Jerry Ike Harless Towing Incorporated, Harless, Inc.

Plain-English summary

Jerry Ike Harless Towing, Inc. dredged sand from the Calcasieu River, while related Harless, Inc. sold sand and other aggregates. Judge Jerold Feldman held that the dredging and processing activities were subject to the Mine Act and affirmed the registration citation against Harless Towing. He concluded that Harless, Inc.'s separate sales and storage activities did not make it a mine operator for this citation, granted its contest, and vacated the citation as applied to that company. Harless Towing was ordered to file the required Legal Identity Report within 21 days.

Decision snapshot

• Cited standard: 30 C.F.R. § 56.1000
• Outcome: Citation No. 3896905 was affirmed against Harless Towing and vacated as to Harless, Inc.
• Subsequent review: The Commission later reviewed the proceeding in cent-92-276-rm-commission.
• Key point: Related companies may receive different Mine Act jurisdiction treatment when one extracts and processes minerals while the other only sells or stores them.

Full text (FMSHRC public release)

FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

             OFFICE OF ADMINISTRATIVE LAW JUDGES
                    2 SKYLINE, 10th FLOOR
                     5203 LEESBURG PIKE
                FALLS CHURCH, VIRGINIA 22041

JERRY IKE HARLESS TOWING : CONTEST PROCEEDING
INCORPORATED, HARLESS, INC.,:
Contestants : Docket No. CENT 92-276-RM
v. : Citation No. 3896905; 5/19/92
:
SECRETARY OF LABOR, : Harless Inc.
MINE SAFETY AND HEALTH :
ADMINISTRATION (MSHA), : Mine ID 16-01238
Respondent :

                             DECISION

Appearances: Jerry Ike Harless, Lake Charles, Louisiana,
Michael E. Roach, Esq., on the brief, for
the Contestants;
Robert Goldberg, Esq., U.S. Department of
Labor, Office of the Solicitor, Dallas,
Texas, for the Respondent.

Before: Judge Feldman

  This proceeding concerns a Notice of Contest filed

pursuant to Section 105 of the Federal Mine Safety and Health
Act of 1977 (the Act), 30 U.S.C. § 815. A hearing was con-
ducted on January 29, 1993, in Lake Charles, Louisiana, at
which Jerry Ike Harless (Harless), the Chief Executive Officer
(CEO) of Jerry Ike Harless Towing, Inc. (Harless Towing), and
Harless, Inc., represented the contestant.(Footnote 1) Harless
stipulated

1
Harless Towing, which is involved with the dredging of sand, and
Harless, Inc., which sells sand, gravel and limestone, will be
referred to collectively as the contestant. Although the subject
citation in this matter was issued to Harless, Inc., it is
apparent that the issuing inspector was not familiar with the
distinction between the two corporate entities. The inspector's
confusion is understandable in view of Harless' failure to file
any identity reports with MSHA distinguishing the corporations.
Moreover, Harless' May 27, 1992, complaint seeking injunctive
relief and his July 20, 1992, Notice of Contest in this
proceeding were filed on behalf of both Harless Towing and
Harless, Inc. (Gov. Ex. 2). Finally, Chief Administrative Law
Judge Merlin's September 4, 1992, Order of Assignment in this
proceeding notes both corporations. Accordingly, at trial, I
concluded that although Harless, Inc., was cited as the operator
in the subject citation, MSHA's jurisdiction over Harless Towing
is also an appropriate issue for disposition in this proceeding.

Page 3

(Tr. 141-143). Consequently, Counsel's posthearing assertion in

on the record to my jurisdiction to hear this matter (Tr. 20).
However, his stipulation concerning my authority was not
an admission that either corporation is engaged in mining.
After the trial, Harless retained Michael E. Roach as legal
counsel. On April 15, 1993, Roach filed a simultaneous motion
to appear and motion requesting an extension of time to file
posthearing briefs which was granted by Order dated April 19,
1993. The parties filed proposed findings and conclusions on
May 10, 1993.

 As detailed below, Harless Towing dredges sand from the

Calcasieu River. The sand is then transported by barge to a
dock location at Harless, Inc., where it is off-loaded, stock-
piled and sold (Tr. 115). This contest proceeding concerns
the validity of Citation No. 3896905 that was issued to Harless
on May 19, 1992, for violation of 30 C.F.R. § 56.1000, as a
result of his failure to notify the Mine Safety and Health
Administration (MSHA) of his commencement of mining
operations.(Footnote 2) The basic issue for determination is
whether the activities of Harless Towing and/or Harless, Inc.,
are subject to the jurisdiction of the Mine Act.

              PRELIMINARY FINDINGS OF FACT

 As indicated above, Jerry Ike Harless is the CEO of Harless

Towing and Harless, Inc., which are closely held corporations
incorporated in the State of Louisiana. His daughters, Jeri
Green and Barbara Southerland, respectively, are the President
and Vice President of both corporations. Harless' wife, Mildred
Whitney Harless, is the Secretary of both companies.

  Harless Towing has been extracting sand from the riverbed

of the Calcasieu River four to six months each year for the
last 30 years. The Calcasieu River is a navigable waterway
which flows into the Gulf of Mexico. Harless Towing, pursuant

fn. 1 (continued)
his proposed findings that Harless Towing is not a party in this
matter is without merit.

2
Section 56.1000 provides:
"The owner, operator, or person in charge of any metal
or nonmetal mine shall notify the nearest Mine Safety and Health
Administration and Metal and Nonmetal Mine Safety and Health
Subdistrict Office before starting operations, of the approximate
or actual date mine operation will commence. The notification
shall include the mine name, location, the company name, mailing
address, person in charge, and whether operations will be
continuous or intermittent."
This notification is essential to the orderly administration
and enforcement of the Mine Act.

to a United States Corps of Army Engineers permit, extracts
approximately 20,000 to 25,000 tons of sand per year. The
extracted material does not contain any coal.

 Harless Towing employs between four and eight individuals

in its sand dredging operation. During non-dredging months
these employees work at Harless, Inc., performing such duties
as truck driving, loading and stockpiling. Harless Towing uses
a vessel, the "D/B Betsy," with dredging machinery situated
thereupon and several barges in tow. The dredge hydraulically
suctions sand and sediment from the river bottom, along with
river water. The dredged material is then pumped through a
system of piping, wherein an initial separation process takes
place separating the sand from the bulkier material. The piping
then directs the sand and sediment onto a barge called the screen
barge. There, the material is pumped through a 1/4 inch mesh
screen where remaining debris is removed. From the screen barge
the sand and water are pumped through a chute or flume to another
barge, called the heart barge. On the heart barge, the sand is
further processed to separate sand from the remaining water.

 The sand screening process continues during the period the

sand is conveyed by tug on the heart barge to one of two of
Harless, Inc.'s, off-loading terminals where cranes, owned and
operated by Harless, Inc., remove and stockpile the sand. The
tugboat operation is regulated by the United States Coast Guard.
Harless, Inc.'s main terminal is located at Bayou D'Inde Street,
approximately 20 miles down river from the dredging site.

 Harless, Inc., sells the sand to individual and corporate

customers who are large industrial concerns such as Occidental
Petroleum, Citgo Petroleum, Olin and Gulf States Utilities.
The sand is used in a variety of ways including industrial use,
building foundations, golf course sand traps and sand boxes.
In addition to river sand, Harless, Inc., also stockpiles and
sells limestone aggregate, gravel, mason sand and concrete sand.
The limestone comes from Kentucky and Missouri by barge and the
gravel is hauled from various quarries north of Lake Charles.
Sometimes the gravel is delivered and sometimes Harless, Inc.,
hauls the gravel by truck.

 On May 12, 1992, MSHA Inspectors John Ramirez and Steve

Montgomery arrived on the Bayou D'Inde premises of Harless, Inc.,
where they met Harless and his daughter, Barbara Southerland.
They identified themselves and explained the legal identity
reporting requirements for mine operators contained in Section
56.1000. Harless and Southerland questioned whether they were
subject to the Mine Act's jurisdiction. Ramirez left the Legal
Identity Report (MSHA Form 2000-7) with them for completion
and obtained permission to inspect Harless Towing's dredging
operation located upstream. Ramirez and Montgomery drove to
the dredging site where they inspected the dredge, including

all moving components on the engine, such as shafts and pulleys.
They also checked handrails and looked at the first aid kit
and fire extinguishers. They did not find any violations and
concluded that the dredging site "was a clean operation."
(Tr. 53).

 Ramirez and Montgomery returned to the Harless, Inc., site

on May 13, 1992, at which time Harless and Southerland refused
to complete the Legal Identity Report because they believed that
they were not engaged in mining. No additional action was taken
by Ramirez in order to provide Harless with the opportunity to
consult an attorney. Ramirez returned on May 19, 1992, at which
time Harless again refused to complete the mine registration
process. Consequently, Ramirez issued Citation No. 3896905 for
a violation of Section 56.1000 based upon Harless' failure to
notify MSHA before commencing sand dredging operations.

 On May 22, 1992, Harless challenged MSHA's jurisdiction

by seeking injunctive relief in the United States District
Court for the Western District of Louisiana. Thereafter,
Citation No. 3896905 was modified on June 1, 1992, to extend
indefinitely the termination date to allow Harless to pursue the
injunction. On July 15, 1992, The Honorable Edward F. Hunter
dismissed Harless' request for relief with the stipulation that
he be provided with the opportunity to pursue relief through the
Mine Act's administrative process. This brings us to the case
at bar.
FURTHER FINDINGS AND CONCLUSIONS

Commerce Issue

 As a threshold matter, regardless of whether Harless is

engaged in mining, he argues that his companies are exempt from
the jurisdiction of the Mine Act because they are not engaged
in interstate commerce. The following discussion formalizes
my bench decision that both corporate entities are engaged in
interstate commerce as contemplated by the Act (Tr. 22-23).
Section 4 of the Mine Act, 30 U.S.C. § 803, provides:

 Each coal or other mine, the product of which enter
 commerce, or the operations or products of which
 affect commerce, and each operator of such mine,
 and every miner in such mine shall be subject to
 the provisions of this Act (emphasis added).

 In Cobblestone, Ltd., 10 FMSHRC 731, 733 (June 1988),

Judge Cetti, citing Brennan v. OSHRC, 492 F.2d 1027 (2nd Cir.
1974); U.S. v. Dye Construction Co., 510 F.2d 78, 83 (10th Cir.
1975); Polish National Alliance v. NLRB, 322 U.S. 643 (1944);
and Godwin v. OSHRC, 540 F.2d 1013 (9th Cir. 1976), noted that

the phrase "which affect commerce" in Section 4 of the Mine
Act is consistent with Congress' intent to exercise its full
constitutional authority under the commerce clause.(Footnote 3)

 Turning to the facts of this case, Harless Towing operates

a vessel under the jurisdiction of the U.S. Coast Guard in the
navigable waters of the Calcasieu River in order to dredge and
transport sand under permit issued by the U.S. Corps of Army
Engineers. These operational activities alone, without address-
ing the issue of the ultimate destination of the extracted sand,
affect commerce and give rise to Federal jurisdiction.
Therefore, Harless Towing is clearly engaged in the requisite
activities that subject it to the jurisdiction of Section 4 of
the Mine Act.

 Harless, Inc., sells the dredged sand it acquires from

Harless Towing to multi-national and national corporations such
as Occidental Petroleum, Citgo Petroleum, Olin, Gulf States
Utilities and Pittsburgh Plate Glass Company. Harless testified
that the sand is delivered to customers by truck. It is used to
manufacture glass. Its uses also include fill under roadways
and use as a construction material in foundations (Tr. 21-23).
It is obvious that the trucking of the sand and its use to sup-
port highways, alone, affect commerce. Moreover, the interstate
activities of its customers, e.g., Gulf States Utilities, provide
a basis for concluding that the sand sold by Harless, Inc.,
enters or affects commerce. Thus, Harless, Inc.'s business
activities also satisfy the commerce criteria in Section 4 of
the Act.(Footnote 4)

Mining Issue

  Having determined the companies are engaged in commerce,

the remaining issue is whether they are mine operators under the
Act. Section 3(h)(1) of the Act defines, in pertinent part,
"coal or other mine" as:

3
"Commerce" is defined in Section 3(b) of the Mine Act,
30 U.S.C. § 802(b) as:

 "Trade, traffic, commerce, transportation or communication

among the several states, or between a place in a state and any
place outside thereof, or within the District of Columbia, or a
possession of the United States, or between points within the
same state but through a point outside thereof."

4
Harless' testimony relied upon in his posthearing brief that,
"Our sand -- I want to say 100 percent -- I will say 99 percent
is sold right here in Calcasieu Parish", is not dispositive (Tr.
21). The local sale of a product does not establish that the
product does not ultimately enter or affect commerce.

    (A) an area of land from which minerals are extracted
    in nonliquid form or, if in liquid form, are extracted
    with workers underground, (B) private ways and roads
    appurtenant to such area, and (C) lands, excavations,
    underground passageways, shafts, slopes, tunnels and
    workings, structures, facilities, equipment, machines,
    tools, or other property including impoundments,
    retention dams and tailings ponds, on the surface or
    underground, used in, or to be used in, or resulting
    from, the work of extracting such minerals from their
    natural deposits in nonliquid form, or if in liquid
    form, with workers underground, or used in, or to be
    used in, the milling of such minerals, or the work of
    preparing coal or other minerals, and includes custom
    coal preparation facilities (emphasis added).
    30 U.S.C. § 802(h)(1).

  In an attempt to escape from the above statutory definition,

Harless asserts that sand is not a mineral. In the alternative,
he contends that the dredging of sand from a river bottom is
extraction of minerals in liquid form. The assertion that sand,
which is composed of quartz and other silica, is a non-mineral
is frivolous (Tr. 86). Harless' remaining contention that the
dredging of sand from a riverbed is the extraction of a mineral
in liquid form is equally uninspiring.(Footnote 5) In this
regard, the United States Court of Appeals has held that the
operation of removing sand and gravel from their natural deposits
is mining under Section 3(h)(1) of the Act. In fact, the Court
concluded that the operation of preparing sand by separating
water and other debris gives rise to Mine Act jurisdiction even
if

5
The contestant's posthearing brief also cites the Louisiana
Civil Code to support its contention that it is not engaged in
mining. Notwithstanding the fact that the Louisiana Civil Code
is preempted by the Mine Act, the provisions of this state
statute have nothing to do with the mine industry. What is on
point are Marshall v. Stoudt's Ferry Preparation Co.,
602 F.2d 589, (3d Cir. 1979) cert. denied, 444 U.S. 1015 (1980)
and Fleniken's Sand and Gravel, Inc., 10 FMSHRC 1509 (November
1988). At my request, copies of these cases were provided to
Harless by counsel for the Secretary. (Letter dated February 9,
1993, from Robert A. Goldberg, Esq., to Jerry Ike Harless).
These decisions were sent to Harless to facilitate his compliance
with my on-the-record statement ordering the parties to compare
these cases to the current case in their posthearing briefs See
Tr. 152). The contestant's brief, however, fails to address
these cases.

the extraction process is not performed by the operator.
See Marshall v. Stoudt's Ferry Preparation Co., 602 F.2d
at 591-592.(Footnote 6)

 Consistent with Stoudt's Ferry, MSHA routinely oversees

sand and gravel dredging operations. See, e.g., Louisa Sand and
Gravel Company, Inc., 11 FMSHRC 1820, 1823 (September 1989);
Fleniken's Sand and Gravel, Inc., 10 FMSHRC at 1509. Thus, it is
evident that Harless Towing's extraction and preparation of sand
through its filtering process are activities covered by Section
3(h)(1) of the Mine Act. Therefore, Harless Towing's contest of
its obligation to complete the required Legal Identity Report as
required by Section 56.1000 of the regulations must be dismissed.

  Regarding Harless, Inc.'s status under the Act, it is clear

that the primary objective of this company is the commercial
sale of river sand extracted by Harless Towing, and the sale of
gravel and limestone that it purchases from suppliers. The sales
activities associated with these products also requires their
off-loading, stockpiling and delivery. In order to determine if
these activities should be construed as the "work of preparing
minerals" under Section 3(h)(1) of the Act, it is important to
determine if the subject activities are normally performed by the
operator.(Footnote 7) Although the work of preparing minerals
can include activities such as loading and storage, it is the
nature of the operations that is dispositive of the
jurisdictional issue. See Oliver M. Elam, Jr., Company, 4 FMSHRC
5 (January 1982). In this case, the performance of these
functions is associated with sales rather than extraction and
preparation. Clearly, Harless, Inc.'s commercial endeavors with
respect to its gravel and limestone sales do not subject it to
the Mine Act. Similarly, its storage and sale of sand should not
provide Mine Act jurisdiction solely because it acquired the sand
from Harless Towing, a distinct corporate entity with identical
ownership. Consequently, Harless, Inc.'s contest concerning its
responsibility to

6
Although the sediment prepared by Stoudt's Ferry included a
burnable product "akin" to coal, the Court stated that the
sand and gravel preparation, alone, subjected the operator to
the Act's jurisdiction as a mineral preparation facility.
Stoudt's Ferry, 602 F.2d at 592.

7
The Mine Act defines preparation of coal but does not address
the meaning of the preparation of "other minerals." Section 3(i)
of the Mine Act, 30 U.S.C. § 802(i), defines the "work of
preparing coal" as:
"[T]he breaking, crushing, sizing, cleaning, washing,
drying, mixing, storing, and loading of bituminous coal,
lignite, or anthracite, and such other work of preparing coal
as is usually done by the operator of a coal mine (emphasis
added).

register pursuant to Section 56.1000 of the regulations is
granted.

 As a final matter, at trial I noted that Harless'

willingness to abide by MSHA's reporting requirements if
he did not prevail in this proceeding would be a factor in
considering the appropriate civil penalty that should be
assessed. I also noted that Harless' completion of the
Legal Identity Report form would not prejudice his right to
further appeal (Tr. 153-154). There is no justification for
delaying implementation of this decision in view of Stoudt's
Ferry and the absence of any irreparable harm to Harless Towing,
particularly in view of the lack of any violations detected by
Ramirez. Finally, permitting any further delay in registration
would deny the employees of Harless Towing the protection
provided under the Mine Act.

                          ORDER

 Accordingly, Citation No. 3896905 IS AFFIRMED with respect

to Jerry Ike Harless Towing, Inc., and the subject contest IS
DISMISSED. Jerry Ike Harless Towing, Inc., IS ORDERED to file
the requisite Legal Identity Report (MSHA Form 2000-7) in
accordance with Section 56.1000 of the regulations within 21 days
of the date of this decision. The contest of Harless Inc.,
IS GRANTED and Citation No. 3896905, as it applies to Harless,
Inc., IS VACATED.(Footnote 8)

                             Jerold Feldman
                             Administrative Law Judge

8
This decision, in effect, permits modification of Citation No.
3896905 to include Harless Towing as well as Harless, Inc., as
the alleged operator. Harless is estopped from objecting to this
modification since it was his failure to identify Harless Towing
as the corporation involved in dredging activities that
necessitates this action. Any other approach would permit an
operator to conceal its identity from an inspector and then
assert that a citation for failure to register as a mine operator
is defective because the operator was not properly cited.
Moreover, Harless can not claim that he has been surprised or
otherwise prejudiced by this modification. (See fn. 1, supra).

Distribution:

Robert Goldberg, Esq., Office of the Solicitor,
U.S. Department of Labor, 525 South Griffin Street,
Suite 501, Dallas, TX 75202 (Certified Mail)

Jerry I. Harless, Jerry Ike Harless Towing, Inc.,
2589 Bayou D'Inde Road, Lake Charles, LA 70601
(Certified Mail)

Jerry I. Harless, Harless, Inc., 2589 Bayou D'Inde Road,
Lake Charles, LA 70601 (Certified Mail)

Michael E. Roach, Esq., 724 Moss Street, Post Office 1747,
Lake Charles, Louisiana 70601 (Certified Mail)

vmy