the plain terms of the statute. This interpretation is buttressed by the legislative history, which indicates that the statute was designed to cover just this sort of situation -- one entity deriving revenue from other entities' extraction of coal and other minerals from leased property. See 138 Cong. Rec. S17635 (daily ed. Oct. 8, 1992). Indeed, without this definition of in business, signatory operators could escape responsibility simply by divesting their actual mining operations and hiring outside contractors to extract the minerals. Lindsey relies on two faulty premises for its argument that it is no longer in business. First, it cites to cases and other sources defining carrying on a business and liquidating trust under the Internal Revenue Code. But definitions embodied in a different statute do not control as to whether Lindsey is an extant signatory operator for purposes of the Coal Act. The Coal Act supplies its own definitions and serves a distinct purpose -- defraying benefit costs for retired miners, not defining the organization's income tax status. Second, Lindsey claims that the Social Security Administration's internal guidelines demonstrate its status as a liquidating trust, exempt from the in business definition. This argument is also misplaced. To begin with, the regulations that Lindsey cites are internal interpretative guidelines that lack the force of law. See Matter of Seidman, 37 F.3d 911, 93031 (3d Cir. 1994). Therefore, the agency is not bound to follow them and Lindsey is not entitled to rely on them. Moreover, even on the guidelines' own terms, Lindsey cannot establish that it is not in business. Although the guidelines exempt liquidating trusts from the in business definition, Lindsey does not appear to qualify as a liquidating trust. The most relevant instruction appears to state that an entity will lose its status as a liquidating trust if the liquidation is unreasonably prolonged. Review Instructions, Section N.7.b. The Lindsey Trust has been in the process of liquidating for over twenty years. By its own testimony, this process will not be complete for several more years when its resources will finally be exhausted from harvesting and mining operations. Thus, the Commissioner did not abuse her discretion in concluding that plaintiffs remained in business and liable for Coal Act premiums.