.
SOUTHERN MINERALS, INC.
March 7, 1995
WEVA 92-15-R


           FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

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


                            March 7, 1995

SOUTHERN MINERALS, INC.,          :  CONTEST PROCEEDINGS
  TRUE ENERGY COAL SALES, INC.,   :
  FIRE CREEK, INC.,               :  Docket Nos. WEVA 92-15-R
                 Contestants      :   through WEVA 92-116-R
                                  :
            v.                    :  Fire Creek No. 1 Mine
                                  :  Mine ID 46-07512
SECRETARY OF LABOR,               :
  MINE SAFETY AND HEALTH          :
  ADMINISTRATION (MSHA)           :
                 Respondent       :
                                  :
SECRETARY OF LABOR                :  CIVIL PENALTY PROCEEDINGS
  MINE SAFETY AND HEALTH          :
  ADMINISTRATION (MSHA),          :  Docket Nos. WEVA 92-786
                 Petitioner       :   through WEVA 92-791
                                  :
            v.                    :  Fire Creek No. 1 Mine
                                  :
SOUTHERN MINERALS, INC.,          :
  TRUE ENERGY COAL SALES, INC.,   :
  FIRE CREEK, INC.,               :
                 Respondents      :

                   ORDER DENYING CROSS MOTIONS FOR
                           SUMMARY DECISION
                                 AND
                          NOTICE OF HEARING

     These consolidated civil penalty and contest proceedings
arise under section 105 of the Federal Mine Safety and Health
Act of 1977 (Mine Act or Act), 30 U.S.C. � 815.  They involve
101 alleged violations of mandatory safety standards for
underground coal mines for which aggregate civil penalties
of $576,681 have been proposed.  They also involve 102 contests
of citations and orders.

     The cases arise out of a fatal explosion on January 16,
1991, at Fire Creek, Inc's (Fire Creek) No. 1 Mine.  Following
an investigation, the Secretary of Labor, through his Mine
Safety and Health Administration (MSHA), issued the contested
citations and orders to Fire Creek, Southern Minerals, Inc.
(Southern Minerals) and True Energy Coal Sales, Inc.
(True Energy) (collectively, the Contestants).  The Secretary
contends that the three entities are liable jointly and severally
as operators of the mine.  Southern Minerals and True Energy
respond that they are not operators within the meaning of the
Mine Act and therefore should not have been cited for the alleged
violations.  Fire Creek does not dispute the Secretary's
jurisdiction.

     The proceedings were bifurcated so that the jurisdictional
status of Southern Minerals and True Energy would be resolved
prior to addressing the individual merits of the cases (See
Notice of Bifurcated Hearing (September 30, 1994)).

     Following extensive discovery, the Secretary, Southern
Minerals and True Energy filed cross motions for summary
decision on the jurisdictional issues.  For the reasons that
follow, the motions are DENIED.

Summary Decision

      Under the Commission's rules, a motion for summary decision
shall be granted only if the entire record shows, (1) no
genuine issue as to any material fact, and (2) the moving
party is entitled to summary decision as a matter of law (29
C.F.R. �2700.67).

     The parties have not stipulated to undisputed facts.
Rather, the Secretary has set forth 122 "findings of fact"
in a memorandum in support of his motion (Sec. Mem.), and the
Contestants have incorporated "material facts" into their
motion (Conts. Mot.).  By referencing the parties' factual
assertions to the record, it is possible to glean a factual
basis to rule upon the motions.

                      GENERAL FACTUAL BACKGROUND

     Fire Creek's No. 1 Mine is an underground coal mine
located in McDowell County, West Virginia.  On September 3,
1991, following an investigation of the accident, MSHA
issued the contested citations and orders, jointly naming the
Contestants as the operators of mine (Sec. Mem. 1-2; Conts.
Mot. 3-4).  The operators filed timely notices of contest
and the Secretary filed the subject civil penalty petitions.

     The Contestants are closely held corporations that share
some common officers and directors.  Fire Creek was
organized in 1988 by D.L. "Jack" Bowling, Brenda Bowling (Jack
Bowling's wife) and David Harold.  The Bowlings and Harold
were the corporation's only share holders.  David Harold was
president and director of Fire Creek and Ronda Harold (David
Harold's wife) was secretary/treasurer.  In July 1989, Ronald
Lilly obtained 10 percent of the stock from Jack Bowling and
Lilly became secretary/treasurer.  Harold left Fire Creek in
October 1990, and the corporation bought back his shares
(Sec. Mem. 7-8, citing to Exh. K, Interrog. 3).  Also, in
October 1990, W. "Fred" St. John became president of Fire
Creek.  He and Jack Bowling served as directors (Sec. Mem.
8, citing to Exh. K, Interrog. 3)

     Southern Minerals was organized in 1987 with Jack Bowling
as the sole stock holder.  In October 1989, stock was
divided between Jack Bowling, his son, his daughter and St.
John.  Jack Bowling served as president and director, St. John
served as vice president and director and Brenda Bowling
acted as secretary/treasurer (Sec. Mem. 8, citing to Exh. 0).

     True Energy was organized in 1986.  At that time, Jack
Bowling and his daughter and son were the corporation's
shareholders.  In October 1989, St. John acquired 20 percent
of Jack Bowling's stock, leaving Jack Bowling with 60
percent.  The other 20 percent continued to be owned by
Bowling's daughter and son.  Bowling served as president
and director, St. John served as vice president and director,
and Brenda Bowling served as secretary/treasurer (Sec. Mem.
8-9, citing to Exh. P).

     Southern Minerals had no employees.  In general, it held
coal leases and subleases, contracted with others, including
Fire Creek, to mine leased coal, and monitored coal
production for royalty purposes.  Southern Minerals bought
the coal and sold it to True Energy.  Fire Creek operated the
No. 1 Mine pursuant to a contract with Southern Minerals.

     Coal from the Fire Creek Mine was processed by an unrelated
company pursuant to a contract with True Energy and True
Energy sold the processed coal.  True Energy also provided
various administrative and technical services to Southern
Minerals' contractors, including Fire Creek.

     When Harold left Fire Creek in October 1990, Ward Bailey,
an employee of Fire Creek, took over as mine manager.  Bailey
contacted MSHA officials after the explosion at the
mine.  Neither Bailey, nor any other Fire Creek officials,
notified  Southern Minerals or True Energy.  Southern
Minerals and True Energy were not represented at the meetings
conducted by MSHA during the investigation of the explosion.
Neither Southern Minerals nor True Energy received a citation or
order from MSHA regarding any aspect of the operations at
the mine until seven months after the explosion, when the
contested citations were issued (Conts. Mot. 10-11).  Fire
Creek is out of business and may not be capable of paying
any penalties for any violations found to have existed
(Sec. Mem. 27).

Specific Facts Involving Relationship of Parties

     Southern Minerals leased the mineral rights to the land
on which the mine is located from Pocahontas Land Company
(Pocahontas).  Southern Minerals then contracted with Fire
Creek.  Southern Minerals paid Fire Creek a royalty payment
based on the amount of coal produced at the mine.  Southern
Minerals also loaned funds to Fire Creek to purchase mining
equipment.

     At times Fire Creek obtained advances from Southern Minerals
to cover operating expenses, such as payroll and supplies.
The funds were authorized by St. John, in his capacity as
vice president of Southern Minerals.  In general, advances
were secured by future coal production.

     Administrative services provided by True Energy to
Fire Creek involved handling Fire Creek's business and
financial records, i.e., maintaining payroll and personnel
files, monitoring workers' compensation, medical insurance
and other employee benefits, depositing semi-monthly cash
receipts, maintaining accounts receivable files, maintaining
accounts payable files, monitoring cash flow, drafting
checks to pay vendor invoices on a semi-monthly basis, preparing
required reports to regulatory agencies, and preparing
financial information for monthly financial statements and
tax returns.  There also came a time when Fire Creek's
liability and other insurance was arranged and paid for by
True Energy (Sec. Mem. 11-12, citing to Exh. K, Interrog.
29).

     Technical services provided by True Energy to Fire Creek
involved surveying, spad setting, map preparation and map
certification.  True Energy began surveying for Fire Creek
in January 1990.  At that time, True Energy hired two spad
setters to work at the mine.  Until July 1990, Fire Creek
paid True Energy for the technical services (Sec. Mem. 12-
13).

     Also in January  1990, True Energy hired a person to
prepare and certify maps for Fire Creek.  According to
the Secretary, the person was paid by True Energy (Sec.
Mem. 12-14).

                          PARTIES' ARGUMENTS

     The Secretary first argues that Fire Creek was
responsible he day-to-day operation and supervision of the
mine.
fore, Fire Creek was an operator (Sec. Mem. 32).

     The Secretary next argues that Southern Minerals
possessed the legal power to exercise control over numerous
aspects of the mine's operations via its contract with Fire
Creek.  In addition, Southern Minerals exercised significant
direct and indirect control over the mine via its control of
engineering, finances, production and other matters.  As
such, Southern Minerals met the statutory definition of
"operator" (Sec. Mem. 33, 35-39).

     Finally, the Secretary argues that True Energy also
exercised control over the mine.  The control arose "via the
common ownership and control [True Energy] shared with the
mine's owner-operator, Southern Minerals, and the mine's
contract operator, Fire Creek" (Sec. Mem. 43).
Additionally, True Energy had control over "essential
engineering matters," all financial matters, administration
of payroll and personnel and occasionally over production,
personnel and safety (Id. 44, 47, 48).

The Contestants counter that the problem with the Secretary's
approach to jurisdiction is that Southern Minerals and True
Energy were "passive" entities who did not exercise the
type of control or supervision envisioned by the statute.
In the Contestants' view, "control" refers to control of the
mine, not to control of the company.  Further, "operates"
and "supervises" are words of action and "control" should be
understood likewise to require active participation in
mining (Conts' Mot. 22).

     Such control is required because, under the Act's
enforcement scheme, it makes sense for those who can prevent
or abate violations to be responsible for them (Conts. Mot.
24-25).  Thus, to be an "operator" within the meaning of
section 3(d) of the Act, one must have both status as an
"owner," "lessee" or "other person" and actively engage in
"operat[ing]," "control[ling]" or "supervis[ing]" a mine
(Id. 26).  The Contestants assert that since the inception
of the Act the Secretary enforced it against those who
actually mined, or those whose activities were so closely
allied with those who mined that the activities produce
hazards of a distinctly mining-related character (Id. 29).

     The Contestants also raise procedural challenges.  They
argue that the Secretary's citation of Southern Minerals and
True Energy was such a clear departure from previous
Secretarial practice, it required rulemaking and a reasoned
explanation before implementation (Conts. Mot. 34-38, 38-
40).  Finally, they argue that the Secretary's
interpretation of the statute was unconstitutionally vague.
It was not implemented with fair warning to those who become
the targets of enforcement, and the lack of standards or
guidelines for enforcement deprived the Contestants of
procedural due process (Id. 45, 49-52).

                               THE ACT

     The meaning of the statutory definition of "operator" is
central to the resolution of the motions.  Once the meaning
is understood, the question of whether undisputed material
facts establish liability or whether they preclude such a
finding may be sorted out.

     Analysis of the definition begins where it must, with the
words of the Act and with the assumption that the Act's
drafters carefully chose the words to mean what they say.
Analysis also is undertaken with the understanding that when
the words and their grammatical structure are clear, it is
not the province of administrative bodies and ajudictors to
interpret the words to the contrary.  They must avoid
conclusions based on what they think Congress might have
meant, but did not state.

     Section 3(d) defines an "operator" as, "[a]ny owner,
lessee, or other person who operates, controls, or
supervises a ... mine or any independent contractor
performing services or construction work at such mine
(30 U.S.C. �802(d)).

     The clause, "who operates, controls, or supervises a coal
or other mine" describes or qualifies each noun in the
preceding phrases "any owner, lessee, or other person" (See,
Elliot Coal Mining Company, Inc. v. Director, Office of
Workers' Compensation Program, 17 F.2d 616, 629-630 (3rd
Cir. 1994)).  The definition clearly requires "owners,
lessees or other persons" to partici-pate in and/or have
authority over the operation, control or supervision of a
mine.  Accordingly, it is not correct to read the definition
as to make owners or lessees operators in and of themselves.
(I find it noteworthy in this regard that it was the
definition of "mine," and not the definition of "operator"
that Congress desired be given "the broadest possibl[e]
interpre-tation" (S. Rep. 95-181, 95th Cong., 1st Sess., at
14, reprinted in Senate Subcommittee on Labor, Committee on
Human Resources, 95th Cong., 2d Sess.; Legislative History
of the Federal Mine Safety and Health Act of 1977, at 602
(1978)).

     In addition to faithfully reflecting the statutory language,
this interpretation supports and strengthens the purpose of
the Act.  Section 2(e) provides that the "operators" of the
nation's mines have primary responsibility for preventing
the existence of unsafe and unhealthful conditions (30
U.S.C. �801(e)).  Throughout the Act, the entity charged
with compliance is referred to simply as the "operator"
(See, e.g. �814(a), �815(a), �820(a)).  It makes no sense
within this context to place liability on those who have not
participated in creating the conditions in a mine or who
have no actual authority over and responsibility for those
conditions.  On the other hand, placing liability on an
entity or entities who have participated or who have that
authority provides a spur to compliance and to safer,
more healthful working conditions.

     Therefore, I agree with the Contestants that a purely
"passive entity" would not meet the statutory definition of
"operator" under the Act, provided the entity did not
reserve to itself authority to control mining operations or
to control the mine itself.  In other words, in a contract
mining situation, an entity that leased mineral rights and
contracted with another entity to mine coal would subject
itself to Mine Act liability if it made decisions with
respect to how coal would be mined and how the mine would
be staffed and run, or if it had the actual authority to
make such decisions.  It would not be enough, however,
to simply establish the potential for
control, for example, by establishing interlocking corporate
relationships between parties and the normal business
transactions attendant thereto.

     In reaching this conclusion, I note that the legislative
history of Titles I, II and III, unlike that of Title IV
(the Black Lung provisions), contains no Congressional
finding that operators were attempting to evade liability
under the safety and health provisions of the Mine Act by
manipulating corporate form and contractual relationships,
and I cannot assume such a concern motivated the drafters
of Titles I, II and III.  Compair Elliot Coal Mining, 17
F.2d at 632.

     Indeed, the words of the Act warrant an opposite assumption.
When the Act was drafted, contractual arrangements between
the owner or lessee of mineral rights and the on-site mine
operator were common and they remain common today.  The
Act's initial legislators chose to condition an operator's
status on its active participation (or, in my view, its
authority to so participate) in the actual operation,
control, or supervision of a mine. Congress has not chosen
subsequently to amend that requirement.  As the Contestants
note, if Congress had intended to hold all owners or lessees
of mineral rights liable, it could have simply stated that
     an "operator" includes both.

     This brings the analysis back to where it began, to the
words of the statute and to the requirements of Congress, as
expressed in Section 3(d), that an owner, lessee, or other
person  operate, control, or supervise a mine.  There is no
inclusive statutory definition of the aspects of
participation or authority necessary to make an entity a
statutory operator. Nor has the Secretary engaged in rule-
making to set forth the aspects.  Lacking a statutory or
regulatory definition and given the fact that the forms of
operation, control, or supervision may vary from case to
case, whether an entity meets section 3(d) of the Act must
be resolved on a case-by-case basis.

     In this regard, the Commission has provided guidance.  In
W-P Coal Company, the Commission gauged the owner-operator's
involvement with its contract operator by looking to things
such as involvement in the mine's engineering, financial,
production, personnel and safety affairs in order to
determine whether there was sufficient involvement for the
Secretary to proceed against the owner-operator (16 FMSHRC
1407, 1411 (July 1994)).  A similar approach is applicable
here, with the proviso that involvement be viewed both in
terms of actual participation and in terms of the authority
to participate.

                     THE CONTESTANTS AS OPERATORS

                              FIRE CREEK

     The parties agree that the actual day-to-day operation of
the mine was conducted by Fire Creek, Inc.  There is no dispute
that Fire Creek was an operator within the meaning of the Act.

                          SOUTHERN MINERALS

                      Involvement in Engineering

     The Secretary states, as fact, that when Harold was
president of Fire Creek, Jack Bowling, in his capacity as
president of Southern Minerals, met with Harold, Pocahontas
personnel and others to work on the mining projection maps for
the Fire Creek mine.  Moreover, he states that Jack Bowling
contributed to the development of mining projections for the
mine and that he reviewed the mining projections before they
were submitted to MSHA or to the state.  He also states that
Southern Minerals approval was required for all mining plans,
projections and maps of the mine.

     In support of these statements, the Secretary cites to
a September 9, 1988, engineering invoice (Sec. Mem., Exh. D)
and to Harold's deposition (Id., Exh. R at 55).  In the
deposition, Harold states that although he mostly prepared
Fire Creek's mining projections, they were reviewed by
Bowling before they were submitted to MSHA and that Bowling
had input into the projections (Id. 55-56).

     The Secretary also points to the contract between Fire Creek
and Southern Minerals, which states in part that "[Fire
Creek] shall present to [Southern Minerals] each quarter a
certified mine map of all mining operations conducted by
[Fire Creek]" (Sec. Mem., Exh. W, Para. 5).  The Secretary
does not note fact that the contract also states, "[i]t is
... understood by the parties ... that [Southern Minerals]
right to approve mining plans, projections and maps is
expressly and solely for the purpose of coordinating the
overall mining operations on [Southern Minerals] leasehold
property and is not for the purpose of directing [Fire Creek's]
overall or daily conduct of its mining operations.  The
direction and control of all mining rests solely with ...
[Fire Creek]" (Id.).

     The Secretary further states that Southern Minerals was
responsible for obtaining state and federal permits
necessary to initiate mining.  The Secretary points out
that the contract provides that "[Southern Minerals] shall
obtain, in its name, the initial permits, and provide
the bonding required to initiate mining activity;
and [Fire Creek] shall be bound by
the terms thereof ... .  Any modification to any permit
shall be made ... only after having received [Southern
Minerals] written permission" (Sec. Mem., Exh. W, Para. 3).

     I cannot determine from the present record whether
Southern Minerals' involvement in the engineering aspect of
the mine was such as to constitute the control envisioned by
the statute.  The contract between Southern Minerals and
Fire Creek clearly states that Southern Mineral's
involvement with mine projections and maps was to coordinate
its overall mining operations on leasehold property.  If
this was in fact the purpose of Southern Mineral's
involvement with mine projections and map preparation,
it would not be an indicia of control over the mine.

     Further, the fact that Jack Bowling and St. John, along
with Harold and officials of Pocahontas, met with MSHA
officials to discuss changes in MSHA policy affecting the
mine's venti-lation plan does not, without more, establish
that Southern Minerals was exercising control over the mine.
The full nature of the discussions is not revealed, nor are
the proposed changes explained.  I note, as well, St. John's
statement in his deposition that his purpose at the meetings
was to act as an intermediary between Pocahontas and Fire
Creek and not to provide technical expertise on the mine's
ventilation (Sec. Mem., Exh. Q 56-57).

     In like manner, I cannot determine from the present
record whether the fact that Southern Minerals obtained
initial federal and state permits that allowed Fire Creek to
initiate mining is an indication that it was acting as an
operator of the mine.  While I assume Fire Creek
could not have operated without the permits, there
may have been reasons relating solely to Southern
Minerals status as lessor of mineral
rights that required it to obtain the permits and to retain,
in effect, a veto power over their modification.

Involvement in Finance

     It is apparently true that Fire Creek obtained operating
capital from Southern Minerals.  The Secretary cites the
deposition of David Harold, who agreed that Southern
Minerals regularly advanced Fire Creek funds to buy
equipment, purchase supplies and possibly to pay the miners
(Sec. Mem. Exh. R, 64-65).  Harold stated that Southern
Minerals, in effect, paid the bills when Fire Creek could
not cover expenses, that he knew
this would be done and that he did not have to request the
funds (Id. at 66).  According to Southern Minerals own
statements, advances between July 1-15, 1988 and October 19,
1990, totaled at least $1,358,000 (Id., Exh. Q, Dep.
Exh. 12).  The Secretary also states that Harold discussed
expenditures of more than $5,000 with Jack Bowling
(Sec. Mem., Exh. R, 13-17).

     The advancement of funds to cover expenses might or might
not be an indication of control over mining operations.  The
funds might have been provided solely to allow mining to
proceed so that Southern Minerals could benefit from its
contract.  Certainly, the maximization of profit is not
prohibited by
the Act.  In other words, it is not clear, on the basis of
the record as it now exists, that Southern Minerals used its
financial leverage to control how mining was done at the
mine or to control the mine itself.

     It is similarly not clear whether Harold's discussions
with Bowling regarding expenditures of more than $5,000 are
proof that Bowling, and through Bowling, Southern Minerals,
was trying to control how mining was done or to control the
mine.  More needs to be know about the discussions, i.e.,
their overall purpose, to what they referred and the context
in which they occurred.

Involvement in Production

     In his deposition, Harold stated that he had a daily
telephone conversation with Bowling in that Bowling always
called to get a report of the number of tons of coal mined
the previous day (Sec. Mem., Exh. R 12-13).  Harold stated
that at times during the conversations Bowling would offer
suggestions to problems Fire Creek was encountering in
carrying out underground mining.  However, Harold also
stated that Bowling did not give specific directives in
terms of what he did or did not want done (Id., Exh. R. 17-
21).

     In his deposition, Bowling agreed that he discussed
production with Harold and that he went to the mine on
occasion to check on production and to visit with Harold
(Sec. Mem., Exh. S 6-7).  According to Bowling, Harold had the
reputationof being "one of the [best] -- if not the best -- coal
miner[s] in southern West Virginia" and Bowling stated he
"talked to [Harold] and listened to him, but [Harold] made
all of the decisions" (Id. 8).  Bowling also stated that he
never told Harold that he wanted something done in a certain
way (Id. 9-10). In addition, Bowling never went underground
at the mine.

     I cannot find this indicates such control of actual
mining, or of the mine itself, so as to make Southern
Minerals an operator.  If the discussions of production included
specific directives from Bowling on how and where to mine
that would be one thing, but suggestions on such topics
could have been nothing more than normal conversations
between the on-site operator and the party for whom it
contracted to mine.  Obviously, Southern Minerals, which
marketed all of the coal produced by Fire Creek, had a vital
interest in the status of production.  The present record
raises unresolved questions of content and context.

Involvement in Employment

     The Secretary states that Harold talked to Bowling about
potential employees he was considering hiring in order to
determine what kind of miners they would make and that he
discussed with Bowling the possible termination of some
employees.  Harold, however, could not recall if Bowling
ever had a say in a person being fired or terminated (Sec. Mem.,
Exh. R 9-11).  Harold further stated that he did not discuss
other personnel matters with Bowling unless it was "really
something important" (Id. 11).

     Again, I cannot determine if Bowling's involvement on
behalf of Southern Mineral in Fire Creek's personnel matters
was indicative of operator status.  Was he trying to control
who was hired and fired?  Or, was he simply being asked for
and possibly offering an opinion on whether someone he knew
was a reliable worker or whether someone should be let go?
In addition, what were the "really ... important" personnel
matters Harold and Bowling discussed?

                             TRUE ENERGY

Involvement in Administrative Services

     The Secretary states that True Energy provided Fire Creek
with the various administrative services indicated above
(Sec. Mem., Exh. K, Interrog. 29).  The Secretary notes that
Harold stated that Fire Creek met monthly with True Energy,
Southern Minerals and the other companies mining under
contract with Southern Minerals to discuss the fee for the
administrative services (Id., Exh. R 37) and that beginning
August 1989, Fire Creek paid True Energy monthly fees for the
administrative services (Sec. Mem., Exh. Q 30-31).  The last such
fee was paid in July 1990 (Id. 120-121).

     The Secretary also states that True Energy recommended,
procured and paid for liability insurance policies for
Fire Creek and other contractor companies and developed
recommendations for medical insurance coverage.  The
Secretary maintains that True Energy's insurance
recommendations were always accepted by Fire Creek (Sec. Mem.,
Exh. Q 24-25, 27, 80, 85).  Although St. John stated that
the cost of the liability insurance was built into the
administrative fee True Energy charged Fire Creek, there came
a point after July 1990 when True Energy alone paid for
the policies (Id. 85).

     I can not find that True Energy's involvement in the
administrative aspect of Fire Creek's business is
necessarily indicative of True Energy's operator status.  It
is not unusual for a small to medium size operator to contract
for administrative services.  It would come as a great surprise
for contractors to learn that by providing such services
they were subjecting themselves to Mine Act liability for any
and all violations arising at a on-site operator's mine.

     While, I suppose, it is conceivable that the
administrative services provided were used by True Energy to
control how mining was carried out or how the mine was
operated, I cannot conclude as much on the basis of the
present record.

Involvement in Finance

     The Secretary asserts that when St. John, as vice president
of True Energy, determined that Fire Creek did not have
suffi-cient funds to cover operating expenses, he advanced
necessary funds from Southern Minerals account into Fire
Creek's account.  St. John described True Energy's situation
as that of a contractor to Fire Creek.  He stated that one
of the things True Energy contracted to do was to advance
funds secured by Fire Creek's coal production (Id. Exh.
Q 101-103, 107).

     It is possible that funding an on-site operator might
be an indication of actual control over mining operations
and over the mine itself, but it does not necessarily follow
that such is always the case.  In my opinion, there must be
evidence that the money actually was used to compel Fire
Creek to mine in a manner True Energy dictated or to run the
mine as True Energy wanted it run.  I can not determine on the
basis of the present record if this in fact happened.

Involvement in Engineering

     St. John stated in his deposition that from 1990 until
January 1991, True Energy provided Fire Creek with surveying
to align entries and with spad setting (Sec. Mem., Exh. Q,
33-34).  Surveying was done at 5 to 10 day intervals and,
according to Harold, True Energy hired engineering personnel
to come to the mine twice a week on the average to set spads
(Id., Exh. R 49).

     Surveying and spad setting frequently are contracted-out
by operators.   In my opinion, surveying of sight lines and
setting of spads does not, in and of itself, make the
contractor an operator for all purposes.  There must be
evidence that the contractor was controlling or intending to
control the actual mining operations at the mine itself.  I
do not find such evidence in the record as it exists to
date.

     Survey data was plotted on the mine maps (Sec Mem.,
Exh. K., Interrog. 33).  After January 1, 1990, John E.
Caffrey, a retired engineer who was on retainer to True
Energy, certified these maps for Fire Creek (Id. Exh. Q 58-
59).  True Energy paid him to certify the maps of August 30,
1990 and October 5, 1990 (Id. 48).  The maps were submitted
to MSHA as part of the ventilation plan.  St. John had no
knowledge that anyone from True Energy or Southern Minerals
reviewed the maps or the plan. (Id. 51).

     As with surveying and spad setting, it is not unusual for
an on-site operator to contract-out the certification and
preparation of its maps.   While it is conceivable that in
providing this service a contractor could control the way an
on-site operator actually conducted mining operations or
controlled the mine itself, I do not find evidence of this
in the record as it exists to date. I cannot conclude that
because True Energy provided this service to Fire Creek, it
was an operator for all purposes under the Act.

                        RULING ON THE MOTIONS

     Because I cannot find that the undisputed material facts
establish Southern Minerals and True Energy exercised such
control over mining or the mine itself so as to make either
or both statutory operators, the Secretary's motion for
partial summary decision is DENIED.

     Conversely, because I also cannot find, on the basis of
the present record, that the material facts establish that
Southern Minerals and True Energy did not exercise such
control over mining or the mine itself, the Contestants'
motion also must be DENIED.

     Therefore, a hearing on the issue of liability will be
necessary.  The burden of proof will be on the Secretary.
He must establish by substantial evidence of record that
Southern Minerals and/or True Energy exercised actual
control over the mining operations at the mine, or over the
mine itself, or had the power to exercise such control.

                     CONTESTANTS' OTHER ARGUMENTS

     The Contestants argue that even if the Secretary properly
cited Southern Minerals and True Energy, the Contestants are
entitled to a dismissal of the proceedings because the
citations represent a significant departure from past
practice.  According to the Contestants, rulemaking was
required before the Secretary could act (Conts. Mot. 33-38).
They further assert that, even if the Secretary could
proceed without rulemaking, the cases must be dismissed
because the Contestants relied on the Secretary's previous
policy not to cite those with "no practical connection to
mining operations" (Id. 42).

     These arguments are rejected.  The central question is
whether the Contestants were operators as defined by the
statute.  If they were and, if upon inspection or
investigation, the Secretary believed any mandatory health
or safety standards had been violated, the Act required they
be cited.  The Secretary certainly may proceed by adjudication
to test the parameters of his statutory authority, as indeed
he has done frequently in the past.

     The Contestants point to no official policy enunciated
by MSHA upon which they have relied to their detriment.
Even were there such a policy, the consequence of their
reliance arguably would not be violative of due process.
Section 110 of the Act would mitigate significantly the
consequences of such reliance by providing that monetary
civil penalties arising from citations be ameliorated by the
operators' lack of negligence (30 U.S.C. �820).

     Finally, because of my conclusions regarding the meaning
of section 3(d), I need not reach the Contestants other
arguments (Conts. Mot. 43).

                          NOTICE OF HEARING

     The parties are advised that these matters will be called
for hearing in Princeton, West Virginia, at 8:30 a.m. on May
2, 1995.  (A specific site will be designated later.)  The
issue of the Contestants liability will be decided on the
basis of the present record and such additional and specific
evidence as the parties shall present showing the
Contestants control over the actual mining operations at the
Fire Creek No. 1 Mine, over the mine itself, or the
Contestants actual authority to exercise such control.


                                David F. Barbour
                                Administrative Law Judge
                                703-756-5232


Distribution:

Pamela S. Silverman, Esq., Office of the Solicitor, U.S. Department
of Labor, 4015 Wilson Boulevard, Suite 516, Arlington, VA 22203
(Certified Mail)

Robert I. Cusick, Esq., Marco M. Rajkovich, Jr., Esq., Wyatt,
Tarrant & Combs, 1700 Lexington Financial Circle, Lexington, KY
40507 (Certified Mail)

David Burton, Esq., P. O. Box 5129, 1460 Main Street, Princeton,
WV 24740 (Certified Mail)

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