<DOC>
[DOCID: f:kt2000128.wais]
FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION
OFFICE OF ADMINISTRATIVE LAW JUDGES
2 Skyline, Suite 1000
5203 Leesburg Pike
Falls Church, Virginia 22041
January 26, 2001
KINDER MORGAN OPERATING : CONTEST PROCEEDINGS
LTD "C", :
Contestant : Docket No. KENT 2000-128-R
v. : Citation No. 7641076; 2/2/2000
:
SECRETARY OF LABOR, : Docket No. KENT 2000-129-R
MINE SAFETY AND HEALTH : Citation No. 7641077; 2/2/2000
ADMINISTRATION (MSHA), :
Petitioner : Docket No. KENT 2000-130-R
: Citation No. 7641078; 2/2/2000
:
: Grant Rivers Terminal Mine
: Mine ID 15-18234
:
SECRETARY OF LABOR, : CIVIL PENALTY PROCEEDING
MINE SAFETY AND HEALTH :
ADMINISTRATION (MSHA), : Docket No. KENT 2000-168
Petitioner : A. C. No. 15-18234-03501
v. :
:
KINDER MORGAN OPERATING LTD "C",: Grand Rivers Terminal Mine
Respondent :
DECISION
Before: Judge Hodgdon
These cases are before me on Notices of Contest and a
Petition for Assessment of Civil Penalty brought by Kinder Morgan
Operating L.P. "C" against the Secretary of Labor, and by the
Secretary of Labor, acting through her Mine Safety and Health
Administration (MSHA), against Kinder Morgan, respectively,
pursuant to section 105 of the Federal Mine Safety and Health Act
of 1977, 30 U.S.C. � 815.[1] The company contests the issuance
to it of Citation Nos. 7641076, 7641077 and 7641078, which allege
violations of the Secretary's mandatory health and safety
standards. The petition seeks a penalty of $187.00 for the three
contested citations. For the reasons set forth below, I affirm
the citations and assess a penalty of $187.00.
The parties have stipulated to the facts in these cases and
submitted their positions in briefs. They agree that the sole
issue in the cases is whether the Grand Rivers Terminal is
subject to the Mine Act. They further agree that if jurisdiction
is found, the citations may be affirmed and penalties assessed.
Stipulated Facts
Kinder Morgan operates the Grand Rivers Terminal, a marine
terminal located adjacent to Kentucky Lake, near Grand Rivers,
Kentucky. The Terminal consists of three separate areas: (1) a
rail-to-ground coal unloading and storage facility (GRT-1); (2) a
rail-to-barge coal loading facility (GRT-2); and (3) a barge-to-
ground coal unloading and ground-to-barge loading facility (GRT-
4). The Terminal employs approximately 40 workers on a permanent
basis and has 12 temporaries. With the exception of eight
administrative employees, the employees, while primarily employed
at one facility, work on an as-needed basis at all three
facilities.
Kinder Morgan receives approximately 10 million tons of
processed coal per year at the Terminal, either by rail or by
barge. Ninety-five percent of the coal arrives by rail. Most of
the coal arrives by rail from mines in Colorado, Utah and
Wyoming. Some comes from the Illinois basin of Kentucky and
Illinois, transported by rail or barge. Occasional shipments
also come from West Virginia and Virginia.
None of the coal received at the Terminal is owned by Kinder
Morgan. Kinder Morgan is a bailee of the coal while it is on the
ground at the Terminal. It has no responsibility for the coal
until it is unloaded at the Terminal, nor does it have any
responsibility for the coal after it has been loaded into barges
for shipment to the ultimate user. Coal shipments are processed
through the facility in three ways: (1) rail-to-stockpile-to-
barge; (2) barge-to-stockpile-to-barge; and (3) rail-to-barge.
More than 95% of the coal received by Kinder Morgan is owned
by the Tennessee Valley Authority (TVA), which purchases it for
use in its 11 coal-fired plants. The price paid by TVA for the
coal is F.O.B. railcar or barge at the producer's or supplier's
shipping facility. By the time the coal arrives at the Terminal,
it has already been processed by the coal producers to meet TVA's
contract specifications, which may differ depending on the
particular plant for which the coal is intended. In its
contracts with the various coal producers, TVA requires the coal
to meet certain specifications such as moisture content, ash
content, percentage of volatile matter, heating value (BTU), SO2
content, grindability and chlorine content. Kinder Morgan is not
a party to the contracts and has no responsibility to deliver
coal to TVA that meets the contract specifications. No washing,
screening, crushing or sizing of coal occurs at the Terminal.
Rail-to-Stockpile-to-Barge
When arriving TVA coal is processed in this manner, it is
unloaded from bottom-dump rail cars into a 100 ton hopper at GRT-
1. The coal is then fed onto two inclined belts which carry the
coal either to: (a) surface stockpiles (approximately 60% of the
coal), or (b) a conveyor belt system that connects GRT-1 and GRT-
4. The coal in the surface stockpiles is later moved by dozers
and trucks into hoppers which deposit it onto the conveyor belt
system to be conveyed to GRT-4. There are up to 18 working
stockpiles of TVA coal. Approximately 95% of the coal received
by rail is unloaded by Kinder Morgan at GRT-1, the rest being
directly loaded into barges at GRT-2.
TVA designates which coal from which supplier will be placed
into which working stockpile. While Kinder Morgan personnel work
with TVA to monitor the quantity of coal moving into and out of
each working stockpile, they may not know the specific qualities
of the coal, identifying the source of each stockpile only by
supplier and railcar.
When the coal arrives at GRT-4 on the conveyor belt system,
it is dumped by chute to a 150 foot inclined belt on a radial
stacker. The stacker segregates the coal into separate
stockpiles. Since the stacker cannot create all of the required
number of stockpiles, some coal is pushed into stockpiles by
dozers and some coal is loaded into haulage trucks and dumped
into stockpiles.
When the coal is to be loaded into a barge, it is pushed
into one of four feeders for the 605 foot draw-off tunnel in the
underground coal "layer loading" facility. The feeders are
computer controlled to facilitate precise "layer loading" from
different surface stockpiles. Each feeder transfers coal at a
predetermined rate onto the main tunnel belt. For example, the
first feeder may put four inches of coal on the belt, the second
six, the third none and the fourth eight, resulting in three
layers 18 inches thick. TVA tells Kinder Morgan the individual
working stockpiles from which coal is to be removed, and the
amount that is to be removed, for the purposes of "layer loading"
in the draw-off tunnel and ultimate loading into barges.
After leaving the draw-off tunnel, the coal is transferred
onto a portable, rail-mounted belt conveyor. Samples of each
coal load are taken at this point by TVA's independent
laboratory, which collects, bags and removes the samples on a
daily basis and sends them by courier to TVA facilities in
Chattanooga for analysis. The conveyor then loads the layered
coal into barges for final shipment as fuel to TVA.
Barge-to-Stockpile-to-Barge
Approximately five percent of the coal processed at the
Terminal arrives by barge at GRT-4. The coal is unloaded by a
crane, which places it in a feeder for a 735-foot inclined belt
on a stacker. The coal is then stockpiled, as directed by TVA,
until it is "layer loaded" in an identical manner to the coal
arriving at GRT-4 from GRT-1 on the conveyor belt system.
Rail-to-Barge
About 20% of the coal arriving at the Terminal by rail is
unloaded from bottom-dump rail cars at GRT-2 into a surge bin and
then directly loaded onto TVA barges. There is no on-the-ground
storage or "layer loading" of coal at GRT-2. Coal is sometimes
temporarily stored on the rail cars until time to load the
barges.
Non-TVA Coal
Non-TVA coal accounts for less than five percent of the coal
received at the Terminal. A portion of the five percent is
petroleum coke (petcoke). The non-TVA coal and petcoke is
unloaded, stored and loaded at the Terminal by Kinder Morgan in
the same manner as is the TVA coal. Alabama Power and West
Kentucky Energy have historically delivered and received the non-
TVA coal unloaded, stored and loaded at the Terminal by Kinder
Morgan.
Conclusions of Law
Section 4 of the Mine Act, 30 U.S.C. � 803, provides that:
"Each coal or other mine, the products 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." Section 3(h)(1) of the
Act, 30 U.S.C. � 802(h)(1), defines "coal or other mine" as:
(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.
. . .
Finally, Section 3(i), 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."
The Secretary contends that Kinder Morgan's Grand Rivers
Terminal mixes, stores and loads coal, which are all included in
the Act's definition of the "work of preparing coal" and,
therefore, the terminal is a mine subject to the Mine Act. On
the other hand, Kinder Morgan maintains that it does not prepare
coal as is usually done by the operator of a coal mine and,
consequently, it is not a mine operator within the meaning of the
Act. A review of the case law indicates that the Secretary is
correct.
In one of the earliest cases determining jurisdiction under
the Mine Act, the Third Circuit Court of Appeals pointed out that
Congress intended that "`what is considered to be a mine and to
be regulated under this Act' was to be given the broadest
possible interpretation and that doubts were to be resolved in
favor of inclusion of a facility within the coverage of the Act.
See S.Rep. No.181, 95th Cong., 1st Sess. 1, 14, reprinted in
[1977] U.S. Code Cong. & Admin. News, pp. 3401, 3414." Marshall
v. Stoudt's Ferry Preparation Co., 602 F.2d 589, 592 (3rd Cir.
1979). The court went on to say that "the work of preparing coal
or other minerals is included within the Act whether or not
extraction is also being performed by the operator." Id.
With this in mind, the Commission, in a case with facts very
similar to the ones here, subsequently determined that not all
facilities dealing with coal are "mines" subject to the Act.
Oliver M. Elam, Jr., Co., 4 FMSHRC 5 (January 1982). Elam owned
and operated a commercial dock on the Ohio river which loaded,
among other things, coal onto barges. Coal brokers, who were not
mine operators, arranged for coal to be delivered by truck to the
dock and then to be loaded onto barges for delivery to their
customers. Elam was paid to load the coal onto the barges. The
coal was delivered to and stockpiled on the property. It was
then weighed by the brokers' employees and loaded into a hopper.
If a piece of coal was too big for the hopper, Elam's employees
would break it so that it could pass through. From the hopper
the coal was carried on a conveyor to a crusher where it was
broken into one size to increase the ease of loading and to allow
more coal to be placed on the barges. From the crusher, another
conveyor carried the coal to the barge.
Based on these facts, the Commission held that:
[A]s used in section 3(h) and as defined in
section 3(i), "work of preparing coal"
connotes a process, usually performed by the
mine operator engaged in the extraction of
the coal or by custom coal preparation
facilities, undertaken to make coal suitable
for a particular use or to meet market
specifications. In the present case,
although Elam performs several of the
functions included in the 1977 Act's
definition of coal preparation (i.e.,
storing, breaking, crushing, and loading), it
does so solely to facilitate its loading
business and not to meet customers'
specifications nor to render the coal fit for
any particular use. We therefore conclude
that Elam's facility is not a "mine" subject
to the coverage of the 1977 Mine Act.
Id. at 8 (footnote omitted).
While there are not any other cases with facts as close to
the ones in this case as Elam, the interpretation of the meaning
of "the work of preparing coal" continued to evolve. Most of the
cases concern coal burning utility plants. In Pennsylvania
Electric Co. v. FMSHRC, 969 F.2d 1501, 1503 (3rd Cir. 1992)
(Penelec), the court held, after setting out the language in
sections 3(h)(1) and 3(i), that: "Under the functional analysis
we are to employ when giving the `broadest possible' scope to
mine Act coverage . . . the delivery of coal from a mine to a
processing station via a conveyor constitutes coal preparation
`usually done by the operator of a coal mine.'" Later, in a
concurring opinion, Commissioner Doyle stated that in referring
to a "functional analysis," the Penelec court had "concluded that
each of the activities listed in section 3(i) . . . as part of
the `work of preparing the coal,' wherever and by whomever
performed and irrespective of the nature of the operation,
subjects anyone performing that activity to the jurisdiction of
the Mine Act." Air Products & Chemicals, Inc., 15 FMSHRC 2428,
2435 (December 1993).
Although not specifically saying so, this seemed to be the
same reasoning of the Fourth Circuit Court of Appeals when it
stated:
We think it irrelevant that United
Energy is transporting and delivering the
coal to the power plant it operates, rather
than to another consumer of coal. The
statute sets forth a functional analysis, not
one turning on the identity of the consumer,
and United Energy's activities meet the
functional test. Although delivery of coal
to a consumer after it is processed usually
does not fall under the coverage of the Mine
Act, United Energy's activities occur a step
earlier in the overall process. They involve
the transportation of coal to the preparation
facility and thus are part of the "work of
preparing coal."
United Energy Services v. MSHA, 35 F.3d 971, 975 (4th Cir. 1994).
Whether or not the court's interpretation of the Act was as
sweeping as Commissioner Doyle's, by 1997 the Commission had
unhesitatingly adopted her conclusion that each activity listed
in section 3(i) subjects the performer of that activity to the
jurisdiction of the Act. RNS Services, Inc., 18 FMSHRC 523, 529
(April 1996), aff'd, 115 F.3d 182 (3rd Cir. 1997).
If this were the state of the law, the case would be fairly
easy to resolve. Whether one concluded that the Commission had
effectively overruled Elam by the adoption of the functional
analysis set forth in RNS, or whether Elam is still good law, the
results would be the same in this case. The Grand Rivers
Terminal is a "mine" within the meaning of the Act.
Since the terminal performs three of the functions set out
in section 3(i), storing, mixing and loading, it is doubtlessly
subject to the Act under the functional analysis. As in United
Energy, the delivery of the coal in this case is a step earlier
than delivery to the consumer after it is processed. And
regardless of whether the coal is "layered" to be loaded onto
barges at TVA's directions or at the Terminal's directions, it is
clearly the Terminal employees who are doing the "layering."
Consequently, this facility is performing the work of preparing
coal within the meaning of the Act.
In addition, the facts in this case are distinguishable from
those in Elam. In Elam, the Commission found that the section
3(i) activities performed by the company were done solely to make
easier the loading of the coal. Here there is no such claim.
Indeed, it would appear that the "layer loading" would make the
loading process more difficult. Furthermore, the Commission held
that Elam's activities were not performed to meet customer's
specifications or to render the coal fit for any particular use.
Here, the "layer loading" is obviously being undertaken to meet
TVA's specifications and to render the coal fit for TVA's
particular use. Thus, unlike Elam, Kinder Morgan is preparing
coal as usually performed by a mine operator or custom
preparation facility.
What seemed clear, however, has been confused by a recent
decision of the Eighth Circuit Court of Appeals. In that case,
relied upon by the Contestant, the court held that an electric
utility plant that purchased crushed coal from two mines, then
removed debris from, and further crushed, it at its facility, so
that it could be burned in its generator units, was not a mine
under the Act. Herman v. Associated Elec. Coop., Inc., 172 F.3d
1078 (8th Cir. 1999). While the court covered most of the
Commission and court decisions discussed above, it did not
mention "functional analysis." Instead, it concluded that the
Act "was designed primarily to protect miners, not employees of
coal purchasers such as electric utilities and steel mills." Id.
at 1082. It apparently based this conclusion on the dissenting
judge's opinion in Penelec. Id. Finally, it held that "after a
mine delivers processed, marketable coal to a utility any further
operations to prepare the coal for combustion are not subject to
MSHA jurisdiction." Id. at 1083.
It is possible that this decision is the law only in the
Eighth Circuit as there do not appear to be any subsequent
decisions following it. In fact, the Fifth Circuit has already
stated that: "We do not entirely agree with the majority opinion
of the Eighth Circuit in Herman . . . ." In re: Kaiser Aluminum
& Chem. Co., 214 F.3d 586, 593 (5th Cir. 2000). Nevertheless,
even if the holding is applicable in this matter, the facts in
this case are distinguishable. No matter how the facts are
arranged, it remains indisputable that the coal in this case is
delivered to Kinder Morgan, not to TVA, the utility, and that the
further operations, "layer loading," to prepare the coal for
combustion are performed by the Kinder Morgan, not TVA.
Accordingly, I conclude that Kinder Morgan does perform the
"work of preparing coal" as is "usually done by the operator" of
a coal mine. As such it is a "mine" within the meaning of the
Act and subject to the Act's jurisdiction.
Civil Penalty Assessment
The Secretary has proposed a civil penalty of $187.00 for
the three violations in this case. However, it is the judge's
independent responsibility to determine the appropriate amount of
penalty in accordance with the six penalty criteria set out in
section 110(i) of the Act, 30 U.S.C. � 820(i). Sellersburg Stone
Co. v. FMSHRC, 736 F.2d 1147, 1151 (7th Cir. 1984); Wallace
Brothers, Inc., 18 FMSHRC 481, 483-84 (April 1996).
In connection with the criteria, the parties have stipulated
that Kinder Morgan demonstrated good faith in attempting to
achieve rapid compliance after notification of the violations,
that the penalty will not affect Kinder Morgan's ability to
continue in business and that Kinder Morgan is a large-size
operator. As might be expected, the Assessed Violation History
Report indicates that these are the first violations charged to
the company. I find that the company's negligence in all three
instances was "moderate." Finally, I find in connection with
Citation No. 7641076 that the gravity of the violation was not
serious, but that with respect to Citation Nos. 7641077 and
7641078 the violations were fairly serious.
Taking all of this into consideration, I conclude that the
proposed penalties of $55.00 for Citation No. 7641076 and $66.00,
each, for Citation Nos. 7641077 and 7641078 are appropriate.
Order
Citation Nos. 7641076, 7641077 and 7641078 are AFFIRMED and
Kinder Morgan Operating L.P. "C" is ORDERED TO PAY a civil
penalty of $187.00 within 30 days of the date of this decision.
T. Todd Hodgdon
Administrative Law Judge
Distribution:
Anne T. Knauff, Esq., Office of the Solicitor, U.S. Department of
Labor, 2002 Richard Jones Road, Suite B-201, Nashville, TN 37215-
2862 (Certified Mail)
Charles E. Allen III, Esq., Frost Brown Todd LLC, 400 West Market
Street, 32nd Floor, Louisville, KY 40202-3363 (Certified Mail)
Medrith Lee Norman, Esq., Frost Brown Todd LLC, 2700 Lexington
Financial Center, Lexington, KY 40507-1749 (Certified Mail)
/nt
**FOOTNOTES**
[1]:The cases are CONSOLIDATED for this proceeding.