Secretary of Labor v. Kempton Transport, Inc.

Plain-English summary

Kempton Transport used four trucks to haul sand and gravel from a developing pit to a nearby crusher for M.R. Tanner five days a week over three months. The company argued that it was outside Mine Act jurisdiction because it had no written contract, was performing construction work, and was present only for that project. Judge Margaret A. Miller held that the actual working relationship controlled, that the oral hauling agreement made Kempton an independent contractor, and that moving extracted material to the crusher placed its drivers close to and directly involved in mining. Their daily, full-shift presence was also substantial rather than infrequent or minimal. The parties had agreed that the nine citations would stand if jurisdiction existed, but the Judge reduced negligence on two new-miner-training citations from moderate to low because Kempton held a good-faith belief that the training was not required, and she assessed $1,186 in total penalties.

Decision snapshot

• Governing provision: 30 C.F.R. § 45.2(c)
• Outcome: Mine Act jurisdiction and nine citations were affirmed, negligence on two training citations was reduced to low, and total penalties of $1,186 were assessed.
• Key point: A regular hauling company can be a Mine Act operator without a written contract when its work is closely tied to extraction and it has a substantial presence at the mine.

Full text (FMSHRC public release)

FEDERAL MINE SAFETY AND HEALTH REVIEW
COMMISSION

OFFICE OF
ADMINISTRATIVE LAW JUDGES

721 19th
STREET, SUITE 443

DENVER, CO 80202-2536

TELEPHONE:
303-844-5266 / FAX: 303-844-5268

October 28, 2015

SECRETARY OF LABOR

MINE SAFETY AND HEALTH

ADMINISTRATION, (MSHA),

Petitioner,

v.

KEMPTON TRANSPORT, INC.,

Respondent.

CIVIL PENALTY PROCEEDINGS

Docket No. WEST 2014-998

A.C. No. 02-03107-359253 B0279

Docket No. WEST 2015-20

A.C. No. 02-03107-362302

Mine: West Side Pit

DECISION

Appearances:               Daniel
Brechbuhl, United States Department of Labor, Office of the Solicitor, Denver,
Colorado, for Petitioner;

Dell Kempton, Kempton
Transport Inc. Phoenix, Arizona for Respondent.

Before:                                    Judge Miller

This case is before me upon a petition for
assessment of a civil penalty under section 105(d) of the Federal Mine Safety
and Health Act of 1977, 30 U.S.C. § 815(d). These dockets involve nine
citations with a total proposed penalty of $1,252.00. The Respondent has
indicated that his objection to the citations is that he is not subject to the
jurisdiction of the Mine Act. The parties presented testimony and evidence
regarding the jurisdiction issue and the citations at a hearing held in Phoenix,
Arizona, on October 21, 2015.

I.  FINDINGS OF
FACT AND CONCLUSIONS OF LAW      

Kempton Transport, Inc., is a
closely held corporation with its principle place of business in Mesa, Arizona.
At the time these citations were issued, Kempton trucks were working at the
West Side Pit, a sand and gravel operation located in Mesa County, Arizona.  Kempton
routinely provides trucking services at various locations for M.R. Tanner
companies, including M.R. Tanner mining, the owner of the West Side Pit. Mr.
Kempton was approached by Tanner to load gravel and other material at a new
construction area near the end of the runway at the small Glendale airport. There
was no written contract, but the parties agreed to a price to have the Kempton
trucks load sand and gravel at the airport site and transport it across the
road to a crusher operation and unload the material at either a stock pile or
at the crusher.  Tanner employees loaded the material, and Kempton drivers
transported the material. Kempton described the material as “native material”
and agreed it was rock, sand and gravel, and dirt.

Kempton explained that the pit area
near the end of the runway was not yet developed, but that Kempton was hired
for the construction project. The project was construction of a sand and gravel
pit at the end of and below the level of the runway. Each of the large Kempton trucks
was weighed after loading at this construction site, and then traveled the half
mile to dump the material at the Tanner crushing location.

Kempton owns and operates fourteen trucks,
four of which were assigned to work on this project for Tanner. Kempton often
works for Tanner, and often hauls material between pits and crushers, as well
as from pit to pit for various sand and gravel operations. Kempton has not been
issued a citation in the past and the drivers at this pit received the required
site-specific training. They had not received new miner training.

Kempton began the job hauling from
the pit construction area to the crusher in June 2014. The Inspector issued the
nine citations at issue here in July 2014. Kempton continued on the job until
September 2014, when his trucks were committed to work elsewhere.  During the
three months that Kempton worked on this job, his trucks were at the pit and
crusher five days a week, for an average of eight hours per day. Each truck
made about 30 roundtrips per day between loading at the pit and dumping at the
crusher. 

Kempton argues that it was not an
“operator” as defined by the Mine Act since it was only on the property for
this job, which was considered a part of the construction of the pit, and not a
part of any mining operation. The Secretary argues that Kempton worked as a
subcontractor at the sand and gravel operation and therefore was an operator
subject to the provisions of the Mine Act. For the reasons that follow, I find
that Kempton is a subcontractor working at the mine site and an operator,
subject to the jurisdiction of the Mine Act.

The Mine Act’s definition of
“operator” contemplates production-operators and independent contractors
“performing services or construction at such mine.” Berwind Nat’l Resources
Corp., 21 FMSHRC 1284, 1293 (Dec. 1999)). Kempton asserts that it is not an
independent contractor as contemplated by the Act because it had no written
contract, it was involved only in construction work as the mine was not yet
developed, and it engaged in hauling between the pit and crusher for only a
short period of time. The Secretary argues that a written contract is not
necessary and that since Kempton was hauling sand and gravel from one area to
the crusher to be processed, it was an independent contractor subject to the
provisions of the Act.

While the Act does not define
“independent contractor,” the Secretary’s regulations define an “independent
contractor” as an entity “that contracts to perform services or construction at
a mine.” 30 C.F.R. § 45.2(c). In Joy Technologies Inc., the Commission decided
that, in determining whether an entity is an independent contractor, the “focus
is on the actual relationships between the parties, and is not confined to the
terms of [the parties’] contracts. . . . [T]he determination of whether a party
is properly designated to be within the scope of section 3(d) of Act is not
based upon the existence of a contract, nor the terms of such a contract.” 17
FMSHRC 1303, 1306 (Aug. 1995) (quoting Bulk Transportation Services, Inc.,
13 FMSHRC 1354, 1358 n.2 (Sept. 1991)), aff’d, 99 F.3d 991 (10th Cir.
1996).

The undisputed facts establish that
Kempton had an agreement with Tanner to provide hauling services for Tanner,
specifically from the new pit near the airport to the crushing operation about
half a mile away. Kempton provided the trucks and the drivers and in return was
paid a sum for the work. Clearly, and although not written, the parties had an
agreement for work and an unwritten, verbal contract.

In 1989, the Commission addressed
the issue of “operator” liability pursuant to the “independent contractor”
clause of Section 3(d) in two Otis Elevator Company decisions, Otis Elevator
Co., 11 FMSHRC 1896 (Oct. 1989) (hereinafter “Otis I”) and Otis
Elevator Co., 11 FMSHRC 1918 (Oct. 1989) (hereinafter “Otis II”). In
Otis I, the Commission explained that “Section 3(d) [of the 1977] Mine
Act expanded the definition of ‘operator’ under . . .[the 1969 Coal Act] to
include ‘any independent contractor performing services or construction at such
mine.’” 11 FMSHRC at 1900. “[T]he goal of Congress, in expanding the definition
of ‘operator’ . . . to include ‘independent contractors,’ was to broaden the
enforcement power of the Secretary so as to reach not only owners and lessees
but a wide range of independent contractors as well.” Id. at 1900-1901. However,
the Commission noted that, in analyzing an independent contractor’s contacts
with the mine, “not all independent contractors are operators under the Mine
Act, and that ‘there may be a point, at least, at which an independent
contractor’s contact with a mine is so infrequent or de minimis that it
would be difficult to conclude that services were being performed.’” Id.
(quoting National Industrial Sand Ass’n, 601 F.2d 689, 701 (3d Cir.
1979)).

In its Otis decisions, the
Commission outlined a two pronged test for determining whether an entity is an
“operator” pursuant to the “independent contractor” clause of Section 3(d) of
the Mine Act. First, one must examine the subject entity’s “proximity to the
extraction process” and whether that entity’s work is “sufficiently related” to
that process. Otis I, 11 FMSHRC at 1902. In Otis I, the
Commission determined that the independent contractor, an elevator service
contractor, satisfied this prong of the test because its employees “were
working in the center of mining activities while servicing equipment essential
to the mining process, were exposed to mining hazards, and had a direct effect
on the safety of others because of their exclusive control over the safety of
the mine elevators[.]” Id. Here, Kempton employees were driving large
haul trucks on the mine property to be loaded with material, then driving them to
a second, separate mine site to unload the material to be crushed and
processed. I find the activity to be sufficiently proximate to the extraction
process, as, like in Otis I, the trucks are in the center of the mining
activity. Next, the Kempton employees’ work was sufficiently related to the
process of removing the sand and gravel and transporting it to a related site
for processing. The Kempton drivers were exposed to mining hazards and had a
direct effect on the safety of others because of their exclusive control over
the operation of the haul trucks.

The second prong of the Otis
test requires an examination of “the extent of [the entity’s] presence at the
mine.” Otis I, 11 FMSHRC 1896, 1902 (Oct. 1989). In Lang Bros., Inc.,
14 FMSHRC 413, 420 (Sept. 1991), the Commission stated that “[a]n independent
contractor's presence at a mine may appropriately be measured by the
significance of its presence, as well as by the duration or frequency of its
presence.” I find that Kempton and its employees had an extensive presence at
the mine. While Tanner employees extracted the sand and gravel and loaded the
mined material onto the trucks, Kempton trucks and drivers controlled the next
phase of moving the material to the crusher. They did this five days a week for
eight hours a day over the entire term of the contract. In Joy Technologies
Inc., the Commission found that substantial evidence supported the ALJ’s
finding that an independent contractor spending six days at the mine over a two
and a half month period, along with an expectation that such contact would
continue, satisfied the second prong of the Otis test. 17 FMSHRC at 1308;
see also Lang Bros., Inc., 14 FMSHRC an413 (Sept. 1991)
(sufficient presence found when contractor was present seven to ten days on a
non-continuing basis) and Otis I, 11 FMSHRC 1896 (Oct. 1989) (sufficient
presence found when contractor was present six hours per month). I find that
the presence of Kempton drivers and trucks each day amounts to a sufficient and
significant presence at the mine.  Accordingly, I find that the Secretary has
satisfied the second prong of the Otis test and that Kempton is an
independent contractor.

The parties stipulated at hearing,
that if it is found that MSHA has jurisdiction over the Kempton trucks, then
there is no further dispute and the citations are admitted as issued. Therefore,
I find that the nine citations contained in these two dockets demonstrate the
violations and conditions as described in each document. However, after
listening to the testimony of Mr. Kempton, I find that he had a good faith
belief that the drivers operating the trucks were not required to have new
miner training. Therefore, I reduce the negligence in Citation Nos. 8829835 and
8829836 to low and reduce the penalty accordingly to $100.00 for each
violation.

II.  PENALTY

The principles governing the authority
of Commission administrative law judges to assess civil penalties de novo for
violations of the Mine Act are well established. Section 110(i) of the Mine act
delegates to the Commission and its judges “authority to assess all civil
penalties provided in [the] Act.” 30 U.S.C. § 820(i). The Act delegates the
duty of proposing penalties to the Secretary. 30 U.S.C. §§ 815(a), 820(a). Thus,
when an operator notifies the Secretary that it intends to challenge a penalty,
the Secretary petitions the Commission to assess the penalty. 29 C.F.R. §
2700.28. The Act requires that “in assessing civil monetary penalties, the
Commission [ALJ] shall consider” six statutory penalty criteria which include
the history of violations, the size of the operator, the negligence, gravity,
the ability to continue in business and good faith abatement. 30 U.S.C. §
820(i). In keeping with this statutory requirement, the Commission has held
that “findings of fact on the statutory penalty criteria must be made” by its
judges. Sellersburg Stone Co., 5 FMSHRC 287, 292 (Mar. 1983), aff'd,
736 F.2d 1147, 1152 (7th Cir. 1984). Once findings on the statutory criteria
have been made, a judge’s penalty assessment for a particular violation is an
exercise of discretion, which is “bounded by proper consideration of the
statutory criteria and the deterrent purpose[ s] . . . [of] the Act’s penalty
scheme.” Id. at 294; see also Cantera Green, 22 FMSHRC
616, 620 (May 2000).

The history of assessed violations
was not admitted into evidence because, as the Secretary explained, Kempton did
not have a mine ID and had not been cited in the past.  Kempton is considered a
small operator and the penalties as proposed will not affect its ability to
continue in business. The Respondent demonstrated good faith in abating the
citations.  The negligence is discussed above. I find that a penalty of
$1,186.00 is appropriate.

III.  ORDER

Based on the criteria in section
110(i) of the Mine Act, 30 U.S.C.§ 820(i), I reduce the negligence from
moderate to low and the penalty to $100.00 each for Citation Nos. 8829835 and
8829836 and assess a total penalty of $1,186.00. Kempton Transport, Inc., is ORDERED
to pay the Secretary of Labor the sum of $1,186.00 within 30 days of the date
of this decision.

/s/
Margaret A. Miller

Margaret A. Miller

Administrative Law Judge

Distribution:

Daniel T. Brechbuhl, U.S. Department of Labor, Office of the
Solicitor, 1244 Speer Boulevard, Suite 216, Denver, CO 80204

Dell Kempton, Kempton Transport, P.O. Box 50667, Mesa, AZ
85208