Three Star Drilling & Production Corporation

Plain-English summary

Three Star Drilling was developing an underground shaft and oil collector rooms as part of an oil-recovery project at DAD Well No. 1 in Illinois. The company argued that the project was not a Mine Act mine because oil would not be pumped while workers were underground, and that its operations did not affect commerce because no oil had yet been produced. Judge Avram Weisberger held that the project was a mine because workers were underground during construction and the facilities were being developed to extract oil. He also held that the construction and excavation activities affected interstate commerce and were not displaced by Illinois regulation. The judge directed the three cases to proceed to a hearing on the merits.

Decision snapshot

• Governing provisions: 30 U.S.C. §§ 803(h)(1), 804, and 955
• Outcome: The jurisdictional motions were resolved for the Secretary, and the cases were scheduled for a merits hearing.
• Key point: Mine Act coverage can extend to underground facilities being developed to extract liquid minerals even when extraction is not occurring while workers are underground.

Full text (FMSHRC public release)

CCASE:
SOL (MSHA) V. THREE STAR DRILLING
DDATE:
19890324
TTEXT:

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Federal Mine Safety and Health Review Commission (F.M.S.H.R.C.)
Office of Administrative Law Judges

SECRETARY OF LABOR, CIVIL PENALTY PROCEEDINGS
MINE SAFETY AND HEALTH
ADMINISTRATION (MSHA), Docket No. LAKE 88-65-M
PETITIONER A. C. No. 11-02866-05501

      v.                            Docket No. LAKE 88-77-M
                                    A. C. No. 11-02866-05502

THREE STAR DRILLING &
PRODUCTION CORPORATION, Docket No. LAKE 88-92-M
RESPONDENT A. C. No. 11-02866-05503

                                    DAD Well No. 1

                           ORDER

Appearances: Rafael Alvarez, Esq., Office of the Solicitor,
U. S. Department of Labor, Chicago, Illinois,
for the Secretary;
James B. Wham, Esq., Richard A. Cary, Esq., Wham &
Wham, Centralia, Illinois, for Respondent.

Before: Judge Weisberger

Statement of the Case

 The above consolidated cases are before me based upon

proposals for civil penalities filed by the Secretary
(Petitioner) for alleged violations by the Operator (Respondent)
of various safety standards set forth in Volume 30 of the Code of
Federal Regulations. The Respondent filed a Motion for Summary
Decision, and Petitioner filed a Motion for Partial Summary
Decision. Pursuant to a telephone conference call between Counsel
for both Parties and the undersigned, at the request of Counsel, I
met with Counsel at the site of Respondent's DAD Well No. 1 and
observed its vertical shaft, on the morning of October 25, 1988.
Pursuant to notice, on October 25 - 26, in Terre Haute, Indiana,
and November 29, 1988, in Indianapolis, Indiana, a hearing was
held solely for the purpose of allowing the Parties to present
argument and evidence on the jurisdictional issues raised by the
respective Motions for Summary Decision. At the hearing, Robert
Earl Williams, Bernard Martin, and William Melcher testified for
Respondent, and Raymond Roesler and Robert L. Ferriter testified
for Petitioner. At the hearing, it was clarified by Counsel for
both Parties that if the jurisdictional issues were to be decided

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in favor of Respondent, then the cases should be dismissed. In
the alternative, should the jurisdictional issues be determined
in favor of Petitioner, then the cases should be set for hearing
on the merits.

  At the conclusion of the hearing, Counsel were directed to

file Posthearing Briefs and Proposed Findings of Fact 3 weeks
after receipt of the hearing transcript. Both Parties requested
an extension to file briefs by February 6, and the request was
granted. Petitioner filed its Proposed Findings of Fact and
Conclusions of Law and Brief on February 8, 1989, and Respondent
filed its Proposed Findings of Fact and Conclusions of Law and
Brief on February 9, 1989. Subsequently, the Parties requested
and were granted an extension until March 16 to file Reply
Briefs, and Respondent filed its Answers to Petitioner's Brief on
March 20, 1989, and Petitioner filed its Reply Brief on March 21,
1989.

Findings of Fact

 1. Respondent, Three Star Drilling and Production Company,

is an oil company which owns three oil wells in Illinois.
Respondent sells its oil to the oil Producers Association in
Springfield, Illinois.

 2. Respondent is engaged in an oil recovery project known as

the DAD Well No. 1 near Casey, in Cumberland County, Illinois.

 3. The DAD Well No. 1 is located in the Siggins Field.

Respondent has over 500 wells in this field that are "producers."

 4. The Upper Siggins is approximately 300 to 350 feet deep

and the Lower Siggins is approximately 500 to 550 feet deep.
Between the Upper and Lower Siggins sand is a Stray sand that is
approximately 412 to 427 feet deep.

 5. Primary and secondary recovery of oil in the Upper

Siggins sand, and primary recovery of oil in the Lower Siggins
sand have occurred.

 6. Primary recovery is by drilling a well from the top of the

ground and the result is that the oil gushes out.

 7. Secondary recovery is by pumping water into the oil

reservoir which forces the oil to come out.

 8. Respondent proposes to extract oil from the Siggins oil

field by direct access drilling.

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9. The DAD Well No. 1 will be developed in two stages:

        a. mine shaft sinking;

        b. developing oil collector rooms.

 10. Respondent began excavating the shaft in October 1986.

The shaft is 6 feet wide by 10 feet and 10 inches long, and as of
November 29, 1988, reached a depth of 384 feet below the surface.

 11. The mine shaft is deepened by drilling holes, loading

the holes with explosives, blasting, and loading broken material
into a hoist bucket with a Criderman mucking hoist.

   12. The shaft is lined with concrete as it is deepened.

 13. Employees are able to enter the shaft by riding a cage.

The shaft has a ladder with a landing every 30 feet. It is used
as an alternative method of exit from the shaft.

 14. A blowing system, which delivers approximately 30,000

cubic feet of air a minute into the shaft, has been installed. The
shaft has a 16 inch ventilation tube that is anchored to the
walls.

 15. Respondent has installed a conduit for electricity and a

water piping system.

 16. All surface equipment such as hoists, hoist drums,

cables, and headframes are typical mine shaft equipment.

 17. Employees work underground drilling holes, loading the

hole with explosives, and loading the muck into a bucket.

 18. A 24-foot circular oil collector room connected to the

shaft, by a 20-foot tunnel, had been completed at the upper level
of the Siggins Sand, 354 feet below the surface.

 19. Respondent used a roof bolting machine to install roof

bolts in the tunnel and oil collector room.

 20. Respondent's plan for drilling involved the horizontal

drilling of a number of holes in the walls of the oil collector
room into the Siggins Sand formation. These 3 1/2-inch diameter
horizontal holes will continue for a distance of approximately
800 feet. Each horizontal hole will be drilled, capped, and
regulated by a remote control valve with a switch located in the
hoist room or at the top of the shaft, both of which are located
above ground. These horizontal drill holes will be connected to

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a common line running to a sump, and any oil flowing into the
sump will then be pumped to the surface by a pump actuated by
remote control from above ground. No oil will run out of the
horizontal drill holes into the sump with men underground. Nor
will there be men underground when the oil is pumped from the
sump to the surface.

 21. DAD Well No. 1, is still under construction and there

has been no oil produced nor drilling for oil commenced as of
November 22, 1988, the date of the last evidentiary hearing. No
product from DAD Well No. 1 has been sold to anyone.

 22. The excavation of the oil collector room required that

employees work underground.

 23. After the development of the oil collector rooms,

Respondent's employees might have to periodically work
underground to replace pumps, unclog pipes, and drill long holes.
During these procedures, the remote control valves, regulating the
oil flow in the horizontal holes, will be shut off, and no oil will
be extracted.

 24. The State of Illinois Division of Mines and Minerals has

ordered Respondent to comply with Chapters 13, 14, and 19 of the
Health and Safety Rules and Regulations found in the 1985
Illinois Revised Statute, Chapter 96 1/2, paragraph 544023.3.

Issues

  1. Whether Respondent's operation at DAD Well No. 1 is a

mine as defined in the Federal Mine Safety and Health Act of
1977.

 2. Whether Respondent's operation at the DAD Well No. 1

affects commerce.

 3. Whether the Federal Mine Safety and Health Act of 1977 is

preempted by the 1985 Illinois Revised Statute, Chapter 96 1/2
Paragraph 5440 23.3.

Discussion

                         I.

 In evaluating whether Respondent's operation at the DAD Well

No. 1 is subject to the Federal Mine Safety and Health Act of
1977 (the Act), and regulations promulgated thereunder, reference
must be made to section 3(h)(1) of the Act which, as pertinent,
defines a mine as . . . "lands, evacuations, underground passage
ways, shafts, slopes, tunnels and workings,

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structures, facilities, equipment, machines, tools, or other
property . . . on the surface or underground, used in, or to be
used in, or resulting from, the work of extracting such materials
from their natural deposits in nonliquid form, or if in liquid
form, with workers underground, . . . . "

 It appears to be Respondent's main argument that lands,

shafts, and equipment used in extracting liquid minerals, are not
to be considered a mine unless workers are underground during the
time when the liquid minerals are being extracted. Respondent
then argues that the operation herein can not be considered a
mine, inasmuch as the evidence clearly establishes that no oil
will be extracted when workers are underground. In this
connection, the record indicates that oil is not produced or
extracted while men are underground engaged in construction of
the shaft, horizontal holes, or collector rooms. Indeed, no oil
will be produced until construction is completed. Also, once
production has commenced, no workers will have any regular tasks
underground. Should a worker have to go underground on occasion
to replace a pump, all valves will be first closed from above
ground, stopping the extraction of oil before men actually go
underground.

 It is manifest that the language of section 3(h)(i), supra,

does not clearly compel a conclusion, based on a plain reading of
its words, that in order for an operation to be subject to the
Act and be considered a mine, workers must be underground during
the time when the liquid mineral is being extracted. The language
of section 3(h)(i), supra, is also capable of being interpreted
as encompassing in the definition of a mine, as in the case at
bar, shaft and various equipment used in extracting liquid
minerals with the additional requirement that workers be
underground at sometime during the operation, but not necessarily
concurrent with the limited activity of the oil being led into
the pumps and pumped to the surface. Inasmuch as section 3(h)(i),
supra, is capable of more than one construction, I place
considerable weight on the legislative history of the Act, in
determining how to interpret section 3(h)(i), supra. In this
connection I note that Congress clearly intended that the
coverage of the Act be as broad as possible. I find most
instructive the following language, contained in the legislative
history of the Act, with regard to Congressional intent to make
the coverage of the Act as broad as possible. "The Committee
notes that there may be a need to resolve jurisdictional
conflicts, but it is the Committee's intention that what is
considered to be a mine and to be regulated under this Act be
given the broadest possible interpretation, and it is the intent
of this Committee that doubts be resolved in favor of inclusion
of a facility within the coverage of the Act." (S. Rep. No. 181,
95th Cong., 1st Sess. 14 (1977), reprinted in Senate Subcommittee
on Labor, Committee on Human Resources, 95th Cong., 2nd Sess.,
Legislative History of the Federal Mine Safety and Health Act of
1977, at 602 (Legis. Hist.). I thus conclude that to adopt the

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narrow construction urged by Respondent would be violative of
Congressional intent. Indeed, taking into account the very strong
Congressional declaration, as contained in section 2 of the Act,
that, with regard to the purpose of the Act, its first priority
". . . must be the health and safety of its most precious
resource - the miner;", it would not seem logical for one working
underground here in the construction of the shaft or one of its
collector rooms, or in the replacing of a pump, not to be covered
by the protections afforded in the Act, merely because the worker
was not present concurrent with the physical pumping of the oil
to the surface. It is clear that the shafts and collector rooms,
where workers are presently located underground, are being
developed for the purpose of extracting oil.(FOOTNOTE 1) I thus conclude
that Respondent's operation at DAD Well No. 1 is a mine within
the purview of the Act.

                         II.

 Section 4 of the Act, in essence, provides that a mine whose

products enter commerce or whose ". . . operations or products of
which affect commerce," shall be subject to the Act. Respondent,
based on the uncontroverted evidence of record, argues that
inasmuch as its operation, at DAD Well No. 1, is not yet
producing any oil, it does not have any product which is entering
commerce. The record supports Respondent's contention in this
regard. However, Respondent is still under the jurisdiction of
the Act if it is established that its operations "affect
commerce." In this connection, it appears to be Respondent's
argument, that inasmuch as its operation is in a speculative
stage, and there is no assurance that oil will ever be produced,
it has not been established that its operation has any affect on
commerce.

 In Godwin v. OSHRC, 540 F.2nd 1013 (9th Cir., 1976), the

Court of Appeals was faced with a factual situation similar to
the
case at bar. In Godwin, supra, the Court had to consider
whether the activity of clearing land for the purpose of growing
grapes was included within the purview of the Occupational Safety
and Health Act of 1970 (29 U.S.C. 651 et seq.), which provides
that, in general, an employee is subject to the Act if his
activities "affect commerce," 29 U.S.C. 652(6), which is the
same language as contained in Section 4 of the Act. The Court in
Godwin, supra, essentially held that the clearing of the land for
the purpose of growing grapes will adversely affect commerce if
performed under unsafe conditions. The Court, at 1016, supra,

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held as follows: "Clearing land is an integral part of the
manufacturing of wine, and therefore commerce is affected by the
activity." (Emphasis added).(FOOTNOTE 2)

 Similarly, in the case at bar, the sinking of the shaft and

excavating of the oil collector room, the activities presently
being engaged in, are integral parts of the activity of the
recovery of oil from the Siggins Field, and as such, commerce is
affected by the present activities. (See also, Secretary v. Sun
Landscaping and Supply Company 2 FMSHRC 975 (April 1980) (a
company that had been in operation for 3 days intending to mine
marble, crush it and sell it, and was engaged in crushing marble
on the day of the inspection was held to be covered by the Act
based upon its current activity and future intentions; see also,
Secretary v. Bradford Coal Company, Incorporated, 3 FMSHRC 1567
(June 1981), where it was found that the business of building
coal preparation plants was a class of activity the cumulative
effect of which affected interstate commerce). I therefore find
that Respondent's operation at DAD Well No. 1 does affect
interstate commerce, and is thus within the jurisdiction of the
Act.

                        III.

 Respondent, in essence, has raised the issue that the

regulation of its mine by MSHA is improper inasmuch as the State
of
Illinois has maintained jurisdiction over the project from its
commencement to the present. It is clear that any State of
Illinois regulations, with regard to signaling during the
operation of the hoist in the shaft, or with regard to any other
aspect of Respondent's operation, do not preempt the Act. Section
506 of the Act permits concurrent State and Federal regulation,
but under

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the Federal Supremacy Doctrine, a State Statute is void to the
extent that it conflicts with a valid Federal Statute. Dixy Lee
Ray v. Atlanta Richfield Company, 435 U.S. 151 1978. Accordingly,
it is held that Respondent's contention in this regard is without
merit.

                          ORDER

 Inasmuch as it is found that Respondent's operation at the

DAD Well No. 1 is subject to the jurisdiction of the Act, it is
ORDERED that these cases be scheduled for hearing on the
merits.(FOOTNOTE 3)

                            Avram Weisberger
                            Administrative Law Judge

ÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
FOOTNOTES START HERE
~FOOTNOTE_ONE
1. Although the testimony of Respondent's witness indicates
that if ultimately the extraction of oil is proved not feasible,
then the shaft and appurtenances, will be used for the storage of
waste, it is their present primary purpose, as a first step in the
extraction of oil, which is deemed critical.

~FOOTNOTE_TWO
2. The gravamen of Respondent's argument, that its present
operations are only speculative and therefore can not affect
commerce, was fully considered by Judge Ely, in a concurring
opinion, in Godwin, supra. Judge Ely found it "almost
inconceivable" for an accident at an early stage of an operation
to have a nexus with interstate commerce where any number of
circumstances could have prevented the fulfillment of the
eventual objective. Indeed, Judge Ely stated as follows: "To me,
it is virtually unthinkable that the Founding Fathers could have
foreseen the extent to which an increasingly expansive
interpretation of the commerce clause could so infringe local
authority." (Godwin, supra, at 1017). However, nonetheless, Judge
Ely reluctantly concurred in the majority decision and did not
feel that he could conscientiously dissent in light of Wickard v.
Filburn, 317 U.S. 111, (1942), Farmer's Irrigation Company v.
McComb, 337 U.S. 755 (1949), and Hodgson v. Ewing, 451 F.2d 526
(5th Cir., 1971).

~FOOTNOTE_THREE
3. I do not find Respondent's arguments persuasive that the
decision herein should not be applied retroactively. Should the
finding of jurisdiction be applied only prospectively, the burden
already suffered by Respondent, i.e. being caught between the
jurisdiction of the State of Illinois and MSHA and being subject
to double inspections would not be effected. It is true that as a
result of a retroactive application of the Act's jurisdiction,
Respondent might become liable for civil penalties for violations
of federally mandatory safety standards set forth in 30 C.F.R,
et. seq. which allegedly occurred during the retroactive period.
However, these penalties should be mitigated, as the record
indicates Respondent acted in good faith in believing it was not
subject to the jurisdiction of the Act, and hence did not act
with any significant degree of negligence in not conforming with
any federally mandated safety standards.

      I reject the remainder of Respondent's arguments and

find that the overriding purpose of the Act, i.e., the protection
of miners, is best furthered by not limiting the jurisdiction of
the Act to a prospective application.