Opinion ID: 6929869
Heading Depth: 1
Heading Rank: 5

Heading: analysis

Text: The Act imposes liability for the payment of black lung benefits on coal mine operators who meet specified statutory and regulatory criteria. It defines an “operator” responsible for the payment of benefits at Section 3(d): For the purposes of this [Act], the term— “operator” means any owner, lessee, or other person who operates, controls, or supervises a coal or other mine or any independent contractor performing services or construction at such mine.... 30 U.S.C.A. § 802(d) (1986); see also 20 C.F.R. §§ 725.101(a)(27), 726.491 (1992) (defining operator in accordance with § 3(d) of Act); National Indus. Sand Assoc. v. Marshall, 601 F.2d 689, 700 (3d Cir.1979). Thus, operators were defined, in both the Act and the regulations, as “any owner, lessee, or other person who operates, controls, or supervises a coal or other mine....” 30 U.S.C.A. § 802(d); 20 C.F.R. §§ 725.-101(a)(27), 725.491. DOL has conceded that not all owners are “responsible operators”: The Department agrees that not all owners of coal lands or mineral rights could be found to be liable coal mine operators. Each case must be determined on the basis of its own facts measured against the requirements of the act. 43 Fed.Reg. 36,772, 36,803 (Aug. 18, 1978). The Director nevertheless argues that the term “operator” should be read to embrace three distinct entities: (1) an “owner” of a coal mine; (2) a “lessee” of a coal mine; and (3) any “other person who operates, controls, or supervises” a coal mine. According to the Director, the status of owner or lessee is sufficient in and of itself to make an owner or lessee an operator under the text of the statute. Thus, the Director asserts that the liability of an “owner” or “lessee,” unlike the liability of any “other person,” is not contingent on the additional statutory criteria of operating, controlling or supervising. The Director argues that its interpretation of the term “operator” follows from basic principles of statutory construction; otherwise, he says, use of the terms “owner” and “lessee” would be meaningless because they would be included within the phrase “other person who operates, controls or supervises.”
In analyzing the Act’s text, “we assume ‘that the legislative purpose is expressed by the ordinary meaning of the words used.’” Air Courier Conference v. United States Postal Serv., 959 F.2d 1213, 1217 & n. 3 (3d Cir.1992) (quoting American Tobacco Co. v. Patterson, 456 U.S. 63, 68, 102 S.Ct. 1534, 1537, 71 L.Ed.2d 748 (1979)). If the Act’s meaning is plain from the text, our job is done, because “judicial deference to an agency’s construction of a statute in conflict with the statute’s plain meaning would be inappropriate.” Id. at 1224. In applying these principles, we first consider the statute from a grammatical standpoint. The clause in § 3(d) introduced by the relative pronoun “who” is an adjective clause which modifies one or more of the series of nouns that precedes it. Whether it modifies only “other person,” the last noun or substantive phrase in the series, or the entire series of nouns including “owner” and “lessee” is the syntactical question before us. In making his argument, it seems to us the Director must rely on the grammatical principle or “doctrine of the last antecedent.” Under that principle, “qualifying words, phrases, and clauses are to be applied to the words or phrase immediately preceding, and are not to be construed as extending to and including others more remote.” Azure v. Morton, 514 F.2d 897, 900 (9th Cir.1975); see United States ex rel. Santarelli v. Hughes, 116 F.2d 613, 616 (3d Cir.1940) (contrary “construction flies in the face of common sense in grammar hardened into law”); 2A Norman J. Singer, Sutherland Statutory Construction § 47.33 (5th ed. 1992). The punctuation of this section indicates, however, that the doctrine of the last antecedent does not apply to the limiting relative clause in § 802(d). The first two nouns in the series, “owner, lessee,” are not only separated by a comma, inter se, but are also separated from the general term “other person” by a comma before the conjunction “or.” Under the normal rules of English punctuation for words in a series, it is the absence of a comma or other punctuation before the coordinate conjunction “or” that would indicate it and its modifier, the limiting adjective clause, are to be treated separately rather than as part of the whole series. See The Gregg Reference Manual at 35 (7th ed. 1993); see also 1A Sutherland Statutory Construction § 21.15. Conversely, the presence of a comma before the last clause in the statute suggests that the limiting clause applies to the entire series. This use of a comma to set off a modifying phrase from other clauses indicates that the qualifying language is to be applied to all of the previous phrases and not merely the immediately preceding phrase. Cf. National Sur. Corp. v. Midland Bank, 551 F.2d 21, 34 (3d Cir.1977) (lack of a comma limited application of the qualifying language to the word immediately preceding it). If Congress intended to define operator in the way the Director argues, it should not have inserted a comma before the word “or”; alternately perhaps it could have said: “ ‘operator’ means any owner [of], lessee [of], or other person who operates, controls, or supervís-ese,] a coal or other mine.... ” If we read the clause “who operates, controls or supervises a coal or other mine” to modify just the catch-all phrase “other person,” all owners or lessees would be operators without regard to what they own. The statute would read “operator means any owner [or] lessee ...” without limitation to owners or lessees of coal mines. The dependent clause “who operates, controls or supervises” cannot be sensibly read to modify only “other person.” The Director’s suggestion is bad grammar and leaves no logical connection between “owner” or “lessee” and “mine.” Accordingly, the punctuation and syntax of § 3(d) indicates that the “doctrine of the last antecedent” does .not help the Director in this case. The Director’s construction of § 3(d) invites us to take a distorted view of the statutory language — one separating “owner” and “lessee” from “other person” instead of recognizing all three belong in one category which is distinguished from a second, namely, “independent contractor.” This distortion is made clearly apparent by the regulatory definition of “operator” which was promulgated after the 1977 amendments to the statute. That regulation provides: “Operator” means any owner, lessee, or other person who operates, controls or supervises an underground mine; or any independent contractor identified as an operator performing services or construction at such mine. 30 C.F.R. § 48.2(e) (1992); see also infra n. 19. The semi-colon between the two categories is particularly striking. For these reasons, we also think the Director’s reliance on Association of Bituminous Contractors, Inc. v. Andrus, 581 F.2d 853 (D.C.Cir.1978), is misplaced. In holding that a mine could have more than one operator, the court stated: There is always an owner of a coal mine, yet the statute includes lessees and “other persons” within the definition of operator as well. So there must be some cases where the person who operates, controls, or supervises is not the owner. In those cases, the definition of operator must encompass the owner and such other person. The district court supports its conclusion that only one person could be an operator by reading the clause “who operates, controls, or supervises a coal mine” to apply to “owner,” “lessee” and “other person.” If that were the correct reading, the specification of owner and lessee would then be superfluous. The statute could merely have read “‘operator’ means any person who operates, controls, or supervises a coal mine.” Id. at 8(32 (emphasis in original). We do not read “owner” and “lessee” to be superfluous; they are merely examples of entities or individuals that fall within the nonexclusive definition of “operator.” Andrus did not concern an owner or lessee’s liability for black lung benefits due a former employee but instead addressed whether an independent construction company that was actually engaged in constructing a new tunnel shaft at a mine, as well as the owner of the coal mine, could be held liable for the construction company’s safety violations. The court of appeals in Andrus held that the definition of “operator” as “other person” could include independent contractors who operate, supervise or control a coal mine, and that in such a case, the independent contractor and the land owner would both be responsible for payment of fines levied for violation of the safety regulations. Id. at 862-63; see also Cyprus Indus. Minerals Co. v. Federal Mine Safety & Health Review Comm’n, 664 F.2d 1116, 1118-19 (9th Cir.1981) (both owner and independent contractor liable for safety violations of independent contractor). Andrus might be distinguished on this functional basis. It concerned responsibility for safety measures and therefore was decided without regard to the effect of the 1977 Amendments to the Black Lung Benefits Act or the Reform Act. See Bituminous Coal Operators’ Ass’n, Inc. v. Hathaway, 406 F.Supp. 371, 375 (D.C.Va.) (in light of different remedial purposes of the subchapters of this chapter, construction placed on particular definitions in one subchapter cannot be mechanically applied to all subchapters), aff'd, 547 F.2d 240 (4th Cir.1975). We understand that syntax and grammatical rules do not completely control issues of statutory interpretation. See Longview Fibre Co. v. Rasmussen, 980 F.2d 1307, 1311 (9th Cir.1992). Still, additional support for our parsing of the text of the Act, insofar as it concerns liability for black lung benefits, can be found in the “mischief’ rule, discussed in the venerable Heydon’s Case, 76 Eng.Rep. 637 (Ex.1584). That canon of construction directs a court to look to the “mischief and defect” that the statute was intended to cure. Id. at 638. Here, the legislative history of the 1977 Amendments to the Act and the Secretary’s own comments concerning them indicate that the statute was aimed at those, who sought to avoid liability by a quick change of corporate garb that served only to disguise the economic identity of the mining company which continued to benefit from the mining operations. Accordingly, we do not believe the statute itself can be read to mean that all persons who owned or leased coal bearing property after June 30, 1973, are operators who are responsible for black lung benefits due their former employees. We reject, as contrary to the plain meaning of the statute, the Director’s interpretation of § 802(d)’s text as imposing liability on all owners of coal lands worked by others without regard to whether the owner or lessee is itself an operator who has retained some right to control or supervise others’ mining operations on lands they own or lease.
Our reading of the statutory text defining “operator” is also supported by its specific legislative history. The Senate reports state that the term “operator” includes “any individual, organization, or agency, whether owner, lessee or otherwise, that operates, controls, or supervises a coal mine, either directly or indirectly.” 115 Cong.Rec.S. 39,985 (daily ed. December 18, 1969) (analysis of Federal Coal Mine Health and Safety Act of 1969 by Subcommittee on Labor of the Committee on Labor and Public Welfare of the United States Senate); see also S.Rep. No. 411, 91st Cong. 1st Sess. 48 (1969). In considering the meaning of the phrase “operator,” the Secretary has commented extensively on the legislative history of the 1977 Amendments. In those comments, the Secretary has noted that Congress intended to prevent businesses from escaping liability for black lung benefits by a change of corporate form or identity that had no substantial economic effect on the power to control the exploitation of the mineral resources. She said: The 1977 amendments to the black lung provisions of the Act were motivated in significant part by the inability of the Secretary of Labor to assess coal operator liability in the vast majority of part C claims under the then existing law. This difficulty was caused primarily by the many and intricate corporate changes which characterized business in the coal industry during the late 1950’s and 1960’s. During this time, many large and medium size coal operators terminated their own mining operations, diversified their interests and began leasing their coal land to other operators both large and small. Many claims were received from the former employees of coal operators turned lessors, and the Department experienced considerable difficulty in assessing liability against these businesses. In response to the difficulties encountered by the Department in assessing operator liability in lessor cases, as well as many other cases involving corporate changes, Congress established the coal tax and Black Lung Disability Benefits Trust Fund, terminating Federal liability for black lung claims, and significantly amended section 422(i) of the Act to clearly require the payment of benefits by an operar tor which had undergone substantial corporate changes. In order to decrease the burden on operators and former operators, the Act established that liability would not be imposed on an operator if the miner’s last employment with the operator occurred before January 1, 1970. While the cutoff date would absolve most coal lessors of liability for their former miners, the lessor problem remained. Accordingly, in the development of the revised section 422(i), the Senate report contained the following language: “In addition, a number of business entities which previously engaged in extensive coal mining operations, although no longer directly involved in the extraction of coal, still derive substantial revenues from the leasing of coal properties    It was originally the intent of Congress that such entities should bear the liability for each lung disease arising out of employment in their mines. ” The explanation of section 422(i)(2) provides, “It is the intention of this section to require the payment of benefits by the prior operator where, for example, such operator now derives revenues from the leasing of coal mines   [ ]. The Senate amendments to section 422(i) were adopted by the Conference Committee unchanged. There can be little doubt that Congress confirmed the view held by the Department concerning the potential liability of certain lessors. 43 Fed.Reg. 36,772, 36,803 (Aug. 18, 1978) (emphasis added and citations omitted). The Senate Report to which the Federal Register discussion refers does evidence Congress’s intent to prevent coal operators from evading liability by shifting corporate form. See S.Rep. No. 209, 95th Cong., 1st Sess. 8-9 (1977). It stated that under the 1977 Amendments business entities no longer directly involved in coal extraction would still be liable for benefits to their former employees if they derived substantial revenues from the leasing of coal properties. Id. DOL has thus stated, in response to comments arguing that use of the term “lessee” in § 3(d) precludes the assessment of liability against a lessor, that “[t]he definition [of operator] extends to any owner or other person who ‘operates, controls or supervises a coal mine,’ ” and moreover, that such “control may be established either ‘directly or indirectly.’ ” 43 Fed.Reg. at 36,803. “It is the opinion of the Department that a lessor of coal mines is an owner of a coal mine and, depending upon the facts of each case, may, either directly or indirectly, supervise and control the lessee’s mining of coal.” Id. (emphasis added). 18
In accordance with its statutory authorization, DOL promulgated the regulations found at 20 C.F.R. Part 725, Subpart F entitled “Responsible Coal Mine Operators.” Under it, mining companies were relieved of responsibility for payment of benefits to miners they had employed after December 31, 1969, if, but only if, they ceased “operating” coal mines by June 30, 1973. In those regulations, the Secretary herself defines “operator” as follows: § 725.491 Operator defined. (a) In accordance with section 3(d) of the Act, an operator for purposes of this part is “any owner, lessee or other person who operates, controls, or supervises a coal mine or any independent contractor performing services or construction at such mine....” 20 C.F.R. § 725.491(a) (1992). It will be seen at once that this regulation tracks the language of § 3(d) of the Act verbatim except for its elimination of the comma after lessee. 19 Other succeeding provisions of the regulations concerning operators give no clear indication that the Secretary, as opposed to her subordinate, the Director, interprets § 3(d) of the Act to impose a per se liability on all owners and lessees who grant others the right to extract coal from lands they own outright or from lands on which they hold the right to extract the coal in place. Section 725.491(b)(2) relates to a lessor’s responsibility for claims made by employees of the lessee. It clearly imposes liability on lessors who possess or retain the right to control certain aspects of the lessee’s mining operations, but it does so in permissive terms that seem to negate any per se rule. It reads: (b)(2) Where a coal mine is leased and the lease■ empowers the lessor to make decisions with respect to the terms and conditions under which coal is to be extracted or prepared, such as, but not limited to, the manner of extraction or preparation or the amount of coal to be produced, the lessor may be considered an operator with respect to employees of the lessee. An individual land owner or others who lease coal lands or mineral rights, who have never been coal mine operators or are not in the regular business of leasing coal mines, shall not be considered a coal mine operator in accordance with the terms of this section. Where a lessor previously operated a coal mine, it may be considered an operator with respect to employees of any lessee of such mine, particularly where the leasing , arrangement was executed or renewed after the effective date of this part and does not require the lessee to secure benefits provided by the Act. Id. § 725.491(b)(2) (emphasis added). Subsection (b)(3) also relates to a lessor’s secondary liability for black lung benefits due its lessee’s employees. It too requires a case-by-case determination of responsibility dependent on the facts of each case. It provides: (b)(3) In any claim in which the liability of a lessor for claims arising out of employment with a lessee is brought into question, the lessee shall be considered primarily liable for the claim, and the liability of the lessor may be established only after it has been determined that the lessee is unable to provide for the payment of benefits to a successful claimant. In any case involving the liability of a lessor for a claim arising out of employment with a lessee, any determination of lessor liability shall be made on the basis of the facts present in the case in consideration of the terms and intent of the act and this part. Id. § 725.491(b)(3) (emphasis added). Elliot’s liability to its own former employees, such as Kovalchick, who worked after January 1, 1970, the effective date of the original Act, is, however, based on subsection (b)(4). It reads, in pertinent part: (b)(4) A former coal mine operator which has become a lessor of coal miner [sic] shall be liable for approved claims arising out of coal mine employment with such lessor during the time the lessor was a coal mine operator, if such employment terminated on or after January 1, 1970, and the conditions for liability contained in § 725.492 are met. Id. § 725.491(b)(4). Subsection (b)(4) does not specifically refer to the language of § 3(d) limiting the class of owners or lessees who are subject to liability for black lung benefits to those who continue to operate, supervise or control mining operations that others conduct on their coal lands after June 30, 1973. Instead, § 725.491(b)(4) refers us by cross-reference to the conditions of liability set out in § 725.492. Section 725.492 provides, in pertinent part: § 725.492 Responsible operator defined. (a) A “responsible operator” is the operator which is determined liable for the payment of benefits under this part for any period after December 31, 1973. In order for an employer to be considered a responsible operator in any case, the following shall be established: (1) The miner’s disability or death shall have arisen at least in part out of employment in or around a mine or other facility during a period when the mine or facility was operated by such operator, except as provided in § 725.-493(a)(2); (2) The operator shall have been an operator of a coal mine or other facility for any period after June SO, 1973; (3) The miner’s employment with the operator or other employer shall have included at least 1 working day (§ 725-493(b)) after December 31, 1969; and (4) The operator or the employer shall be capable of assuming its liability for the payment of continuing benefits under this part, through any of the following means: (i) By obtaining a policy or contract of insurance ...; or (ii) By qualifying as a self-insurer ...; or (in) By possessing any assets that may be available for the payment of benefits _ (b) In the absence of evidence to the contrary, a showing that a business or corporate entity exists shall be deemed sufficient evidence of an operator’s capability of assuming liability under this part. 20 C.F.R. §§ 725.492(a), (b) (1992) (emphasis added). The parties to this dispute agree that the conditions for liability contained in § 725.492(a)(1), (a)(3), and (a)(4) are met. Thus, Elliot’s liability to Kovalchick depends solely on whether it was “an operator of a coal mine ... for any period after June 30, 1973” in accord with § 725.491(b)(4)’s incorporation of the conditions of § 725.492(a)(2). Because § 725.492(a)(2) does not expressly refer to an owner’s or lessee’s right to control, supervise or direct mining operations conducted on its coal lands after June 30, 1973, the Director contends that neither control, nor a right to control, play any part in determining whether an owner or lessee who grants another a right to mine coal on the owner’s or lessee’s lands is an “operator” responsible for the black lung benefits due its own former employees. In making that argument, the Director ignores the Secretary’s use of the controlling word “operator” in § 725.492(a)(2), the definition of operator in § 725.491(a), and the statute’s limitation of the liability of an owner or lessee of coal lands to those owners or lessees who retain rights to supervise, direct or control mining operations on their coal lands. We begin with the word “operator.” We assume that it should be given its normal meaning unless it is apparent the Secretary has given some artificial, technical meaning to it. The dictionary defines “operator” as follows: “[ojne who works a business, undertaking, etc.” The Oxford English Dictionary at 1996 (Compact ed. 1981); see also The American Heritage Dictionary at 871 (2d College ed. 1982) (“operator” is “[t]he owner or director of a business or industrial concern.”). The regulations do indicate that the word “operator” as used in § 725.492(a)(2) has been given its broad dictionary meaning in accord with the text of § 3(d) of the statute and the purpose behind the 1977 amendments to include owners or lessees who would not normally be thought of as “operators” of coal mines but for their retention of effective power to control, ie., direct, the extraction of coal from lands they had once mined. That expansion of meaning is shown in § 725.491(a)’s general definition of “operator.” It, like § 3(d) of the Act, limits the owners, lessees or others who are classed as “operators” to those who retain “control” over mining operations on their lands. We think, however, that the Director’s even broader proposed interpretation which would include all “owners” as well as all “lessors” would reduce § 725.492 to the meaningless tautology that an operator is an operator— true but not helpful to analysis. Moreover, such an interpretation conflicts with the limiting clause of § 725.491(a)’s definition of operator — and the definition in the statute. Thus, to give meaning to § 725.492(a)(2), as § 725.491(b)(4) requires, our inquiry continues. 20 If all owners were automatically included in the broader category of “operator,” there would be no need for §§ 725.491(b)(4) and 725.492. Section 725.491(b)(4) requires the facts of each situation to be measured against the criteria of § 725.492. The Director’s per se interpretation would render this regulatory cross-reference superfluous. The Secretary has specifically stated: Coal mine lessors are most likely to be former operators with extensive land or mineral rights holdings or other large commercial enterprises, and some of them have the capability to mine their own coal when conditions are favorable. While few lessors exercise day-to-day control over their leased properties, standard coal leases frequently demand a specified level of production and royalties, and retain numerous rights for the lessor.       [TJhe revised section 422(i) of the act and the explanations of that section further clarify the potential liability of a lessor in the black lung benefits' context of the act. It is the opinion of the Department that a lessor of coal mines is an owner of a coal mine and, depending on the facts of the case, may, either directly or indirectly, supervise and control the lessee’s mining of coal. Actual day-to-day supervision and control is not required by the Act. 43 Fed.Reg. at 36,803 (emphasis added). In 1981, the Secretary published a proposed amendment to § 725.491(b)(2) which would have prevented certain coal mine lease terms such as minimum royalty and tonnage requirements, rights of inspection and approval, and reentry rights, from being used to establish that a coal mine lessor was an operator with respect to its liability for its lessees’ employees. See 46 Fed.Reg. 8570 (proposed Jan. 27, 1981). 21 Comments in response to the proposed § 725.491 regulation registered substantial opposition to the provisions by which a lessor of a coal mine may be considered a coal mine operator liable for benefits to a lessee’s employees, as well as opposition to a lessor’s liability in general. The Secretary subsequently withdrew the proposal after receiving comments favoring continued case by case adjudication on the issue. See 52 Fed.Reg. 26,352 (July 14, 1987). The Director argues that this amendment, if it had been effectuated, would have only affected lessors who were responsible under § 725.491(b)(2) for benefits to their lessees’ employees, not lessors like Elliot who may be responsible for benefits to their own former employees under § 725.491(b)(4). We think, however, that the Director’s per se argument cannot stand in the face of the language of § 3(d), the use of the word “operator” in Regulation § 725.492(a)(2) and Regulation § 725.491(a)’s definition of “operator.” The Director’s argument that all owners, lessees and lessors are automatically responsible operators with respect to their own former employees without regard to supervision and control, like Elliot’s equally simplistic argument that it is not liable if it is not actually an operator of coal mines within the dictionary definition of that word, proves too much. If accepted in the broad sense the Director advances it, every person who owned land from which they permitted others to mine coal after June 30,1973, would be an operator responsible under § 3(d) for the payment of black lung benefits to any of their own employees who worked after December 31, 1969, under § 3(d). We do not think the Secretary’s regulations go that far. Even Long v. Bituminous Coal Corp., 1 BLR 1-149 (1977), the case decided prior to promulgation of the 1978 regulations on which the Director and the Board heavily rely, rejected this broad argument. Instead, Long required inquiry into the question of whether a former operator who becomes an owner/lessor before June 30, 1973, maintained a right to control the mining operations of its lessees through the terms of its lease agreements with them. For all these reasons, the Director’s per se argument seems contrary to the text of both the regulations and the statute which we think impose on lessors or owners liability for Part C claims of their own former employees who worked for them after January 1, 1970, only if the lessor or owner itself either continues to operate coal mines after June 30, 1973, or has the power to control the mining operations after that date and we so hold. Because we hold that the Director’s per se interpretation of the Act is contrary to the plain meaning of § 3(d) of the Act, as well as the Director’s own regulations, it becomes necessary to determine whether Elliot had some substantial right or power to supervise, control, or operate a coal mine after the June 30,1973, cut-off date in order to incur liability to its former employees. The question whether the lessor of coal mines supervises mining operations, either directly or indirectly, is expressly said to depend “on the basis of [the case’s] own facts measured against the requirements of the act.” 43 Fed.Reg. at 36,803.
The question thus recurs. Did Elliot continue to be an operator because the terms of the leases that it entered into governing operations on its coal lands after June 30, 1973 gave it an effective power to control those operations?
On this question, the Director argues that even if a lessor must have “operated, supervised, or controlled” a coal mine after June 30, 1973 to be liable to its own former employees who worked as miners after December 31, 1969, the lease and sublease agreements Elliot made granting mining rights to the actual operators gave Elliot, as a matter of law, substantial power to control its lessees’ mining operations. Thus, according to the Director, Elliot is a responsible operator who is liable for Kovalchick’s black lung benefits. Relying on Long, the Director argues that a substantial right of control is present whenever a lessor retains a right of reentry for breach coupled with a right to monitor production and require periodic payments of minimum royalties. Subject to any deference due the Secretary or the Director, our scope of review over the statute and regulations is plenary. As we have already explained, we need not defer to the Board’s interpretation of the Act in Long. See Barnes, 969 F.2d at 1527. Thus, we will follow Long only to the extent we believe its reasoning is persuasive. Moreover, Long is distinguishable. There, the Board found that the leases were essentially contracts of adhesion. Long, 1 BLR at 1-168. In this case, there is no similar evidence that the leases were adhesive in nature. Clearfield Bituminous Coal Corporation, the company the Board held responsible in Long, was a subsidiary of the New York Central Railroad formed to mine coal for the railroad’s use. Id. at 1-150. In 1968, the New York Central and Pennsylvania Railroads merged. Id. at 1-151. When the merged railroad’s need for coal gradually diminished and eventually ceased, Clearfield systematically phased out its own direct coal mining operations. Id. It replaced them with a system of identical leasing arrangements which had many of the aspects of a contract of adhesion. Id. at 1-168. Under those leases, other firms undertook to operate Clearfield’s mines and made rental and royalty payments directly to Clearfield. 22 Id. at 1-151. The Board held in Long that Clearfield had retained such substantial powers of supervision and control over its working mines that it came within the responsible operator provisions of the Act and regulations. Id. at 1-171. Thus, the Board held it liable for black lung benefits due any former employees who had worked for it as miners after December 31, 1969, and held that the ALJ erred in determining otherwise. Id. at 1-175. The regulations themselves incorporate much of the Long rationale with respect to owner and lessor liability for black lung benefits payable to miners employed after December 31, 1969. 23 Accordingly, we believe Long is persuasive in holding as a principle of law that an actual exercise of control is not necessary. Cf. id. at 1-171 to 172. Therefore, we reject Elliot’s argument that the Act and the regulations require actual operation, supervision or control and that the mere existence of an unex-ercised right to control cannot make a lessor or owner a responsible operator. To the contrary, we believe that the statute and the regulations impose liability for black lung benefits on mining companies who transfer the right to mine coal on lands they had once worked to subsidiaries or others over whose mining operations they have the power to exercise substantial, effective control. In determining who is a “responsible operator” under the Act, we think some analogy to the National Labor Relations Board’s framework for determining whether an individual is a “supervisor” within the meaning of Section 2(11) of the National Labor Relations Act, 29 U.S.C.A § 152(11) (West 1973), is not inappropriate. Supervisors include persons who have the power to make effective recommendations about employee disciplinary measures, not just those who carry them out. Under this analogy to section 2(11) of the NLRA, the validity of the Director’s proposed per se litmus test for determining when a right of control exists is doubtful. See NLRB v. Keystone Pretzel Bakery, Inc., 696 F.2d 257, 260 (3d Cir.1982) (in banc) (supervisor status is factual finding of ALJ that can only be overturned absent substantial evidence). Moreover, in referring to the legislative history of the Black Lung Reform Act, the Secretary herself, as we have pointed out, has stated that the determination of who is a responsible operator must be determined on a case-by-case basis. See 43 Fed.Reg. at 36,803 (“Each case must be determined on the basis of its own facts measured against the requirements of the Act.”).
Accordingly, at this point we part company with Long's determination that “the question of whether the rights retained under the leases are equivalent to the terms ‘supervision’ and ‘control’ as used in the Act is ... a question of statutory construction and interpretation, i.e., a question of law and not of fact.” Long, 1 BLR at 1-164. Rather, we agree with Elliot that neither the regulations nor the statements of the Secretary concerning the meaning of the Act imply a per se rule. They speak in permissive, not mandatory terms, because the Secretary in her statements and the regulations themselves has indicated that whether a lessor is an operator responsible for black lung benefits must be determined on a case-by-case basis. Absent some corporate relation that gives lessor or owner de facto power to control the person nominally in charge of operations, 24 we think the decision whether a particular lessor has retained a substantial right or power to control its lessee’s operations is for the ALJ to resolve by inference from his findings of historical fact, not one for the Board to decide as a question of law. Indeed, the Board itself has stated that resolution of the control issue calls for a two-part inquiry requiring evaluation of the relationships of the parties to the leases, along with the lease terms themselves. Id. at 1-164. The Board’s statement, “What the Act is concerned with here is not the technical refinements of title, but rather the realities of supervision and control,” is not to the contrary. Id. at 1-174. The question of who determines the “realities” remains. Thus, while we agree with Long that the issue is the lessor’s right or power to control, not the actual exercise of control, we also believe that the determination of who is an operator is fact specific, absent evidence of interlocking corporate relationships which would always give the owner or lessor an effective right of control. 3. Substantial Evidence Supports the ALJ’s Finding That Elliot Had No Effective Power to Control Its Lessees’ Operations Here, there is no evidence that Elliot had any corporate power to control or influence the operation of its lessees. Elliot’s leases and subleases are arms-length transactions, not completely uniform in their terms, and not contracts of adhesion as in Long. See Long, 1 BLR at 1-165 to 1-168. In addition, Elliot had lost four million dollars when it ceased operations and sought only to recoup some of that loss by preserving its rights to the coal under its lease agreements. There is no evidence that the leases in the instant case yielded substantial revenue, or any revenue, for Elliot. In contrast, there is evidence in the record that the terms of Elliot’s subleases were dictated to it by its lessors in accord with the terms of the prime leases. Furthermore, revenues and royalties derived from Elliot’s subleases were primarily passed through to Elliot’s lessors. Deep mining was never continued after June 1973, on the lands Elliot owned in fee, though strip mining was conducted on them by independent contractors such as Helena up to 1978. Thereafter, Power leased them from Elliot under agreements that gave it the right to mine them to exhaustion. It follows that there is substantial evidence on the whole record from which the ALJ could have found that Elliot was not an owner or lessor who retained substantial power to control mining operations on lands it leased to others for its own economic benefit. There is likewise substantial evidence to show that Elliot is not an owner or lessor who simply changed corporate form, structure or method of operation in order to retain the economic value of coal mined from its lands while avoiding responsibility for black lung benefits due the miners who worked for it after the Act became effective. We also think the ALJ could properly infer that Elliot was a failed business seeking to liquidate its assets in preparation for dissolution. In doing so, he seems to have credited Elliot’s President’s testimony that the decision to shut down Elliot’s operations was based on economic factors arising out of the losses it had incurred, and that Elliot granted its sublessees mining rights to prevent complete loss of the rights its own lessors had given it. Perhaps most significantly, there is evidence in this record indicating that Elliot had no effective power to supervise to any substantial degree the strip mining done by the independent contractors who operated after June 1973, on lands leased from Elliot. The evidence also shows that Elliot gained little economic benefit from the mining that continued after June 30, 1973, on the lands it leased to others. Long, former President of Elliot, testified in his deposition that the revenue derived from strip mining by the independent contractors was paid to Elliot and then passed through to Elliot’s lessors. He stated: “We did not as Elliot have a royalty to us. It was a pass-through to the owner of the land.” App. at 508. “We were obligated to pay the owner those lands of royalties [sic]. And if somebody else was there through us, they had to abide by the terms of the owners of the land whatever they were. Not by our rules, but by theirs.” App. at 509. The testimony of Minds, one of Elliot’s sublessees, also supports the ALJ’s finding that Elliot had no substantial power to control mining operations on the leased coal lands. He stated: “The property I was on Elliot didn’t even own. They had it leased from Kittanning [sic] Coal.” App. at 463. There is similar testimony from other lessees that they were not supervised or controlled in any way by Elliot and that Elliot never inspected any records despite the provision in some leases that permitted their inspection. Elliot did not have any right to tell its lessees to whom the coal they mined should be sold. It did not inspect operations. The independent contractors were responsible for insurance and compensation, determining what type of equipment to use, and inspection for safety hazards. The independent contractors who mined coal under Elliot’s leases also testified that they had undertaken the responsibility for safety or environmental violations. Finally, the sublease agreements between Elliot and Power provided that “[i]t is understood by Elliot and Power that this sublease agreement is derivative from Elliot’s rights under the GR Prime Lease and Power shall do nothing to violate any term, condition, covenant, stipulation or agreement contained in the GR Prime Lease and that any such violation by Power shall give Elliot the right to terminate this sublease.” App. at 191 (sublease between Elliot and Power). This same provision is contained in four other subleases with Power. The contract between Minds and Elliot also includes a consent to the sublease by the owner of the land, Kit-taning Coal. Though we agree with the Board that the key issue is whether there is evidence of a lessor’s right to control, not evidence that actual control was exercised, the lessor’s ability to control must be substantial. On this record, Elliot, given its financial condition and the pressures exerted by its own lessors, had only a limited ability to control and supervise its lessees and sublessees. The Board’s determination that “Elliot not only retained ownership of the mining permits but also possessed, under its lease agreements, the right of inspection, the right of ejectment and confession of judgment and the right to direct the manner of coal extraction,” though correct, is not controlling on Elliot’s status as a responsible operator liable for black lung benefits due Kovalchick and its other former miners. App. at 24-25 (emphasis deleted). It is instead a fact that could be inferred from the record, but it is not a proper conclusion of law made necessary from the facts and record in this case. Although legal rights that evidence some power of control were enumerated in some of the leases Elliot granted after June 30, 1973, the ALJ, as factfinder, had before him substantial evidence that they were required by Elliot’s own prime lessors who were the ones who had substantial power to control coal mining operations on the facts of this case. Elliot’s lessors received the economic benefit of mining operations on the lands Elliot leased to others when it paid over to them the money collected from the persons, such as Helena, Power, and Minds, to whom it had granted mining rights. By doing so, Elliot hoped only to avoid breaching its lease agreements and preserve whatever value its mining leases had while it attempted to liquidate its assets. Elliot itself did not derive substantial revenue from the lease agreements and was not changing corporate form to evade liability as the responsible operator regulations were intended to prevent. The ALJ found that: Elliot was not a lessor with enough substantial control to make it a Responsible Operator within the meaning of the regulations. The regulations were enacted to prevent a coal mine company from circumventing responsibility for black lung benefits by merely changing the form with which it does business. Here, there were arms-length leases and Elliot exerted little or no control over the lessees. Moreover, the control and supervision in Long v. Clearfield Bituminous Coal Corp., 1 BLR 1-149 (1977) is not present here. See Moore v. Duquesne Light Co., ... BRB No. 80-147 BLA (June 19, 1981). App. at 13. Because this finding is supported by substantial evidence, the Board erred when it decided that any owner or lessor who, like Elliot, retains rights similar to those present here in lease agreements executed and effective after June 30, 1973, is a responsible operator under § 3(d) of the Act and 20 C.F.R. § 725.492(a)(2). The Board exceeded its power in overturning the ALJ’s decision and concluding that Elliot was an operator who was liable to former employees like Kovalchick because it continued to operate coal mines after June 30, 1973.
Although we have concluded that the ALJ’s finding that Elliot did not possess substantial powers of supervision or control over mining operations on the coal lands it leased to others was correct, we must still consider the Director’s alternative argument that Elliot is an “operator” because it employed Kanour as a miner after June 30, 1973. The regulations defining an operator state, “any employer of a miner as defined in § 725.202(a) shall, to the extent appropriate, be considered an operator for the purposes of this part....” 20 C.F.R. § 725.491(a) (1992). Section 902(d) of the Act, as well as the regulations, defines a “miner” as “any individual who works or has worked in or around a coal mine or coal preparation facility in the extraction or preparation of coal.” 25 30 U.S.C.A. § 902(d); 20 C.F.R. §§ 725.-101(a)(26), 725.202(a). This Court has fashioned a two-prong test for determining whether an individual is a miner. See Hanna v. Director, OWCP, 860 F.2d 88, 91 (3d Cir.1988). “The definition of miner contains two elements — a ‘situs’ test requiring work in [or around] a coal mine [or a coal preparation facility], and the second, a ‘function’ component requiring performance of coal extraction or preparation work. Both of these requirements must be met.” Id. (quoting Wisor v. Director, OWCP, 748 F.2d 176, 178 (3d Cir.1984) (citations omitted, brackets in original)). To satisfy the situs test, a person must have worked in or around a “coal mine” or custom coal preparation facility and have been subject to coal dust exposure as a result. The term “coal mine” is defined as: an area of land and all structures, facilities, machinery, tools, equipment, shafts, slopes, tunnels, excavations, and other property, real or personal, placed upon, under or above the surface of such land by any person, used in, or to be used in, or resulting from, the work of extracting, in such area bituminous coal, lignite, or anthracite from its natural deposits in the earth by any means or method.... 30 U.S.C.A. § 802(h)(2). The function part of the test requires that the claimant’s job be “ ‘integral to the extraction or preparation of coal, not ancillary to the delivery and commercial use of processed coal.’ ” Stroh v. Director, OWCP, 810 F.2d 61, 63 (3d Cir.1987) (holding that self-employed hauler of coal was miner because he transported coal from mine site to processing plant that further processed coal before retail sale) (citation omitted); see also Hanna, 860 F.2d at 93 (holding employee of mining company that also happened to be coal consumer who loaded coal from tipple onto barges was miner because his work was necessary in preparing coal for delivery). Even work which does not meet a strict “but for” test, i.e. but for the work no coal could be extracted or prepared, may be covered if it is “part of the extraction and preparation process as it is now practiced....” Amax Coal Co. v. Fogg, 865 F.2d 916, 919 (7th Cir.1989) (holding that “work in the extraction or preparation of coal” includes all work, including plaintiffs work as reclamation bulldozer operator, which is part of the modern commonly-applied process of extracting and preparing coal). In the instant case, the ALJ specifically found that: Mr. Kanour does not meet the “situs” [prong of the situs-function] test. Mr. Kanour’s activities involved no oversight or control; he was an observer, was in the mines on an occasional basis, and reported to Elliot regarding the lessees’ operations. In Zavora v. United States Steel Corp., 2 BLR 1-1202, 1208-10 (1980), the Benefits Review Board held that a Department of Interior inspector was not a “miner” while employed at the Department because he was only occasionally in the mines. Here, Mr. Kanour was not in the leased mines enough to be considered a “miner.” Thus, Elliot did not employ a miner or miners after June 30, 1973. App. at 13. 26 We agree with the ALJ that Kanour was not a “miner.” In the instant case, it is not disputed that Elliot employed Kanour after June 30,1973. The nature and characterization of his employment is what is in dispute. He worked out of the main office that Helena and Power also used and was required to travel by company truck among five strip mines within a fifteen mile radius. He assisted Minds in performing noise samples and, according to Long, he looked after Elliot’s equipment before it was sold and answered employee questions about whether there was going to be any more work. According to Kanour himself, he took care of the permits and leases and made sure the contractors were staying within DER regulations and that the reclamation procedures were timely carried out. He also answered some of the employees’ questions concerning what they should do regarding certain regulations. According to the independent contractors, no Elliot employees, including Kan-our, assisted or directed their coal production. Avery, President of Helena and later Power, also stated in her deposition that Elliot did not send any inspectors to check the mining operations. Elliot also did not inform her of any type of specific preparation process that they should use for the coal. Furthermore, Elliot never told them how to mine the coal, never told them how to go about selling it, never sent anyone to help supervise the mining, and never had any financial interest in her company. Kanour was present at the mines on only limited occasions and did not perform the functions of a miner. Cf. Falcon Coal Co., Inc. v. Clemons, 873 F.2d 916, 918 (6th Cir.1989) (night watchman at strip mine was not “miner”). Substantial evidence supports the ALJ’s finding that Kanour was not a “miner” within the meaning of the Act after June 30, 1973. 27 Thus, Elliot cannot be considered an operator on this alternative basis.