Fittstone, Inc. (ALJ decision, November 30, 2011)

Plain-English summary

Fittstone argued that MSHA lacked jurisdiction because its Oklahoma limestone gravel operation did not substantially affect interstate commerce. Judge L. Zane Gill held that local economic activity may be regulated when similar activity in the aggregate affects interstate commerce. He found that the operation's $358,901 in sales, its participation in the gravel market, and its use of out-of-state equipment placed it within the Mine Act's broad jurisdiction. The judge granted the Secretary partial summary judgment, denied Fittstone's competing motion, and ordered the parties to continue settlement negotiations on the citations.

Decision snapshot

• Governing provision: 30 U.S.C. § 801
• Outcome: The Secretary won partial summary judgment on MSHA jurisdiction, and the penalty case continued.
• Key point: A gravel mine need not sell across state lines when its local economic activity, combined with similar operations, can affect interstate commerce.

Full text (FMSHRC public release)

FMSRHC ALJ DECISION

FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

OFFICE OF THE CHIEF ADMINISTRATIVE LAW JUDGE

601 NEW JERSEY AVENUE, N.W., SUITE 9500

WASHINGTON, DC 20001-2021

TELEPHONE: 202-434-9958 / FAX: 202-434-9949

November 30, 2011

SECRETARY OF LABOR,

MINE SAFETY AND HEALTH

ADMINISTRATION (MSHA),

Petitioner

v.

FITTSTONE, INC.,

Respondent

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CIVIL PENALTY PROCEEDINGS

Docket No. CENT 2011-297-M

A.C. No. 34-01487-240699

MINE: Fittstone Mine

ORDER GRANTING THE SECRETARY’S

PARTIAL SUMMARY JUDGMENT MOTION

This case is before the court on a petition for assessment of civil penalty under Section 105(d) of the Federal Mine Safety and Health Act of 1977, 30 U.S.C. §801 et seq. (the “Act”). The parties filed cross-motions for summary judgment. The underlying controversy involves citations issued by the Department of Labor's Mine Safety and Health Administration (“MSHA”) under Section 104(a). The issue the parties argued in their cross-motions is whether MSHA has jurisdiction to inspect the Respondent’s limestone gravel operation. A telephone hearing on this issue was conducted on September 28, 2011.

The Respondent argues that its limestone gravel facility is not subject to MSHA’s jurisdiction because it does not “substantially” affect interstate commerce. This position is based on the Respondent’s interpretation of the Supreme Court’s decision in United States v. Lopez, 514 U.S. 549 (1995). Respondent argues that after Lopez, a mine must satisfy a “substantial qualifier” test before MSHA can exert its inspection jurisdiction. This interpretation is plausible because in Lopez the Supreme Court stated that “the proper test requires an analysis of whether the regulated activity substantially affects interstate commerce.” Id., 559 (emphases added) The Supreme Court also said that “where economic activity substantially affects interstate commerce, legislation regulating that activity will be sustained.” Id. (emphases added)

However, by placing so much weight on the word “substantial,” the Respondent misinterprets Lopez. The Lopez decision resolves the issue of whether a federal law banning possession of a firearm on public school property, 18 U.S.C. § 922(q)(1)(A), the Gun-Free School Zones Act of 1990, could be applied under a Commerce Clause argument when there was no discernable nexus between a student’s possession of a firearm and any commercial or economic activity.

While it is true that in order for an activity to come under the Commerce Clause, there must be a showing that the activity “substantially affects” interstate commerce, i.e., the activity must first be shown to be commercial in nature. Lopez determined that possession of a firearm was not commercial or economic in nature, therefore there was no need to move to the secondary issue of whether the commercial activity had a substantial impact on interstate commerce.

In short, the Lopez decision did not elevate the “substantial qualifier” test to primary importance as the Respondent argues, but affirmed that laws and/or regulations promulgated via the Commerce Clause need to have some basis in commerce. By validating Wickard v. Filburn 317 U.S. 111 (1942) in its Lopez decision, the Supreme Court made it clear that if an economic activity is involved, the level of activity needed to justify extension of Commerce Clause authority is indeed quite minimal. The Supreme Court cited Wickard as “perhaps the most far reaching example of Commerce Clause authority over intrastate activity.” Id., at 560 Accordingly, Wickard is still good precedent, and we are bound by it in this matter.

Comparing the facts in Wickard with the facts in this case, there is no question that the Fittstone facility affects commerce and is under the Mine Act’s jurisdiction. In Wickard, a law was established to limit wheat production based on acreage owned by a farmer in order to drive up wheat prices during the Great Depression. A farmer grew more than the limits permitted and was ordered to destroy his crops and pay a fine, even though he was producing the excess wheat for his own use and had no intention of selling it. The Supreme Court found that “[e]ven activity that is purely intrastate in character may be regulated by Congress, where that activity, combined with like conduct by others similarly situated, affects commerce among the States [. . .]." Fry v. United States, 421 U.S. 542, 547 (1975) citing Wickard, at 127-128

Here, the Respondent’s total facility sales were $358,901.00 for the time period February 23, 2010, to August 24, 2010.

In addition, the Research and Innovative Technology
Administration (“RITA”) survey

cited by the Respondent in support of its position, confirms that there is only a small amount of gravel and stone included in the total freight transported in the United States. This demonstrates that even a relatively small amount of gravel production can have a disproportionate effect on interstate commerce for purposes of jurisdictional analysis, and it bolsters the Secretary’s argument.

In addition to Wickard and Fry, there are numerous decisions that support the argument that MSHA has jurisdiction over the Respondent’s Fittstone facility. For instance, in Jerry Ike Harless Towing, Inc. and Harless Inc. v. Sec’y of Labor, the Commission stated that the “Commerce Clause of the Constitution has been broadly construed [ . . . and that] Commercial activity that is purely intrastate in character may be regulated by Congress under the Commerce Clause, where the activity, combined with like conduct by others similarly situated, affects commerce among the states.”Jerry Ike Harless Towing, Inc. and Harless Inc. v. Sec’y of Labor, 16 FMSHRC 683, 686 (April 1994), citing Fry v. United States, 421 U.S. 542, 547 (1975); Wickard, at 111. The Commission continued by saying that “Congress intended to exercise its authority to regulate interstate commerce to the ‘maximum extent feasible’ when it enacted section 4 of the Mine Act.” Id., citing Marshall v. Kraynak, 604 F.2d 231, 232 (3d Cir. 1979), cert. denied 444 U.S. 1014 (1980) Though Harless Towing was published a year prior to Lopez, the Commission has not changed its stance on the matter.

In a Second Circuit decision issued in 2004, the court affirmed Wickard and Fry v. United States when it found that a gravel mine that did business only in New York was under the Mine Act’s jurisdiction. D.A.S. & Gravel v. Sec’y of labor, 386 F. 3d 460, 463 (2nd Cir. 2004). The court stated that “the Commerce Clause does not preclude Congress from regulating the activities of an economic actor whose products do not themselves enter interstate commerce, where the activities of such local actors taken together have the potential to affect an interstate market the regulation of which is within Congress' power.” Id.

In United States v. Lake, 985 F.2d 265, 267-69 (6th Cir. 1993), which the Commission cited in Harless Towing above, a mine operator sold all its coal locally and purchased mining supplies from a local dealer. Id., at 269. The court found that the operator was engaged in interstate commerce because “such small scale efforts, when combined with others, could influence interstate coal pricing and demand.”

The Secretary has also argued and provided evidence that the Respondent’s use of machinery and equipment bought from out-of-state manufactures affects interstate commerce, also bringing respondent under MSHA’s jurisdiction. Though there is abundant precedent supporting the Secretary’s assertion on this point,

it only serves to bolster my decision. I
conclude, therefore, that the Respondent’s gravel operation affects interstate commerce and comes under MSHA’s inspection authority.

Accordingly, the Secretary’s Motion for Partial Summary Judgment is GRANTED and the Respondent’s summary judgment motion is DENIED. Further, the parties are ORDERED to continue settlement negotiations on the underlying citations and to file a status report within 60 days.

/s/ L. Zane Gill

L. Zane Gill

Administrative Law Judge

Distribution:

Amy S. Hairston, Esq., U.S. Department of Labor, Office of the Solicitor, 525 Griffin St. Ste 525, Dallas TX 75202

Dennis L. Heath, Esq., Fittstone, Inc., P.O. Box 279, Fittstown, OK 74842