Jim Walter Resources, Inc.

Plain-English summary

Jim Walter Resources operated a Central Supply Shop away from its underground coal mines, stocking and delivering equipment, tools, and supplies used in its mining operations. An ALJ had concluded that the shop was not a mine and dismissed the proceedings after JWR contested citations issued when MSHA sought to inspect the facility. The Commission held that the Mine Act's definition of a mine includes off-site facilities and equipment used in extracting or preparing coal, even when a mine operator centralizes supply operations at one warehouse. It reversed the ALJ's decision and remanded for reassessment of penalties under the statutory criteria.

Decision snapshot

• Governing provisions: 30 U.S.C. § 802(h)(1); 30 U.S.C. § 820(i)
• Outcome: The Commission reversed the ALJ's decision, held that the Central Supply Shop was a mine under the Mine Act, and remanded for penalty reassessment.
• Key point: Mine coverage turns on whether a facility and its equipment are used in mining or coal preparation, not simply on where the facility is located.

Full text (FMSHRC public release)

FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION
1730 K STREET NW, 6TH FLOOR
WASHINGTON, D.C. 20006

                                     January 31, 2000

SECRETARY OF LABOR, :
MINE SAFETY AND HEALTH : Docket Nos. SE 99-6-R
ADMINISTRATION (MSHA) : through 99-10-R
: and 99-66
v. :
:
JIM WALTER RESOURCES, INC. :

BEFORE: Jordan, Chairman; Marks, Riley, Verheggen, and Beatty, Commissioners

                                        DECISION

BY THE COMMISSION:

    This case involves contest proceedings arising under the Federal Mine Safety and Health Act

of 1977, 30 U.S.C. § 801 et seq. (1994) (“Mine Act” or “Act”). At issue is whether the Central
Supply Shop operated by Jim Walter Resources, Inc. (“JWR”) is a “coal or other mine” under
section 3(h)(1) of the Act, 30 U.S.C. § 802(h)(1).1 JWR refused to allow the Department of Labor’s
Mine Safety and Health Administration (“MSHA”) to conduct an inspection of the premises during
September 1998. Subsequently, MSHA issued several citations that are the subject of this

     1

Section 3(h)(1) provides:

          “[C]oal or other mine” means (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.


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Page 2

proceeding. Administrative Law Judge Jerold Feldman found that the Central Supply Shop was not
a “mine” and dismissed the proceedings against JWR. 21 FMSHRC 494 (May 1999) (ALJ). For
the reasons that follow, we reverse the judge’s decision and remand for reassessment of penalties.

                                                I.

                              Factual and Procedural Background

    JWR operates four underground coal mines in a two-county area in Alabama. 21 FMSHRC

at 496. In one of those counties, JWR also operates its Central Machine Shop and Central Supply
Shop. Id. The two facilities, which are adjacent to one another, are not on the property of any one
of the coal extraction sites but are located 1 mile from the closest site, 6 miles from two of the sites,
and 25 miles from the farthest site. Id.

     The main function of the Central Machine Shop is to repair and maintain electrical and

mechanical equipment used at the nearby JWR mines. Id. at 497. Typical jobs include the
rebuilding of longwall stageloaders, continuous mining machines, ram cars, scoops, and roof bolters,
overhauling longwall shields, and fabricating chutes and hoppers for coal preparation plants at the
mines. Id. JWR employees deliver equipment from the mines to the Central Machine Shop using
JWR vehicles. Id. The Central Machine Shop provides its services only to JWR’s mines and related
facilities. Id.

    MSHA has inspected the Central Machine Shop annually since 1982, and JWR paid

penalties for 43 violations as a result of such inspections. Id. at 496-97. JWR has complied with the
Part 50 reporting requirements with regard to that shop. Id. at 497. The Central Machine Shop also
has a mine identification number. Id. at 496.

   The primary function of the Central Supply Shop is to warehouse materials and supplies used

in JWR’s nearby mines, preparation plants, and the adjacent Central Machine Shop. Id. at 498.
Central Supply does not sell any of these materials to the public. Id. The value of the inventory in
the Central Supply is approximately $12 million, which includes about $7 million in supplies on
consignment. Id. Until such time as the goods are used, the vendor has the right to retrieve the
goods, although this rarely occurs. Id.

   Workers at the Central Supply Shop deliver materials and supplies to JWR mines in a

company-owned flatbed truck. Id. Over 90 percent of inventoried supplies are used directly in
JWR’s mining operations. Id. Supplies include everything needed to support JWR’s mines,
including hard hats, safety glasses, nails, conveyor belts, belt structures, and oil filters. Id. The
majority of items on the active inventory list are parts for maintaining and repairing machinery and
equipment. See S. Br. in Support of Juris., Ex. B.

   Before the incident at issue in this case, MSHA had not previously inspected the Central

Supply Shop. 21 FMSHRC at 497. Nor had JWR secured a mine identification number for the shop.

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Page 3

Id. JWR employs 16 salaried and 7 hourly paid workers at the Central Supply Shop. Id. at 498.
Although the regular hours of the Central Supply Shop are Monday through Saturday, on-call
personnel are available to staff the facility around the clock, seven days a week. Id. at 499.

     On September 23, 1998, MSHA issued five citations for alleged violations in the Central

Machine Shop. Id. at 501; Order Correcting Sum. Dec. at 2. In addition, MSHA issued three
citations for alleged violations in the Central Supply Shop, including JWR’s refusal to allow MSHA
entry to conduct an inspection, JWR’s failure to provide a fire extinguisher on a fork lift, and its
failure to have an audible horn on the fork lift. 21 FMSHRC at 502; Order Correcting Sum. Dec. at

2. JWR contested the citations on the basis that neither facility was a “mine” within the meaning of
   the Act. 21 FMSHRC at 494.

    With regard to the Central Machine Shop, the judge regarded as controlling the
   

   Commission’s decision in U.S. Steel Mining Co., 10 FMSHRC 146 (Feb. 1988), in which the
   Commission held that a centrally located repair shop was covered by MSHA’s surface mine
   regulations. 21 FMSHRC at 500-01. In addition, the judge considered it significant that
   maintenance of mine equipment was an integral part of the mining process and was one of the
   activities generally performed by mine operators. Id. at 501.2 Thus, the judge held that the Central
   Machine Shop was subject to Mine Act jurisdiction. Id.

   In addressing the Central Supply Shop, the judge first noted that MSHA’s enforcement
   

   history was “inconsistent” because the agency had not previously sought to assert jurisdiction. Id.
   Further, the judge noted that, while the Mine Act’s coverage is broad, in order to qualify as a
   “miner” under section 3(g) of the Act, 30 U.S.C. § 802(g),3 one must work in a mine. Id. at 501-02
   (quoting National Indus. Sand Ass’n v. Marshall, 601 F.2d 689, 704 (3d Cir. 1979)). The judge
   reasoned that some activities might be covered, if on mine property, but would not be covered if
   outside mine property. Id. at 502 (citing Oliver M. Elam, Jr., Co., 4 FMSHRC 5 (Jan. 1982)).
   Finally, the judge noted that individuals performing supply activities were not exposed to hazards
   normally associated with mining. Id. Therefore, the judge concluded that the Central Supply Shop
   was not “a coal or other mine” under section 3(h) of the Mine Act. Id.

                                              II.
   
                                          Disposition
   
   The Secretary argues that the Central Supply Shop is a mine under the plain language of
   

   section 3(h)(1) of the Mine Act. S. PDR at 7-9.4 Alternatively, the Secretary argues that her

    2
        JWR has not appealed the judge’s conclusion that the Central Machine Shop is a mine.
    3
        Section 3(g) defines “miner” as “any individual working in a coal or other mine.”
    4
        The Secretary designated her petition for review as her brief.
   
                                       22 FMSHRC 23
   

Page 4

interpretation of the Act is permissible and consistent with Congressional intent that the Act’s
definition of a mine be expansively interpreted. Id. at 9-12. The Secretary asserts that the judge’s
reliance on several cases was misplaced, in particular his analogy to cases interpreting who is a
“miner.” Id. at 12-15 & n.4. Finally, the Secretary contends that her interpretation is entitled to
deference even though MSHA had not previously sought to assert jurisdiction over the Central
Supply Shop. Id. at 16-18.

    JWR’s primary argument on review is that the judge’s findings are supported by substantial

evidence. JWR Br. at 8-9. It further argues that the judge’s decision is in accordance with
Commission precedent, because there are no cases on point in the Secretary’s favor. Id. at 10.
Finally, JWR argues that the judge’s legal conclusions are correct. More particularly, JWR argues in
support of the judge’s conclusion that the Mine Act’s definition of a “mine” does not apply to the
Central Supply Shop because the facilities and equipment there are not used in the work of preparing
coal. Id. at 10-11. JWR also contends that the judge correctly concluded that the Secretary’s
position is not reasonable because the activities performed in the Central Supply Shop are not of a
type normally performed in coal mines. Id. at 11.

    The first inquiry in statutory construction is “whether Congress has directly spoken to the

precise question at issue.” Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467
U.S. 837, 842 (1984); Thunder Basin Coal Co., 18 FMSHRC 582, 584 (Apr. 1996). If a statute is
clear and unambiguous, effect must be given to its language. See Chevron, 467 U.S. at 842-43;
accord Local Union 1261, UMWA v. FMSHRC, 917 F.2d 42, 44 (D.C. Cir. 1990). In ascertaining
the plain meaning of the statute, courts utilize traditional tools of construction, including an
examination of the “particular statutory language at issue, as well as the language and design of the
statute as a whole,” to determine whether Congress had an intention on the specific question at issue.
K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291 (1988); Local Union 1261, UMWA v. FMSHRC,
917 F.2d at 44; Coal Employment Project v. Dole, 889 F.2d 1127, 1131 (D.C. Cir. 1989).

    The definitions of coal mine and coal preparation in sections 3(h) and 3(i) are “broad,”

“sweeping,” and “expansive.” Marshall v. Stoudt’s Ferry Preparation Co., 602 F.2d 589, 591-92
(3d Cir. 1979), cert. denied, 444 U.S. 1015 (1980) (“[T]he statute makes clear that the concept that
was to be conveyed by the word [‘mine’] is much more encompassing than the usual meaning
attributed to it — the word means what the statute says it means.”).5 Under section 3(h)(1), “coal or
other mine” includes “lands, . . . structures, facilities, equipment, machines, tools or other property

     5
       In addition, the legislative history of the Mine Act emphasizes that “what is considered

to be a mine and to be regulated under this Act [shall] be given the broadest possibl[e]
interpretation, and . . . doubts [shall] be resolved in favor of inclusion of a facility within the
coverage of the Act.” S. Rep. No. 95-181, at 14 (1977), reprinted in Senate Subcomm. on Labor,
Comm. on Human Resources, 95th Cong., Legislative History of the Federal Mine Safety and
Health Act of 1977, at 602 (1978).

                                       22 FMSHRC 24

Page 5

. . . used in, or to be used in, . . . the work of preparing coal . . . .” 30 U.S.C. § 802(h)(1). In light of
the Mine Act’s expansive language, we conclude that the Central Supply Shop is a mine under the
definition of section 3(h)(1).

    We further conclude that the language of the statute is clear. The stipulated record is equally

clear in establishing that the Central Supply Shop is a dedicated off-site facility of a (multiple) mine
operator where employees receive, stock, maintain, and deliver equipment, tools, and supplies used
at JWR’s coal extraction sites, preparation plants, and Central Supply Shop, including, inter alia,
rock dust, line curtains, hard hats, machine parts, and conveyor belts.6 Consequently, there is Mine
Act jurisdiction because a “mine” includes “facilities” and “equipment . . . used in or to be used in”
JWR’s mining operations or coal preparation facilities.7

    Our result is consistent with Commission case law. The Commission has stated, “[t]he

definition [of ‘coal or other mine’] is not limited to an area of land from which minerals are
extracted, but also includes facilities, equipment, machines, tools and other property used in the
extraction of minerals from their natural deposits and in the milling or preparation of the minerals.”
Harless, Inc., 16 FMSHRC 683, 687 (Apr. 1994) (citation omitted). In Harless, the Commission
rejected the operator’s argument that its sand dredging operation was not a “mine” because it was
not “an area of land from which minerals are extracted” and did not employ miners who worked
underground. See id. at 686-88. In this proceeding, the judge failed to consider Harless in reasoning
that the activities of JWR employees were not covered by the Mine Act because they were
performed “off mine site property.” 21 FMSHRC at 502.

    Similarly, in W.J. Bokus Indus., Inc., 16 FMSHRC 704, 708 (Apr. 1994), the Commission

held that MSHA properly cited equipment in a storage garage that was shared by a sand and gravel
operation and an asphalt plant. The Commission rejected the argument that title to the cited
equipment was determinative and found it significant that the cited equipment was “used or to be
used in mining and that . . . the cited conditions could affect miners in the garage.”8 Id.

      6
       The status of many items in JWR’s Central Supply Shop, as equipment “used in, or to

be used in,” extracting or preparing coal, would not necessarily have been evident until it was
delivered to JWR or another mine operator. Supplies such as nails, hard hats, conveyor belts and
machinery parts or equipment stored by a manufacturer, distributor, or commercial vendor, are
generally fungible and thus can be used in any number of industries, until they are to be used in
mining.
7
This case does not involve, and we therefore do not address, whether an off-site supply
warehouse operated by a vendor, mining equipment manufacturer, or distributor would be
covered under the Act, or even whether an off-site facility operated by a mining company or
subsidiary that is open for ‘commercial’ business would be covered.
8
In Bokus, the Commission did not reach the issue of whether the garage was a structure
or facility used in mining and, therefore, was a “mine” within the meaning of section 3(h)(1) of

                                          22 FMSHRC 25

Page 6

    U.S. Steel, 10 FMSHRC 146, on which the judge relied in affirming MSHA’s jurisdiction

over the Central Machine Shop, is suggestive, if not determinative, of the outcome of MSHA’s
assertion of jurisdiction over the Central Supply Shop as well. U.S. Steel operated a central machine
shop away from any of its mines. Id. at 147. In concluding that the shop itself was a “mine,” the
Commission reasoned, “the Shop consists of ‘lands . . . structures, facilities, equipment, machines,
tools, or other property’” used in extracting or preparing coal and, therefore, was a mine. Id. at 149.9
The Commission’s reasoning applies with equal force to the Central Supply Shop, which contained
equipment, machines, tools, or other property used in JWR’s mining and coal preparation activities.
S. Br. in Support of Juris., Ex. B.

    The judge’s reliance on the Commission’s decisions in Oliver Elam, 4 FMSHRC at 5, and

Dilip K. Paul v. P.B. - K.B.B., Inc., 7 FMSHRC 1784 (Nov. 1985), is misplaced. The central issue
in Elam was whether the operator of a commercial dock was engaged in the “work of preparing
coal,” within the meaning of sections 3(h)(1) and 3(i), 30 U.S.C. § 802(h)(1) and (i), when it loaded
coal onto barges. 4 FMSHRC at 6. In concluding that Elam’s facility was not a “mine,” the
Commission reasoned that coal preparation activities are generally undertaken to make coal suitable
for a particular use or to meet market specifications. Although Elam performed some of the
functions included in the Act’s definition of coal preparation, these were done solely to facilitate its
loading of coal onto barges. Id. at 8. In contrast to the operator in Elam, it was stipulated that JWR
operated coal mines and coal preparation facilities. 21 FMSHRC at 496. There is no issue here
concerning whether the Central Supply Shop was involved in the “work of preparing coal;” rather
the basis for jurisdiction is the presence of equipment and facilities used in the extraction process.
Thus, Elam and its progeny are inapplicable to determining whether the Central Supply is a “mine.”

    Paul is also readily distinguishable. That case, involving a complaint of discrimination,

arose at the office of an engineering firm charged with designing a ventilation plan and shaft for
storing nuclear waste. Id. at 1786-87. In dismissing the complaint, the Commission found it
significant that there was only a preliminary engineering design, which “never left the drawing
board,” and therefore there was literally no mine in existence. Id. at 1787. In short, neither Elam
nor Paul is dispositive of any issue in this proceeding. 10

the Mine Act. 16 FMSHRC at 708.
9
The Commission also noted that the shop had a mine identification number and a
history of citations. 10 FMSHRC at 149.
10
Cyprus Empire Corp., 15 FMSHRC 10, 14 (Jan. 1993), was also cited by the judge to
support the statement that in order to qualify as a “miner” an employee must work in a mine.
The issue in that case was whether striking employees at a mine could have their designated
walkaround representative accompany an MSHA inspector. Id. at 15. Thus, the primary issue
was whether striking employees were miners. See id. at 14.

                                       22 FMSHRC 26

Page 7

    Finally, in concluding that the Secretary’s interpretation was unreasonable, the judge relied

on the fact that the supply functions performed by JWR employees at the Central Supply Shop are
generally performed by vendors not exposed to mine hazards. 21 FMSHRC at 502. However, the
judge indicated that these same warehouse activities would be covered if the Central Supply Shop
was located on the site of one of JWR’s underground mines. Id. Coverage of JWR’s Central Supply
Shop employees should not be different because a mine operator has centralized supply room
operations for four of its mines at a single offsite warehouse. In any event, the hazards to which
miners are exposed are not limited to the hazards of underground mines, but include improperly
maintained equipment and supplies that are used in mining. See Bokus, 16 FMSHRC at 708 (cited
conditions of gas cylinders used in mining could affect miners in the garage where they were
stored).11 Moreover, the stipulated record shows that Central Supply Shop employees were
regularly on the sites of JWR’s underground mines to deliver supplies (21 FMSHRC at 498), and
thus were exposed to the same hazards as miners who work in surface facilities or operations on site.

     11
       It is apparent that, even under the judge’s holding that the Central Machine Shop was a

“mine,” JWR’s equipment and supplies would be covered if stored in the Central Machine Shop.
However, as Bokus indicates, whether a mine operator’s equipment is covered by the Mine Act is
not determined by its location but rather by its function — that is, whether it is used in extracting
or preparing coal. 16 FMSHRC at 708.

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Page 8

                                             III.

                                         Conclusion

    For the foregoing reasons, we reverse the decision of the administrative law judge and

conclude that the Central Supply Shop is a “mine” within the meaning of section 3(h)(1) of the Mine
Act. We remand the proceeding to the judge for the assessment of the appropriate penalties, taking
into consideration the penalty criteria of section 110(i), 30 U.S.C. § 820(i).12

                                          Mary Lu Jordan, Chairman




                                          Marc Lincoln Marks, Commissioner




                                          James C. Riley, Commissioner




                                          Theodore F. Verheggen, Commissioner




                                          Robert H. Beatty, Jr., Commissioner


     12
        Notwithstanding that JWR agreed to pay the proposed penalties in the event that it lost

on the issue of jurisdiction over the Central Supply Shop, the judge is required to make
“[f]indings of fact on each of the statutory criteria [that] not only provide the operator with the
required notice as to the basis upon which it is being assessed a particular penalty, but also
provide the Commission and the courts . . . with the necessary foundation upon which to base a
determination as to whether the penalties assessed by the judge are appropriate, excessive, or
insufficient.” Sellersburg Stone Co., 5 FMSHRC 287, 292-93 (Mar. 1983), aff’d, 736 F.2d 1147
(7th Cir. 1984).

                                      22 FMSHRC 28

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Distribution

Jack Powasnick, Esq.
Office of the Solicitor
U.S. Department of Labor
4015 Wilson Blvd., Suite 400
Arlington, VA 22203

Guy R. Hensley, Esq.
Jim Walter Resources, Inc.
P.O. Box 133
Brookwood, AL 35444

Administrative Law Judge Jerold Feldman
Federal Mine Safety & Health Review Commission
Office of Administrative Law Judges
5203 Leesburg Pike, Suite 1000
Falls Church, VA 22041

                                 22 FMSHRC 29