<DOC>
[DOCID: f:knt94574d.wais]
BERWIND NATURAL RESOURCES CORP.
December 16, 1999
FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION
1730 K STREET NW, 6TH FLOOR
WASHINGTON, D.C. 20006
December 16, 1999
SECRETARY OF LABOR, :
MINE SAFETY AND HEALTH :
ADMINISTRATION (MSHA) :
:
v. : Docket Nos. KENT 94-574-R
: through KENT 94-797-R
BERWIND NATURAL RESOURCES CORP., : and KENT 94-862-R
KENTUCKY BERWIND LAND COMPANY, :
KYBER COAL COMPANY, and :
JESSE BRANCH COAL COMPANY :
BEFORE: Jordan, Chairman; Marks, Riley, Verheggen, and Beatty,
Commissioners
DECISION
BY: Jordan, Chairman; Marks, Riley, and Beatty, Commissioners
These consolidated contest and civil penalty proceedings,
arising under the Federal Mine Safety and Health Act of 1977,
30 U.S.C. � 801 et seq. (1994) ("Mine Act" or "Act"), involve
225 citations and orders issued for alleged violations of
mandatory standards at the Elmo No. 5 Mine in Pike County,
Kentucky, in connection with an explosion that occurred on
November 30, 1993, killing one miner. 18 FMSHRC 202, 205 (Feb.
1996) (ALJ). The citations and orders were issued by the
Department of Labor's Mine Safety and Health Administration
("MSHA") to AA&W Coals, Inc. ("AA&W"), the company that
contracted to operate the mine, as well as Berwind Natural
Resources Corporation ("Berwind"), Jesse Branch Coal Company
("Jesse Branch"), Kentucky Berwind Land Company ("Kentucky
Berwind"), and Kyber Coal Company ("Kyber"). Id. On February
23, 1996, Administrative Law Judge David Barbour issued a
decision in which he concluded that Berwind, Kentucky Berwind
and Jesse Branch were not operators of the Elmo No. 5 Mine
within the meaning of the Mine Act. Id. at 233-34, 235-36,
241-43. The judge also rejected the Secretary's theory that
Berwind and its subsidiary corporations constituted a
"unitary operator" under the Mine Act. Id. at 233. Finally,
the judge concluded that Kyber was an operator because of its
active participation in mine operations and its authority to
participate in the decision-making process regarding the daily
development of the mine through projections. Id. at 240.
The Commission granted cross-petitions for discretionary
review filed by the Secretary and Kyber. The Commission also
granted motions permitting amicus curiae participation by the
National Mining Association ("NMA"), the National Council of
Coal Lessors, Inc. ("NCCL"), and Coal Operators and Associates,
Inc. ("COA"), in support of Berwind, Jesse Branch, Kentucky
Berwind, and Kyber (collectively referred to as "Contestants");
and by the United Mine Workers of America ("UMWA") and the
United Steelworkers of America ("USWA") in support of the
Secretary. In addition, the Commission heard oral argument in
the case. For the reasons that follow, we affirm in part,
vacate in part, and remand.
I.
Factual and Procedural Background
A. Contestants' Activities and Scope of Authority
Berwind is a holding company incorporated in Delaware
and located in Philadelphia. 18 FMSHRC at 208. Kyber, Jesse
Branch, and Kentucky Berwind are all wholly-owned subsidiaries
of Berwind. Id. at 205, 208. Berwind's primary business as
a holding company is to oversee the operations of its
subsidiaries. Id. at 208-09. Berwind is also involved in
decisions that affect the general direction of the business
of its subsidiaries and, as sole shareholder, has the power
to unilaterally replace the officers of its subsidiaries. Id.
at 209. Berwind received periodic production reports and
financial statements from its subsidiaries, which were used
to project cash flow and monitor their economic performance
as well as the production and quality of coal mined at leased
mining property. Id. at 209-10. Berwind reviewed and approved
the budgets submitted by its subsidiaries, and allocated
capital to each as necessary to meet their budget. Id. at 212.
Expenditures by subsidiaries in excess of budgetary limits
were subject to approval by Berwind. Id. Berwind provided
funds to Jesse Branch and Kyber for their operating expenses
and capital expenditures, since neither subsidiary was
profitable. Id. Significant capital expenditures of these
companies, such as the purchase of coal preparation plants
and the costs of opening new mines, were approved by Berwind.
Id. Berwind had no direct relationship with AA&W with respect
to the operation of the Elmo No. 5 Mine. Id. at 211. It never
provided funding, loans or advances to AA&W; did not provide
any supplies, materials, machinery, or tools to AA&W for use
at the mine; and did not receive any production or financial
reports from AA&W. Id.
Kentucky Berwind is a Kentucky corporation with its
principal place of business in Charleston, West Virginia, and
an office in Kentucky. Id. at 208. It owns approximately
90,000 acres of coal reserves in Pike County, Kentucky. Id.
Kentucky Berwind leased coal reserves to 21 different lessees
in Pike County, including Kyber. Id. at 212. Kentucky
Berwind never funded any of AA&W's mining operations, and it
did not provide or sell supplies, machinery or tools to the
Elmo No. 5 Mine. Id. at 210, 236. It did not require AA&W
to obtain its approval for the purchase or lease of mining
machinery or equipment, and did not own any of the equipment
used by AA&W at the mine. Id. at 210.
Kyber and Jesse Branch are both Kentucky corporations
that lease land and coal reserves from Kentucky Berwind and
contract out the actual mining of the coal. Id. at 206-07.
Neither Kyber nor Jesse Branch are regularly engaged in the
extraction of coal. Id. at 207, 228. Kyber and Jesse Branch
both own and operate separate preparation plants at which
almost all coal mined by their contractors is blended, sized,
and washed. Id. at 207. Kyber used Jesse Branch exclusively
to provide surveying services, including preparation of mine
maps and setting spads, at mines that it leased. Id. at 228.
In 1984, Kyber entered into an oral lease with Kentucky
Berwind for the right to mine coal at the Elmo No. 5 Mine in
return for the payment of rent and royalties to Kentucky
Berwind. 17 FMSHRC 684, 689 (Apr. 1995) (ALJ). In April 1991,
Kentucky Berwind and Kyber entered into a written lease for
the mine. Id. Meanwhile, during the spring of 1990, Kyber
entered into a contract with AA&W for the mining of coal at
that location by AA&W. Id. at 689-90. Jimmy Walker, the
president of Kyber and Jesse Branch, and Steve Looney, vice
president of operations for the two companies, selected AA&W
to operate the mine. Id. at 689.
The contract between Kyber and AA&W with respect to
mining coal at the Elmo No. 5 Mine was similar to that
entered into by Kyber with other contract operators.[1] Id.
at 690; Joint Stipulations of Fact ("JSF") 100. The contract
provided for the payment of a variable price to AA&W for
each ton of coal mined and deposited in a stockpile outside
the mine. 17 FMSHRC at 690. The contract required AA&W to
obtain all necessary mining permits that were not obtained
by Kyber, and to post all required bonds. Id. The contract
also specified that mining was to be conducted in accordance
with mining projections established by Kyber's engineers.
Id. at 694.
To prepare for mining, Kyber determined the location
of portals to the mine and contracted with a third party
to prepare the area for the development of portals and to
establish a stockpile area. Id. at 691. Kyber also contracted
for the construction of a haulage road to serve the mine and
developed drainage ponds for mine runoff. Id. Coal production
began at the Elmo No. 5 Mine in May 1990. Id. at 689. Before
the mine opened, Kyber obtained some of the state and federal
environmental permits necessary to conduct mining and paid
some of the permit fees. Id. at 690. AA&W obtained and paid
for the state mining license and posted the state bond. Id.
Using a coal reserve study prepared for Kentucky Berwind
several years earlier, Kyber developed a coal reserve map
that indicated the location of coal reserves that Kyber
expected AA&W to recover. Id. at 694.
AA&W employed about 20 miners at the mine, who produced
between 180,000 and 200,000 tons of coal per year. 18 FMSHRC
at 206. Mining was conducted by cutting machines, drilling
machines, and explosives. 17 FMSHRC at 689. Most of the
mining conducted was advance mining, under which the main
entries were usually driven on 60 foot centers, and rooms off
the entries were driven on 40 foot centers. Id. AA&W and
Kyber jointly agreed that mining could be conducted on 40
foot centers in certain areas. Id. at 695. AA&W provided
the equipment, machinery, and tools necessary to extract coal
from the mine and transport it to the stockpile outside. Id.
Once outside, the coal was loaded onto trucks by drivers for
independent trucking companies for transportation to the Kyber
preparation plant, using a front-end loader supplied by AA&W
Id.
Jesse Branch provided map drafting and surveying services
at the Elmo No. 5 Mine, and set spads upon request by AA&W. 18
FMSHRC at 207; 17 FMSHRC at 692. Kyber paid Jesse Branch a fee
for these services that was based upon the volume of coal
produced by AA&W. 18 FMSHRC at 207. Jesse Branch employees
generally surveyed and set spads at the mine on a weekly basis.
17 FMSHRC at 692-93. Jesse Branch also prepared all the mine
maps used at the mine, which showed the areas of the mine from
which coal had been extracted and the areas in which future
mining was projected. Id. at 692; 18 FMSHRC at 241. In
addition, Jesse Branch employees recorded the height of
coal seams and entryways, and noted the locations of pillars
and centers on which mining was conducted, stopping lines,
conveyor belt lines, roof falls, and gas wells that would
intersect the mine. 17 FMSHRC at 693. This information was
recorded in a "field book" for the mine that was kept in
Jesse Branch's offices. Id. Jesse Branch's engineers also
notified AA&W when the cover - the thickness of rock between
the mine workings and the surface - would not sustain the
number of entries projected by AA&W, or when the cover would
allow more or wider entries. 18 FMSHRC at 241-42.
The projections for the mine were developed jointly by
Kyber and AA&W, but were subject to final approval by Kyber.
Id. at 237. The mining projections showed the direction of
mine development, the number of entries to be developed,
the centering to be used for the entries, the position of
cross-cuts, and, in some instances, the overall distance to
be mined. Id. Once approved by Kyber, the projections were
incorporated by Jesse Branch into mine maps. 17 FMSHRC at
694. Once the projections were established and approved by
Kyber, they could not be unilaterally modified by AA&W;
instead AA&W was contractually obligated to follow them.
18 FMSHRC at 237. If AA&W and Kyber agreed to changes in
the projections, they were incorporated by Jesse Branch in
a revised mine map that was then submitted by AA&W to federal
and state regulatory authorities. 17 FMSHRC at 694. Kentucky
Berwind had no input into the formulation of projections for
the mine, and had nothing to do with the roof control and
ventilation plans under which the mine operated or mining
sequence decisions. 18 FMSHRC at 236.
When AA&W believed that it could not mine to the full
extent of the projections, for safety reasons or because the
coal seam became too thin, it notified Kyber. 17 FMSHRC at
694; JSF 184. Kyber had the right under the contract to
reject any proposal by AA&W to deviate from the projections
if it would not lead to the efficient extraction of coal.
18 FMSHRC at 237-38. Kyber never challenged AA&W's opinion
that mining should be discontinued because of safety
considerations, such as poor roof conditions. Id. at 238.
It did, however, occasionally deny requests by AA&W to
discontinue mining for other reasons. Id. When Kyber agreed
with a proposal by AA&W to deviate from the mining projections,
Kyber notified Kentucky Berwind and requested it to inspect
the area in order to protect Kyber from liability for wasting
coal reserves. 17 FMSHRC at 694, 713-14. Kyber also notified
Kentucky Berwind when an area slated to be mined was removed
from the projection. Id. at 714. Kentucky Berwind employees
never disagreed with Kyber and AA&W about the propriety of
discontinuing mining in specified areas of the mine. 18
FMSHRC at 235. Kentucky Berwind could contact Kyber if it
believed that coal was not being mined effectively, but it
never did so at this mine. 17 FMSHRC at 696.
Kyber's employees visited the mine occasionally to check
on the height and quality of the coal seam, to carry out its
obligation to insure that coal reserves were mined to the
greatest extent possible. Id. Kyber's employees also
occasionally visited the site at the request of AA&W. Id.
Although Kyber's employees had the right to go onto the mine
property at will, they generally first notified AA&W before
entering the mine. Id.
Kentucky Berwind employees visited the mine quarterly,
or upon request, to examine the workings, ensure that coal
was being properly recovered, and check seam heights and
tonnages to confirm royalties. 18 FMSHRC at 210-11. After
conducting their inspections, these employees prepared
reports on their visits that were used by Kentucky Berwind
to track mining operations. 17 FMSHRC at 696. These reports
contained information on the percentage of coal projected
for extraction, the average coal production per shift and per
month, and the ash content of the coal mined. Id. at 713.
The reports were used to calculate the tonnage of coal mined,
the tonnage remaining to be mined, and the areas to be mined.
Id. at 696. Kentucky Berwind inspectors conducted inspections
at the mine twice in 1990, seven times in 1991, twice in 1992,
and five times in 1993. Id. at 697.
Kyber occasionally contacted AA&W when it felt that the
amount of rock in the coal was excessive. Id. at 697. AA&W
sometimes requested a waiver of contractual penalties for low
quality coal when it was mining in an area where the ash
content of the coal was unusually high. Id. at 695. In such
situations, Kyber sent a representative to the mine to
determine the cause of the poor coal quality. Id. In some
cases, Kyber consulted with Kentucky Berwind regarding whether
mining should continue in that area. Id. Kyber and AA&W
would then jointly determine the best course of action. Id.
Pursuant to its contract with Kyber, AA&W paid all state
and federal income taxes, social security taxes, and
unemployment compensation payments for its employees. Id. at
691. Kyber paid state severance taxes, federal black lung
excise taxes, and state and federal reclamation taxes with
funds owed to, and withheld from, AA&W. Id. Kyber paid for
electricity supplied to the mine, and deducted the amount
paid from the payments it made to AA&W. Id. at 692. Kyber
also deducted from its payments to AA&W the cost of an
electrical substation it had purchased and installed at the
mine. Id.
B. Proceedings Below
On November 30, 1993, an explosion occurred at the Elmo
No. 5 Mine that resulted in the death of one miner. 18 FMSHRC
at 205. Following an investigation of the accident, MSHA
issued 225 citations and orders jointly to AA&W, Berwind,
Jesse Branch, Kentucky Berwind,[2] and Kyber. Id.
The contest proceedings were bifurcated so that the
jurisdictional status of Berwind, Jesse Branch, Kentucky
Berwind, and Kyber could be resolved before the merits of
the individual cases were addressed. Id. at 206. Following
extensive discovery, the parties filed 302 joint
stipulations of fact, as well as cross-motions for summary
decision on the status of the Contestants as operators under
the Mine Act. Id.
On April 24, 1995, Judge Barbour issued an order and
notice of hearing in which he denied the Secretary's motion
for summary decision and granted the Contestants' motion
regarding the status of Berwind and Jesse Branch, concluding
that the undisputed facts established that these two companies
were not operators within the meaning of the Mine Act. 17
FMSHRC at 710-12, 715-16, 717. The judge also denied the
Contestants' motion for summary decision as to Kyber and
Kentucky Berwind, concluding that the stipulated facts did
not conclusively establish whether these two entities
exercised day-to-day control over the operations of the
Elmo No. 5 Mine, or had the authority to do so. Id. at
706-10, 712-15, 716-17. The judge concluded that additional
evidence was necessary to resolve issues relating to these
two companies, and therefore directed a hearing for the
purpose of eliciting additional evidence regarding whether
Kyber and Kentucky Berwind were operators of the mine. Id.
at 716-17.
The hearing was conducted on June 27 and 28, 1995, in
Pikeville, Kentucky. 18 FMSHRC at 213. On February 23, 1996,
Judge Barbour issued a decision in which he reconsidered his
earlier decision based upon the additional evidence elicited
at the hearing. Addressing the appropriate standard for
determining whether Berwind and its subsidiaries were
"operators" of the Elmo No. 5 Mine, the judge concluded that
the purpose of the statutory definition of "operator" in
section 3(d) of the Mine Act is "to place responsibility for
health and safety upon those entities that create the
conditions at the mine or that have actual authority over
the conditions on the theory that such responsibility will
further compliance." Id. at 231. The judge explained:
"Control may be either direct or indirect, but it must be
actual. In other words, an operator must `call the shots'
at a mine regarding its day-to-day operation, or have the
authority to do so." Id. (citations omitted). The judge
thus concluded that "in order to establish an entity as an
`operator' subject to the Act, the Secretary must prove that
the entity, either directly or indirectly, substantially
participated in the operation, control, or supervision of
the day-to-day operations of the mine, or had the authority
to do so." Id. (citations omitted).
The judge rejected the Secretary's argument that Berwind
and its subsidiary corporations constituted a "unitary
operator" under the Mine Act on the grounds that this theory
represented a significant deviation from the Secretary's past
enforcement policy with respect to interrelated corporate
entities, that it would interfere with the rights of the
entities to be treated as separate corporate entities, and
that it could be used to extend jurisdiction without logical
limit. Id. at 233.
The judge affirmed his prior holdings that Berwind and
Jesse Branch were not operators of the Elmo No. 5 Mine within
the meaning of the Mine Act. Id. at 233-34, 241-43. He found
that the record "contains no suggestion that those who acted
for Berwind actually were controlling and supervising the
Elmo No. 5 Mine, or were attempting to do so." Id. at 234.
Instead, the judge found that the record established that
Berwind "had virtually nothing to do with the day-to-day
operations of the mine." Id. He concluded that Berwind's
financial involvement with the mine was "too far removed"
from the mine's daily operation to warrant a conclusion that
Berwind played "a substantial role in controlling and
supervising the day-to-day operation of the mine, or [had]
the authority to do so." Id. The judge also specifically
rejected the Secretary's position that "Berwind is liable
solely because it is part of a group that worked together
to make possible the operation of the [mine]." Id. In
addition, the judge concluded that the engineering services
which Jesse Branch provided to AA&W at the Elmo No. 5 Mine,
"did not place Jesse Branch in the position of controlling
the day-to-day operation of the mine." Id. at 242.
Based on the evidence adduced at the hearing, the judge
also concluded that Kentucky Berwind was not an operator of
the mine. Id. at 235-36. He reaffirmed his prior findings
that, while Kentucky Berwind owned the minerals rights at the
mine and leased those rights to Kyber, neither the lease
provisions nor the report forms prepared by Kentucky Berwind
indicated that it reserved to itself the right to substantial
participation in the operation of the mine. Id. at 234-35;
17 FMSHRC at 713-15. The judge found that, based on the record
evidence and the stipulations, Kentucky Berwind employees who
inspected the mine did so to insure that coal was being
recovered properly and to check seam heights and tonnage in
order to confirm royalties, and that Kentucky Berwind never
disagreed with Kyber and AA&W about the propriety of
discontinuing mining along particular projections. 18 FMSHRC
at 235. He found that Kentucky Berwind's authority to impose
lost coal penalties was not indicative of control or authority
to control day-to-day mining operations, but rather was
designed to insure that the coal was mined to the maximum
extent possible, consistent with the protection of its
proprietary interest in its mineral rights. Id. at 236.
Finally, the judge concluded that Kyber was an operator
because of its active participation in the day-to-day
operation of the mine and its authority to participate in
the decision-making process regarding the daily development
of the mine through the projections. Id. at 240. The judge
found that Kyber possessed "bottom line authority" for
determining the direction of mining, and that it did not give
AA&W sufficient authority to act independently to change the
direction of mining within the overall constraints of the
projections. Id. at 238-39. He found that, except for
conditions relating to safety, AA&W could not change the
direction of mining without the approval of Kyber. Id.
at 239.
II.
Disposition
A. The Standard for Determining Operator Status[3]
The Secretary contends that the judge erred in holding
that, to be an operator under the Mine Act, an entity must
exercise or have the authority to exercise "day-to-day"
control over the overall operations of a mine. S. Br. at
29-37. The Secretary argues that the judge's imposition of
a requirement of substantial "day-to-day" control is
inconsistent with the language of the Mine Act, its
legislative history, the statutory purpose, and the relevant
case law. Id. The Secretary submits, in the alternative,
that to qualify as an operator under section 3(d) of the Act,
30 U.S.C. � 802(d), "an entity must exercise or have the
authority to exercise substantial control over the overall
operation of the mine." Id. at 29 (emphasis in original).
Amici UMWA and USWA agree with the Secretary that the judge
applied an incorrect standard to determine operator status.
UMWA Br. at 2-4; USWA Br. at 1-3, 5. The UMWA also asserts
that the economic control that an owner or lessee exerts
over a mine may suffice to render it an operator under the
Mine Act. UMWA Br. at 5-7.
Contestants and amici NMA and NCCL argue that the
"substantial day-to-day control" standard applied by the
judge to resolve the operator status of Berwind and its
subsidiary corporations is consistent with, and supported
by, the statutory language, applicable legislative history,
case law and purposes of the Mine Act. B. Resp. Br. at
11-36; NMA/NCCL Br. at 3-14. Contestants and amici NMA, NCCL
and COA further contend that the Secretary's alternative
formulation of the standard for determining operator status
is not entitled to deference since it is unreasonable and
contrary to the clear intent of Congress. B. Resp. Br. at
36-38; NMA/NCCL Br. at 14-17; COA Br. at 16-19. Amicus COA
further asserts that the Secretary's attempt to impose
liability on owners and lessees of mineral rights through
the adoption of a new standard for determining operator
status would amount to a fundamental shift in the Secretary's
enforcement policy that would threaten the future use of
contract mining, and thus can only be implemented
prospectively through legislation or notice-and-comment
rulemaking. COA Br. at 4-16, 19-25.
An operator is defined in section 3(d) as "any owner,
lessee, or other person who operates, controls, or supervises
a coal or other mine or any independent contractor performing
services or construction at such mine[.]" 30 U.S.C.
� 802(d).[4] This language, without the independent contractor
clause, originated with the Federal Coal Mine Health and Safety
Act of 1969, 30 U.S.C. � 801 et. seq. (1976) (amended 1977)
("Coal Act"). The Senate Report to the Coal Act states that
the operation, control, or supervision may be either direct
or indirect. S. Rep. No. 91-411, at 44 (1969), reprinted in
Senate Subcommittee on Labor, Committee on Labor and Public
Welfare, 94th Cong., Part 1, Legislative History of the Federal
Coal Mine Health and Safety Act of 1969, at 170 (1975) ("Coal
Act Legis. Hist."). Because the forms of participation and
authority vary from entity to entity, the question of whether
an entity meets the statutory definition of "operator" must
be resolved on a case-by-case basis. When reviewing the
Secretary's decision to designate an entity as an operator
under the Act, the Commission will examine whether the entity
has substantial involvement with the mine. In answering this
question, we will not be constrained by the Secretary's
requirement of "overall control" or the judge's test of
"day-to-day control." Instead, we will evaluate the
participation and involvement of the entity in the mine's
engineering, financial, production, personnel, and health and
safety matters to determine whether that entity qualified as
an operator under the Act. See W-P Coal Co., 16 FMSHRC 1407,
1411 (July 1994).[5] In determining operator status, however,
the Commission will review and evaluate all of these forms of
participation and involvement in the operation of the mine,
and no particular factor will be considered controlling.
Instead, the Commission will weigh the totality of the
circumstances in determining whether the Secretary could
designate the entity as an operator under the Mine Act.[6]
B. The Status of the Individual Contestants as
Operators[7]
1. Kyber
Kyber asserts that the judge's finding that it is liable
as an operator of the mine is not supported by substantial
evidence, and contends that the record demonstrates that it
lacked the requisite control over operations at the mine or
the authority to direct the work force employed there. K. Br.
16-19, 20-25. Kyber argues that its authority to approve
changes in the direction of mining or deviations from mining
projections was not indicative of substantial control over
operations at the mine sufficient to render it an operator
under the Mine Act. Id. at 21-25. Kyber asserts that the
Secretary relies upon isolated portions of the record and
deposition testimony not in evidence to support the judge's
finding that it was an operator of the mine, and ignores other
evidence and facts found by the judge which indicate that it
did not exercise or possess sufficient authority to qualify
as an operator. K. Reply Br. at 20-31. In addition, Kyber
contends that the judge's finding of operator status is at
odds with Mine Act precedent, which has never held a lessee
of mineral rights liable as an operator merely because it
had the contractual authority to ensure that the production
operator extracted all minable coal. K. Br. at 25-30.
The Secretary argues that, although the judge erred by
failing to apply the correct legal standard for determining
Kyber's status as an operator, even under the "day-to-day"
control test applied by the judge substantial evidence
compels the conclusion that Kyber was the operator of the
mine since it exercised, or had the authority to exercise,
substantial control over the mine plan which governed the
overall mining operation, the mining projections which
governed the direction of mining, and production-related
decisions relating to the areas and the manner in which
mining would be conducted. S. Resp. Br. at 2-3, 32-34. The
Secretary discounts Kyber's argument that an owner or lessee
of mineral rights can never be an operator under the Mine
Act when it has contracted with an independent contractor to
mine the mineral reserve and given the production-operator
broad control over its activities. Id. at 4-14. Amicus UMWA
contends that the judge correctly concluded that Kyber is an
operator because of the substantial control it exercised over
operations at the mine. UMWA Br. at 7-9.
Although we have held that it was error for the judge to
apply the day-to-day control standard to determine whether
Kyber was an operator of the Elmo No. 5 Mine, we affirm the
judge's conclusion that Kyber qualified as an operator. We
think that implicit in the judge's finding that Kyber
exercised day-to-day control at the mine is a finding that
Kyber was substantially involved in the mine's operation. In
our view, substantial evidence[8] supports this finding and
that Kyber had "bottom line authority" for determining the
direction of mining, as well as that it "denied AA&W autonomy
of action within the overall constraints of the projections."
18 FMSHRC at 238-39. Although the mining projections were
jointly agreed to by AA&W and Kyber, the record indicates
that Kyber had final authority to approve the projections and
"to insist upon the projections it wanted[.]" Id. at 237.
Moreover, the judge found it "clear that Kyber had the
authority to insist upon the projections it wanted, and that
once the projections were approved by Kyber, AA&W could not
unilaterally modify them." Id. Kyber retained ultimate
authority to reject any proposal by AA&W that it believed
would not lead to the efficient extraction of coal. Id. at
237-38. Based upon the foregoing evidence, the judge
reasonably concluded that "Kyber, not AA&W, had the bottom
line authority for determining mining direction, and . . .
AA&W implemented Kyber's directional decisions." Id. at 238.
This evidence supports the judge's finding that Kyber
retained more control over the direction of mining than the
typical mine owner or lessee. Id. at 239. As the judge
explained:
[T]he owner or lessee of mineral rights has
the right to protect its asset and to try to
insure the asset is developed to the maximum
extent possible consistent with sound safety
and environmental practices. Consistent with
this right, when the owner or lessee
contracts the mining of its mineral, it is
permissible for the entity, in conjunction
with its contract operator, to project an
overall course of mine development. However,
once overall projections have been agreed to,
the owner or lessee must give leeway to the
contractor to act independently within the
general constraints of the projections. If
it does not afford the contract operator such
autonomy, the lessee or mineral right owner
may retain control sufficient to make it an
operator for Mine Act purposes.
In my view, Kyber's relationship with
AA&W illustrates such a situation. Except
for conditions relating to safety, AA&W could
not change the direction of mining without
Kyber's approval. . . . When it exercised its
authority, the choice faced by AA&W was
either to mine as Kyber wished or to cease
mining - period (Tr. 402). In dictating the
course mining had to take and in having the
authority to dictate that course Kyber denied
AA&W the autonomy of action within the
overall constraints of the projections. The
owner or lessee of mineral rights can not
deny its responsibility for the actions of
its contract operator, when the contract
operator is not free to choose the course of
mining it believes best in this regard.
Id. (emphasis added). We agree with the judge's conclusion
that Kyber's active participation and its authority to
actively participate in the decision-making process regarding
the daily development of the mine through the projections
were sufficient to render it an operator within the meaning
of the Act. Id. at 239-40.
The judge's conclusion that Kyber was an operator is
further supported by other evidence of Kyber's substantial
involvement in decisions concerning the ways in which mining
was conducted and the quality and quantity of coal produced
at the mine. Its contract with AA&W gave Kyber the authority
to approve and enforce the mine plan for the Elmo No. 5 Mine,
which governed matters as wide-ranging as the applicable
ventilation and roof control plans, and the number of
employees and the types of equipment to be used. 18 FMSHRC
at 237 n.5; JSF Ex. C � 4.c; Tr. 308-09, 478-79. These
considerations, in turn, affected the safety and health of
miners. Although Kyber did not regularly exercise its
authority with respect to the mine plan (18 FMSHRC at 237
n.5), its contractual authority over the mine plan may be
considered by the Commission as evidence of the actual
relationship between Kyber and AA&W with respect to the
operation of the mine. See Bulk Transp. Servs., Inc., 13
FMSHRC 1354, 1358 n.2 (Sept. 1991).[9] In addition, the
involvement of Kyber officials in taking steps to prevent
future roof falls as the result of blasting at the neighboring
Corvette mine[10] provides further evidence that Kyber
functioned as an operator of the Elmo No. 5 Mine. The record
indicates that Kyber officials were instrumental in providing
notice of the roof fall caused by Corvette's blasting
activities and in developing the ultimate solution for this
problem. 17 FMSHRC at 699-700; JSF 301 & Ex. E.[11]
Commissioner Verheggen rejects our conclusion that
substantial evidence supports the judge's finding that Kyber
was an operator of the Elmo No. 5 Mine, asserting that,
"Kyber's involvement in the mine, which did not include any
involvement in the mine's health and safety affairs, is
simply too remote" to render Kyber an operator. Slip op.
at 80. Under the substantial evidence test, however, the
Commission is limited to searching for "such relevant evidence
as a reasonable mind might accept as adequate to support [the
judge's] conclusion" (supra, at n.8), and it may not
"substitute a competing view of the facts for the view [an]
ALJ reasonably reached." Donovan on behalf of Chacon v.
Phelps Dodge Corp., 709 F.2d 86, 92 (D.C. Cir. 1983); see
also Secretary of Labor v. Keystone Coal Mining Corp., 151
F.3d 1096, 1104 (D.C. Cir. 1998) ("This sensibly deferential
standard of review does not allow [a reviewing body] to
reverse reasonable findings and conclusions, even if [it]
would have weighed the evidence differently."). In reaching
his conclusion that Kyber does not qualify as an operator,
Commissioner Verheggen appears to violate these precepts by
proceeding to reweigh the evidence on an issue on which the
judge's determination is well supported by the record.
Commissioner Verheggen's competing view of the record
evidence is based in large part on his assertion that Kyber
"played no role in health and safety affairs at the mine."
Slip op. at 75. In our view, however, there can be little
question that Kyber's ultimate control over the direction of
mining at the Elmo No. 5 Mine, through its final authority
over the mining projections and any deviations from those
projections, had a direct and significant bearing on the
conditions encountered by miners engaged in operations at
the mine. The mining projections determine the direction of
mine development, which significantly impacts on such things
as roof and rib conditions and ventilation projections. These
factors directly involve mine safety and the conditions
experienced by miners in the course of their duties. This
significant element of control, as well as the other forms
of authority exercised by Kyber at the mine,[12] had a direct
effect on the health and safety of those miners, and could be
reasonably relied upon by the judge as indicative of Kyber's
status as an operator. Cf. Otis Elevator Co., 11 FMSHRC 1896,
1902 (Oct. 1989) (finding independent contractor to be an
operator under section 3(d) of the Mine Act where its
employees "had a direct effect on the safety of the mine
elevators because of their exclusive control over the safety
of the mine elevators"), aff'd, 921 F.2d 1285 (D.C. Cir.
1990).
Despite ample record evidence that Kyber had "bottom
line authority for determining mining direction" at the Elmo
No. 5 mine and approving any deviations from the established
mining projections (18 FMSHRC at 238), Commissioner Verheggen
focuses on a relatively narrow exception to this authority,
involving deviations based upon safety concerns, to support
his view that Kyber does not qualify as an operator. In our
view, however, analyzing only one element of Kyber's control
over operation of the mine does not provide a convincing
rationale for rejecting the judge's determination that Kyber
qualified as an operator because safety considerations are
only one of several potential categories of factors that
could provide a basis for a proposed deviation from the mining
projections. It is undisputed that, with respect to all other
potential grounds for deviations, Kyber had the ultimate
approval authority. JSF 187. In addition, we conclude that
the significance of this single limitation on Kyber's
authority to approve deviations from the projections is not
nearly as great as our dissenting colleague suggests.[13]
Significantly, there is no evidence of any limitation on
Kyber's authority to question whether AA&W has in fact raised
a valid health or safety concern. Further, once a valid
health or safety concern was raised by AA&W as a basis for a
proposed deviation, it would appear that, even absent the
"no-veto" limitation, Kyber's discretion to cancel the
proposed change would be essentially illusory, since it would
amount to suggesting that miners should work under unsafe or
unhealthy conditions. We are not prepared to accept any
suggestion that Kyber can only qualify as an operator if it
possessed authority to insist on adherence to the projections
in the face of legitimate countervailing safety or health
concerns.
Commissioner Verheggen's assertion that Kyber had
"virtually no involvement" in financial, production,
personnel, or safety and health matters at the mine (slip op.
at 80) is contradicted by the record evidence. Kyber had
significant involvement in safety and health at the mine
through its ultimate control over the mining projections and
any subsequent deviations from those projections, which
determined the direction and manner in which coal was mined.
Kyber also had the authority to approve and enforce the mining
plan, which encompassed matters including the applicable
ventilation and roof control plans. In addition, Kyber paid
many of the initial costs associated with development of the
mine, including those incurred for the development of portals
to the mine, the establishment of a stockpile area, the
construction of a haulage road to serve the mine, the
development of drainage ponds for mine runoff, the
acquisition of many of the required federal and state
environmental permits, and the preparation of a coal reserve
map. Kyber also paid its sister corporation, Jesse Branch,
to perform map drafting and surveying services at the mine.
Indeed, the record indicates that Kyber engaged in many of
the same activities at the mine that the Commission found
dispositive in its decision in W-P Coal: it "calculated
mining projections, prepared and updated mine maps [through
its sister corporation, Jesse Branch], contacted and visited
the mine frequently to discuss production and other matters,
. . . [and] participated in an inspection of the mine."
W-P Coal, 16 FMSHRC at 1411.[14] Thus, there is clearly
substantial evidence in this record to support the judge's
finding that Kyber was an operator. In reweighing the
evidence to reach a different result, Commissioner
Verheggen focuses on individual elements of Kyber's control
over operation of the Elmo No. 5 Mine, arguing that each is,
in itself, insufficient to support an finding that Kyber is
an operator. He errs, however, in focusing on separate
elements of Kyber's control at the mine without considering
the totality of the circumstances, that is, Kyber's overall
relationship with the mine, which we find provides
substantial evidence to support the judge's finding.[15]
2. Jesse Branch
The Secretary contends that, even under the
"day-to-day" control test applied by the judge, the evidence
establishes that Jesse Branch qualifies as an operator of the
Elmo No. 5 Mine based upon the engineering services and
activities it performed there on behalf of, and in conjunction
with, Kyber. S. Br. at 50-56. Amicus UMWA contends that
Jesse Branch qualifies as an operator of the mine because of
the engineering services it performed there. UMWA Br. at 8-9.
Amicus USWA contends that the judge erred in finding that
Jesse Branch did not have day-to-day control over the mine,
and therefore was not an operator. USWA Br. at 4-5.
Contestants argue that the engineering services performed by
Jesse Branch at the mine did not give it sufficient control
over mine operations to warrant finding it to be an operator.
B. Resp. Br. at 49-50.[16]
In determining whether Jesse Branch as a separate entity
qualifies as an operator of the Elmo No. 5 Mine, we note that
the services provided by Jesse Branch were relatively limited
in scope, consisting primarily of engineering services
including surveying, spad setting and the preparation of mine
maps. The record also discloses, however, that these services
played an important role in determining the direction of mining
at the mine, and that Jesse Branch also provided technical
advice to AA&W in connection with the engineering services it
provided.
The parties stipulated that the surveying and spad
services that Jesse Branch performed at the mine were
necessary so that AA&W could mine in accordance with the mine
projections and the requirements of the Mine Act. JSF 160,
161. In addition, it is undisputed that the mine maps prepared
by Jesse Branch established the projections that AA&W was
required to follow when driving entries in the mine, and also
designated the areas in the mine from which coal could not
safely be extracted because of the presence of natural gas
wells. 17 FMSHRC at 693; JSF 166, 167, 178, 179. These mine
maps prepared by Jesse Branch were required under federal law,
and were submitted to MSHA on a semi-annual basis to show the
direction of mining, as part of the ventilation plan, to
facilitate regular ventilation examinations. 17 FMSHRC at
692-93; JSF 158, 169. Thus, the engineering services provided
by Jesse Branch played a key role in determining the areas to
be mined, and the direction of mining conducted, by AA&W at
the mine.
In addition, the judge found that Jesse Branch provided
AA&W with technical expertise that AA&W lacked regarding
on-site implementation of the projections, the mine cover,
and the number of entries it would sustain. 18 FMSHRC at
241-42. While conducting surveys at the mine, Jesse Branch
employees also collected information concerning the dimensions
of the coal seam, entryways, and coal pillars, and the
locations of coal pillars, the centers on which mining was
conducted, stopping lines, conveyor belt lines, and roof
falls. This information was recorded in a field book kept
at Jesse Branch's offices, and was used to draft subsequent
mine maps. 17 FMSHRC at 693; JSF 156. Jesse Branch also
inspected the drainage ponds on the surface of the mine on a
quarterly basis, and prepared inspection results that were
submitted in an annual certification report to the Kentucky
Office of Surface Mining Reclamation and Enforcement ("OSM").
JSF 209. Employees of Jesse Branch, not AA&W, accompanied
OSM inspectors on inspections of the surface area of the
mine, and either Jesse Branch or Kyber corrected any
violations cited as the result of OSM inspections, and paid
any associated penalties. JSF 210, 211.
We conclude that while this evidence shows that Jesse
Branch played an important role in the operation of the Elmo
No. 5 Mine, it does not establish substantial involvement in
the operation of the mine sufficient to support a conclusion
that Jesse Branch, considered by itself, was an operator of
the mine. As the judge observed, the type of surveying and
engineering work performed by Jesse Branch is frequently
contracted out because many on-site operators lack the
capacity to perform such work, and is not typically regarded
as indicative of substantial control over the operations of
a mine. 18 FMSHRC at 241. The judge also noted that there
was no indication in the record that Jesse Branch denied AA&W
the autonomy of decision-making within the confines of the
projections established by Kyber and AA&W, or reserved for
itself the authority for such decision-making. Id. at 242.
In addition, the record indicates that when Jesse Branch
provided AA&W with advice regarding the direction of mining
or geological conditions, it was merely supplying information
and related opinions that were beyond the technical expertise
of AA&W. Id. Accordingly, we affirm the judge's conclusion
that Jesse Branch, considered by itself, was not an operator
of the mine.[17]
3. Kentucky Berwind
The Secretary argues that Kentucky Berwind was an
operator because, as the owner of mineral rights at the mine,
it retained control and supervision over the manner in which
coal was mined through its lease agreement with Kyber, even
if it chose not to continually exercise that control. S. Br.
at 38-45. In particular, the Secretary relies on periodic
inspections conducted by Kentucky Berwind employees at the
Elmo No. 5 Mine, and its involvement in resolving problems
caused by blasting operations at the neighboring Corvette
mine, to support its position that Kentucky Berwind was an
operator. Id. at 40-45. Amicus UMWA argues that Kentucky
Berwind maintained and exercised economic control over the
mine sufficient to render it an operator under the Mine Act.
UMWA Br. at 6-7. Amicus USWA contends that the judge erred
in concluding that Kentucky Berwind was not an operator.
USWA Br. at 3-5.
Contestants argue that the inherent authority retained
by Kentucky Berwind in connection with operations at the mine
was comparable to that generally retained by coal lessors in
order to protect their economic interests, and did not suffice
to render it an operator under the Mine Act. B. Resp. Br. at
38-46. Contestants also contend that the quarterly inspections
conducted by employees of Kentucky Berwind, and its involvement
in the Corvette incident, are not indicative of the type of
control or authority over mining operations sufficient to
render Kentucky Berwind an operator of the mine. Id. at 42-45.
We affirm the judge's conclusion that Kentucky Berwind
was not an operator of the mine. The Secretary's argument
that Kentucky Berwind is an operator appears to be based
primarily on the authority it possessed as an owner of mineral
rights at the Elmo No. 5 Mine, despite the Secretary's
contention (S. Br. at 33 n.13) that it has not relied on mere
status as an owner to establish operator status and that an
entity must exercise or at least possess the authority to
exercise substantial control over the operation of the mine.
In our view, the rights retained by Kentucky Berwind pursuant
to the terms of its lease with Kyber, including the right to
impose lost coal penalties, do not indicate that Kentucky
Berwind reserved to itself the authority to have substantial
involvement in the operation of the mine. The record indicates
that Kentucky Berwind's authority to impose lost coal penalties
was rarely, if ever, exercised at the Elmo No. 5 Mine, and was
not used by Kentucky Berwind as a means of exerting control
over the operation of the mine. Rather, these provisions were
merely used to protect the interests of Kentucky Berwind, as
owner of the mine, by insuring that the coal was mined to the
maximum extent possible.
To support her argument that Kentucky Berwind is an
operator because of the authority it possessed as an owner
and lessor, the Secretary cites (S. Br. at 33) language from
the Third Circuit's Elliot decision that "where the lessor
and lessee are closely affiliated companies, . . . existence
of a power to control the lessee should be presumed." 17 F.3d
at 620. This statement, in dicta, was made in the context of
determining whether the lessor in that case was a "responsible
operator" liable for benefits under the Black Lung Benefits
Act, 30 U.S.C. �� 901-945 ("BLBA"), and its implementing
regulations, which were specifically directed towards
preventing operators from manipulating their corporate form
to avoid liability for benefits to employees employed on or
after June 30, 1973. As the Elliot court noted, the
legislative history of the 1977 amendments to the BLBA
indicates that "Congress intended to prevent businesses from
escaping liability for black lung benefits by a change of
corporate form or identity that had no substantial economic
effect on the power to control the exploitation of the mineral
resources." 17 F.3d at 631. Thus, the quoted language from
Elliot was based upon Congress' express intent to impose
continuing liability on a former mine operator for BLBA
benefits to that operator's former employees even though
it may have attempted to evade those responsibilities by
a corporate restructuring in which it substituted an
affiliated company as its lessee to continue the actual
operation of the mine, while continuing to profit from mine
operations. This reasoning is not applicable to the pertinent
lease arrangement between Kentucky Berwind and Kyber, who,
as shown above, dealt with each other at "arm's length."
Unlike the lessor involved in Elliot, neither Kentucky
Berwind nor any of its affiliates ever previously operated
the mine or employed AA&W's employees, and there was no
allegation that any of those entities sought, through the
lease agreement, to avoid any legal obligations.
In any event, the quoted language from Elliot speaks
only of a "presumption" of a lessor's power to control the
lessee. In determining whether Kentucky Berwind is an
operator, the key issue is the extent of its involvement in
the operation of the mine, and not the activities of Kyber,
its affiliated lessee. Moreover, any presumption of control
over the lessee could be overcome by evidence, of the type
elicited in this case, that the lessor did not possess actual
authority to control the lessee or the operations of the
mine.
In addition, it does not appear that Kentucky Berwind
engaged in the type of activities that are indicative of
substantial involvement in the operation, supervision or
control of the mine. Rather, the record supports the judge's
findings that the inspections of the mine by Kentucky Berwind
personnel, the only regular contact by Kentucky Berwind with
the mine, were essentially pro forma operations designed to
insure that the coal was being recovered properly and to
check seam heights and tonnages and confirm royalties; that
Kentucky Berwind never disagreed with Kyber and AA&W about
the propriety of discontinuing mining in certain areas; and
that Kentucky Berwind had little or no input into the
formulation of projections or other decisions regarding mining
operations. 18 FMSHRC at 235-36. As the judge noted, there
was no showing that the report forms prepared by Kentucky
Berwind employees who visited the mine were linked to any
substantial participation in the operation of the mine. Id.
at 235. In addition, based upon the lack of supporting
evidence of financial control and the stipulation of the
parties that Kentucky Berwind had no financial dealings with
AA&W, the judge's conclusion that Kentucky Berwind did not
exert sufficient financial control over operations at the
mine to qualify as an operator is supported by substantial
evidence.
Nor do the actions of Kentucky Berwind in response to a
roof fall at the Elmo No. 5 Mine that resulted from blasting
at the neighboring Corvette mine (see discussion supra, at 13
& n.11) warrant a finding that it was an operator. While the
undisputed evidence establishes that Kentucky Berwind
intervened to insure that operations at the Corvette mine did
not interfere with the operation of the Elmo No. 5 Mine, there
is no evidence that it directed AA&W to make any changes with
respect to its operation of the mine. As the judge concluded,
"it was only natural that Kentucky Berwind, as the owner of
the coal reserves mined by both AA&W and Corvette, would have
an interest in trying to assist both operators so that they
did not interfere with one anothers' operations." 17 FMSHRC
at 715. While we rely on the involvement of Kyber officials
in the Corvette incident as additional evidence of Kyber's
operator status (supra, at 12-13), we do not believe that the
involvement of Kentucky Berwind in these limited circumstances,
in itself, required the judge to conclude that Kentucky
Berwind was an operator, in absence of other evidence of its
substantial involvement in the operations of the mine.
4. Berwind
The Secretary argues that Berwind qualifies as an
operator because it had the power to control and supervise
operations at the mine as the result of the control it
exercised over its three subsidiary corporations - Kentucky
Berwind, Kyber, and Jesse Branch. S. Br. at 45-49. Amicus
UMWA argues that Berwind qualifies as an operator on the
basis of the economic control it exercised over operations
at the mine. UMWA at 6-7. Amicus USWA asserts that the
judge erred in concluding that Berwind was not an operator
of the mine because of the business and economic control it
exercised over operations at the mine, through Kyber. USWA
Br. at 3-4.
Contestants argue the judge correctly held that Berwind
was not an operator of the Elmo No. 5 Mine based on his
finding that Berwind had virtually nothing to do with the
day-to-day operations of the mine. B. Resp. Br. at 46.
They argue that the Secretary erroneously attempts to rely on
the control Berwind exerted over its subsidiary corporations
as indicative of operator status, since she has failed to
establish any of the necessary prerequisites for piercing
the corporate veil and disregarding Berwind's status as a
separate corporation. Id. at 46-49.
We affirm the judge's determination that Berwind was
not an operator of the mine. We conclude that substantial
evidence supports the judge's finding that Berwind "had
virtually nothing to do with the . . . operations of the
mine." 18 FMSHRC at 234. The Secretary does not dispute
this finding, but argues that Berwind should be found to be
an operator because of the control it exercised over its
three wholly-owned subsidiaries - Jesse Branch, Kentucky
Berwind and Kyber - which, in turn, controlled various
aspects of operations at the mine. This same argument could
be applied to virtually any parent corporation, however, and,
in our view, amounts to an attempt to "bootstrap" Berwind's
operator status based on the finding that Kyber is an
operator.
The stipulated evidence does indicate that Berwind
allocated funds to its subsidiaries to meet their budgets,
retained the authority to approve expenditures by the
subsidiaries in excess of their budgets, and approved the
expenditure of funds by Kyber to do face-up work prior to
the opening of the Elmo No. 5 Mine. Id. at 212, 234. In our
view, however, the judge correctly concluded that Berwind's
financial involvement with the mine was "too far removed"
from the actual operation of the mine to warrant a finding
that Berwind is an operator. Id. at 234. Likewise, the
overlap between the officers of Berwind and those of its
subsidiaries, and the authority that Berwind had to approve
the election and appointment of top level officers and
management officials of its subsidiaries, does not in itself
constitute substantial involvement in the operation of the
mine. We agree with the judge that the record contains "no
suggestion that those who acted for Berwind actually were
controlling and supervising the Elmo No. 5 Mine, or were
attempting to do so." Id. Nor is there any evidence that
Berwind used the common officers it shared with its
subsidiaries, or its authority to name officials of the
subsidiaries, as a means by which to exert control over the
operations of the mine.
In our view, the judge also correctly concluded that the
Secretary failed to establish that any of the subsidiaries
did not operate independently of Berwind, or the existence of
any other grounds for disregarding the corporate distinctions
between Berwind and its subsidiaries. Id.; 17 FMSHRC at 715.
In the absence of any such evidence, or any showing that
Berwind had substantial involvement in the operation of the
mine, we find no basis for disturbing the judge's finding that
Berwind was not an operator.
C. The Secretary's Unitary Operator Theory[18]
Having determined that not all of the individual
entities named by the Secretary are operators within the
meaning of section 3(d) of the Mine Act, we address the
Secretary's alternative argument that Berwind and its three
subsidiary corporations constituted a "unitary operator"
under the Mine Act because together they allegedly controlled
all aspects of mining at the Elmo No. 5 Mine.[19]
1. The Secretary's Interpretation of the Mine Act
Section 3(d) of the Mine Act defines "operator" as
including "any . . . person who operates, controls, or
supervises a coal or other mine." 30 U.S.C. � 802(d).
Section 3(f) defines a "person" as "any individual,
partnership, association, corporation, firm, subsidiary of
a corporation, or other organization[.]" 30 U.S.C. � 802(f).
The Secretary contends that the judge erred by not
considering the operator status of Berwind and its three
subsidiary corporations under a unitary operator theory
because that theory is consistent with the language and
underlying purposes of the Mine Act. S. Br. at 12-22. In
particular, the Secretary relies on the definition of
"person" in section 3(f) of the Act, which appears in the
definition of the term "operator" in section 3(d), and
expressly includes the terms "association" and "other
organization." She asserts that these two provisions, taken
together, indicate that Congress envisioned holding multiple
entities liable as a unitary operator if together they
constitute an "association" or "other organization" that
"operates, controls, or supervises a coal or other mine."
Id. at 12-13. The Secretary also contends that the grounds
offered by the judge for rejecting the unitary operator
interpretation in this case are irrelevant and inconsistent
with the purposes of the Mine Act. Id. at 22-26.
Contestants and amici NMA and NCCL argue that the
Secretary's assertion of a unitary operator theory is
inconsistent with, and unprecedented under, the Mine Act,
and would undermine legitimate business structures and
commercial relationships that have developed with respect
to the mining of coal. B. Resp. Br. at 52-59; NMA/NCCL
Br. at 2-3, 17.
The Secretary's unitary operator theory is based upon
her construction of the definition of the statutory terms
"operator" and "person" in sections 3(d) and 3(f) of the
Mine Act, respectively. The first inquiry in statutory
construction is "whether Congress has directly spoken to the
precise question in 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. Chevron, 467 U.S. at 842-43. Accord Local
Union 1261, UMWA v. FMSHRC, 917 F.2d 42, 44 (D.C. Cir.
1990).[20] If, however, the statute is ambiguous or silent
on a point in question, a second inquiry, commonly referred
to as a "Chevron II" analysis, is required to determine
whether an agency's interpretation of a statute is a
reasonable one. See Chevron, 467 U.S. at 843-44; Thunder
Basin, 18 FMSHRC at 584 n.2; Keystone, 16 FMSHRC at 13.
Deference is accorded to "an agency's interpretation of
the statute it is charged with administering when that
interpretation is reasonable." Energy West Mining Co. v.
FMSHRC, 40 F.3d 457, 460 (D.C. Cir. 1994) (citing Chevron,
467 U.S. at 844). The agency's interpretation of the statute
is entitled to affirmance as long as that interpretation is
one of the permissible interpretations the agency could have
selected. Chevron, 467 U.S. at 843; Joy Technologies, Inc.
v. Secretary of Labor, 99 F.3d 991, 995 (10th Cir. 1996),
cert. denied, 520 U.S. 1209 (1997). See also Thunder Basin
Coal Co. v. FMSHRC, 56 F.3d 1275, 1277 (10th Cir. 1995).
The Mine Act does not define the terms "association"
and "organization." The use of the terms "association" and
"organization" in the statutory definition of "person," and
thus, indirectly, in the definition of "operator," therefore,
sheds little light on whether Congress intended that multiple
related entities could be held liable as a unitary operator.
In the absence of an express definition or an indication that
the drafters intended a technical usage, the Commission has
relied on the ordinary meaning of the word to be construed.
Peabody Coal Co., 18 FMSHRC 686, 690 (May 1996), aff'd mem.,
111 F.3d 963 (D.C. Cir. 1997). See also Walker Stone Co. v.
Secretary of Labor, 156 F.3d 1976, 1081 (10th Cir. 1998)
("the Commission appropriately considered the plain
meaning of [the] words as indicated by their dictionary
definitions."). The Secretary relies on the definitions of
these terms in the American Heritage Dictionary of the
English Language 80, 926 (New College ed. 1976). S. Br. at
13. That source defines the term "association" as "an
organized body of people who have some interest, activity,
or purpose in common." Id. at 80. An "organization" is
defined as "[a] number of persons or groups having specific
responsibilities and united for some purpose or work." Id.
at 926.
These definitions of the terms "association" and
"organization" all use the terms "persons" or "people."
While the term "people" is more commonly understood to refer
to human beings, i.e., natural persons, the term "person" is
usually defined broadly to also include other types of legal
entities. For instance, Webster's Third New International
Dictionary defines "person" as "a human being, a body of
persons, or a corporation, partnership, or other legal
entity that is recognized by law as the subject of rights and
duties." Webster's Third New Int'l Dictionary (Unabridged)
1686 (1986). The term is also defined, for legal purposes, as
"a human being (natural person) or a group of human beings, a
corporation, a partnership, an estate, or other legal entity
(artificial person or juristic person) recognized by law as
having rights and duties." Random House Dictionary of the
English Language (Unabridged) 1445 (2d. ed. 1987) (emphasis
in original). See also Black's Law Dictionary 1162 (7th ed.
1999).
These definitions indicate that the terms "association"
and "organization," as well as "person" and "people," are
open to various interpretations that may or may not include
Berwind and its three subsidiaries. Those companies would
appear to qualify as "persons" if that term is interpreted
broadly to include entities that are not human beings. It
could be argued, however, that they do not fall within the
commonly understood meaning of the term "people," as used
in certain definitions of the terms "association" and
"organization." Moreover, resolution of the issue whether
Berwind and its three subsidiaries otherwise qualify as an
"association" or "organization" depends largely on which
definition of those terms is applied and how it is
interpreted. For instance, utilizing the American Heritage
and Webster's Third definitions of the term "association,"
it could be argued that the companies have some "interest,
activity, or purpose in common" or "common interest" based
on their financial ties and their common involvement in the
mining industry. On the other hand, if the quoted language
is interpreted more narrowly, it could be argued that they
do not satisfy this definition of the term "association"
since they are all separate corporate entities that operate
within different sectors of the mining industry. The same
holds true in analyzing whether the four companies can be
said to be "united for some purpose or work" or "organized
for some end or work" within the meaning of the American
Heritage and Random House definitions of the term
"organization." Thus, Berwind and its three subsidiaries
could be considered "united" for the purpose of conducting
business at various levels of the mining industry and thereby
generating profits for Berwind, the parent corporation.
Conversely, applying a more restrictive interpretation to
this language, it is possible to conclude that these are
four independent corporate entities that are not "united" in
any formal legal sense or "organized" to achieve the same
end. The other definitions of the terms "association" and
"organization" are likewise open to different, conflicting
interpretations.
Because the meaning of the terms "association" and
"organization" as used in the statutory definitions of the
term "person" and "operator" is open to alternative
interpretations, as reflected in the dictionary definitions,
we conclude that they are ambiguous. See National R.R.
Passenger Corp. v. Boston & Maine Corp., 503 U.S. 407, 418-19
(1992); 2A Norman J. Singer, Sutherland Statutory Construction
� 45.02, at 6 (5th ed. 1992) ("Ambiguity exists when a statute
is capable of being understood by reasonably well-informed
persons in two or more different senses."); Ehlert v. United
States, 402 U.S. 99, 105 (1971). In Walker Stone, the Tenth
Circuit found a regulatory safety standard to be inherently
ambiguous where neither of two conflicting interpretations
adopted by the Commission and its administrative law judge
was "either clearly required or clearly prohibited by the
language of the . . . standard." 156 F.3d at 1081. Similarly,
in this case, the pertinent statutory terms must be regarded
as ambiguous because the dictionary definitions do not
conclusively establish that the Secretary's interpretation
of these statutory terms is either required or prohibited.
Moreover, the legislative history of the Coal Act of 1969,
in which these definitional sections were originally adopted,
is silent regarding Congress' intention in including the
terms "association" and "organization." These terms were
subsequently carried over into the Mine Act in 1977, without
any further explanation from Congress as to their intended
meaning.
Accordingly, we conclude that the statutory language on
the question whether more than one entity may constitute a
single operator is far from clear, and that Congress has not
"directly spoken to the precise question at issue." Chevron,
467 U.S. at 842. We therefore examine whether the Secretary's
unitary operator interpretation is a permissible construction
of the Mine Act that is entitled to deference.
The Secretary elicits support for her unitary operator
interpretation of the Mine Act by relying on cases that have
held multiple entities liable as a "single employer" or
"single enterprise" under other statutes, including the
National Labor Relations Act "("NLRA"), 29 U.S.C. � 141
et seq., and Title VII of the Civil Rights Act of 1964 ("Title
VII"), 42 U.S.C. � 2000e et seq. S. Br. at 13-16, 24.
Although these two statutes are more directly concerned
with the employment relationship itself, and forms of
discrimination that can occur thereunder, the key statutory
provisions defining the terms "employer" and "person" are
very similar to those contained in the Mine Act.[21]
In a number of cases, we have looked for guidance to
case law interpreting similar provisions of the NLRA, as well
as Title VII and other employment statutes, in resolving
questions concerning the proper construction of provisions of
the Mine Act. See Swift v. Consolidation Coal Co., 16 FMSHRC
201, 206 (Feb. 1994) (standard for showing facial
discrimination); Delisio v. Mathies Coal Co., 12 FMSHRC 2535,
2542-45 (Dec. 1990) (legality of operator's policy of paying
employees who testify as witnesses on its behalf, but not
paying employee for time spent testifying as another party's
witness); Local Union 2274, UMWA v. Clinchfield Coal Co.,
10 FMSHRC 1493, 1501 n.6, 1504-05 (Nov. 1988) (appropriate
rate of interest on backpay awards), aff'd sub nom.
Clinchfield Coal Co. v. FMSHRC, 895 F.2d 773 (D.C. Cir.
1990); Metric Constructors, Inc., 6 FMSHRC 226, 231-33 (Feb.
1984) (mitigation defense to backpay award), aff'd, 766 F.2d
469 (11th Cir. 1985). In Delisio, the Commission noted that
it "has recognized in several contexts that . . . cases
decided under the NLRA - upon which much of the Mine Act's
antiretaliation provisions are modeled - provide guidance on
resolution of discrimination issues under the Mine Act."
12 FMSHRC at 2542-43 (citing Metric Constructors, 6 FMSHRC
at 231). Applying a similar rationale, we believe that cases
applying the "single employer" doctrine under the NLRA and
Title VII may be properly considered in determining whether
the unitary operator theory now advanced by the Secretary
constitutes a reasonable interpretation of comparable
provisions of the Mine Act.[22]
A "single employer" doctrine has been developed to
determine when separate entities should be treated as a
single employer by the National Labor Relations Board
("NLRB") for purposes of enforcing the provisions of the
NLRA. This doctrine, which has been approved by the Supreme
Court, provides:
[I]n determining the relevant employer, the
[NLRB] considers several nominally separate
business entities to be a single employer
where they comprise an integrated enterprise.
The controlling criteria, set out and
elaborated in [NLRB] decisions, are
interrelation of operations, common
management, centralized control of labor
relations and common ownership.
Radio & Television Broadcast Technicians Local Union 1264 v.
Broadcast Serv. of Mobile, Inc., 380 U.S. 255, 256 (1965)
(per curiam) (citations omitted). See also Lihli Fashions
Corp. v. NLRB, 80 F.3d 743, 747 (2d Cir. 1996); Esmark, Inc.
v. NLRB, 887 F.2d 739, 753 (7th Cir. 1989); NLRB v. Al Bryant,
Inc., 711 F.2d 543, 550-53 (3d Cir. 1983), cert. denied, 464
U.S. 1039 (1984); Penntech Papers, Inc. v. NLRB, 706 F.2d 18,
24-26 (1st Cir.) ("the fundamental inquiry is whether there
exists overall control of critical matters at the policy
level"), cert. denied, 464 U.S. 892 (1983). To demonstrate
single employer status, not every factor need be present, and
no particular factor is controlling. Lihli Fashions Corp.,
80 F.3d at 747. "[I]nstead, the [NLRB] must weigh the
totality of the circumstances and determine whether the parent
exercised such pervasive control of the subsidiary at the
policymaking level that the purposes of the labor laws are
served by treating the two entities as one." Esmark, 887 F.2d
at 753. See also Al Bryant, 711 F.2d at 551 ("single employer
status depends on all the circumstances of the case and is
characterized by absence of an `arm's length relationship
found among unintegrated companies'") (quoting Local 627,
Int'l Union of Operating Eng'rs v. NLRB, 518 F.2d 1040,
1045-46 (D.C. Cir. 1975), aff'd on this issue per curiam sub
nom. South Prairie Constr. Co. v. Local 627, Int'l Union of
Operating Eng'rs, 425 U.S. 800 (1976)). Proof of subterfuge,
or an intent to avoid legal obligations, is not necessary to
establish single employer status. Al Bryant, 711 F.2d at
552.[23]
The four-part single employer test developed under the
NLRA has also been applied to determine whether two or more
companies should be treated as one entity for purposes of
assessing liability for Title VII violations. See, e.g.,
Cook v. Arrowsmith Shelburne, Inc., 69 F.3d 1235, 1240 (2d
Cir. 1995); McKenzie v. Davenport-Harris Funeral Home, 834
F.2d 930, 933 (11th Cir. 1987); Armbruster v. Quinn, 711 F.2d
1332, 1337 (6th Cir. 1983). But see Papa v. Katy Indus.,
Inc., 166 F.3d 937, 940-42 (7th Cir. 1999) (questioning
continued applicability of four-part test in Title VII
context), cert. denied, 68 U.S.L.W. 3137 (U.S. Nov. 29, 1999)
(No. 99-284). "The showing required to warrant a finding of
single employer status for Title VII purposes has been
described as `highly integrated with respect to ownership
and operations.'" McKenzie, 834 F.2d at 933 (quoting Fike
v. Gold Kist, Inc., 514 F. Supp. 722, 726 (N.D. Ala.), aff'd
mem., 664 F.2d 295 (11th Cir. 1981)).
The single employer doctrine has been applied to hold
a parent corporation liable for the statutory obligations of
its subsidiary[24] and to hold a sister corporation liable
for the obligations of an affiliate.[25] The doctrine
represents an exception to the general principle of "[t]he
insulation of a stockholder from the debts and obligations
of his corporation. . . ." NLRB v. Deena Artware, Inc., 361
U.S. 398, 402-03 (1960). See also Watson v. Gulf & Western
Indus., 650 F.2d 990, 993 (9th Cir. 1981) (absent special
circumstances, parent is not responsible for subsidiary's
Title VII violation). As the Supreme Court also noted in
Deena Artware, 361 U.S. at 403-04, however, there may be
variety of situations in which it is appropriate to hold a
corporation liable for the sins of its subsidiary or
affiliate.
We believe that this well-developed body of case law
interpreting similar statutory language to create a single
employer doctrine under the NLRA and Title VII provides
support for the Secretary's interpretation of the Mine Act
as permitting the application of a similar unitary operator
theory. The terms "association" and "organization" in
section 3(f) of the Mine Act are not so inherently
restrictive as to preclude the interpretation applied to them
by the Secretary, and there is nothing in the legislative
history that detracts from this construction of the statutory
language. Indeed, the legislative history of the Coal Act
indicates that Congress intended that "[t]he definition of
an `operator' . . . be as broad as possible,"[26] consistent
with the established principle that provisions of the Mine
Act pertaining to statutory coverage are entitled to a very
expansive interpretation. See United Energy Servs., Inc. v.
MSHA, 35 F.3d 971, 975 (4th Cir. 1994); Pennsylvania Elec.
Co. v. FMSHRC, 969 F.2d 1501, 1503 (3d Cir. 1992); Donovan v.
Carolina Stalite Co., 734 F.2d 1547, 1551-55 (D.C. Cir. 1984)
(all interpreting the term "mine" in section 3(h)(1), 30 U.S.C.
� 802(h)(1)). This is comparable to the liberal construction
that courts have applied in interpreting the NLRA, Title VII,
and the provisions relating to the scope of their coverage.
See, e.g., Armbruster, 711 F.2d at 1336 ("To effectuate its
purpose of eradicating the evils of employment discrimination,
Title VII should be given a liberal construction. The impact
of this construction is the broad interpretation given to the
employer and employee provisions.") (citations omitted).
Viewed in this context, we consider the Secretary's unitary
operator theory to be a gap-filling measure designed to flesh
out the definition of an "operator" under the Mine Act. It
is entitled to deference because it is consistent with the
purposes and policies of the Act.[27]
The support that these NLRA and Title VII cases provide
for the Secretary's interpretation of the Mine Act is enhanced
by their similar definitions of the term "person," which is
incorporated in other key definitions ("operator" in the Mine
Act, "employer" in the NLRA and Title VII). The following
observation by the Sixth Circuit in Armbruster, in approving
the application of the single employer test developed under
the NLRA in Title VII cases, is also applicable in a Mine Act
context:
Since it is clear that the framers of Title
VII used the NLRA as a model, we find the
similarity in language of the Acts indicative
of a willingness to allow the broad
construction of the NLRA to provide guidance
in the determination of whether, under Title
VII, two companies shall be deemed to have
substantial identity and treated as a single
employer.
711 F.2d at 1336 (citations omitted).
We find the reasons offered by the judge for rejecting
the Secretary's unitary operator theory inconsistent with a
Chevron II analysis. The judge stated that "[p]arts of the
industry have functioned in this way for years and . . . the
Secretary has never had a policy of citing all corporate
entities involved in the operation of a mine for the
production operator's violations." 18 FMSHRC at 233
(emphasis in original). The judge further found that the
absence of such a policy "raises questions about the validity
and wisdom of a `unitary' approach to enforcement." Id. As
the judge himself recognized, however, the mere fact that the
Secretary has not previously cited operators based on this
theory does not estop her from relying on the unitary operator
theory here. See Sunny Ridge Mining Co., 19 FMSHRC 254,
267-68 (Feb. 1997) (equitable estoppel does not generally
operate against the Secretary) (citing King Knob Coal Co.,
3 FMSHRC 1417, 1421-22 (June 1981)). The issue before the
Commission, in evaluating an agency's interpretation of the
statute it is charged with administering, is whether that
interpretation is a permissible reading of the statute. The
D.C. Circuit has observed: "As a court of review . . . we
are not positioned to choose from plausible readings the
interpretation we think best. Rather, our task is to inquire
whether the [agency's] reading is sufficiently plausible and
reasonable to stand as the governing law, absent alteration
by Congress." American Fed'n of Gov't Employees v. FLRA, 778
F.2d 850, 856 (D.C. Cir. 1985) (alteration in original).
The judge also reasoned that a "unitary entity" theory
of operator status could "fly in the face of the entities'
corporate rights to be treated separately and . . . be used to
extend jurisdiction without a logical limit." 18 FMSHRC at
233. But while we must not ignore the corporate forms adopted
by the entities before us, neither are we required to exalt
these forms over the substance of interrelated and integrated
operations. As the Commission has previously observed, in
resolving the issue of whether a facility was a "mine" within
the meaning of section 3(h) of the Mine Act, 30 U.S.C.
� 802(h): "the operations taking place at a single site must
be viewed as a collective whole. Otherwise, facilities could
avoid Mine Act coverage simply by adopting separate business
identities along functional lines, with each performing only
some part of what, in reality, is one operation." Mineral
Coal Sales, Inc., 7 FMSHRC 615, 621 (May 1985).[28] Courts
applying the single employer doctrine have likewise recognized
that "the separation of parent and subsidiary is not absolute.
. . . There may be a variety of situations in which it is
appropriate to hold a parent corporation liable for the sins
of its subsidiary." Esmark, 887 F.2d at 753; see also
Armbruster, 711 F.2d at 1337 (high degree of interrelatedness
sufficient to support single employer finding justifies
"departure from the `normal' separate existence between
entities").
Despite Commissioner Verheggen's assertions to the
contrary, the single employer test we adopt today, which
applies only to entities that have in fact ceased functioning
as separate operations, is not a departure from the "common
law of corporations" (slip op. at 85), but rather is entirely
consistent with well established principles of corporation
law.[29] See Package Serv. Co., 113 F.3d at 847 ("Corporate
law recognizes situations in which it is appropriate to
`pierce the veil' of separate affiliates"). For instance, it
is well recognized that under the "alter ego" theory of
corporation law,[30] a parent corporation may be held liable
for the obligations of its subsidiary where "there is such
unity of interest and ownership that the individuality or
separateness of the two corporations has ceased." 18 Am.
Jur. 2d, Corporations � 56, at 861-62 (1985). Similarly,
"the so-called `identity rule'" provides:
if there is such a unity of interest and
ownership that the independence of the
corporation has in effect ceased or had never
begun, an adherence to the fiction of
separate identity would serve only to defeat
justice and equity by permitting the economic
entity to escape liability arising out of an
operation conducted by one corporation for
the benefit of the whole enterprise.
Id. at 862 (citations omitted); accord 1 William Meade
Fletcher et al., Fletcher Cyclopedia of the Law of Private
Corporations � 43, 1999 Cum. Supp. at 20 (rev. perm. ed.
1999). See also 1 Fletcher, Cyclopedia Corporations � 43,
at 719 ("Many cases disregard the corporate entity where it
is so organized and controlled, and its affairs are so
conducted, that it is merely an instrumentality, agency,
conduit, or adjunct of another corporation.").[31] There is
no requirement for a showing of fraud in determining whether
two separate corporations may be treated as a single entity
under traditional corporation law alter ego analysis.
1 Fletcher, Cyclopedia Corporations � 43.60, at 737. See
also authorities cited supra.
In sum, we conclude that the Secretary's interpretation
of the Mine Act as permitting multiple entities to be
considered an operator is a reasonable reading of the statute
and therefore entitled to deference.
2. The Test for Determining Unitary Operator Status
Having upheld as reasonable the Secretary's interpretation
of the Mine Act as permitting the designation of two or more
related entities as a single operator, we must also define the
elements of an appropriate test to determine when related
entities may be found to constitute a single operator. The
Secretary appears to propose an approach based on the single
employer doctrine developed under the NLRA and Title VII and
the common enterprise standard developed under the Fair Labor
Standards Act ("FLSA"), 29 U.S.C. � 201 et seq. See S. Br. at
15-16. We believe that the most appropriate standard for
determining whether two or more related entities constitute a
unitary operator under the Mine Act is that applied in
determining whether two or more entities constitute a single
employer under the similar statutory language of the NLRA and
Title VII,[32] with one modification.
As indicated above, the factors evaluated to determine
whether entities are considered a single employer for purposes
of the NLRA and Title VII are: (1) interrelation of operations,
(2) common management, (3) centralized control of labor
relations, and (4) common ownership. In our view, this well-
established test, which has been universally upheld and approved
by the federal courts, should be used as a model for determining
whether two or more entities should be considered a single
operator under the Mine Act. We adopt one modification to this
test, however, based on the Mine Act's primary concern with the
protection of health and safety, rather than labor relations.[33]
Based on this focus of the Mine Act, we conclude that centralized
control over mine health and safety, rather than "centralized
control of labor relations," should be the third element of the
Mine Act unitary operator test.
Accordingly, we will consider the following factors in
determining whether entities will be treated as a unitary
operator for purposes of the Mine Act: (1) interrelation of
operations, (2) common management, (3) centralized control
over mine health and safety, and (4) common ownership. To
demonstrate unitary operator status, not every factor need be
present, and no particular factor is controlling. Instead,
we will weigh the totality of the circumstances to determine
whether one corporate entity exercised such pervasive control
over the other that the two entities should be treated as one.
See Lihli Fashions, 80 F.3d at 747 (applying single employer
test developed under NLRA); Esmark, 887 F.2d at 753 (same);
Al Bryant, 711 F.2d at 551 (single employer status depends on
all the circumstances of the case).
We find no merit in Commissioner Riley's suggestion
(slip op. at 65-66) that it is somehow inappropriate for a
Commission majority to fashion its own unitary operator test,
derived largely from principles set forth by the Secretary in
her briefs. See S. Br. at 15-16. Having concluded, through
application of Chevron II analysis, that the Secretary's
interpretation of the Mine Act to support a unitary operator
theory of liability was reasonable, and therefore entitled to
our deference, we are not bound to defer to any specific test
proposed by the Secretary for determining unitary operator
status. It is hardly open to question that this Commission
has the authority to interpret the Mine Act and adopt a
specific test or standards for adjudicating charges arising
thereunder. See, e.g., Mathies Coal Co., 6 FMSHRC 1, 3-4
(Jan. 1984) (adopting four-part test for determining whether
a violation is "significant and substantial" under section
104(d) of the Mine Act); Kenny Richardson, 3 FMSHRC 8, 16
(Jan. 1981) (adopting standard for determining liability
under section 110(c)), aff'd on other grounds, 689 F.2d 632
(6th Cir. 1982), cert. denied, 461 U.S. 928 (1983).
We are also not persuaded by our dissenting colleague's
criticisms of the unitary operator standard we adopt today.
Despite Commissioner Riley's characterization of this test
(slip op. at 68-69), it is apparent that the essence of the
test we adopt has been universally accepted and consistently
applied by federal courts for over 20 years to determine
whether one or more related entities should be treated as a
single employer under the NLRA and Title VII. Nor do we find
any merit to Commissioner Riley's suggestion that our test
is overly broad because it could render liable as an operator
a labor organization that represents miners employed at a
mine, such as, in this case, the UMWA. Slip op. at 68.
Although, applying a liberal interpretation, a labor
organization that represents miners at a particular mine
might be found, in some sense, to have a certain degree of
control over health and safety at that location, we seriously
question whether such an organization would meet any of the
other three elements of the unitary operator test we adopt
today.[34]
In dissenting from our application of a unitary operator
test in this case to determine when two or more related
entities may be treated as a single operator for purposes of
the Mine Act, Commissioner Riley applies an explicitly
result-oriented approach and accuses the Secretary of doing
the same. He argues that because the Commission has not
concluded in this case that Berwind and its three subsidiaries
qualify as a single operator (see discussion infra, at 35), as
the Secretary had urged, it follows that the test we have
adopted for resolving that issue is unnecessary and
unwarranted under the circumstances presented in this case.
Slip op. at 66, 68. We note, however, that in Emery Mining
Corp., 9 FMSHRC 1997 (Dec. 1987), the Commission's seminal
case on unwarrantable failure, we adopted the identical
approach: we announced a new test pursuant to our
interpretation of the Mine Act, and in applying it found no
unwarrantable failure. Id. at 2004.
Commissioner Riley's argument blurs the distinction
between three independent issues with which we must come to
grips, namely: whether a unitary operator theory is a
reasonable construction of the Mine Act; if so, identifying
the elements of an appropriate test to determine when related
entities may be found to constitute a single operator under
the Mine Act; and, finally, applying such a test to the four
entities involved in this proceeding. We fail to perceive
how our disagreement with the Secretary on the ultimate
results of applying our unitary operator test to these four
related entities undermines the validity of our position on
the first two issues.[35]
3. Application of the Unitary Operator Test
a. Berwind and Its Three Subsidiaries
The Secretary argues that pursuant to her unitary operator
theory, the record evidence compels the conclusion that Berwind
and its wholly-owned subsidiaries together constituted a single
business enterprise that controlled and operated the mine and
therefore qualifies as a unitary operator under the Mine Act.
S. Br. at 26-29. Amicus USWA contends that the judge erred in
declining to hold that Berwind and its three subsidiary
corporations together constituted a unitary operator of the
mine. USWA Br. at 4. Contestants dispute the Secretary's
argument that Berwind and its three subsidiaries qualify as a
unitary operator on that ground that it is not supported by
the evidence concerning the operations of the four entities.
B. Resp. Br. at 52-59.
A majority of the Commission concludes that Berwind and
its three subsidiaries do not qualify as a unitary operator.
Chairman Jordan and Commissioner Beatty conclude that Berwind
and its three subsidiaries - Kentucky Berwind, Kyber, and
Jesse Branch - did not function as a unitary or single operator
of the Elmo No. 5 Mine under the criteria of the unitary
operator test adopted by the Commission today. Slip op. at
42-44, 50 n.2. Commissioners Riley and Verheggen disagree with
the unitary operator test adopted by the Commission majority
and its application in this case, and thus would not hold any
of the entities liable pursuant to this theory. Id. at 62-69,
82-86. Commissioner Marks concludes that Berwind and its three
subsidiaries satisfy the Commission's unitary operator test.
Id. at 58-60. The separate opinions of Commissioners are set
forth in Part IV.
b. Kyber and Jesse Branch[36]
The Secretary and the UMWA contend that the close
relationship between Kyber and Jesse Branch, including their
shared facilities and common ownership and officers,
establishes that they essentially functioned as alter egos
and therefore must be considered joint operators of the mine.
S. Br. at 51-56; UMWA Br. at 8-9.[37] Contestants argue that
the Secretary's alter ego argument is not supported by
substantial evidence and is based on inapplicable precedent.
B. Resp. Br. at 50-51.
In our view, the judge should have considered the
compelling record evidence concerning the high degree of
interrelationship between Kyber and Jesse Branch, particularly
with respect to operations at the mine, and determined whether
these two entities qualified as a unitary operator under the
theory espoused by the Secretary.[38] We reach the issue,
and conclude that the record compels the conclusion that Jesse
Branch and Kyber meet our unitary operator test.
The record establishes that Kyber and Jesse Branch both
lease land and coal reserves from Kentucky Berwind and contract
out the mining of the coal. 18 FMSHRC at 205-07. At times
relevant herein, Kyber and Jesse Branch shared a president
(Jimmy Walker), a vice president of operations (Steve Looney),
a vice president of engineering (Randolph Scott), a controller
(Bob Bond), a treasurer (Bryan Ronck), and an assistant
treasurer (B. McKenney).[39] Id. at 207; JSF 23, 34. The two
companies also used the same person to handle personnel matters
(Shelia Sullivan, a Jesse Branch employee), and employed the
same individual to manage their coal preparation plants (A.J.
Thacker). JSF 43, 44. Each of these individuals performed
duties on behalf of both companies, as agreed to by Kyber and
Jesse Branch, but were compensated only by Jesse Branch for
their services. 18 FMSHRC at 207; JSF 39.
Kyber and Jesse Branch shared an office at a facility
owned by Jesse Branch in Kimper, Kentucky. 18 FMSHRC at 207;
JSF 40; Tr. 495. On occasion, Kyber and Jesse Branch used
each others' equipment and machinery, without any written
agreement between them governing the use of such equipment
and machinery. 18 FMSHRC at 208; JSF 48. Kyber's secretarial
work was also sometimes performed by Jesse Branch employees.
18 FMSHRC at 208. Occasionally, coal produced at Kyber
contract mines was processed at the Jesse Branch preparation
plant. Id. The parties stipulated that there was no written
agreement between the two companies concerning the manner in
which such coal was processed or how Jesse Branch was
compensated for the use of its plant to process Kyber's coal.
JSF 42. It is also undisputed that a Jesse Branch employee
monitored the amount of coal received by both companies from
contract mines, and arranged for transportation of the coal
to the companies' preparation plants. 18 FMSHRC at 208; JSF
47. In addition, Kyber used Jesse Branch exclusively to
provide surveying services, including preparation of mine
maps and setting spads, at mines that it leased. 18 FMSHRC
at 228.
Turning to the four elements of our unitary operator test,
there is little question that Kyber and Jesse Branch meet the
"common ownership" criterion, since they are both wholly owned
subsidiaries of Berwind. In addition, these two subsidiaries
also clearly shared common management because, at relevant
times, their officers and board members were essentially
identical.
The record also establishes that, even though Kyber and
Jesse Branch were nominally separate corporations, they did not
function as completely independent entities. Instead, their
operations were highly integrated and interrelated, particularly
in connection with the operation of the Elmo No. 5 Mine. In
addition to sharing the same officers, who were paid by Jesse
Branch, the companies used the same office facility and shared
each others' machinery and equipment. Moreover, as noted
above, Kyber sometimes used employees of Jesse Branch to
perform its own secretarial services and used Jesse Branch's
preparation plant to process coal from Kyber contract mines,
without any written agreement providing compensation to Jesse
Branch for such services. Id. at 207-08; JSF 42. Similar
factors have been relied upon to demonstrate the functional
integration of related entities, and support a finding that
they were a single employer under the NLRA. See, e.g., Lihli
Fashions Corp., 80 F.3d at 747 (common office facilities and
equipment); Al Bryant, 711 F.2d at 551-52 (two entities shared
office building, equipment, and personnel, and had frequent
interchange of employees). In Al Bryant, the court found that
the lack of any written agreements between the two entities
governing the use of one company's equipment and administrative
support by the other supported a finding that the two entities
were a single employer. Id. at 551.
In addition to the high degree of interrelationship and
functional integration between Kyber and Jesse Branch, the
record demonstrates that the two companies were viewed as
interchangeable in the eyes of officials at AA&W who worked
with them on a regular basis. For instance, Norman Stump,
AA&W's mine foreman, testified that he considered Kyber and
Jesse Branch to be "associated with each other" and different
parts of the same company, and was therefore unable to specify
which company set spads at the mine or determined the number
of entries that could be mined by AA&W in certain areas.
Tr. 40, 70-72, 100-01. Jim Akers, the vice president of AA&W,
testified that he was unaware of any distinctions between
Kyber and Jesse Branch, since they were "run by the same
people" and had the "same officers." Tr. 226, 278. Akers
also testified that AA&W had seven contracts to operate mines
for Kyber or Jesse Branch, and that there was no significant
difference in the way it operated a mine for either of the
two companies. Tr. 278-80. Perhaps because of this blurred
distinction between the two companies, Akers testified that
it was Jesse Branch, not Kyber, that made final decisions
regarding mining projections and the direction of mining at
the Elmo No. 5 Mine and set the contract price to be paid to
AA&W for the coal it mined. Tr. 244-45, 253, 276, 282-83.
Akers also testified that the mining contract between AA&W
and Kyber with respect to the operation of the mine was
developed by "Jesse Branch/Kyber." Tr. 273.
Finally, the control exercised by Kyber and Jesse Branch
over health and safety at the Elmo No. 5 Mine was centralized
within the two companies. The projections established by
Kyber, which determined the direction and nature of mining
conducted at the mine, as well as any agreed upon changes in
the projections, were incorporated by Jesse Branch into mine
maps submitted to federal and state regulatory authorities.
17 FMSHRC at 694. Pursuant to its agreement with Kyber, Jesse
Branch prepared maps showing the ventilation system at the
mine that were submitted to MSHA every six months, and
prepared diagrams used in the roof control plan to illustrate
the pillaring methods used during retreat mining, based upon
information provided by AA&W. Id. at 693. The record also
indicates that all surveying and map preparation work
performed by Jesse Branch was supervised by Randolph Scott,
the vice president of engineering for both companies. Tr.
461-62. It is also undisputed that, even though the mine
maps were prepared and certified by employees of Jesse
Branch, they stated that they were "engineered by Kyber."
JSF 155.
The foregoing evidence compels a finding that Jesse Branch
and Kyber functioned as a single entity, particularly with
respect to their control over the operation of the Elmo No. 5
Mine. Kyber and Jesse Branch shared common ownership and also
had the same management and officers. In addition, they were
engaged in the same business, their operations were highly
interrelated, and they functioned as essentially one entity.
Moreover, the two companies exercised centralized input with
respect to health and safety matters - including the
preparation of maps and diagrams used in required roof control
and ventilation plans. Therefore, we conclude that on this
issue the record can only support one conclusion - that Kyber
and Jesse Branch constituted a single entity under the unitary
operator test we adopt.[40] Accordingly, remand of this issue
to the judge is unnecessary. See Walker Stone, 156 F.3d at
1085 n.6 (remand not necessary where Commission properly
determined that record as a whole allowed only one conclusion);
Donovan on behalf of Anderson v. Stafford Constr. Co., 732
F.2d 954, 961 (D.C. Cir. 1984) (finding remand would serve no
purpose where all evidence bearing upon issue was contained in
record and would only support one conclusion); REB Enterprises,
Inc., 20 FMSHRC 203, 216 (Mar. 1998) (remand not necessary
where evidence could justify only one conclusion); American
Mine Servs., Inc., 15 FMSHRC 1830, 1833-34 (Sept. 1993) (same).
1. Liability
Contestants argue that even if the Secretary's unitary
operator theory is viable, principles of administrative law
and due process preclude her from applying that theory to hold
Berwind and its subsidiaries liable in this case because it
amounted to a novel interpretation of the Mine Act that was
asserted without fair notice, and the Secretary failed to cite
the four entities as a unitary operator in the contested
citations and orders or in her answer to the notices of contest.
B. Resp. Br. at 59-61.[41] The Secretary disputes Contestants'
argument that she failed to provide fair notice of her unitary
operator theory in this case on the grounds that the theory is
derived from the plain language of the Mine Act, that she had
never previously advanced an inconsistent interpretation of the
Act, and that she asserted the theory at an early (summary
decision) stage of this proceeding, well before the hearing was
held in this case. S. Reply Br. at 14-16.
Notwithstanding our conclusion that under the test we
adopt today, Jesse Branch and Kyber constitute a unitary
operator which would qualify as an operator under the Mine
Act, a majority of the Commission also declines to hold that
combined entity liable for any violations that may ultimately
be found in this case. Commissioner Beatty concludes that it
would violate principles of due process to hold Jesse Branch
liable in this case as part of the joint entity Kyber/Jesse
Branch because these entities did not receive fair notice that
they could be subject to liability under the unitary operator
theory first espoused by the Secretary in this case. Slip op.
at 44-47. Commissioner Riley concurs in Commissioner Beatty's
position on this issue (id. at 70), while Commissioner
Verheggen has indicated that he agrees with Commissioner
Beatty "in principle." Id. at 87. Chairman Jordan and
Commissioner Marks would reject the Contestants' notice
argument based on their conclusion that Berwind and its
subsidiaries had adequate notice that two or more of those
entities could be held liable for violations at the Elmo
No. 5 Mine pursuant to a unitary operator theory. Slip op.
at 48-50, 60-61 The separate opinions of Commissioners are
set forth in Part IV of this opinion.
**FOOTNOTES**
[1] This contract was first developed and used by Jesse
Branch, and was based upon contracts in general use
throughout the mining industry. Id. at 690.
[2] MSHA originally issued citations and orders to
Berwind Land Company, but later substituted Kentucky Berwind
in its place in the contest proceedings. Id. at 205 n.1.
[3] Chairman Jordan and Commissioners Marks, Riley, and
Beatty join in Part II.A of this opinion.
[4] Two circuits have issued differing interpretations
of the clause in section 3(d) of the Mine Act "who
operates, controls, or supervises a coal or other mine."
In Association of Bituminous Contractors v. Andrus, 581 F.2d
853, 861-62 (D.C. Cir. 1978), the D.C. Circuit held that the
clause "who operates, controls, or supervises a coal or other
mine" only modifies the preceding noun "other person," thereby
rendering any "owner" or "lessee" liable as an operator
regardless of its level of involvement in or control
over the mine's activities. Accord Chaney Creek Coal Corp. v.
FMSHRC, 866 F.2d 1424, 1432 n.9 (D.C. Cir. 1989); International
Union, UMWA v. FMSHRC, 840 F.2d 77, 82 n.8 (D.C. Cir. 1988).
On the other hand, the Third Circuit has construed the clause
"who operates, controls, or supervises a coal or other
mine" to describe and qualify each noun in the preceding
phrase "any owner, lessee, or other person." Elliot Coal
Mining Co. v. Director, Office of Workers' Compensation
Programs, 17 F.3d 616, 629-32 (3d Cir. 1994). Elliot,
which arose under the Black Lung Benefits Act, 30 U.S.C.
�� 901-945 ("BLBA"), expressly distinguished Andrus, on the
grounds that Andrus was a Coal Act case. 17 F.3d at 631
(citing Bituminous Coal Operators' Ass'n, Inc. v. Hathaway,
406 F.Supp. 371, 375 (D.C. Va.) (in light of different
remedial purposes of the subchapters of this chapter,
construction placed on particular definitions in one
subchapter cannot be mechanically applied to all subchapters),
aff'd, 547 F.2d 240 (4th Cir. 1975)). See also Bituminous
Coal Operators' Ass'n v. Secretary of the Interior, 547
F.2d 240, 245 (4th Cir. 1977) (BLBA case, because of
difference in statutes, does not furnish persuasive
authority for resolution of issues in Coal Act case).
In this case, the Secretary does not argue that any owner
or lessee is an operator under section 3(d). See S. Br. at
33 n.13. Rather, as indicated above, the Secretary argues
that, to be an "operator," an entity must "exercise or
have the authority to exercise substantial authority over
the overall operation of the mine." Id. at 29 (emphasis
in original).
[5] The Commission in W-P Coal expressly declined
to address the issue of whether a passive operator could be
properly cited for violations at a mine and left that open
for another day. 16 FMSHRC at 1411 n.5.
[6] Commissioner Marks notes that the Secretary has
submitted that, in this case, the Commission need not reach
the issue of whether the entities qualified as operators
under the D.C. Circuit's approach. S. Br. at 33 n.13.
Commissioner Marks agrees and would therefore leave the issue
for another time when it has been properly briefed. He
urges that the Secretary bring the issue before the
Commission at her earliest opportunity.
[7] Chairman Jordan and Commissioners Riley and Beatty
join in Parts II.B.1, II.B.2, II.B.3, and II.B.4 of this
opinion. Commissioner Marks concurs in result in Part II.B.1
of this opinion.
[8] When reviewing an administrative law judge's factual
determinations, the Commission is bound by the terms of the
Mine Act to apply the substantial evidence test. 30 U.S.C.
� 823(d)(2)(A)(ii)(I). "Substantial evidence" means
"`such relevant evidence as a reasonable mind might accept
as adequate to support [the judge's] conclusion.'" Rochester
& Pittsburgh Coal Co., 11 FMSHRC 2159, 2163 (Nov. 1989)
(quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229
(1938)).
[9] We do not find the terms of the contract relating
to Kyber's authority over the mine plan to be determinative
of its operator status. Rather, the contract is additional
evidence of the relationship between Kyber and AA&W with
respect to the operation of the mine. See slip op. at
77 n.11. This is entirely consistent with Bulk Transportation.
Interestingly, our dissenting colleague violates his own
restrictive reading of Bulk Transportation when he attempts
to rely on the agreement between Kyber and AA&W to rebut the
judge's finding that Kyber retained more control over the
direction of mining than the typical lessee. See slip op.
at 77 nn.9 & 11.
[10] Kentucky Berwind leased separate coal reserves in
a coal seam located above the Elmo No. 5 Mine to an
unrelated company, which then contracted with Corvette
Mining Company ("Corvette") for the operation of a surface
mine to extract the coal. 17 FMSHRC at 699. On April 8, 1993,
a roof fall occurred at the Elmo No. 5 Mine, which was
apparently caused by blasting at the Corvette mine. Id. at
700.
[11] Randolph Scott, vice president of engineering for
both Kyber and Jesse Branch (JSF 23, 34), notified Kentucky
Berwind of the roof fall, after receiving notification from
AA&W that Corvette was "shooting their mine in." 17 FMSHRC
at 700; JSF 294 & Ex. E at 3. Following additional roof
fall problems caused by blasting at the Corvette mine,
Kentucky Berwind officials visited the Elmo No. 5 Mine to
examine affected areas of the roof. 17 FMSHRC at 700. On
April 12, 1993, Steve Dale, the chief mine inspector and land
manager of Kentucky Berwind, and two other Kentucky
Berwind mine inspectors visited the Corvette mine and the
Elmo No. 5 Mine, where they met with a Corvette official,
AA&W vice president Jim Akers, and a representative of
the Kentucky Division of Surface Mine Reclamation
Enforcement. Id; JSF 297. Akers was extremely angry about
the April 8 blasting incident, stating that AA&W "almost
had four men killed" as a result. JSF Ex. E at 3. When
Dale suggested that Corvette limit the frequency of its
blasting activity and the strength of explosives used,
Kyber President Jimmy Walker responded by insisting that
Corvette move its blasting operations 500 feet away from
the operations of the Elmo No. 5 mine. 17 FMSHRC at 700;
JSF 301 & Ex. E at 4. Corvette was notified of Kyber's
position, and agreed to move its blasting operations the
requested 500 feet. JSF Ex. E at 4.
[12] The record also indicates that, in initially
selecting AA&W as the contract mine operator for the Elmo
No. 5 Mine, Kyber was requested by Berwind to assure itself
that AA&W was capable of operating the mine in a safe
manner, in order to conform to corporate policy. JSF 97-99.
[13] We think Commissioner Verheggen overstates the
nature of this limitation on Kyber's authority to review and
approve any deviation from the mining projections. While
Commissioner Verheggen asserts that "Kyber could not
overrule AA&W's deviations from the mine plan when they
involved matters of safety and health" (slip. op. at 76) ,
the record indicates that any such restriction was not express,
but implied. Indeed, the very stipulation that Commissioner
Verheggen relies upon states only that "[Kyber] interpreted
the mining contract to allow [Kyber] to reject AA&W Coals'
requests to mine less than the full extent of the mine
projections, unless mining conditions made it unsafe to mine
those areas." JSF 187 (emphasis added). In fact, the provision
of the coal mining contract between Kyber and AA&W relating
to this issue expressly obligated AA&W to "[c]onduct all
mining operations . . . in accordance with mining plans
and projections prepared by [Kyber's] engineers[.]" JSF Ex. C
� 4.c. (emphasis added). This fully supports the judge's
finding that, under the express terms of the contract, AA&W
was required to adhere to the mining projections
established by Kyber, and that Kyber had the consequent
right to reject any deviation to the projections proposed by
AA&W that would not lead to the efficient extraction of coal.
18 FMSHRC at 237-38.
[14] Like Kyber, W-P Coal was a lessee which "entered
into a contract with [independent contract operator] Top Kat,
under which Top Kat extracted the coal in return for royalty
payments from W-P based upon the number of tons of clean
coal produced." Id. at 1407. Significantly, the contract
between W-P Coal and Top Kat identified Top Kat, not W-P
Coal, as the entity "responsible for controlling the
mine, hiring miners and complying with mine safety and
health laws." Id. at 1408 (emphasis added).
[15] Because we do not adopt the Secretary's
interpretation of the word "operator," we need not address
Kyber's assertion that it lacked notice of the Secretary's
definition of the term. Moreover, because we hold that Kyber
is an operator by simply applying a test that is well-
developed in Commission case law (see W-P Coal, 16 FMSHRC at
1411), Kyber has no claim that it was not provided notice
of its potential liability as an operator.
[16] The Secretary also argues that Jesse Branch could
be found to be an operator of the mine on the alternative
ground that it was an "independent contractor performing
services . . . at [a] mine," within the meaning of section
3(d) of the Mine Act. S. Br. at 55 n.21. We decline to
address this argument, however, since the Secretary failed
to properly preserve it on appeal. Under the Mine Act and
the Commission's procedural rules, review is limited to the
questions raised in the petition for discretionary review.
30 U.S.C. � 823(d)(2)(A)(iii); 29 C.F.R. � 2700.70(f). See
Wyoming Fuel Co. n/k/a Basin Resources, Inc., 16 FMSHRC 1618,
1623 (Aug. 1994), aff'd mem., 81 F.3d 173 (10th Cir. 1996);
Donovan on behalf of Chacon v. Phelps Dodge Corp., 709
F.2d at 91 & n.6. The Secretary's petition did not mention
this alternative theory for finding Jesse Branch to be an
operator, and instead focused solely on the relationship
between Jesse Branch and Kyber, which is discussed
below in Part II.C.3.b. See S. Pet. at 16-17.
[17] In Part II.C.3.b, infra, we consider whether Kyber
and Jesse Branch together constitute a single operator under
the Mine Act.
[18] Chairman Jordan and Commissioners Marks and
Beatty join in Parts II.C.1, II.C.2, and II.C.3.b of this
opinion.
[19] The Secretary's "unitary operator" interpretation
focuses only on whether two or more entities should be treated
as one, and thus might be more appropriately described
as the "single entity" theory. Whether a particular entity,
unitary or otherwise, qualifies as an operator under section
3(d) of the Mine Act is a separate question that is resolved
by applying the control test discussed in Part II.A.
[20] The examination to determine whether there is such
a clear Congressional intent is commonly referred to as a
"Chevron I" analysis. Thunder Basin, 18 FMSHRC at 584;
Keystone Coal Mining Corp., 16 FMSHRC 6, 13 (Jan. 1994).
[21] Section 2 of the NLRA contains the following
definitional provisions:
(1) The term "person" includes one or
more individuals, labor organizations,
partnerships, associations, [or] corporations
. . . .
(2) The term "employer" includes any
person acting as an agent of an employer,
directly or indirectly . . . .
29 U.S.C. � 152. Section 701 of Title VII provides:
(a) The term "person" includes one or
more individuals, governments, . . . labor
unions, partnerships, associations,
corporations, legal representatives, mutual
companies, joint-stock companies, trusts,
[or] unincorporated organizations . . . .
(b) The term "employer" means a person
engaged in any industry affecting commerce
who has fifteen or more employees . . .,
and any agent of such a person . . . .
42 U.S.C. � 2000e.
[22] We reject Contestants' suggestion that the single
employer doctrine developed under the NLRA and Title VII is
inapplicable in a Mine Act context because none of the cases
relied upon by the Secretary applied that doctrine to hold
liable, as a single employer, a group of companies that did
not employ any of the employees in question. B. Resp. Br. at
56. This can be readily explained by the fact that the NLRA
and Title VII are statutes concerned with regulation
of employment relations, as opposed to the Mine Act,
which is primarily concerned with protection of the health
and safety of miners. As discussed infra, at 33, our
test for determining a "unitary operator" under the Mine Act
takes account of this difference in the orientation of the
respective statutory schemes.
[23] We find it noteworthy that at least one commentator
has concluded that the single employer test developed under
the NLRA may be appropriately applied to employers in the coal
mining industry, for purposes of regulating labor relations.
See Forrest H. Roles, Unique Nature of the Coal Mining
Industry - Are the Labor Law Rules Determining When Two
Employers Should be Treated as One Different for the Coal
Industry?, 97 W. Va. L. Rev. 985, 993-96 (1995).
[24] See, e.g., Package Serv. Co. v. NLRB, 113 F.3d 845,
847-48 (8th Cir. 1997) (corporate parent liable for unfair
labor practices committed by subsidiary); NLRB v.
International Measurement & Control Co., 978 F.2d 334, 340
(7th Cir. 1992) (parent corporation liable for obligations
to employees under collective bargaining agreement between
subsidiary and union); Royal Typewriter Co. v. NLRB, 533
F.2d 1030, 1042-43 (8th Cir. 1976) (derivative unfair labor
practice liability imposed on corporate parent).
[25] See, e.g., Lihli Fashions Corp., 80 F.3d at 748
(affiliate is responsible for obligations of related entity
under collective bargaining agreement); NLRB v. Rockwood
Energy & Mineral Corp., 942 F.2d 169, 174 (3d Cir. 1991)
(mine operator, corporate parent, and another related
corporation found to be a single employer were bound by terms
of collective bargaining agreement executed by operator);
Al Bryant, 711 F.2d at 553 (affiliated companies found to
be single employer are bound to each others' collective
bargaining agreements).
[26] S. Rep. No. 91-411, at 44 (1969), reprinted in 1
Coal Act Legis. Hist. at 170.
[27] We are not persuaded by the Contestants' argument
that application of the unitary operator theory to hold
Berwind and its three subsidiaries liable as a single operator
would lead to each of those entities being held separately
responsible for complying with the requirements applicable
to operators, such as taking dust samples, conducting a
training program, and preparing a ventilation plan. B. Resp.
Br. at 20-23. The Secretary's interpretation of the Act would
not obligate each of the entities that constitute a single
operator to comply with these requirements, but rather
would only require compliance by one of the entities.
See S. Reply Br. at 4-6.
[28] The Commission found this approach "particularly
appropriate" in Mineral Coal Sales in view of evidence of
"pervasive intermingling of personnel and functions among
entities that sporadically operated at the facility, with
little or no apparent regard for business or contractual
formalities." Id.
[29] Commissioner Verheggen's reliance (slip. op. at
82-83) on the Supreme Court's decision in United States v.
Bestfoods, 524 U.S. 51 (1998) to suggest that our adoption
of a unitary operator theory represents a departure from
fundamental principles of corporate law is misplaced. First
that case addressed issues of liability under the
Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. � 9601 et seq. ("CERCLA"), a
far different statutory scheme whose primary statutory goal
is not the protection of the health and safety of miners or
other employees, but the cleanup of hazardous waste
sites and the allocation of related costs. Second, the
language quoted by Commissioner Verheggen (slip op. at 83)
relates to the issue of whether a parent may be held
liable as an operator under CERCLA for the actions
of its subsidiary, referred to as "indirect" or "derivative"
liability by the Court in Bestfoods, without piercing the
corporate veil. By contrast, our unitary operator theory, and
the single operator doctrine developed under the NLRA and
Title VII, addresses the separate question of when it is
appropriate, and consistent with settled principles of
corporation law, to disregard the separate corporate
existence of two or more entities whose operations are
so interrelated that they function as a single entity.
[30] A separate alter ego doctrine developed under the
NLRA is distinguishable from both the alter ego theory of
corporation law and the single employer doctrine. It is
generally applied when a new legal entity replaces a
predecessor company, and focuses on "the existence of a
disguised continuance or an attempt to avoid the obligations
of a collective bargaining agreement through a sham
transaction or a technical change in operations." Carpenters
Local Union 1846 v. Pratt-Farnsworth, Inc., 690 F.2d 489,
508 (5th Cir. 1982), cert. denied, 464 U.S. 932 (1983).
See also Howard Johnson Co. v. Detroit Local Joint Exec.
Bd., 417 U.S. 249, 259 n.5 (1974); Southport Petroleum Co.
v. NLRB, 315 U.S. 100, 106 (1942); Lihli Fashions Corp.,
80 F.3d at 748; Al Bryant, 711 F.2d at 553. As a result,
"the alter ego test is notably different than the `four-
factor' single employer test." Lihli Fashions Corp., 80 F.3d
at 748-49, and cases cited. It focuses on factors
including substantial identity of management, business
purpose, operation, equipment, customers, supervision, and
ownership between the old and new corporation. Al Bryant,
711 F.2d at 553-54; Pratt-Farnsworth, 690 F.2d at 508.
There is disagreement among the courts of appeals as to
whether an "intent to evade" statutory obligations is a
necessary element of an alter ego finding. See Stardyne,
Inc. v. NLRB, 41 F.3d 141, 146-47 & n.4 (3d Cir. 1994)
(collecting cases). See also Gary MacDonald, Labor Law's
Alter Ego Doctrine: The Role of Employer Motive in
Corporate Transformations, 86 Mich. L. Rev. 1024, 1039-52
(1988) (surveying positions taken by the courts of appeals).
[31] The law of the state of Kentucky, the jurisdiction
in which the Elmo No. 5 Mine is located and the events
at issue herein arose, likewise recognizes that:
The legal fiction of distinct corporate
existence may also be disregarded in a case
where a corporation is so organized and
controlled, and its affairs are so conducted,
as to make it merely an instrumentality,
conduit or adjunct of another corporation.
It is not enough, however, that shareholders
in the corporation are identical. Nor is it
enough that one corporation owns shares in
the other and that they have interrelated
dealings. In order to warrant treating them
as one, it must further appear that they are
the business conduits and the alter ego of
one another.
Louisville Gas & Elec. Co. v. Moore, 284 S.W. 1082, 1083-84
(Ky. 1926) (quoting 1 Fletcher, Cyclopedia Corporations � 45,
at 63). See also United States v. WRW Corp., 778 F.Supp. 919,
924 (E.D. Ky. 1991) (discussing elements of alter ego theory
under Kentucky law, which include "such unity of interest
and ownership that the separate personalities of the
corporation[s] . . . no longer exist"), aff'd, 986 F.2d 138
(6th Cir. 1993); Hermitage Land & Timber Co. v. Scott's
Ex'rs, 93 S.W.2d 1, 4 (Ky. 1936) ("we have not hesitated to
look beyond the form or shadow when the corporation
is the mere dummy or alter ego or conduit of individuals or
of another corporation").
[32] We find unconvincing the Secretary's argument for
application of the "common enterprise" standard developed
under the FLSA to determine whether related entities
constitute a unitary operator under the Mine Act, given that
the term "enterprise" in that statute has no analogue in
the Mine Act.
See FLSA � 3(r), 29 U.S.C. � 203(r).
[33] The Commission has long recognized that "the Mine
Act is not an employment statute. The Act's concerns are
the health and the safety of the nation's miners." UMWA on
behalf of Rowe v. Peabody Coal Co., 7 FMSHRC 1357, 1364
(Sept. 1985), aff'd sub nom. Brock on behalf of Williams v.
Peabody Coal Co., 822 F.2d 1134 (D.C. Cir. 1987).
[34] We disagree with Commissioner Riley's interpretation
(slip op. at 67) of certain statements made by the Secretary's
counsel at oral argument as an attempt to amend or refine her
proposed unitary operator test to add an element of "economic
involvement" or "economic control." See Oral Arg. Tr. 10-11.
In response to a question from Commissioner Verheggen,
counsel merely alluded to economic considerations to further
explain why a labor organization, such as the UMWA, could not
qualify as an operator under the test proposed by the
Secretary, as suggested by Contestants.
[35] We do not agree with Commissioner Riley's assertion
that "nothing is gained" through application of our unitary
operator test since Kyber and Jesse Branch, the two entities
that we find to constitute a unitary operator under this test,
"could . . . have been cited under conventional notions
of operator status." Slip op. at 62 & n.1. The unitary
operator theory must also be applied to resolve the potential
liability of Kentucky Berwind and Berwind, given our prior
conclusions that these two entities do not by themselves
qualify as operators under the control test we apply.
[36] A majority of Commissioners, Chairman Jordan, and
Commissioners Marks and Beatty, conclude that Kyber and
Jesse Branch qualify as a unitary operator.
[37] The Secretary argues that because of their
interrelationship Kyber and Jesse Branch should be
considered "alter egos." See S. Br. at 55-56. In using the
term "alter ego," the Secretary may have instead been
referring to the separate theory of corporation law, which
focuses on whether two or more separate corporate entities
are so interrelated that their corporate separateness may be
disregarded. See discussion supra, at 30-32. In any event,
there can be no question that the Secretary argues in
essence that Kyber and Jesse Branch functioned as a
unitary operator of the Elmo No. 5 Mine, and therefore
we apply our newly-adopted unitary operator test in evaluating
the legal relationship between these two entities. Contrary to
the arguments of our dissenting colleagues (slip op. at 66
n.5, 86), we also find that this theory of liability was
raised by the Secretary to the judge. See S. Mot. For
Partial Sum. J. at 27-29 ("Although legally [Jesse Branch]
and [Kyber] are separate corporate entities, in practice the
companies did not function as sovereign, independent
entities"); id. at 33-34 ("Since [Jesse Branch] undertook
these activities [at the Elmo mine] in conjunction with, and
on behalf of [Kyber], . . . [Jesse Branch] and [Kyber] were
acting as `alter egos' at the Elmo mine and both must be
considered an [sic] `operators' of the mine."). Indeed, in
his initial order and notice of hearing, the judge
acknowledged the Secretary's arguments that Jesse Branch
and Kyber were interrelated and served each other's
interests, but declined to accept or consider them. 17 FMSHRC
at 710-11, 712.
[38] The judge implicitly rejected the argument that
Jesse Branch and Kyber should together be considered a unitary
operator of the Elmo No. 5 Mine, and analyzed the status
of the two companies only as a separate entities. See 18
FMSHRC at 236-43.
[39] In the past, the two companies also shared the same
treasurer and assistant treasurer. Id. at 207.
[40] Given our prior conclusion that Kyber's supervision
and control over the operation of the mine were sufficient
to render it an operator within the meaning of the Mine Act
(supra, at 11-16), it follows that the combined Kyber/Jesse
Branch entity also ualifies as an operator. Indeed, this
combined entity possesses many of the same indicia of
authority and control as the non-production operator that the
Commission held was properly subject to prosecution by the
Secretary in W-P Coal, 16 FMSHRC at 1411.
[41] The Commission finds no merit in Contestants'
argument that, because the Secretary never cited the four
entities collectively as a single operator either in the
underlying citations and orders, or in her answers to
Contestants' notices of contest, the Secretary's unitary
operator theory is not properly before it. See B. Resp. Br.
at 60-61 & n.50. Even though the Secretary, in her
answers, may have alleged only that the Contestants were
each individually liable as an operator, without explicitly
asserting that the four entities were collectively liable
as a unitary operator, we are not precluded from considering
the unitary operator theory if it was knowingly and fairly
litigated by the parties before the judge. This result
is mandated by Rule 15(b) of the Federal Rules of Civil
Procedure, which provides for conformance of pleadings to the
evidence adduced at trial, and permits the adjudication of
issues actually litigated by the parties irrespective of
pleading deficiencies. See Faith Coal Co., 19 FMSHRC 1357,
1362 & n.10 (Aug. 1997). In this case, the record indicates
that the Secretary's unitary operator theory was fully
litigated by the parties and explicitly addressed by the
judge. See 18 FMSHRC at 233.
III.
Conclusion
For the foregoing reasons, we vacate the judge's
conclusion that, in order to establish an entity as an
operator under the Mine Act, the Secretary must prove that
the entity, either directly or indirectly, substantially
participated in the operation, control, or supervision of
the day-to-day operations of the mine, or had the authority
to do so. Instead, we evaluate the participation and
involvement of the entity in the mine's engineering,
financial, production, personnel, and health and safety
matters to determine whether that entity had substantial
involvement with the mine, and therefore qualified as an
operator under the Act. We affirm the judge's findings that
Kyber is an operator of the Elmo No. 5 Mine, and that Jesse
Branch, Kentucky Berwind, and Berwind are not individual
operators. We remand these cases for further proceedings as
to Kyber.
We vacate the judge's rejection of the Secretary's
unitary operator theory, and hold that two or more entities
may be considered a unitary operator for purposes of the Mine
Act based upon consideration of their: (1) interrelation of
operations, (2) common management, (3) centralized control of
mine health and safety, and (4) common ownership. We hold
that, under this standard, Berwind and its three subsidiaries
do not qualify as a unitary operator for purposes of the Mine
Act, but that Kyber and Jesse Branch do constitute a single
entity, which would qualify as an operator of the mine.
We further conclude, however, that the joint entity
Kyber/Jesse Branch may not be held liable for any Mine
Act violations in this case.
IV.
Separate Opinions of the Commissioners
Commissioner Beatty, concluding that Berwind and its three
subsidiaries do not qualify as a unitary operator under the
Commission's unitary operator test; and holding that Kyber
and Jesse Branch did not receive fair notice that they could
be subject to liability under the unitary operator theory
first espoused by the Secretary in this case, and that
therefore the combined Kyber/Jesse Branch entity may not be
held liable for any violations found in these cases.
A. Berwind and Its Three Subsidiaries Do Not Qualify
as a Unitary Operator
The record in this case compels the conclusion that
Berwind and its three subsidiaries do not qualify as a unitary
operator. There is little question that these four entities
satisfy the "common ownership" criterion, since Kentucky
Berwind, Kyber, and Jesse Branch are all wholly-owned
subsidiaries of Berwind. In addition, the record indicates
that the four companies shared common officers and
management.[1] There is also some interrelationship in the
operations of the four companies, due to their vertical
integration with respect to the ownership and leasing of mine
property.[2] However, the record establishes that, with one
exception discussed below, the Contestants otherwise
functioned as independent entities. Although Berwind, as the
parent holding company, was responsible for overseeing the
operations of its subsidiaries and making decisions concerning
the general direction of their business (18 FMSHRC at 208-09),
it was not directly involved in the operations of Kentucky
Berwind, the owner of coal reserves, or of Kyber and Jesse
Branch, which both lease coal reserves and contract for the
mining of the coal they lease. Berwind had no direct
involvement with the operation of the Elmo No. 5 Mine, and no
relationship with AA&W, the contract operator. Id. at 211, 234.
The record also indicates that Kentucky Berwind and Kyber
dealt with each other at "arm's length" with respect to coal
reserves leased by Kentucky Berwind to Kyber, including those
at the Elmo No. 5 Mine. The written lease agreement between
the two subsidiaries involving the mine required Kyber to,
inter alia, submit coal samples from the mine to Kentucky
Berwind for quality analysis, allow Kentucky Berwind's
inspectors on the premises to ascertain the condition of the
mine and the amount of coal removed, and assure that coal
reserves at the mine were mined to the greatest extent
possible, consistent with mining conditions, relevant laws,
and regulations. 17 FMSHRC at 694, 713. The lease also gave
Kentucky Berwind the right to terminate the lease if it
determined that Kyber was not complying with its terms, to
penalize Kyber for lost coal reserves, and to order an
immediate cessation of mining if the reserves were being
damaged or if mining was conducted in violation of law. Id.
at 714. Pursuant to the lease, Kentucky Berwind received
monthly royalties from Kyber for coal mined at that location.
18 FMSHRC at 210. Kentucky Berwind had no relationship with
AA&W and no direct involvement in the operation of the Elmo
No. 5 Mine. Id. The only Kentucky Berwind employees who
entered the mine were those who visited on a quarterly basis,
or upon request, to examine the workings and check seam heights
and tonnages to confirm royalties and insure that coal was
being recovered properly. Id. at 210-11.
Finally, it does not appear that there was any
centralized control by these companies over health and safety
matters at mine property owned by Kentucky Berwind and leased
to Kyber or Jesse Branch. Rather, the record indicates that
health and safety issues were largely the responsibility of
the contract operator of the mine, in this case AA&W. AA&W
was responsible for the preparation and submission to MSHA of
the mine's roof control plan, ventilation plan and system,
and other plans required for health and safety purposes,
including the fire fighting plan, miner training plan, smoking
articles search plan, self-contained self rescuer plan, and
fan stoppage plan. 17 FMSHRC at 690; 18 FMSHRC at 221, 226.
AA&W also developed and implemented the respirable dust and
noise sampling programs required under the Mine Act and
provided required training for its miners. 17 FMSHRC at
690-91. In addition, AA&W was responsible for maintaining
preshift and onshift examination books at the mine. 18 FMSHRC
at 221. AA&W representatives participated in MSHA
inspections and subsequent conferences, and decided whether
to challenge the validity of citations issued by MSHA
inspectors. 17 FMSHRC at 695-96. AA&W also decided the
manner in which violations should be abated and paid all
penalties assessed under the Mine Act. Id. at 696. There
is no evidence that Berwind or Kentucky Berwind had any
involvement at all with respect to health and safety issues
at the Elmo No. 5 Mine.
In sum, although these four entities satisfy the common
ownership criterion and shared common management to a
significant extent, in our view these factors are outweighed
by the evidence that these entities operated essentially
independently of each other and (with the exception of Kyber
and Jesse Branch, discussed below) dealt with each other at
"arm's length." In addition, there is little or no evidence
that these entities exercised any significant degree of
centralized control over health and safety matters at the
mine. Chairman Jordan and I believe that the foregoing
evidence compels the conclusion that Berwind and its three
subsidiaries - Kentucky Berwind, Kyber, and Jesse Branch -
did not function as a unitary or single operator of the Elmo
No. 5 Mine under the criteria set forth above. Accordingly,
we conclude that a remand to the judge to determine whether
these four entities collectively constitute a unitary operator
is not necessary. American Mine Servs., Inc., 15 FMSHRC
1830, 1833-34 (Sept. 1993); see also cases cited supra,
slip op. at 38-39.
B. Liability/Fair Notice of the Unitary Operator Theory
It is well established that in cases involving imposition
of civil penalties, considerations of due process "prevent[]
. . . deference [to an agency's interpretation] . . . that
fails to give fair warning of the conduct it prohibits or
requires." Gates & Fox Co. v. OSHRC, 790 F.2d 154, 156 (D.C.
Cir. 1986). For, "`elementary fairness compels clarity' in
the statements and regulations setting forth the actions with
which the agency expects the public to comply." General Elec.
Co. v. EPA, 53 F.3d 1324, 1329 (D.C. Cir. 1995) (quoting Radio
Athens, Inc. v. FCC, 401 F.2d 398, 404 (D.C. Cir. 1968)). For
an agency's interpretation may be permissible but nevertheless
may fail to provide the notice required to support imposition
of a civil penalty. General Electric, 53 F.3d at 1333-34;
Phelps Dodge Corp. v. FMSHRC, 681 F.2d 1189, 1193 (9th Cir.
1982). An agency will be deemed to have provided fair notice
of its interpretation, "[i]f, by reviewing the regulations and
other public statements issued by the agency, a regulated party
acting in good faith would be able to identify, with
`ascertainable certainty,' the standards which the agency
expects parties to conform." General Electric, 53 F.3d at
1329 (citing Diamond Roofing Co. v. OSHRC, 528 F.2d 645, 649
(5th Cir. 1976)).
In resolving the notice issue raised with respect to
the Secretary's unitary operator theory, it is fundamental
to first determine whether the Contestants, in particular
Kyber and Jesse Branch, had fair notice that they were
subject to liability pursuant to that theory.[3] Despite
our conclusion that the Secretary's unitary operator theory
is a reasonable statutory interpretation that merits our
deference, I conclude that, under the standards set forth
above, neither the Secretary's actions nor the language of
the Mine Act were sufficient to put Kyber and Jesse Branch
on notice that they were potentially subject to liability as
a joint entity in this case.
First, it is undisputed that the unitary operator theory
was not previously advanced by the Secretary in any prior
civil penalty case brought pursuant to the Mine Act. Cf.
General Electric, 53 F.3d at 1331 (finding of lack of fair
notice of agency interpretation was reinforced where
"[a]lthough th[e] reading [wa]s certainly permissible, the
agency present[ed] it for the first time [on] appeal"). In
addition, although we have concluded that the unitary operator
theory is consistent with, and supported by, the meaning of
certain definitional terms used in the Mine Act - specifically,
the terms "person," "association," and "organization" - as
reflected in everyday dictionary definitions of those terms,
it is also fair to state that this interpretation "would not
exactly leap out at even the most astute reader" of these
provisions. Rollins Envtl. Servs. Inc. v. EPA, 937 F.2d 649,
652 (D.C. Cir. 1991).
It is also clear that the Secretary provided no notice
to the Contestants, through preenforcement efforts designed
to achieve compliance with the Mine Act, that they might be
subject to liability pursuant to a unitary operator theory.
See General Electric, 53 F.3d at 1329. Rather, she
"effectively decid[ed] `to use a citation . . . as the
initial means for announcing [this] particular
interpretation'" of the Mine Act. Id. (quoting Martin v.
OSHRC, 499 U.S. 144, 158 (1991)). It has been previously
recognized that "such a decision may raise a question
about `the adequacy of notice to regulated parties.'" Id.
We have also concluded in this case that the Secretary's
unitary operator theory was presaged, and is further supported,
by the single employer doctrine that has developed through
application and interpretation of similar provisions of the
NLRA and Title VII. I do not believe, however, that given
the facts presented here Kyber and Jesse Branch can fairly be
charged with knowledge of these doctrines, particularly since
the doctrines have developed under statutory schemes unrelated
to mine health and safety.[4]
Based on the foregoing, I conclude that the Contestants
did not have adequate notice of the Secretary's "unitary
operator" theory of liability in this case, and therefore
Jesse Branch, as part of the Kyber/Jesse Branch joint entity,
should not be held liable for any Mine Act violations
ultimately found to have been committed in these cases pursuant
to that theory.[5]
I disagree with the suggestion made by Chairman Jordan,
in her separate opinion, that the above-described requirement
of fair notice has no applicability here because we are
concerned not with the requirements of a particular regulation,
but rather with whether Jesse Branch was on notice of its
potential liability as a unitary operator. Slip op. at 48.
In my view, the notice requirement takes on even greater
importance where, as here, the relevant agency interpretation
relates to the threshold issue of the coverage of an entirely
new class of entities under the Mine Act, as opposed to the
requirements of a specific regulation. If a party has no idea
of its potential liability under a new interpretation of an
existing statute or regulation, such as the unitary operator
theory, I believe that it is profoundly unfair, and
inconsistent with the teachings of General Electric and its
progeny, to impose liability for civil penalties pursuant to
such a theory without fair notice.
I also find Sewell Coal Co. v. FMSHRC, 686 F.2d 1066
(4th Cir. 1982), and the other cases cited by Chairman Jordan,
to be unpersuasive. As noted by Judge Widener in his dissent
in Sewell, neither SEC v. Chenery Corp., 332 U.S. 194 (1947),
nor NLRB v. Bell Aerospace Co., 416 U.S. 267 (1974), "involved
the imposition of a fine without notice." 686 F.2d at 1073.
In Bell Aerospace, the Supreme Court explicitly acknowledged
this distinction, stating: "[T]his is not a case in which
some new liability is sought to be imposed on individuals for
past actions which were taken in good faith reliance on Board
pronouncements. Nor are fines or damages involved here." Id.
at 295 (emphasis added). Neither Molina v. INS, 981 F.2d 14
(1st Cir. 1992), nor General American Transportation Corp. v.
ICC, 872 F.2d 1048 (D.C. Cir. 1989), also cited by Chairman
Jordan, dealt with the imposition of liability without prior
notice; indeed, in Molina the court expressly notes that no
due process claim is involved. 981 F.2d at 19. See also
Energy West Mining Co., 17 FMSHRC 1313, 1317 n.7 (Aug. 1995)
(distinguishing cases on similar grounds).
Nor am I persuaded by the arguments of Chairman Jordan
and Commissioner Marks that Jesse Branch should have been on
notice that it was potentially liable as an operator pursuant
to the "independent contractor" provision of section 3(d).
Slip op. at 50, 55. The unitary operator theory is a totally
separate and distinct legal construct that provides a basis
for finding entities such as Kyber and Jesse Branch to be
"unitary operators," based on the interrelationship between
the entities. Therefore, any arguments by my colleagues in
the majority that Jesse Branch was alternatively liable as
an independent contractor fail to recognize the distinctions
between these two theories and therefore have no bearing
whatsoever on the question of whether Jesse Branch had
adequate notice of its potential liability as a unitary
operator.[6]
Accordingly, I conclude that because Jesse Branch did
not have adequate notice of the Secretary's "unitary operator"
theory of liability in this case, and that it was thus subject
to liability as part of the Kyber/Jesse Branch joint entity,
it should not be held liable for civil penalties assessed for
any Mine Act violations that are ultimately found in this
case.
Robert H. Beatty, Jr.,
Commissioner
**FOOTNOTES**
[1] Thomas Falkie, the president of Berwind, was the
chairman of the board of Jesse Branch, Kentucky Berwind, and
Kyber. 18 FMSHRC at 209. Berwind's vice president, Richard
Rivers, was also the vice president of the three
subsidiaries. Id. In addition, Berwind's chief financial
officers acted in the same capacity for Jesse Branch,
Kentucky Berwind, and Kyber; its assistant secretary also
acted as secretary for the three subsidiaries; and its
controller was also the controller of Kentucky Berwind.
Id. The treasurer and assistant treasurer of Kentucky Berwind
also held the same positions with Kyber and Jesse Branch.
Id. at 208. Berwind's board of directors approved the election
of Jimmy Walker as president of Jesse Branch and Kyber. Id.
at 209. Walker hired Steve Looney as vice president of
operations, and Bob Bond as controller, of both of these
subsidiaries. Id. Walker and the president of Kentucky
Berwind both reported to Berwind's president, Falkie. Id.
[2] Although Berwind has never received a dividend
as a shareholder of Kyber, it has received dividends from
Kentucky Berwind, which are in part attributable to
royalties received by Kentucky Berwind on its coal leases.
18 FMSHRC at 212. Berwind is also paid a management fee by
its subsidiaries for legal, financial, and administrative
services. Id. In addition, Kyber paid Berwind for services
provided by Berwind Coal Sales, Inc., another Berwind
subsidiary, in locating customers and negotiating contracts
for the sales of coal mined for Kyber. 17 FMSHRC at 697.
[3] Of course, this issue is largely academic with
respect with Kyber, which we have already found to be an
operator of the mine within the meaning of the Mine Act. See
Part II.B.1. With respect to Jesse Branch, however, the
question becomes far more significant, since we have
previously concluded in Part II.B.2 that Jesse Branch, on
its own, does not qualify as an operator. Therefore, our
resolution of the notice issue is dispositive of whether
Jesse Branch may be held liable for any Mine Act
violations, pursuant to the unitary operator theory, as
part of the Kyber/Jesse Branch joint entity.
[4] In addition, Title VII has a jurisdictional
prerequisite that limits its application to small companies.
See 42 U.S.C. � 2000e(b).
[5] This is consistent with the result in General
Electric, where the D.C. Circuit deferred to the agency's
interpretation because it was "`logically consistent with
the language of the regulation[s],'" but found that the
interpretation was "so far from a reasonable person's
understanding of the regulations that they could not have
fairly informed [the regulated party] of the agency's
perspective." 53 F.3d at 1330 (quoting Rollins, 937 F.2d
at 652) (alteration in original). Although the agency could
require future compliance with its interpretation, the lack
of fair notice led the court to reverse the enforcement action
taken in that particular instance. Id. at 1328, 1330. See also
United States v. Hoechst Celanese Corp., 964 F. Supp. 967, 985
(D.S.C. 1996) (concluding that "due process precludes a
finding of liability" where plant owner was not afforded
fair notice of U.S. Environmental Protection Agency's
interpretation of regulatory exemption from benzene
regulation).
[6] I also note that the Commission majority has agreed
that the Secretary has failed to preserve on appeal the issue
of the potential liability of Jesse Branch as an
independent contractor. See slip op. at 16 n.16. Separate
opinion of Chairman Jordan, holding that Jesse Branch received
fair notice that it could be held liable as an operator:
I write separately to express my view that Jesse Branch
was provided with sufficient notice regarding its potential
liability as an operator.[1] At the outset, it is essential
to understand what this inquiry does not involve: it is not
concerned with the question more frequently posed in Mine Act
cases as to whether an operator had notice about the
requirements of a particular regulation. See, e.g., Ideal
Cement Co., 12 FMSHRC 2409 (Nov. 1990). Consequently, a
discussion of whether a regulation provided "fair warning of
the conduct it prohibits or requires," (separate opinion of
Commissioner Beatty, slip op. at 44, citing Gates & Fox, 790
F.2d at 156), or whether an operator could know "with
`ascertainable certainty,' the standards which the agency
expects parties to conform" (id.), is not helpful here. This
case is simply not about whether a reasonably prudent person
would have been put on notice of a specific standard requiring,
for example, that signs needed to be posted (Bluestone Coal
Corp., 19 FMSHRC 1025 (June 1997)) or a circuit breaker set at
a certain level. BHP Minerals Int'l, Inc., 18 FMSHRC 1342
(Aug. 1996). Rather, it is simply about whether Jesse Branch
was on notice of its potential liability as an operator. This
question hinges on the language of the Mine Act and its
interpretation.
In this case we adopt the unitary operator theory, and,
as is the common practice, apply the rule we are announcing
to the relevant parties in this proceeding. This is consistent
with the widely recognized concept that "retroactive
application of new principles in adjudicatory proceedings is
the rule, not the exception." Molina v. INS, 981 F.2d 14, 23
(1st Cir. 1992). In Molina, the First Circuit explicitly
addressed the question of whether the INS had improperly
utilized a retroactive interpretation in a proceeding in which
it ordered an individual deported despite his amnesty request.
Id. at 20-23. The Court held that in so doing, INS acted
within its legal authority. Id. at 23.
Similarly, in Sewell Coal Co. v. FMSHRC, 686 F.2d 1066,
1070 (4th Cir. 1982), in which the Fourth Circuit affirmed a
Commission judge's decision imposing a penalty on an operator,
the court held that, "retroactive application of a novel
principle expounded in an adjudicatory proceeding does not
infringe the rights secured by the due process clause." In
fact, the D.C. Circuit has noted that "it seems clear that
the circumstances in which a rule may be announced but not
applied in an adjudication are few." General Am. Transp.
Corp. v. ICC, 872 F.2d 1048, 1061 (D.C. Cir. 1989) (upholding
the retroactive application of the reversal of a 40 year old
Interstate Commerce Commission policy that had prevented
railroads from charging the owners of railcars for
transportation costs in certain circumstances). See also
Local 900, Int'l Union of Elec., Radio & Mach. Workers v.
NLRB, 727 F.2d 1184, 1194-95 (D.C. Cir. 1984) (upholding
retroactive application that resulted in imposition of money
damages).
This doctrine was carefully articulated by the Supreme
Court in SEC v. Chenery Corp., 332 U.S. 194 (1947). In Chenery
the Court reviewed a decision of the Securities and Exchange
Commission ("SEC") applying new standards of conduct to
management trading during a stock reorganization. The SEC
ruled that the trading at issue violated federal law. The
corporations argued that the SEC was free to announce its new
rule but that it had to remain prospective and could have no
retroactive effect upon the parties to the case.
The Supreme Court soundly rejected this approach, stating:
To hold that the Commission had no
alternative in this proceeding but to approve
the proposed transaction, while formulating
any general rules it might desire for use in
future cases of this nature, would be to
stultify the administrative process. That we
refuse to do.
. . . .
There is thus a very definite place for the
case-by-case evolution of statutory
standards. . . .
. . . [W]e refuse to say that the
Commission, which had not previously been
confronted with [the question at issue], was
forbidden from utilizing this particular
proceeding for announcing and applying a new
standard of conduct. That such action might
have a retroactive effect was not necessarily
fatal to its validity. Every case of first
impression has a retroactive effect, whether
the new principle is announced by a court or
by an administrative agency. But such
retroactivity must be balanced against the
mischief of producing a result which is
contrary to a statutory design or to legal
and equitable principles.
Id. at 202-03 (emphasis added) (citation omitted).
As Justice Scalia has noted, "Chenery involved that form
of administrative action where retroactivity is not only
permissible but standard. Adjudication deals with what the
law was; rulemaking deals with what the law will be." Bowen v.
Georgetown Univ. Hosp., 488 U.S. 204, 221 (1988) (Scalia, J.,
concurring) (emphasis in original).
Moreover, Jesse Branch should have been on notice in any
event that it was potentially liable as an operator. The
Secretary argued before both the judge and the Commission that
Jesse Branch should be considered an operator of the Elmo Mine
pursuant to section 3(d) of the Mine Act because it was an
independent contractor performing services at a mine. S. Mot.
Part. Sum. J. at 33, n. 27, S. Br. at 55 n. 21. Although I
agree with the Commission's holding that the Secretary failed
to preserve this question on review to prove liability (slip
op. at 16 n.16), I conclude that, for purposes of ascertaining
whether proper notice existed, the record would compel the
conclusion that Jesse Branch was an independent contractor.
This is due to the mine mapping, surveying, and spad services
it performed at the mine. 17 FMSHRC at 711-12. The case law
is clear that such an independent contractor may be held
liable as an operator. Williams Natural Gas Co., 19 FMSHRC
1863 (Dec. 1997). Accordingly, Jesse Branch should always
have been aware of its duty to comply with the Mine Act and
its regulations. It should not be permitted to escape
liability in this case by claiming that it lacked adequate
notice of its legal responsibilities.[2]
Mary Lu Jordan, Chairman
**FOOTNOTES**
[1] I do not address the issue of whether or not Kyber
had notice of the unitary operator theory, as the Commission
has already found that Kyber is an operator, based on its
status as a single entity (slip op. at 11-16) and was
on notice of its potential liability as an operator (slip op.
at 16 n.15).
[2] In addition, I agree with Commissioner Beatty that,
applying the unitary operator test that we adopt today, the
record in this case compels the conclusion that Berwind and
its three subsidiaries do no qualify as a unitary operator.
See slip op. at 42-44.
Separate opinion of Commissioner Marks, concurring in
part and dissenting in part:
I join with the majority in concluding that Kyber
qualifies as an operator under the Mine Act. I dissent from
the majority in their conclusion that neither Berwind,
Kentucky Berwind, or Jesse Branch are operators because I
find that all three of these entities qualify as operators.
I join with the majority in adopting a unitary operator test,
and in concluding that under such test, Jesse Branch and
Kyber compose a unitary operator. However, I conclude that
all four entities - Berwind, Kentucky Berwind, Kyber, and
Jesse Branch - constitute a unitary operator and therefore
dissent on that ground.
A. Kyber
As discussed in the majority opinion, Kyber had
substantial involvement with the mine. Kyber was the
lessee of Elmo No. 5 Mine and possessed the right to mine
coal at that mine. 17 FMSHRC at 689. Kyber contracted with
AA&W for the mining of the coal. Id. at 689-90. As part
of the arrangement with AA&W, Kyber had "bottom line
authority" for determining the direction of mining; it had
final authority to approve mining projections and "to insist
upon the projections it wanted." Slip op. at 11 (citing 18
FMSHRC at 237-39). Kyber also had some involvement in the
decisions concerning the manner of mining and the quality
and quantity of coal produced at the mine. Slip op. at
12-13. The contract with AA&W gave Kyber the authority to
approve and enforce Elmo No. 5's mine plan, which governed
matters such as the applicable ventilation and roof control
plans, the number of employees, and the type of equipment to
be used. Id. at 12. As the majority correctly points out,
the authority to control operations is a relevant
consideration in determining whether an entity qualifies as
an operator. Id. Based on these facts, Kyber's
participation more than exceeds the substantial involvement
test applied by the Commission in this case. After all, in
an analogous context, "substantial" has been described by
the Supreme Court and courts of appeals as amounting to
"more than a mere scintilla." Richardson v. Perales, 402
U.S. 389, 401(1971) (quoting Consolidated Edison Co. v. NLRB,
365 U.S. 197, 229 (1938))[1]; Grand Canyon Air Tour Coalition
v. FAA, 154 F.3d 455, 475 (D.C. Cir. 1998); Kajaria Iron
Castings PVT. Ltd v. United States, 156 F.3d 1163, 1173 (Fed.
Cir. 1998). Webster's II New Riverside University Dictionary
at 1045 (1988) defines a "scintilla" as "a tiny amount:
trace." Kyber certainly exhibited more than a scintilla of
involvement in the Elmo No. 5 Mine.
My conclusion that Kyber is an operator is buttressed by
the cases of Association of Bituminous Contractors, Inc. v.
Andrus, 581 F.2d 853, 861-62 (D.C. Cir. 1978); Chaney Creek
Coal Corp v. FMSHRC, 866 F.2d 1424, 1432 n.9 (D.C. Cir. 1989);
and International Union, UMWA v. FMSHRC, 840 F.2d 77, 82 n.8
(D.C. Cir. 1988). In those cases, the D.C. Circuit explained
that regardless of an owner's or lessee's level of activity at
a mine, an owner or a lessee qualify as an operator under
section 3(d) of the Mine Act. Id. By virtue of the fact
that Kyber was the lessee of the Elmo No. 5 Mine, Kyber
qualifies as an operator under the Mine Act. 17 FMSHRC at 689.
The plain language of the Mine Act also supports that
view. Under section 3(d), "operator" means "any owner, lessee,
or other person who operates, controls, or supervises a coal
or other mine or any independent contractor performing
services or construction at such mine." 30 U.S.C. � 802(d)
(emphasis added). The Mine Act does not attach conditions
to the type of owner or lessee who may be an operator but
states that "any owner, lessee . . ." qualifies as an
operator. Use of the term "any" in the provision indicates
that "any" owner or lessee is an operator under the Act.
As stated in my concurring opinion in Joy Technologies Inc.,
17 FMSHRC 1303 (Aug. 1995), with respect to the independent
contractor clause of the operator definition, "any" means
"any" and there is no warrant in the plain language of the
Act or in the legislative history for diluting the term "any."
Id. at 1311 (citing Otis Elevator Co. v. Secretary of Labor,
921 F.2d 1285, 1290 (D.C. Cir. 1990)). The D.C. Circuit in
Andrus likewise reasoned that, if one assumes a contrary view
and interprets the clause "who operates, controls, or
supervises a coal mine" to attach to "owner," "lessee," as
well as "other person," the "specification of owner and
lessee would then be superfluous" and the statute could
merely have read "`operator' means any person who operates,
controls or supervises a coal mine." 581 F.2d at 862. The
Mine Act specifically named "any owner, lessee, or person
who operates . . . [a] mine" as operators. Adhering to
that plain language, I conclude that Kyber, as "any lessee,"
qualifies as an operator.
B. Kentucky Berwind
Kentucky Berwind was the owner of the mineral rights at
the Elmo No. 5 Mine. JSF 52. As the legal owner, Kentucky
Berwind had the right to extract coal from the mine itself
or could lease that right to others. JSF 88. In contracting
the right to extract coal to Kyber, Kentucky Berwind
maintained substantial involvement with the workings of the
Elmo No. 5 Mine. In the lease agreement, Kentucky Berwind
retained the right to approve long-term contracts for the
sale of coal to any third party; required Kyber to submit
samples and analyses of coal; required Kyber to maintain
records of coal produced and sold; required Kyber to
regularly furnish it with mine maps; permitted Kentucky
Berwind's inspectors to enter on to the premises for coal
sampling, inspections, surveying, measuring, and ascertaining
the conditions of the mine; required Kyber to adhere to the
laws and regulations promulgated under the Mine Act; required
Kyber to secure the written permission of Kentucky Berwind to
sublease or assign any part of the leasehold. JSF Ex. B at 13,
15, 18-20, 21, 22-23 (Lease Agreement). The lease agreement
indicates that Kentucky Berwind had the authority to oversee
many of the operations of Elmo No. 5, including whether health
and safety regulations were being followed at the mine. As
discussed in section A, supra, it is the authority to control
operations, and not the actual exercise of that authority,
that is relevant in determining whether an entity qualifies
as an operator.
Kentucky Berwind's substantial involvement in the
workings of Elmo No. 5 Mine is particularly illustrated in
three instances. First, Kentucky Berwind regularly inspected
Elmo No. 5 pursuant to the lease agreement with Kyber. JSF
Ex. B at 19-20. Kentucky Berwind's inspectors conducted
inspections of the mine on at least 16 occasions between
June 19, 1990, and September 24, 1993. JSF 224-26. Kentucky
Berwind's inspectors had the right to enter the mine and mine
property and inspect at will. JSF 228. As part of these
inspections, Kentucky Berwind's inspectors developed
inspection reports detailing their observations. JSF Ex. D.
The reports noted the general conditions of the surface and
underground areas, including whether the roof control plan
was being followed, whether ventilation was adequate, and
the type and condition of the mine floor and roof. JSF
Ex. D-2.
Second, Kentucky Berwind's oversight is shown by its
reaction to the April 1993 roof fall at the Elmo No. 5 Mine
caused by blasting at the neighboring Corvette mine. JSF
Ex. E. Kentucky Berwind was notified of the incident and sent
its head inspector, Steve Dale, to the mine to determine the
cause of the problem. JSF 295-302, Ex. E (Memo to Hunt from
Dale, dated April 20, 1993).[2] In particular on April 12,
1993, Dale obtained mine maps from Jesse Branch and went to
the Elmo No. 5 Mine. JSF Ex. E. He accompanied an MSHA
inspector and an AA&W representative underground and examined
the cause of the roof fall. JSF 298, Ex. E. One citation
was issued to the mine for the fall. JSF 300, Ex. E. Dale
worked with Jimmy Walker, President of Kyber and Jesse Branch,
to come up with an acceptable solution for blasting at the
Corvette Mine so as not to endanger the safety of miners at
the Elmo No. 5 Mine. JSF 301, Ex. E. Dale also ensured that
the violation was abated. JSF Ex. E. This sequence of
events, which was stipulated to by the parties (JSF 302),
unquestionably shows Kentucky Berwind's substantial
involvement with the Elmo No. 5 Mine. Even the judge,
following the incorrect test of day-to-day control, stated
that "this may show that Kentucky Berwind was `involved' with
the operation at the mine." 17 FMSHRC at 715.[3] Unlike the
majority and the judge, I do not dismiss this as an isolated
instance of Kentucky Berwind's taking control in order to
protect its property rights. Slip op. at 20; 17 FMSHRC at
714-15. I agree with the Secretary that the level of control
that Kentucky Berwind exhibited with regard to this roof fall
plainly demonstrates that Kentucky Berwind had the authority
to actively oversee operations at the mine and would exercise
that authority when a specific need arose for it to do so.
S. Br at 43.
The third indicium of Kentucky Berwind's substantial
involvement is that Kentucky Berwind participated in decisions
concerning changes in mining direction. JSF 188, 189, 191,
192. In particular, Kyber notified Kentucky Berwind before
decisions were made to not mine an area that had been projected
to contain recoverable coal. JSF 191. Kyber sought guidance
from Kentucky Berwind as to whether mining should continue in
certain areas where the coal contained an unusually high level
of inherent ash. JSF 193. During the process of waiting for
a decision from Kentucky Berwind as to the direction of future
mining, AA&W mined an area of the mine that had prior approval.
JSF 190. Accordingly, Kentucky Berwind's authority to approve
or disapprove mining changes had a significant effect on the
actual working of the mine.
The case of W-P Coal Co., 16 FMSHRC 1407 (July 1994)
is instructive. There, the Commission found the level of
involvement of W-P Coal Company, which is comparable to that
of Kentucky Berwind, sufficient to support the Secretary's
decision to proceed against W-P as an operator. Id. at 1411.
Like Kentucky Berwind, W-P held the mining rights to the mine
but contracted with Top Kat to extract the coal in return for
royalty payments paid to W-P. Id. at 1407. The Commission
found significant that W-P personnel visited the mine
frequently, had met with MSHA personnel regarding mine
conditions, and had involvement in the mine's engineering,
financial, production, personnel, and safety affairs. Id. at
1411. Similarly, Kentucky Berwind inspectors were on mine
premises regularly and had contact with MSHA following the
roof fall incident. JSF 224-26, 302, Ex. E. Under the lease
agreement with Kyber, Kentucky Berwind retained authority to
oversee financial, production, engineering, and safety
affairs. JSF Ex. B at 13-15, 18-20, 21, 22-23. In W-P Coal,
the Commission recognized that the Secretary did not have to
show that the owner and the contract operator were co-equals
in order for the Secretary to proceed against the owner of
the mine. 16 FMSHRC at 1411. The Commission expressly did
not reach the argument that an entity only passively involved
with a mine was also properly cited for a contractor's
violation, but found W-P's involvement more than a sufficient
basis for MSHA to proceed against it. Id. at 1411 n.5.
Applying a similar substantial involvement test, Kentucky
Berwind had sufficient participation with the workings of the
Elmo No. 5 Mine for the Secretary to proceed against it as
an operator.
Finally, and perhaps most importantly, Kentucky Berwind
was the "owner of the premises." Lease Agreement, JSF Ex. B
at 18. Pursuant to Andrus, 581 F.2d at 861-62, and the plain
terms of the Mine Act section 3(d), which the majority seems
quite willing to disregard, Kentucky Berwind is an operator
by virtue of the fact that it is "any owner." Accordingly,
I would reverse the judge's determination that Kentucky
Berwind was not an operator under the Act.
C. Jesse Branch
I join with the majority in concluding that Jesse Branch
and Kyber functioned as a single entity with respect to their
control over the operation of the Elmo No. 5 Mine. Slip op.
at 38-39. Having concluded that Kyber was an operator having
substantial involvement with Elmo No. 5 Mine, I am led to the
conclusion that Jesse Branch also qualifies as an operator.
Additionally, I also believe that Jesse Branch, standing
alone, qualifies as an operator. Under Mine Act section 3(d),
an operator is defined as "any independent contractor
performing services at a mine." 30 U.S.C. � 802(d). The
evidence unquestionably reveals that Jesse Branch was an
independent contractor performing services at the mine.[4]
Jesse Branch performed the engineering services of surveying,
spad setting and preparation of mine maps. Slip op. at 17.
The mine maps prepared by Jesse Branch established the
projections that AA&W was required to follow when driving
entries in the mine, and also designated the areas in the mine
from which coal could not safely be extracted because of the
presence of natural gas wells. 17 FMSHRC at 693; JSF 166, 167,
178, 179. Jesse Branch employees generally surveyed and set
spads at the mine on a weekly basis. 17 FMSHRC at 692-93.
Jesse Branch provided AA&W with technical expertise that AA&W
lacked regarding on-site implementation of the projections,
the mine cover, and the number of entries it would sustain.
18 FMSHRC at 241-42. While conducting surveys at the mine,
Jesse Branch employees also collected information concerning
the dimensions of the coal seam, entry ways, and coal pillars,
the centers on which mining was conducted, stopping lines,
conveyor beltlines and roof falls. 17 FMSHRC at 693. Jesse
Branch also inspected the drainage ponds on the surface of
the mine. JSF 209. The majority concludes that "Jesse Branch
played an important role in the operation of the Elmo No. 5
Mine." Slip op. at 17. On the additional ground that Jesse
Branch was, at the very least, an independent contractor
performing services at the mine, I would reverse the judge
and conclude that Jesse Branch constituted a separate
operator under the Act.
D. Berwind
In determining that Berwind was not an operator, the
judge applied the incorrect day-to-day control test and failed
to inquire into whether Berwind was involved in the Elmo No. 5
Mine. The majority, although rejecting the judge's day-to-day
test,does not stray far from it. What the majority overlooks
is that when the term "operator" was first defined in the Coal
Act, Congress specifically explained that indirect operation,
control or supervision of a mine may render a person an
operator. S. Rep. No. 91-411, at 44; Coal Act Legis. Hist. at
170. Berwind provides a perfect example of an entity that
exercised substantial indirect control and supervision such
that it qualifies as an operator under the Act.
Berwind is the parent company of Kentucky Berwind, Kyber
and Jesse Branch. JSF 58. It is a holding corporation whose
business it is to oversee its subsidiaries. JSF 63. Berwind
had the power to direct its subsidiaries as well as to approve
and remove the officers of the subsidiaries. JSF 64-66. The
parties stipulated that three individuals were the primary
officers that acted on behalf of Berwind. JSF 62. Those
individuals were Thomas Falkie, president of Berwind, and
vice presidents Richard Rivers and Bryan Ronck. JSF 60, 62.[5]
All three of those individuals were also board members or
officers for Kentucky Berwind, Kyber, and Jesse Branch.
17 FMSHRC at 688. The president of Kyber and Jesse Branch,
Jimmy Walker, reported directly to the president of Berwind,
Thomas Falkie, regarding the operation of the two companies.
JSF 69. Similarly, the president of Kentucky Berwind, Ray
Brainard, reported to Falkie. JSF 69.[6] Berwind had the
power to approve, reject, or replace the officers of Kyber,
Jessie Branch, and Kentucky Berwind. 17 FMSHRC at 688; JSF
66, 67. By virtue of the fact that Berwind unilaterally
selected and/or approved the officers of Kentucky Berwind,
Kyber, and Jesse Branch, Berwind exerted substantial indirect
control over the Elmo No. 5 Mine.
When the President of Jesse Branch and Kyber, Jimmy Walker,
selected AA&W to contract mine the Elmo mine, Walker advised the
president of Berwind, Falkie, of the selection. JSF 97. Berwind
maintained a policy that its subsidiaries must only engage mining
contractors to perform mining operation on land owned by Berwind
subsidiary companies that were capable of operating the mines in
a safe manner, including operation in conformity with MSHA's
regulations and state mining regulations. JSF 98. In order to
conform to corporate policy, Berwind requested Kyber to assure
itself that AA&W was capable of operating the Elmo mine in a safe
manner. JSF 99. Accordingly, Berwind had indirect substantial
involvement in the safety of the Elmo No. 5 Mine.
Berwind performed substantial oversight of Kyber, Jesse
Branch, Kentucky Berwind, and the workings of the Elmo mine.
The judge found that Berwind is involved in decisions that
affect the general direction of business of its subsidiaries.
17 FMSHRC at 688. Berwind reviews financial statements and
coal production reports of Kentucky Berwind, Kyber, and Jesse
Branch. Id. at 688-689. In particular, Falkie and Rivers,
Berwind's vice president, who is also vice president of Kyber,
Jesse Branch, and Kentucky Berwind, monitor Kentucky Berwind's
lease-holding activities and are aware of the economic
performance, personnel, coal sales, and coal quality of Kyber
and Jesse Branch. Id. at 689. Falkie receives monthly
reports from Kyber and Jesse Branch regarding coal production
at each mine in which contract mining is conducted. Id.
Kyber submits reports to Berwind listing the projected
tonnage for the Elmo No. 5 Mine, and the amount of coal
actually mined, along with small mine maps of areas that have
been mined. JSF 281. Kyber also submits financial reports
documenting monies generated in mining operations. JSF 282.
After the explosion, from which these citations stem, Falkie
began receiving internal daily reports on the amount of coal
processed at Kyber and Jesse Branch preparation plants.
JSF 77.
Berwind had the ultimate responsibility to resolve
disputes between its subsidiaries, including disputes over
the feasibility of mining certain resources owned by Kentucky
Berwind. JSF 68. This power of final resolution is very
significant in that, if Kyber and Kentucky Berwind were to
disagree over the mining projections at Elmo No. 5, whether
or not they ever did so, it was up to Berwind to make the
final binding determination. Id. As set forth above, the
authority to control is a relevant consideration in the
operator inquiry.
Berwind's control is best illustrated in its economic
dealings with Kyber and Jesse Branch. The parties stipulated
that neither Jesse Branch nor Kyber are profitable companies.
JSF 284. Berwind as the shareholder of those companies provides
some funds to them for their operating expenses and capital
expenditures. Id. All significant expenditures are approved by
Berwind. Id. Berwind provided the capital expenditure required
to conduct the preparatory and face-up work necessary to begin
mining at the Elmo mine. 18 FMSHRC at 234; JSF 286. In its
economic dealings, Berwind had direct substantial involvement
with the mine.
Berwind's direct and indirect participation in the
workings of Elmo No. 5 Mine more than qualifies as substantial
involvement. For this reason, I would reverse the judge's
finding that Berwind is not an operator.
E. Unitary Operator
Although I join in the majority's adoption of the unitary
operator test, I conclude that all four Berwind entities in
question satisfy the Commission's test. Therefore I dissent on
that ground.
Under the Commission's test, four general factors are
considered, but not every factor need be present and no
particular factor is controlling. Slip op. at 33. Those
factors are (1) interrelation of operations, (2) common
management, (3) centralized control of labor relations, and
(4) common ownership. Id. Without question, the record
conclusively establishes the two factors of "common ownership"
and "common management." Id. at 2, 56. As to the factor of
"interrelation of operations," the high level of common
management causes a substantial degree of interrelation in
this case. I agree with the Secretary that there is no way
to separate the actions Falkie, Rivers, and Ronck took as
members of the boards of Berwind's subsidiaries from their
actions as members of the board for Berwind. S. Br. at 46
n.17. Indeed, both Rivers, General Counsel of Berwind (as
well as vice president of Kentucky Berwind, Kyber, and Jesse
Branch) and Ronck, Chief Financial Officer of Berwind (as
well as treasurer of Kentucky Berwind, Kyber, and Jesse
Branch) provided legal and financial oversight to the
subsidiaries. JSF 73-74, 102-103.
Interrelation of operations is also illustrated in the
financial arrangements among the companies. Berwind provided
Kyber and Jesse Branch with necessary capital for expenses
and capital expenditures and never received a dividend as a
shareholder of Kyber. 18 FMSHRC at 212; JSF 284. Berwind was
involved in the financial analysis aspects of some equipment
purchases made by Jesse Branch and Kyber. JSF 285. A high
degree of interrelation is further shown in the arrangement
between Berwind, Kyber/Jesse Branch, and Kentucky Berwind as
to the power to approve or disapprove mining changes at the
Elmo No. 5 Mine. JSF 188-193. Kyber had the bottom-line
authority to approve mining projections in its relationship
with AA&W; Kentucky Berwind in turn had the authority to
approve or disapprove any changes in mining projections in its
relationship with Kyber; and in case of any disputes between
them, Berwind had the ultimate responsibility to resolve
disputes among its subsidiaries. 18 FMSHRC at 237-39; JSF 68,
188-93. These arrangements show a high degree of interrelation
between the entities with Berwind having the final and
dispositive authority in disputed matters among the entities.
The Berwind entities also had a high degree of
interrelation with respect to health and safety matters. This
interrelation of operations is particularly illustrated by
the April 1993 roof fall at the Elmo Mine. The memo of
Kentucky Berwind head inspector Steve Dale, dated April 20,
1993, that the parties stipulated was an accurate account of
the activities of personnel of Berwind and its subsidiaries,
is on the parent company Berwind's stationery. JSF 302, Ex. E.
According to the memo, Randy Scott, the vice president of
engineering for both Jesse Branch and Kyber contacted Dale
about the roof fall. JSF 302 Ex. E. Dale contacted the
president of Kentucky Berwind, Ray Brainard. Id. Brainard
reports to Falkie, president of Berwind and Chairman of the
Board for Kentucky Berwind, Kyber, and Jesse Branch. JSF 34,
55, 60, 69. Dale was sent to investigate. JSF Ex. E. He met
with Randy Scott and Jim Akers of AA&W and discussed the effect
the blasting had on the Elmo No. 5 Mine. Id. He reported his
findings to the president of Kentucky Berwind. Id. Dale and
other Kentucky Berwind inspectors investigated the roof fall.
Id. As part of his investigation, Dale went to Jesse Branch
to pick up maps of the Elmo No. 5 Mine. Id. Dale then
accompanied MSHA in its inspection of the Elmo mine, and
ensured that all citations were properly abated. Id. Dale
was involved in working out a plan between Walker, president
of Kyber and Jesse Branch, and the neighboring Corvette mine.
Id.
As to the fourth factor, centralized control over health
and safety matters, it may be true that AA&W handled the
day-to-day health and safety matters. But this is not
dispositive. As the court stated in Penntech Papers, Inc.
v. NLRB, 706 F.2d 18 (1st Cir. 1983), with respect to
centralized labor relations, upon which the majority draws
for its test: "Although [the company's] day-to-day labor
matters were apparently handled at the local level, this fact
is not dispositive. `A more critical test is whether the
controlling company possessed the present and apparent means
to exercise its clout in matters. . . by its divisions or
subsidiaries.'" Id. at 26 (quoting Soule Glass & Glazing Co.
v. NLRB, 652 F.2d 1055, 1075 (1st Cir. 1981). As set forth
previously in my opinion, both Kentucky Berwind and Berwind
required compliance with health and safety regulations at the
Elmo No. 5 Mine. Berwind had the authority to replace any of
its subsidiaries' officers and to resolve disputes among
subsidiaries. Berwind also had significant funding control
over Kyber/Jesse Branch who, in turn, held the bottom line
authority for determining mining projections at Elmo No. 5
Mine as well as approving the mine plan, which governed many
health and safety matters at the mine. See slip op. at 11-12.
Berwind may not have had local control of the safety of the
mine, but the record compels the conclusion that Berwind
possessed the clout in any matters of dispute between its
subsidiaries and had the authority, by its control of
management and funding, to direct and oversee the four
entities at issue.
The evidence in this case reveals that, although
ostensibly separate corporations, the Berwind respondents
acted as an integrated mining operation[7] together with the
contract operator AA&W to perform the functions that were
necessary to the mining operation at the Elmo No. 5 Mine.
Each of the respondents had a specialized function in which
they engaged for the benefit of the overall mining operation.
Berwind was established to oversee the subsidiaries and, as
such, it provided its subsidiaries with the capital necessary
for their operations. JSF 283, 285, 286. Berwind specifically
provided the capital for the face-up work necessary to begin
operation of the Elmo No. 5 Mine. JSF 286. The officers of
the subsidiaries reported to Falkie, who was the president of
Berwind, as well as the Chairman of the Board for Kyber,
Kentucky Berwind, and Jesse Branch. JSF 23, 34, 55, 60, 69.
Members of Berwind's Board of Directors sat on the boards of
directors for each of its subsidiaries. JSF 23, 34, 55, 60.
Kyber and Jesse Branch contracted out the actual extraction
of coal, supervised the extraction, and provided engineering
support necessary to run the mine. 18 FMSHRC at 207; JSF 22,
33, 149. Coal consumers paid Kyber for coal extracted. JSF
236. Kyber paid royalties to the Berwind subsidiary, Kentucky
Berwind, who was the owner of the premises, and who also
performed a supervisory role over the mining. JSF 52, 188-89,
191-93. In turn, Kentucky Berwind paid dividends to Berwind.
JSF 287.
The four entities acted in concert to start up the mine,
to finance its operation, and to keep the mine running. The
fact that these four entities have been separately incorporated
should not bar their treatment as an operator, when if one
entity was performing all these functions that entity would
clearly be held to be an operator. In determining that
Berwind exercised "such pervasive control" over the entities
that the entities should be treated as one (slip op. at 33),
I find relevant that Kyber and Jesse Branch were not
profitable, self-supporting companies. JSF 284. Berwind
provided them with funds for operating expenses and capital
expenditures. Id. Effectuation of the Mine Act's purpose
is clearly enhanced by requiring large and well-funded
entities that oversee subsidiary coal production companies,
which are not so well funded, to be involved in safety aspects
of the mine. Cf. Cyprus Indus. Minerals Co. v. FMSHRC, 664
F.2d 1116, 1120 (9th Cir. 1981) ("A mine owner cannot be
allowed to exonerate itself from its statutory responsibility
for the safety and health of miners merely by establishing
a private contractual relationship in which miners are not
its employees and the ability to control the safety of its
workplace is restricted") (citing Republic Steel Corp.,
1 FMSHRC 5, 11 (April 1979)).
Under the test announced by the majority, I conclude
that Berwind, Kentucky Berwind, Kyber, and Jesse Branch
constitute a unitary operator.
F. Notice
I join with Chairman Jordan in concluding that, because
we adopt the unitary operator theory as part of an
adjudicative proceeding, it is appropriate to apply the
theory to the relevant parties in the proceeding. Because
I conclude that all four entities constitute a unitary
operator, neither Kyber nor Jesse Branch nor Kentucky Berwind
nor Berwind may claim lack of notice of the Secretary's
theory as a bar to their potential liability as operators.
Moreover, there was sufficient court and Commission
precedent to put Kyber, the lessee of the mine, on notice
that it was subject to potential liability as an operator
as a result of the D.C. Circuit's interpretation of section
3(d) of the Mine Act in Andrus, 581 F.2d at 861-62. There
the court opined that the clause, "who operates, controls,
or supervises a coal or other mine" in section 3(d) only
modified the preceding noun "other person," thereby rendering
any "owner" or "lessee" liable as an operator regardless of
its level of involvement in or control over the mine's
activities. Id. (emphasis added). This interpretation of
the language of section 3(d) was approved by the D.C. Circuit
in Chaney Creek, 866 F.2d at 1432 n.9 and International Union,
UMWA v. FMSHRC, 840 F.2d at 82 n.8. See also Bituminous
Coal Operators Ass'n, Inc. v. Secretary of Interior, 547
F.2d 240, 246 (4th Cir. 1977) ("But the [1969 Coal] Act
does not limit the term operator to owners and lessees. It
expressly mentions any `other person who . . . controls or
supervises a coal mine.'") In addition, the Commission case
of W-P Coal Co., 16 FMSHRC 1407 (July 1994), held that a
lessee was properly subject to suit as an operator of the
subject mine.
Likewise, Jesse Branch should have been on notice that
it was potentially liable as an operator because the record
compels the conclusion that it was an independent contractor
performing services at the mine. So too, Kentucky Berwind,
as the owner of the mine, should have been on notice that it
was potentially liable as an operator. Andrus, 581 F.2d at
861-62. Similarly, Berwind, by virtue of its involvement
with the Elmo mine, as well as because it provided
supervision and control over the owner and lessee of the
mine, should have been on notice that it potentially could
be held liable as an entity "who operates, controls, or
supervises a coal or other mine." 30 U.S.C. � 802(d).
Accordingly, I conclude that all four Berwind entities
had sufficient notice that they were potentially subject
to liability as operators under the Mine Act.
G. Conclusion
When introducing the term "operator" in the Coal Act,
Congress intended that the term "be as broad as possible."
S. Rep. No. 91-411 at 44; Coal Act Legis. Hist. at 170. In
keeping with that Congressional mandate, I conclude that
all four entities at issue - Berwind, Kentucky Berwind,
Kyber, and Jesse Branch - qualify as operators. I also
conclude that they constitute a unitary operator.
Accordingly, I would reverse the judge's incorrect
determinations that Berwind, Kentucky Berwind, and Jesse
Branch were not operators under the Mine Act.
Marc Lincoln Marks, Commissioner
Commissioner Riley, concurring in part and dissenting in part:
I concur in the majority opinion with respect to Parts
II.A and II.B, regarding the revised "operator test." However,
I respectfully dissent with respect to Part II.C, regarding
the "unitary operator" theory.
I do not believe it is necessary to reach the Secretary's
alternative theory that Berwind and its three subsidiaries
constitute a "unitary operator" in order to resolve this case.
Indeed, nothing is gained by application of the new
interpretation offered by the Secretary.[1] Even the majority
declines to apply it, either as originally briefed or as
argued before the Commission. Instead, the majority applies
the legal equivalent of CPR and attempts to resuscitate the
unitary operator concept with a reworked theory of their own.
The majority then argues collectively, and in individual
separate opinions, that the Commission is bound to defer to
what each of them presumes the Secretary meant to say but did
not. For the following reasons, I decline to join my
colleagues in their novel approach to statutory interpretation.
As a specialized tribunal, created by Congress to
"develop a uniform interpretation of the [Mine Act] law"
(Hearing on the Nomination of Members of the Federal Mine
Safety and Health Review Commission Before the Senate Comm.
on Human Resources, 95th Cong. 1 (1978) ("Nomination
Hearing")), the Commission receives cases such as this in a
far different posture than courts of general jurisdiction.
Nonetheless, the Commission has frequently reviewed the
Secretary's interpretations of the Mine Act under the
two-step formulation in Chevron U.S.A. Inc. v. Natural
Resources Defense Council, Inc., 467 U.S. 837, 842-44
(1984). First, the Commission, must "try to determine
congressional intent, using `traditional tools of statutory
construction.'" NLRB v. United Food & Commercial Workers
Union Local 23, 484 U.S. 112, 123 (1987) (quoting INS v.
Cardoza-Fonseca, 480 U.S. 421, 446 (1987)). If the intent
of Congress is indeed clear, the Commission must give effect
to that intent. See Chevron, 467 U.S. at 842-43. The
Commission and the courts call this initial inquiry "Chevron
I" analysis. See, e.g., Coal Employment Project v. Dole,
889 F.2d 1127, 1131 (1989). If, however, legislation is
"silent or ambiguous with respect to the specific issue"
(Chevron, 467 U.S. at 843), the Commission or a court reviews
the agency's interpretation as "`entitled to respect if based
upon a reasonably defensible construction of the Act.'"
Kenrich Petrochemical, Inc. v. NLRB, 893 F.2d 1468, 1476
(3rd Cir. 1990), quoting NLRB v. Local 54, Hotel Employees &
Restaurant Employees Int'l Union, 887 F.2d 28,29 (3d Cir.
1989). See also United Food, 484 U.S. at 123 ("where `the
statute is silent or ambiguous,'" the Board's statutory
interpretation should be sustained if it is "rational and
consistent") (citations omitted). This same analysis, known
as Chevron II, is applied to Commission decisions by the court,
where they "generally need ask only whether the [Commission's]
interpretation is rational and consistent with the statute,
according deference to reasonably defensible constructions of
the Mine Act by the Commission." Simpson v. FMSHRC, 842 F.2d
453, 458 (1988) (internal quotations and citations omitted).
The majority asserts that the meaning of the terms
"association" and "organization" as used in the statutory
definitions of the terms "person" and "operator" is open to
alternative interpretations, as reflected in dictionary
definitions. Slip op. at 23. The statutory language is not
clear as to whether more than one entity may constitute a
single operator. It also appears that Congress has not
"directly spoken to the precise question at issue." Chevron,
467 U.S. at 842. Thus, in the instant case, the Secretary
has met her Chevron I burden, in raising questions about
who is ultimately responsible for safety violations at a
mine. Her complex unitary operator theory, however, only
complicates and protracts a case that can be more efficiently
resolved on much simpler grounds.
In any event, I must break from my colleagues in the
majority because I do not agree with their Chevron II analysis,
asserting that the Secretary's proffered interpretation must
be accorded deference by this Commission. It is my belief that,
notwithstanding voluminous pleadings and the unprecedented
amount of rehabilitation massaged into the Secretary's unitary
operator theory by the majority, it is neither a rational and
consistent nor a reasonably defensible construction meriting
deference under the Chevron model.
To support their Chevron II analysis, the Secretary and
the majority rely on cases holding multiple entities liable as
a "single employer" or "single enterprise" under at least three
other statutes, including the National Labor Relations Act
("NLRA"), 29 U.S.C. � 141 et seq.,[2] Title VII of the Civil
Rights Act of 1964 ("Title VII"), 42 U.S.C. � 2000e et seq.,[3]
and the Fair Labor Standards Act ("FLSA"), 29 U.S.C. � 201 et
seq.[4] S. Br. at 13-16; slip op. at 25-29, 32. Chevron
deference is warranted in this instance, the Secretary argues,
because she is doing exactly what Congress left her the
discretion to do under the Mine Act. S. Br. at 10-11.
Reviewing the Secretary's various submissions in support
of the unitary operator theory, one absolute goal obviously
drives her position - that the combination of Berwind and its
three subsidiaries, operating in concert, are a single entity,
a "unitary operator" under the Mine Act. She frequently and
unequivocally reiterates this objective which underlies her
statutory interpretation: "[T]hat Berwind operated the Elmo
Mine through Kentucky Berwind, Kyber, and Jesse Branch, i.e.,
that Berwind and its subsidiary corporations together
constituted one unitary operator under Section 3(d) of the
Act . . . ." S. PDR at 9. "The Secretary contends in this
case that Berwind and its three subsidiary corporations
constituted a unitary `operator' under the Mine Act . . . ."
S. Br. at 12. "[W]e would submit that all of them must
nonetheless be determined to be operators . . . under this
unitary operator theory which we derive from Section 3(f)
of the Act." Oral Arg. Tr. 55. After pouring through every
submission of the Secretary, I have been unable to find any
equivocation compromising her position that all four entities
must be held accountable as a single entity known as a unitary
operator. The majority concedes this point on page 36 of
their opinion.
The language of Chevron provides direction that is
helpful in deciding the case at hand. "[T]he meaning of a
word must be ascertained in the context of achieving
particular objectives." Chevron, 467 U.S. at 861. If, as the
majority asserts, the Commission is obligated to follow
Chevron here, and the Secretary's stated objective is to
find Berwind and its three subsidiary corporations to be a
unitary "operator," we must examine, under this Chevron
language, whether the Secretary's interpretation achieves
that goal.
The Commission must determine whether to defer to the
Secretary's interpretation in the factual context of this
case according to the Secretary's stated reasons for seeking
deference. In this regard, I believe that the majority's
declaration, "we consider the Secretary's unitary operator
theory to be a gap-filling measure designed to flesh out the
definition of an `operator' . . . entitled to deference
because it is consistent with the purposes and policies of
the [Mine] Act" (slip op. at 28) to be not only premature
but, in the final analysis - wrong.
As everyone involved with this proceeding is aware,
hundreds of pages of pleadings and evidentiary material from
the various parties have accumulated in the voluminous record
before us. The majority apparently believes that the
Secretary has satisfied the Chevron II threshold. The
Secretary's briefs, however, provide no comprehensive strategy
to apply the unitary operator approach under the Mine Act to
the legal and economic realities of the industry today.
Unfortunately, the sheer volume of the record, including the
Secretary's various arguments and many filings, taken as a
whole, have a tendency, not to clarify her position, but to
obscure it.
The majority wastes little time and even less space
trying to explain the Secretary's interpretation. They
apparently prefer the NLRA and Title VII models, and do not
like the FLSA blueprint. Slip op. at 25-29, 32. Particularly
troubling is the lack of analysis of language added from Lihli
Fashions Corp. v. NLRB, a case not mentioned in any submission
to the Commission. Later, we learn that Lihli's contribution
is to turn what is represented as a simple four-part test into
as little as a one-part test if expedience demands it because
the record comes up short on facts in a particular case:
"To demonstrate unitary operator status, not every factor need
be present, and no particular factor is controlling." Slip op.
at 33.
Clearly, if the majority had spent more time examining
and explaining its test for determining operator status (three
paragraphs and a footnote) (slip op. at 8-9 & n.4) as they did
defending the Secretary's deference arguments (more than seven
pages) (slip op. at 25-32), the additional scrutiny would have
forced the majority to come to grips with the dichotomy
presented by two sentences in consecutive paragraphs of their
opinion: "The Secretary argues that pursuant to her unitary
operator theory, the record evidence compels the conclusion
that Berwind and its wholly owned subsidiaries together
constituted a single business enterprise . . . and therefore
qualifies as a unitary operator under the Mine Act." Slip op.
at 35. Followed by: "A majority of the Commission concludes
that Berwind and its three subsidiaries do not qualify as a
unitary operator." Id. What is the import of these two
juxtaposed sentences? The Secretary asserts that something is
true and the majority responds that the Secretary is mistaken.
Unfortunately, the point upon which the majority says the
Secretary is in error happens to be the underpinning for the
Secretary's request for deference.
When the test was finally applied by the majority (slip
op. at 35-39), my colleagues should have recognized that
something was seriously amiss. The best they could accomplish
with their ad hoc theory was to find that only two of the four
entities cited by the Secretary qualify as a single unitary
operator, far short of the objective the Secretary argued
warranted such a determination.[5] The test, even in its most
charitable application to this case by the majority, fails to
achieve the Secretary's stated statutory purpose.
The majority seems to be trying to graft a new prong onto
the Chevron test. Their new prong, or Chevron III, should be
called "Deference to Expediency." It is apparently of no
consequence to them that the agency asserting expertise
entitling it to deference from the Commission and by the courts,
even with the majority's assistance, has not articulated an
interpretation that accomplishes the objectives the agency set
out as its rationale for seeking deference. They would defer
anyway, whether or not the Secretary has presented a reasonable
construction of the Mine Act.
Contrary to the majority's perspective, the purposes and
goals of the Mine Act are not furthered by sympathetically
deferring when the Secretary comes before this Commission.
The Secretary has a duty to deliver a workable theory. The
majority's inability to find Berwind and its three subsidiaries
to be an integrated unitary operator under the Mine Act as the
Secretary argues, does not advance the Secretary's statutory
goals in this case and therefore should doom her request for
deference. As it now stands, the majority decision depresses
the jurisprudential bar so far that 50% has become a passing
grade. This outcome represents neither a rational and
consistent, nor a reasonably defensible, construction worthy
of deference under the Chevron model.
C. Deficiencies in the Unitary Operator Test
The Secretary cites the standard basis for broad agency
authority: "In cases arising under the Mine Act, it is
important to remember that Congress intended the Mine Act to
be liberally interpreted. [As we are certainly aware,] the
primary purpose of the Mine Act [is] to protect mining's most
valuable resource - the miner, and [the Secretary reminds us
that] Congress intended that the Act be expansively
interpreted to achieve that purpose. It is also important[,
we are told,] to remember that Congress specifically designed
the definition of an operator . . . to be as broad as possible
. . . ." S. Br. at 11-12 (citations and internal quotations
omitted). The use of this boilerplate would become problematic
at the oral argument.
On October 29, 1996, the Secretary filed with the
Commission a statement opposing the motion of amici curiae
to participate in oral argument. So certain was the Secretary
that amici participation would serve no useful purpose that
she asserted, "[i]t should be noted that under Commission Rule
73, 29 C.F.R. � 2700.73, an entity seeking intervention must
demonstrate [t]he reasons why [its] interest is not adequately
represented by parties involved in the proceeding. The moving
amici curiae have failed to allege, much less demonstrate, why
the captioned respondents are unable fully and adequately to
represent their interests at oral argument. Indeed, as is
apparent from their brief, the moving amici curiae have not
even cast the arguments made to the Commission from a
perspective significantly different than that of the captioned
respondents. . . ." S. Statement in Opp'n to Mot. of Amici
Curiae to Participate in Oral Argument at 2 (internal
quotations omitted). While it is clear that the Secretary was
referring in this instance to amici for the Contestants, it
is apparent that something offered to this Commission by amici
regarding the unitary operator theory touched a raw nerve.
The comment that provoked that reaction pertained to the
judge's second rationale for rejecting the unitary operator
test, that it could "be used to extend jurisdiction without
a logical limit." 18 FMSHRC at 233. This was rather forcefully
rejected by the Secretary and glossed over by the majority, yet
at some point the Secretary began to search for some definable
limits for the application of her new theory.
In their brief, the United Mine Workers of America
("UMWA") attempted to "gap-fill" the Secretary's awkward
unitary operator test by adding the qualification of "economic
control." UMWA Br. at 5-9. Their approach would proscribe
limits on the test by requiring that something other than the
economic relationships of the parties be examined to address
"the practical realities of trying to further safety and health
in the mine industry." Id. at 5. Something in the Secretary's
approach apparently troubled the UMWA and this concern was
acknowledged by the Secretary when she too offered up her
variation on this theme of "economic control" at oral argument.
Oral Arg. Tr. 8, 10-15.
Although the Secretary conceded under questioning that
"economic involvement" was not directly mentioned in the
statute (Oral Arg. Tr. 10-11), her defense must be read as an
attempt to put some stricture into this fledgling theory. It
is interesting that while rejecting the judge's contention of
"jurisdiction without a logical limit" (18 FMSHRC at 233),
the Secretary nevertheless saw a need to more specifically
refine the test.
Since the majority only cryptically mentions either
"economic control" or "economic involvement" (slip op. at 34
n.34), it is difficult to fully appreciate their reasons for
rejecting this issue. What is apparent is that the majority
has created the most dangerous kind of test imaginable - a
test that is, simultaneously, too narrow to accomplish the
Secretary's stated goals and too broad, so as to cause concern
even to those who would, at first glance, be the most likely
beneficiaries of the test.
Before we can uphold the Secretary's interpretation of
the Act as permitting the designation of two or more related
entities as a "unitary operator," we must define precisely
the elements of an appropriate test to determine if related
entities constitute a single operator. According to the
Secretary's brief, her approach appears to be based upon the
single employer doctrine developed under the NLRA and Title
VII and the common enterprise standard developed under the
FLSA. See S. Br. at 12-16. The Secretary's position in
Berwind is that when an association or other organization
functions in an interrelated manner for the purpose of
extracting or processing coal or other mineral and controls
or supervises a mine through an entity, which is a component
part of such association or organization, the entire
association or organization and each participating part of
the association or organization is liable for safety and
health violations that occur at the mine. See id. at 9-10.
Why would that position alarm a labor union? What did
they perceive that the majority does not? Perhaps it is that
while the test fails to meet the Secretary's goals of finding
Berwind and her three subsidiaries to be a unitary operator,
it is so imprecisely drawn that they fear, not without some
basis, of being tagged as a unitary operator in a future
case. Nonsense? Not if one carefully reads the definitions
of "person" contained in the two statutes on which the
majority models its unitary operator test - the NLRA and Title
VII. Slip op. at 25 n.21. Both statutes include in their
definitions of person the terms labor organizations and labor
unions. What guarantee can the majority or the Secretary give
any labor organization that they too will not eventually be
swept up in a jurisdictional blanket and be cited as a
unitary operator? The answer is simple - none. Thus, the
unitary operator theory, articulated by the majority, is not
only ill-conceived, but it represents a step backward in
enforcing the Mine Act.
I regret that my colleagues have not rejected the current
request for us to rule on a theory that is still a work in
progress, opting instead to wait for a more appropriate
vehicle through which to reexamine the need for a unitary
operator theory. Building upon the preliminary steps taken
here, the Secretary could bring a revised and improved
theory before the Commission in another case. Someday the
Secretary may come before us with a case where all of the
cited entities actually fit her own construction of the
unitary operator theory. Such a development would bring
the Secretary's agency expertise (the linchpin of Chevron
deference) in alignment with her statutory authority.
This, however, is not that case.
Much more appropriate would be to consider such a
far reaching proposal through rulemaking under the
Administrative Procedure Act, 5 U.S.C. � 55 et. seq. The
advent of a unitary operator rule is a virtual sea change
in the Secretary's approach to enforcement of the Mine Act,
vastly expanding the circle of liability for violations.[6]
So expansive is the potential impact of this proposal that
it will likely engender widespread reorganization of
corporate relationships throughout the industry. Without
a more comprehensive regulatory review by the Secretary to
better delineate the length and breadth of her unitary
operator theory as well as give notice to landowners, holders
of mineral rights, operators, contract miners, labor unions,
and other organizations, or interested parties, it is
inappropriate and unwise for the Commission to cobble
together an imprecise substitute merely to save face for
the Secretary.[7]
**FOOTNOTES**
[1] The concept of substantial evidence has been
defined as "more than a mere scintilla." Richardson, 402 U.S.
at 401.
[2] According to Dale's April 20, 1993 memo, Dale
notified the president of Kentucky Berwind, Raymond Brainard,
about the roof fall, who, in turn, directed Dale to
investigate. JSF Ex. E.
[3] Although the majority today espouses an operator
test that focuses on substantial involvement rather than
the judge's day-to-day approach, my colleagues, in actuality,
seem to be applying a more stringent test calling for
day-to-day control. Certainly, the facts here indicate that
Kentucky Berwind's involvement with Elmo No. 5 was far
greater than a scintilla and should be considered substantial.
[4] The Secretary argued to the judge that Jesse Branch
was as an independent contractor performing services at the
mine and as such "[fell] squarely into the Mine Act's
definition of an `operator.'" S. Mot. Part. Sum. J. at 33
n.27. The judge failed to address the Secretary's independent
contractor argument. In her brief to the Commission, the
Secretary also asserted that Jesse Branch is an operator
under the Act because it was an independent contractor
performing services at the Elmo mine. S. Br. at 55 n.21.
While the majority does not entertain the Secretary's
independent contractor argument (slip op. at 16 n.16), I
believe the Secretary's petition for review, which generally
disputed the judge's holding that Jesse Branch was not an
operator under the Act (S. PDR at 1-2, 17), more than
adequately encompasses the Secretary's argument. This
Commission is generally willing to broadly construe the
petition for review to preserve parties' argument. See Fort
Scott Fertilizer-Cullor, Inc., 19 FMSHRC 1511, 1514 (Sept.
1997) (construing petition to implicitly request reversal
of udge's unwarrantable failure, negligence and section
110(c) conclusions when petition merely requested that
Commission "reverse the judge's decision"); Rock of Ages
Corp., 20 FMSHRC 106, 115 n.11 (Feb. 1998) (Commission
addressed unwarrantability determinations when petitioner
only generally raised negligence issue in PDR), aff'd in
relevant part, 170 F.3d 148 (2d Cir. 1999). Thus, I
believe the issue is properly before the Commission and
should be addressed.
[5] On at least two occasions, Thomas Falkie visited
the Elmo mine. JSF 229. Bryan Ronck visited AA&W's corporate
office. JSF 229.
[6] Bryan Ronck, Berwind's vice president and chief
financial officer, oversees the controller for Kyber and
Jesse Branch, Bob Bond. JSF 34, 60, 74.
[7] Senior MSHA fficial Jack Tisdale explained the
integrated mining operation ("IMO") as a mining operation in
which a business entity that owns the right to extract the
coal, markets the coal, and capitalizes the operations.
Tr. 330-33. The specialized functions of the IMO are
divided into departments including sales, operations,
operations support, finance, purchasing, legal, human
resources, and corporate development. Tr. 330.
[1] The two corporations found by the majority to
constitute a unitary operator, could more efficiently have
been cited under conventional notions of operator status.
With respect to Kyber, while we rejected both the
Secretary's proffered "overall control" standard as well
as the judge's "day-to-day-control" interpretation, a
substantial majority of the Commission nonetheless found
Kyber liable under our revised "operator test." Thus, we
agree with the Secretary that Kyber is already covered
under the Act's more traditional definition of operator.
Similarly, Jesse Branch could simply have been cited
as a contractor performing services at a mine, without having
to tie up the resources of the Commission and the courts
attempting to pioneer a new, complicated, and, in view of the
majority's modifications, apparently incomplete interpretation
of the Act.
[2] Section 2 of the NLRA contains the following
definitions:
(1) The term "person" includes one or
more individuals labor organizations,
partnerships, associations, [or]
corporations . . . .
(2) The term "employer" includes any person
acting as an agent of an employer, directly
or indirectly . . . .
29 U.S.C. � 152.
[3]: Section 701 of Title VII provides:
(a) The term "person" includes one or
more individuals, governments, . . .
labor unions, partnerships, associations,
corporations legal representatives, mutual
companies, joint-stock companies, trusts,
[or] unincorporated organizations . . . .
(b) The term "employer" means a person engaged
in an industry affecting commerce who has
fifteen or more employees . . ., and any
agent of such a person . . . .
42 U.S.C. � 2000e.
[4] The cases cited by the Secretary apply and interpret
section 3(r) of the FLSA which provides:
"Enterprise" means the related activities
performed (either through unified operation or
common control) by any person or persons for
a common business purpose, and includes all
such activities whether performed in one or more
establishments or by one or more corporate
or other organizational units . . . .
29 U.S.C. � 203(r).
[5] The Secretary never raised the issue before the judge
or argued to the Commission that the Kyber/Jesse Branch
relationship alone was a unitary operator, irrespective of
the status of the other cited parties.
[6] The majority summarily dismisses the judge's
observations that "`[p]arts of the industry have functioned
in this way for years and . . . the Secretary has never had a
policy of citing all corporate entities involved in the
operation of a mine for the production operator's violations.'"
Slip op. at 29 (quoting 18 FMSHRC at 233) (emphasis in
original). To support their derision of the judge's accurate
appraisal of the posture of this case, the majority cites Sunny
Ridge Mining Co., 19 FMSHRC 254, 267 (Feb.1997), for the
principle that the Secretary is always free to change her mind
without notice or warning. Slip op. at 29. Unlike Sunny
Ridge, however, this is not a fact-specific question about
whether an inspector's allowing mining to continue in an area
cited for a violation estopped the Secretary from later
characterizing the violation as significant and substantial
due to a likelihood of serious injury.
[7] The majority acknowledges "that this Commission has
the authority to interpret the Mine Act" (slip op. at 33),
citing examples of where that authority was exercised rather
than how it is that the Commission has authority to "develop
a uniform and comprehensive interpretation of the law. Such
actions will provide guidance to the Secretary in enforcing
the [A]ct and to the mining industry and miners in appreciating
their responsibilities under the law." Nomination Hearing at 1.
The Supreme Court reiterated this legislative history in
Thunder Basin Coal Co. v. Reich, 510 U.S. 200 (1994), observing
that the Commission "was established as in independent-review
body" for the purpose stated in the previous sentence. Id. at
214. The Court took note of the Commission's authority under
30 U.S.C. � 823(d)(2) to review "novel question[s] of policy,"
and "substantial question[s] of law, policy or discretion."
Id. at 208 n.9. Merely because the Commission has such
authority, however, does not require, or even make it
advisable, for the Commission to backstop the Secretary's
incomplete proposal with its own attempt to resolve such a
complicated issue. Especially where, as here, the majority
opinion is accompanied by five individual opinions, for a
total of six confusing and contradictory impressions as to
what a unitary operator is, might be, or isn't. In this
case, the Secretary is in the best position to consult with
miners, operators, state regulators and others through
rulemaking, for the purpose of developing a complete, fair
and workable theory that will survive judicial review.
D. Due Process
In addition, I also concur in Commissioner Beatty's
observations with respect to due process issues arising from
holding any party liable as a "unitary operator" without
Constitutionally-required notice. Slip op. at 44-47.
James C. Riley, Commissioner
Commissioner Verheggen, dissenting:
The sole issue in this case is whether the Contestants,
either individually or collectively, qualify as "operators" under
the Mine Act. I find that none of the Contestants in these cases
can be considered operators of the Elmo No. 5 Mine and,
therefore, I respectfully dissent.[1]
A. Operator Status
The term "operator" is defined under section 3(d) of the
Mine Act as "any owner, lessee, or other person who operates,
controls, or supervises a coal or other mine or any independent
contractor performing services or construction at such mine." 30
U.S.C. � 802(d). To be an operator, a given entity must exhibit
a substantial degree of involvement or participation in the
operation of the mine. National Indus. Sand Ass'n v. Marshall,
601 F.2d 689, 701 (3d Cir. 1979) ("NISA") (designation of persons
as operators "requires substantial participation in the running
of the mine"); Old Dominion Power Co. v. Donovan, 772 F.2d 92, 97
(4th Cir. 1985) (adopting "substantial participation" analysis of
NISA).[2] In accord with these cases, in W-P Coal Co., the
Commission found that a lessee who hired a contractor to mine
coal could be subject to liability under the Mine Act as an
operator because of its "substantial . . . involvement" in the
operation of the mine. 16 FMSHRC 1407, 1411 (July 1994).
In this case, the judge held that to establish that an
entity is an operator under the Mine Act, the Secretary must
prove that the entity, "either directly or indirectly,
substantially participated in the operation, control, or
supervision of the day-to-day operations of the mine, or had the
authority to do so." 18 FMSHRC at 231. Contestants, in essence,
agree with this approach. K. Br. at 12-16; B. Resp. Br. at 9-11.
The Secretary, on the other hand, argues that the judge's
requirement of "day-to-day" participation in the mine has no
basis in the Mine Act or its legislative history. Instead, the
Secretary claims that to qualify as an operator under section
3(d), "an entity must exercise or have the authority to exercise
substantial control over the overall operation of the mine." S.
Br. at 29-37 (emphasis in original).[3]
Both the judge's and the Secretary's tests fall wide of the
mark, as neither have any basis in the Mine Act.[4] The correct
approach, in my view, is not whether there is "overall" or "day-
to-day" control, but rather whether a given entity's
participation or involvement in the operation of the mine is
substantial enough to establish that entity as an operator. The
proper inquiry is whether the facts and circumstances of a
particular case indicate that an entity is engaged in the
supervision, control, and operation of a mine to a substantial
degree so as to render it an operator under the Mine Act. This
requires a fact-specific examination of the record for all
indicia of supervision, control, and operation exercised by a
given entity, followed by a careful weighing of the indicia to
determine whether they are sufficiently substantial to establish
operator status.
My colleagues adopt a similar approach in which they examine
the "totality of the circumstances," including an entity's
involvement in the mine's engineering, financial, production,
personnel, and safety matters. Slip op. at 9-10. I agree that
an evaluation of an entity's involvement in all of these areas is
important. Such an evaluation, however, cannot be conducted in a
vacuum - as my colleagues attempt to do - outside the context of
the Mine Act and without reference to the Act's purpose and
intent. Congress had a clear and specific reason for defining
"operator" in the Mine Act in terms of supervision and control.
It is only through supervision and control that an operator will
be able to create safe and healthful working conditions at a
mine, a responsibility the Mine Act places squarely on the
shoulders of the operator.
Section 2(e) of the Act states that operators "have the
primary responsibility to prevent the existence of [unsafe and
unhealthful] conditions and practices in [the Nation's] mines."
30 U.S.C. � 801(e). This responsibility is further described in
the Act's legislative history:
Operators have the final responsibilities for
affording safe and healthful workplaces for
miners, and therefore, have the
responsibility for developing and enforcing
through appropriate disciplinary measures,
effective safety programs that could prevent
employees from engaging in unsafe and
unhealthful activity.
S. Rep. No. 95-181, at 18 (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 ("Mine Act
Legis. Hist."), at 606 (1978). Congress intended that operators
bear the ultimate responsibility under the Mine Act, creating, in
essence, a duty on the part of operators to provide a safe and
healthful working environment in compliance with the Act. In
fact, so great is this duty that operators are held strictly
liable for violations of the Mine Act. As the Fifth Circuit
held:
[I]t is a common regulatory practice to
impose a kind of strict liability on the
employer as an incentive for him to take all
practicable measures to ensure the workers'
safety, the idea being that the employer is
in a better position to make specific rules
and to enforce them than the agency is.
Allied Prods. Co. v. FMSHRC, 666 F.2d 890, 893 (5th Cir. 1982).
This assumes, of course, that the employer is in a position to
take measures to ensure safety, and to ensure that those measures
are enforced.[5] It necessarily follows that designating an
entity as an operator, and hence subjecting that entity to strict
liability for violations under the Mine Act, presupposes that
such an entity is in a position to secure a safe and healthful
working environment within the mine and to prevent potential
violations from occurring.
Thus, in determining whether a given entity is an operator,
those facts in the record which serve as indications that the
entity is operating, controlling, or supervising the mine must be
evaluated in the context of the Mine Act's inextricable link
between operating a mine and the ability to affect health and
safety. There must be some nexus between indications of an
entity's control and supervision and that entity's ability to
affect health and safety.
Of course, countless entities and individuals can have some
effect on health and safety at a mine including, as Contestants
point out, "the miner's spouse who packs too large a lunch
causing the miner to doze off at the controls of his truck." B.
Resp. Br. at 28 n.26. However, simply because an individual or
entity may have an effect, however remote, on safety conditions
at a mine does not render it an operator. Rather, as the
Secretary acknowledges, "only entities that have the ability to
substantially affect safety and health at a mine" should be
considered operators, S. Reply Br. at 2 (emphasis added) - i.e.,
only those who exercise some control over health and safety.
This approach is consistent with the underlying purpose and
intent of the Mine Act. In sum, the appropriate inquiry as to
whether or not a given entity is an operator depends upon whether
that entity is substantially involved in the operation of the
mine, which is a question not only of the degree of involvement,
but also of the extent to which such involvement allows the
entity "to prevent the existence of [unsafe and unhealthful]
conditions and practices" at the mine. 30 U.S.C. � 801(e).
The Commission's decision in W-P Coal Co. is illustrative.
In that case, the lessee of the mineral rights, W-P Coal Company
("W-P"), contracted out the operation of the mine to Top Kat
Mining, Inc. ("Top Kat"). 16 FMSHRC at 1407-08. The Commission
found that W-P was substantially involved in the mine's
engineering, financial, production, personnel, and safety
affairs. Id. at 1411. As the financial condition of Top Kat, as
well as safety conditions at the mine, began to deteriorate, W-P,
which had previously operated the mine, became increasingly
involved in the mine's operations. See Top Kat Mining, Inc., 15
FMSHRC 682, 685-86 (Apr. 1993) (ALJ). The Commission found:
W-P prepared the mine plan, calculated mining
projections, prepared and updated mine maps,
contacted and visited the mine frequently to
discuss production and other matters, waived
certain fees owed by Top Kat, advanced funds
to Top Kat, met with MSHA personnel regarding
mine conditions and enforcement activity,
participated in an inspection of the mine,
and even arranged and attended a meeting of
MSHA and Top Kat to discuss the increasing
number of citations, inspections, and orders.
16 FMSHRC at 1411; see also id. at 1408. In addition, W-P leased
equipment to the contractor and involved itself in the
contractor's personnel matters. 15 FMSHRC at 685. W-P's
increasing and, ultimately, substantial involvement in the
operation of the mine - particularly substantial involvement in
the safety affairs of the mine, such as their direct dealings
with MSHA - provides a clear illustration of when an owner of
mineral rights crosses the line to become a full-fledged operator
under the Mine Act.
1. Kyber Coal Company
I agree with my colleagues that implicit in the judge's
finding that Kyber exercised day-to-day control at the mine is a
finding that Kyber was substantially involved in the mine's
operation. Slip op. at 11. I find, however, that this finding
is not supported by substantial evidence.[6] To the contrary,
Kyber's involvement in the operation of the mine can only be
described as minimal, beginning with the judge's finding that
"AA&W exercised most of the aspects of control and supervision at
the mine." Specifically, the judge found:
AA&W hired, fired, disciplined, trained,
supervised, directed and paid its employees.
AA&W developed and submitted all of the plans
required under the Act and instituted all of
the measures necessary to comply with dust
and noise sampling programs. For all
practical purposes, AA&W furnished and
maintained all of the equipment, machinery,
tools and materials used in the mine, as well
as all of the machinery, equipment and
structures for stockpiling coal on the
surface. AA&W participated in all MSHA
inspections and conferences. AA&W decided to
contest violations. AA&W decided how to
abate violations. AA&W paid the civil
penalties assessed for violations. Finally,
although Kyber could request that AA&W
increase production, AA&W ultimately
determined whether it would comply with such
a request. The debate . . . is whether the
Contestants' involvement in what was left was
sufficient to make them operators.
18 FMSHRC at 212-213 (citations omitted).
Thus, in stark contrast to the lessee in W-P Coal, Kyber
had no involvement in AA&W's personnel matters, leased no
equipment to AA&W, provided no financing to AA&W, and played no
role in health and safety affairs at the mine. With respect to
three of the five areas the majority claims to be relevant in
determining operator status - personnel, financial, and health
and safety matters - Kyber had no involvement whatsoever.
Moreover, the judge found that AA&W retained sufficient autonomy
over production such that Kyber's involvement did not amount to
an indication that Kyber was an operator. Id. at 240. Finally,
engineering services, map drafting, spad setting, and surveying
were all provided by Jesse Branch. Id. at 241. The judge's
remaining and sole basis for finding that Kyber was an operator,
a basis affirmed by the majority, was the fact that Kyber
retained "bottom line" authority for determining the direction of
mining. Id. at 238.
Control over the direction of mining may be one indication
of an entity's involvement in the operation of a mine. However,
Kyber's control of the direction of mining, by means of
exercising its contractual right to reject AA&W's request to
deviate from the mining projections, was in fact limited. The
judge found that:
The Kyber-AA&W relationship was such that
AA&W had considerable discretion to deviate
from the projections for reasons of safety.
Stump testified that he could depart from the
projections if he encountered "an emergency."
Akers essentially agreed that although AA&W
had an obligation to consult with Kyber,
Kyber never challenged AA&W's opinion that
mining should be discontinued because of
safety concerns such as poor roof. Akers'
testimony in this regard was supported by
Looney.
18 FMSHRC at 238 (citations omitted). Kyber could not reject
AA&W's request to mine less than the full extent of the mine
projections if "it [was] unsafe to mine those areas." JSF 187
(emphasis added).[7] While there is ample evidence in the record
on this limitation to Kyber's control, both the judge and my
colleagues fail to consider its relevance in the context of
determining the degree of Kyber's involvement in the health and
safety affairs of the mine, and whether any such involvement
could have enabled Kyber "to prevent the existence of [unsafe and
unhealthful] conditions and practices" at the mine. 30 U.S.C.
� 801(e).
The majority asserts that "Kyber's ultimate control over the
direction of mining[8] . . . had a direct and significant bearing
on the conditions encountered by miners," and that, consequently,
the company's actions "had a direct effect on the health and
safety of those miners." Slip op. at 14. Any number of factors,
however, can have an effect on the health and safety of miners,
such as barometric pressure or whether the seam being mined is
gassy. The quality of parts used in mine machinery can have an
enormous effect on mine safety. Even "the miner's spouse who
packs too large a lunch causing the miner to doze off at the
controls of his truck" (B. Resp. Br. at 28 n.26) has an effect on
safety. But an entity's effect on safety is not necessarily
relevant to determining whether the entity is an operator under
the Mine Act. The manufacturer of parts for a mine's machinery
certainly would not be considered an operator, despite the
potentially enormous effect of the quality of its work on mine
safety. Instead, as W-P Coal clearly demonstrates, what is
relevant is an entity's involvement in health and safety affairs
of a mine. Here, it is undisputed that Kyber played no role in
such matters as pre-shift examinations, MSHA inspections,
decisions to contest Mine Act violations, health and safety
training, and Mine Act record keeping. Cf. W-P Coal, 16 FMSHRC
at 1411 (meeting with MSHA personnel and participation in an
inspection considered involvement in the mine's safety affairs).
The majority fails to grasp the significance of this important
distinction between effect on health and safety and substantial
involvement in the management of health and safety affairs.
Because Kyber could not overrule AA&W's deviations from the
mine plan when they involved matters of safety and health,
Kyber's control over the direction of mining can not rise to the
level of substantial involvement for the purpose of determining
whether Kyber is an operator under the Mine Act. The nexus
between Kyber's control in this regard and the company's ability
to affect health and safety conditions at the mine through its
control is too remote to support the judge's finding of
liability. 18 FMSHRC at 238. In the absence of additional
indications of Kyber's involvement in the operation of the mine,
I find that the judge's determination that Kyber was an operator
on this basis alone (see id. at 238-40) is not supported by
substantial evidence. Accordingly, I would reverse his
finding.[9]
In an effort to salvage the judge's finding of Kyber's
substantial involvement in the operation of the mine, my
colleagues rely on additional evidence rejected by the judge in
his decision.[10] First, they adopt the Secretary's argument,
rejected by the judge, that Kyber's contract with AA&W gave Kyber
at least the authority to approve and enforce the mine plan for
the Elmo No. 5 mine, which included, among other things, the
ventilation and roof control plans which affect the safety and
health of miners. Slip op. at 12; S. Resp. Br. 22-23, 33. Even
though Kyber never exercised its authority with respect to any
mine plan, the majority appears to believe that it is the mere
authority to control operations, and not the actual exercise of
the authority, that is dispositive.
The Commission, however, looks to the actual relationship
between entities, rather than a contract between them, in order
to determine operator status. Bulk Transp. Servs., Inc., 13
FMSHRC 1354, 1358 n.2 (Sept. 1991) ("Our focus is on the actual
relationships between the parties, and is not confined by the
terms of their contracts. . . . Moreover, the determination of
whether a party is properly designated to be within the scope of
section 3(d) of the Act is not based upon the existence of a
contract, nor the terms of such a contract," emphasis added).[11]
The Secretary's assertion that Kyber's contract with AA&W gave
Kyber, through its never-exercised authority over mine plans, the
authority to select and approve the ventilation and roof control
plans (S. Resp. Br. at 22-23) seems disingenuous in light of the
fact that the Secretary specifically stipulated that AA&W was
responsible for developing, implementing, and submitting both the
ventilation and roof control plans. JSF 168, 175. Indeed, AA&W
developed, implemented, and submitted all plans that are required
under the Mine Act. JSF 115. Because "[t]here is no basis for
finding Kyber . . . had anything to do with mining plans at the
Elmo No. 5 Mine" (18 FMSHRC at 237 n.5), my colleagues err in
finding Kyber's contract with AA&W to be an indication of Kyber's
operator status.
My colleagues also assert that Kyber's status as an operator
"is further supported by other evidence of Kyber's substantial
involvement in decisions concerning the ways in which mining was
conducted and the quality and quantity of coal produced at the
mine." Slip op. at 12. Yet, the judge rejected any claim that
Kyber was substantially involved in production at the Elmo No. 5
Mine. 18 FMSHRC at 240. Among other things, the judge rejected
the argument that AA&W's responses to Kyber's requests for
additional hours of operation were an indication of Kyber's
operator status, crediting the testimony of AA&W employees that
AA&W did not always comply with those requests. Id. According
to the judge, "[c]omplying with Kyber's requests was clearly in
AA&W's self interest (Tr. 291-292), and AA&W retained its
autonomy to decide whether or not to accede." Id. In addition,
it is undisputed that if Kyber requested additional coal
production to meet demand, "AA&W ultimately determined whether it
would comply with [Kyber's] request." JSF 105. Although the
contract did contain a minimum production requirement, it had no
effect on daily production because AA&W produced coal far in
excess of the required amount. 18 FMSHRC at 240. Thus, to the
extent Kyber had any influence over production at the mine, it
never rose to the level of control, since AA&W ultimately decided
when and how much coal to produce.[12]
Oddly, the only evidence cited by the majority of Kyber's
actual involvement in production is an incident involving
blasting at the neighboring Corvette mine. Slip op. at 12-13 &
n.11. When blasting at the nearby Corvette mine apparently caused
a roof fall at the Elmo No. 5 Mine, Kentucky Berwind intervened
to resolve the problem.[13] I find it peculiar that the majority
would cite this incident as an example of Kyber's involvement in
production since it was Kentucky Berwind, not Kyber, that
intervened between AA&W and the operator of the Corvette mine.
17 FMSHRC at 700. The extent of Kyber's involvement was
notifying Kentucky Berwind of the problem and suggesting the
solution that Corvette should move its blasting operations. Id.
In fact, not even the Secretary has argued in this case that this
incident is evidence of Kyber's control of the mine. Rather, the
Secretary only argued this incident demonstrated Kentucky
Berwind's involvement, an argument rejected by the judge.[14]
The majority's reliance on this incident as evidence of
operator status is even more peculiar given the fact that my
colleagues, elsewhere in their opinion, find that Kentucky
Berwind's involvement in the incident - which was far more
significant than Kyber's - was insufficient to establish operator
status. Slip op. at 20. Indeed, it defies my comprehension how
this incident suggests Kyber was "substantial[ly] involv[ed] in
decisions concerning the ways in which mining was conducted and
the quality and quantity of coal produced at the mine." Id. at
12.
My colleagues also rely on Kyber's payment of the initial
mine development costs as evidence of Kyber's substantial
involvement in the mine. Id. at 15. Again, the judge properly
rejected Kyber's involvement in the development of the mine as a
basis for finding the company an operator, citing it as
"irrelevant" to the question of Kyber's operator status since
development of the mine occurred before the mine opened and AA&W
became the on-site operator. 17 FMSHRC at 708. As the judge
correctly stated, "[t]he question is whether the Contestants
actually were operators of the mine on November 30, 1993," the
date the citations were issued. Id. My colleagues also cite as
evidence of Kyber's involvement in the mine the fact that Kyber
paid Jesse Branch for map drafting and surveying services. Slip
op. at 15. What they neglect to mention, however, is that AA&W
first paid Kyber ten cents for each ton of coal mined for those
very services. JSF 151.[15]
In short, the evidence of Kyber's involvement in the mine
amounts to, at most, limited control over the direction of
mining, consistent with Kyber's status as lessee, and its never-
used authority to approve the mine plan. This hardly makes Kyber
an operator. Taken as a whole, Kyber's control or supervision of
the Elmo No. 5 mine, limited as it was, certainly did not rise to
the level of involvement of the lessee in W-P Coal, which had
extensive involvement in financial, production, personnel, and
safety and health matters at the mine. With virtually no
involvement in any of these areas, it can hardly be said that
Kyber's involvement in the mine was substantial, let alone that
it was substantially involved in safety and health affairs at the
mine. Kyber's involvement in the mine, which did not include any
involvement in the mine's safety and health affairs, is simply
too remote to support a finding that would impose strict
liability upon the company under the Mine Act. Accordingly, I
would reverse the judge's finding that Kyber was an operator of
the Elmo No. 5 Mine.
2. Jesse Branch
I find that substantial evidence supports the judge's
conclusion that Jesse Branch was not an operator. 18 FMSHRC at
242-43. The company's involvement in the operation of the mine
was limited to engineering services, which consisted primarily of
drafting maps, surveying, setting spads, and inspecting surface
drainage ponds. 17 FMSHRC at 711-712. Unlike the lessee in W-P
Coal, Jesse Branch had no additional involvement whatsoever in
the mine's financial, production, personnel, or safety matters.
Cf. W-P Coal, 16 FMSHRC at 1407.
Simply because Jesse Branch's role may have been "critical"
(S. Br. at 53) or "important" (slip op. at 17) to the operation
of the mine does not mean its role was substantial for purposes
of determining whether the company was an operator in these
proceedings. As the judge correctly noted, most on-site
operators like AA&W lack the capacity to perform such engineering
functions as surveying and spad setting, and frequently contract
for such services. 17 FMSHRC at 710-12. By agreeing to provide
these services, Jesse Branch did not thereby assume any control
over the operation of the mine. Indeed, the judge found that
while Jesse Branch participated in drafting and mapping the mine
projections, there was no indication that Jesse Branch "denied
AA&W autonomy of decision-making within the confines of the
projections or reserved for itself the authority for such
decision-making." 18 FMSHRC at 242.[16] As such, I would affirm
the judge's conclusion that Jesse Branch was not an operator of
the mine.[17]
3. Kentucky Berwind
I find that the judge's conclusion that Kentucky Berwind was
not an operator because its level of involvement in the mine did
not rise to the level of statutory control is supported by
substantial evidence. 17 FMSHRC at 715. Kentucky Berwind had no
involvement in the mine's engineering, personnel, or safety
matters, nor did it have any financial dealings with AA&W. 18
FMSHRC at 236. To the extent Kentucky Berwind retained the
authority to control production at the mine through its lease
agreement, either by means of imposing lost coal penalties,
participating in decisions concerning mining direction, or
otherwise, there is little or no evidence such authority was ever
exercised. Again, the proper focus is upon the actual
relationship between Kentucky Berwind and AA&W, rather than the
terms of the contract between Kentucky Berwind and Kyber, in
determining operator status. See Bulk Transp., 13 FMSHRC at 1358
n.2. In that regard, the judge found that Kentucky Berwind's
actions with respect to the mine were consistent with, and
nothing more than, the conduct one would expect of an owner of
the mineral rights protecting its interests. 18 FMSHRC at 235-
36.
I agree with my colleagues' assessment that "[t]he
Secretary's argument that Kentucky Berwind is an operator appears
to be based primarily on the authority it possessed as an owner
of mineral rights at the Elmo No. 5 Mine." Slip. op at 18. Yet
during oral argument, the Secretary asserted that mere ownership
of a mineral right was not sufficient to establish operator
status. Oral Arg. Tr. 11. Unless the Secretary is prepared to
declare all owners or lessors of mineral rights as operators -
which she apparently is not - Kentucky Berwind cannot be
considered an operator of the mine. Accordingly, I would affirm
the judge's decision.
4. Berwind
The judge held that Berwind was not an operator, based on
his finding that Berwind had "virtually nothing" to do with the
operation of the mine. 18 FMSHRC at 234. I find this conclusion
amply supported by substantial evidence. There is no evidence
that Berwind was involved in the mine's engineering, financial,
production, personnel, or health and safety affairs. Cf. W-P
Coal, 16 FMSHRC at 1407. While Berwind provided the capital
necessary for its subsidiaries to operate (18 FMSHRC at 234),
there is no evidence that this financing extended to the operator
of the mine, AA&W. Moreover, the judge found that contacts
between Berwind and AA&W, such as they were, were "a long way"
from substantial participation in the operation of the mine.
17 FMSHRC at 715-16. Indeed, the Secretary concedes that Berwind
did not have any direct control of the mine, but that its control
was derived from its relationship with its subsidiaries, which in
turn controlled the operation of the mine. S. Br. at 6. Because
I find that none of those subsidiaries were substantially
involved in the operation of the mine, it necessarily follows
that neither was Berwind. I would therefore affirm the judge's
finding that Berwind was not an operator of the Elmo No. 5 Mine.
B. Unitary Operator Theory
In W-P Coal, the Secretary attempted to hold the
operator
liable under a "co-operator" theory of liability. 16 FMSHRC at
1409. After finding that "W-P was sufficiently involved with the
mine to support the Secretary's decision to proceed against [the
company]," the Commission wisely rejected the Secretary's
alternative theory. Id. at 1411. First, the Commission noted
that the term "co-operator" "does not appear in the statute."
Id. The Commission also stated: "existing case law adequately
addresses liability issues where owner-operators and independent
contractors are involved." Id.
I find both of these statements still true today with
respect to the majority's effort to use this case to create a new
form of liability under the Mine Act, unitary operator liability.
I begin my analysis of this question by noting the Supreme
Court's recent reaffirmation of the "general principle of
corporate law deeply `ingrained in our economic and legal
systems' that a parent corporation (so-called because of control
through ownership of another corporation's stock) is not liable
for the acts of its subsidiaries." United States v. Bestfoods,
524 U.S. 51, 61 (1998) (citations omitted).[18] The Court stated
that "it is hornbook law that `the exercise of the "control"
which stock ownership gives to the stockholders . . . will not
create liability beyond the assets of the subsidiary.'" Id. at
61-62 (citations omitted). The "hornbook law" to which the Court
was referring is, of course, state law: "corporations being
creatures of state law, that law generally governs their
affairs." 18 Am. Jur. 2d Corporations � 17, at 812 (1985).
The majority's new unitary theory is an exception to the
general rule of the separate existence of corporate entities, and
is thus an attempt to modify the general principles of state
corporate law so forcefully reiterated in Bestfoods. In their
rush to rewrite corporate law, however, the majority has lost
sight of the fundamental principle that "in deciding if federal
law pre-empts state law," federal courts "`start with the
assumption that the historic police powers of the States [are]
not to be superseded by the Federal Act unless that was the clear
and manifest purpose of Congress.'" Milwaukee v. Illinois, 451
U.S. 304, 316 (1981). Similarly, in Bestfoods, the Court stated
that "nothing in CERCLA purports to reject this bedrock principle
[of the separate existence of corporate entities], and against
this venerable common-law backdrop, the congressional silence is
audible." 524 U.S. at 62. The Court went on to observe:
CERCLA is thus like many another
congressional enactment in giving no
indication "that the entire corpus of state
corporation law is to be replaced simply
because a plaintiff's cause of action is
based upon a federal statute," and the
failure of the statute to speak to a matter
as fundamental as the liability implications
of corporate ownership demands application of
the rule that "[i]n order to abrogate a
common-law principle, the statute must speak
directly to the question addressed by the
common law."
Id. at 63 (citations omitted, emphasis added).[19] Similarly, in
United States v. Texas, the Court noted the "longstanding . . .
principle that `[s]tatutes which invade the common law . . . are
to be read with a presumption favoring the retention of
long-established and familiar principles, except when a statutory
purpose to the contrary is evident.'" 507 U.S. 529, 534 (1993)
(citations omitted).
The majority asserts that its new unitary operator theory is
"consistent with well established" and "settled" "principles of
corporation law." Slip op. at 30 and n.29. Yet I find that in
their opinion, all they do is mention a few principles - piercing
the corporate veil (id. at 30-31 & n.29), the "identity rule"
(id. at 31), and alter ego theory (id. at 31-32) - without any
explanation of why these principles apply to or support their
theory. In fact, I am unable to divine what, if any, basis their
theory has in traditional corporate law. The cryptic nature of
the majority's opinion on this point may be due to the fact that
the principles they mention simply do not apply to this case in
which the meaning of a federal statute is at issue.
For example, the majority mentions piercing the corporate
veil. In fact, they appear to embrace this particular principle
when they state that their theory is "consistent with well
established principles of corporate law," then quote the
following passage from an Eighth Circuit case in support of this
statement: "Corporate law recognizes situations in which it is
appropriate to `pierce the veil' of separate affiliates." Id. at
30-31 (quoting Package Serv. Co. v. NLRB, 113 F.3d at 847). Yet
the Secretary has expressly disclaimed any intent to pierce the
corporate veil in this case. S. Br. at 26 n.12. Moreover,
piercing the corporate veil has traditionally been used where
recognizing the boundaries around corporate entities "would work
fraud or injustice." Taylor v. Standard Gas & Elec. Co., 306
U.S. 307, 322 (1939). As the Supreme Court stated in Bestfoods,
"the corporate veil may be pierced . . . when . . . the corporate
form would otherwise be misused to accomplish certain wrongful
purposes, most notably fraud." 524 U.S. at 62; see also 18 Am.
Jur. 2d Corporations � 58, at 868-69 ("It has been said that any
court must start from the general rule that the corporate entity
should be recognized and upheld, unless specific, unusual
circumstances call for an exception; these circumstances arise
where the corporation is used principally as an intermediary to
perpetrate fraud or promote injustice."). Here, the record
contains not even a hint that Berwind or any of its subsidiaries
organized themselves the way they did for fraudulent or improper
purposes.[20]
The majority also mentions alter ego theory and the identity
rule. These theories, however, are premised on a degree of
"unity of interest and ownership" so great "that the
individuality or separateness of the two corporations has
ceased," or "that the independence of the corporation has in
effect ceased or had never begun." 18 Am. Jur. 2d Corporations
� 56, at 861-62. I do not find that the facts of this case can
be twisted into any such scenario. Indeed, if the affairs of
Berwind and its subsidiaries had been so intertwined, and
particularly if the safety affairs of the Elmo No. 5 Mine had
been managed at all levels of the Berwind corporate structure,
then the majority would not have to resort to their ill-advised
theory to find the companies liable. More to the point, however,
is that despite the great emphasis the majority places on alter
ego theory, their four-part test hardly can be said to bear any
resemblance to that theory. See slip op. at 33.
What I see the majority doing is trying to camouflage the
weaknesses of their rationale behind the talismanic invocation of
a few principles of corporate law, and cases construing those
principles, with no explanation of how the principles or cases
apply to their new theory. Incantation, however, is no
substitute for reasoned analysis.
Regarding whether the Mine Act can be interpreted to allow
the Secretary to cite many operators as one "unitary operator,"
the majority concludes "that the statutory language on the
question whether more than one entity may constitute a single
operator is far from clear, and that Congress has not `directly
spoken to the precise question at issue.'" Id. at 25 (quoting
Chevron, 467 U.S. at 842).[21] My colleagues then defer to the
Secretary's interpretation of the Mine Act that boldly
circumvents the common law of corporations by creating out of
whole cloth "operators" under the Mine Act that exist only for
the purpose of broadening the Secretary's prosecutorial power.
I reject the majority's decision to defer to the Secretary
on this question. The unitary operator liability created by the
majority is in direct conflict with the common law of
corporations by grafting onto that body of law a new form of
corporate organization: a super-corporation consisting of any
number of separate entities joined to create a larger whole.
Nowhere in the common law of corporations is there such an
entity. In the absence of any provision in the Mine Act that
directly and unequivocally abrogates the common law principles of
corporate structure, the majority's ill-advised attempt to
rewrite the common law must fail. Their new theory must have a
clear and unequivocal statutory basis - which it most clearly
does not have. Bestfoods, 524 U.S. at 62-63.
Indeed, the Secretary's attempts to justify her new theory
are unavailing. No matter how plausible or reasonable her
arguments might seem at first blush (and I do not believe they
are the least bit plausible), under Bestfoods, deference does not
even arise because of the even more fundamental principle that
any statutory abrogation of a common law principle must be
explicitly, directly, and unequivocally set forth on the
statute's face. Id. Yet here, as the majority concedes, all we
have is an interpretive gloss. The majority has formulated a
rule of liability, in concert with the Secretary, that is at odds
with the common law of corporations - and controlling Supreme
Court precedent under which only Congress can create such
liability.
I would hasten to add that I am not in favor of blind fealty
to corporate forms. In the event a corporation attempts to
shield itself behind a sham corporate structure, the Secretary
could pierce the corporate veil. Indeed, I am at a loss as to
why the Secretary has sought to establish unitary operator
liability under the Mine Act. She has advanced few, if any,
reasons why this Commission should take the extraordinary step of
casting aside the common law in favor of her interpretation of
section 3 of the Act - notwithstanding the fact that any such
arguments would probably either be unavailing because at odds
with Bestfoods or better addressed under the existing law of
operator status and piercing the corporate veil.
But even assuming arguendo that the majority's acceptance of
unitary theory was not at odds with the bedrock principles
reaffirmed in Bestfoods, their decision is still a house of cards
that fails to hold up to any degree of scrutiny. Although the
majority concedes that the statutes on which it relies - the NLRA
and Title VII - are "concerned with regulation of employment
relations" (slip op. at 26 n.22),[22] they nevertheless forge
ahead. But at issue here is a term - "operator" - that has
nothing to do with employment relations. The majority confuses
apples with oranges, despite the fact that other more analogous
statutes include the term "operator" rather than "employer,"
including CERCLA, and the Surface Mining Control and Reclamation
Act, 30 U.S.C. � 1201 et seq. The majority cites several Mine
Act cases in which the Commission has turned to the NLRA and
Title VII for guidance (slip op. at 26), yet all the cases they
cite involve employment relations, either in the context of Mine
Act discrimination or compensation. These cases are thus
singularly irrelevant to the questions posed in this case.
I am also concerned that, in applying unitary theory, the
majority has essentially passed upon a question that was never
before the Administrative Law Judge. In this case, the Secretary
sought to hold liable a unitary operator consisting of Berwind,
Kentucky Berwind, Kyber, and Jesse Branch. The judge rejected
this attempt. He never considered whether any other permutations
of these four entities might be a unitary operator. Yet the
majority nevertheless does just that when it finds that Kyber and
Jesse Branch are a unitary operator. They do so without offering
any justification whatsoever for passing on a question on which
the judge had no opportunity to pass. Beech Fork Processing,
Inc., 14 FMSHRC 1316, 1319-21 (Aug. 1992).
C. Conclusion
My greatest concern in dissent is that I see the majority's
decision as a setback to the orderly administration of the Mine
Act. First, I find their treatment of operator liability full of
confusion and contradiction. They arrive at a rule which appears
almost metaphysical under which we must not focus on "separate
elements" of an operator's control of a mine, but must consider
"the totality of circumstances, that is, [an operator's] overall
relationship with [a] mine" (slip op. at 16, emphasis added) -
which is something presumably greater than the sum of various
indicia of control which may be contained in a particular record.
I find this rule unworkable, if not fanciful.
Second, the majority's new unitary operator theory sprung
from a Secretarial position that appeared to change at every
juncture. Indeed, the Secretary was offering substantive
refinements to her theory even as late as the oral argument
before the Commission. Oral Arg. Tr. 9; see supra note 3 of my
opinion. The majority nevertheless has deferred to the
Secretary's moving target of a theory in principle, and has
proceeded to fill in the various gaps on an ad hoc basis. Yet
even then, they stumble. They have set forth their new unitary
theory in the most fractured opinion I have encountered in my
tenure as a Commissioner, and are then unable to come to an
effective application of the theory, not only because of the
notice problems recognized by Commissioner Beatty (with which I
agree in principle), but also because no majority of
Commissioners is able to decide which permutation of defendants
to hold liable under the theory.[23] Far from contributing to
the development of "a uniform and comprehensive interpretation of
the [Mine Act] . . . [to] provide guidance to the Secretary in
enforcing the act and to the mining industry and miners in
appreciating their responsibilities under the law," Nomination
Hearing Before the Senate Committee on Human Resources, 95th
Cong. at 1 (1978), I believe that the majority's decision sows
the seeds of confusion. I believe that in this case, the wheels
of justice have now, after six years of litigation, become
hopelessly mired in a morass of legal mumbo jumbo.
**FOOTNOTES**
[1] While I agree in result with my colleagues in the
majority that Berwind, Kentucky Berwind, and Jesse Branch are not
"operators" under the Mine Act, I write separately because I
reach my conclusions as to these entities using a different
analytical approach, as discussed infra.
[2] See also 44 Fed. Reg. 47,746, 47,748 (1979) (MSHA's
proposed independent contractor rule citing "substantial
participation" language).
[3] During oral argument, the Secretary amended her
"overall control" test to include an additional requirement that
the entity have "an economic involvement at the mine" in order to
qualify as an operator. Oral Arg. Tr. 9. The ostensible purpose
for this change was to ensure that labor organizations do not
fall within the definition of "operator" (id. at 10-11), although
Contestants point to a number of ways in which labor
organizations can be economically involved in the operation of a
mine. B. Resp. to UMWA/USWA Brs. at 12-13.
[4] It is unclear whether the majority rejects the
Secretary's "overall" control requirement, even though the
requirement has no legal basis. First, my colleagues decline to
be "constrained" by the Secretary's test. Slip op. at 9. Later
in their opinion, however, they state that it is error not to
consider a party's "overall relationship with the mine." Id. at
16 (emphasis added).
[5] See S. Rep No. 95-181, at 18, Mine Act Legis. Hist. at
606 ("this duty places the primary responsibility for providing a
safe and healthful working environment on the operator, who, of
course, ultimately has the authority to operate the mine").
[6] When the Commission reviews factual determinations
made by its judges, it applies the substantial evidence test. 30
U.S.C. � 823(d)(2)(A)(ii)(I). "Substantial evidence" means
"`such relevant evidence as a reasonable mind might accept as
adequate to support [the judge's] conclusion.'" Rochester &
Pittsburgh Coal Co., 11 FMSHRC 2159, 2163 (Nov. 1989) (quoting
Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)).
[7] As the judge's finding and the stipulations indicate,
Kyber did not have exclusive control over the direction of
mining, unlike the independent contractor in Otis Elevator Co.,
which did have "`exclusive control over the safety of the mine
elevators.'" See slip op. at 14 (citing 11 FMSHRC at 1902).
[8] The majority overstates the extent of Kyber's
authority because, as a practical matter, control of the
direction of mining was jointly exercised by Kyber and AA&W. As
the parties stipulated, "[p]rior to initiating mining operations,
[AA&W] and [Kyber] developed initial mining projections for
mining at the Elmo mine. [AA&W] and [Kyber] jointly developed
subsequent mining projections on an `as needed' basis during the
course of mining." JSF 181 (emphasis added). The parties also
stipulated that "[o]nce projections were established and agreed
upon by both [AA&W] and [Kyber], any modifications to those
projections we made only upon joint consultation and
determination of both [AA&W] and [Kyber]." JSF 179 (emphasis
added).
[9] My colleagues agree with the judge that "Kyber
retained more control over the direction of mining than the
typical mine owner or lessee" (slip op. at 11), but neither they
nor the judge cite any evidence in the record to support this
finding. If anything, the record indicates that the agreement
between Kyber and AA&W was typical for the industry. Tr. 573,
579; 18 FMSHRC at 230. In fact, the contract was based on
contracts in general use throughout the industry. 17 FMSHRC at
690; slip op. at 3 n.1. Even assuming arguendo that Kyber's
control of the direction of mining was absolute, it is unlikely
Kyber could be considered an operator on this basis alone since,
as the majority puts it, "no particular factor will be
controlling" in determining whether an entity is an operator.
Slip op. at 10.
[10] In so doing, my colleagues abandon the substantial
evidence test, rejecting specific findings of the judge without
pointing to a single fact the "fairly detracts" from the weight
of evidence that supports the judge's finding. Midwest Material
Co., 19 FMSHRC 30, 34 n.5 (Jan. 1997).
[11] In a bizarre twist, the majority cites Bulk
Transportation in support of its assertion that the mere terms of
Kyber's contract is indicative of the company's status. Slip op.
at 12-13 (stating that Kyber's "contractual authority over the
mine plan may be considered by the Commission as evidence of the
actual relationship between Kyber and AA&W"). Bulk
Transportation, however, directly contradicts the majority's
position.
[12] As for the manner of mining - or the "ways in which
mining was conducted," to use the majority's phrase - the
Secretary argues that a single instance involving Kyber's
objection to AA&W's proposal to use a continuous mining machine
is evidence of Kyber's control over the manner of mining (S.
Resp. Br. at 31-32), notwithstanding the parties' stipulation
that, except on very limited occasions, AA&W furnished and
maintained all equipment, machinery, and materials at the mine.
JSF 136. The judge properly rejected the incident as evidence of
Kyber's substantial control of the mine. 17 FMSHRC at 710. The
majority also claims Kyber was substantially involved in the
"ways in which mining was conducted" (slip op. at 12), yet they
cite no evidence in the record to support this assertion.
Indeed, the judge specifically found that "AA&W determined the
manner in which coal was mined." 17 FMSHRC at 695.
[13] Kentucky Berwind leased separate coal reserves in a
coal seam located above the Elmo No. 5 Mine to an unrelated
company, which then contracted with Corvette Mining Company for
the operation of a surface mine to extract the coal. 17 FMSHRC
at 699. On April 8, 1993, a roof fall occurred at the Elmo No. 5
Mine, which was apparently caused by blasting at the Corvette
mine. Id. at 700. AA&W notified Kyber of the roof fall, which
in turn notified Kentucky Berwind. Id. Following additional
roof fall problems caused by blasting at the Corvette mine,
Kentucky Berwind officials visited the Elmo No. 5 Mine to examine
affected areas of the roof. Id. On April 12, 1993, Steve Dale,
the chief mine inspector and land manager of Kentucky Berwind,
and two other Kentucky Berwind mine inspectors visited the two
mines and met with a Corvette official, AA&W vice president Jim
Akers, and a representative of the Kentucky Division of Surface
Mine Reclamation Enforcement. Id. Kyber president Jimmy Walker
suggested that, in order to alleviate the problem, Corvette
should move its blasting operations 500 feet away from the
location it had been using. Id.; JSF 23, 301. Dale endorsed
this solution and showed Corvette where its operations should be
moved. 17 FMSHRC at 700; JSF 301.
[14] The judge found:
There is no indication that Kentucky Berwind
ordered AA&W to change anything with regard
to its daily operations as a result of the
Corvette incident. Moreover, it was only
natural that Kentucky Berwind, as owner of
the coal reserves mined by both AA&W and
Corvette, would have an interest in trying to
assist both operators so that they did not
interfere with one anothers' operations.
That interest and Kentucky Berwind's
resulting role in the incident do not equate
to statutory control and supervision.
17 FMSHRC at 715. The same findings hold true for Kyber as well.
[15] My colleagues also suggest that Kyber's role in
selecting a safe operator for the mine is somehow indicative of
Kyber's status as an operator. Slip op at 14 n.12. It is
difficult to conceive that a lessee's judicious selection of a
safe operator - as opposed to, say, picking a name out of a hat -
thereby imbues the lessee with yet another indicia of ownership
status.
[16] The judge properly declined to draw any inference of
operator status from the relationship between Kyber and Jesse
Branch. 17 FMSHRC at 712. Any such relationship, whether
through interlocking officers or shared office space, has no
bearing as to whether Jesse Branch, standing alone, was an
operator of the mine.
[17] I agree with my colleagues in the majority that the
Secretary failed to preserve on appeal her argument that Jesse
Branch could still be found to be an operator of the mine on the
alternative ground that it was an independent contractor. Slip
op. at 16 n.16. I note, however, that the Commission has never
held that an independent contractor is liable for violations that
arise from conduct unrelated to its activities at the mine.
[18]: At issue in Bestfoods was the potential liability
under the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, 42 U.S.C. � 9601 et seq. ("CERCLA") of a
parent corporation as an operator for the clean-up of a hazardous
waste site owned or operated by one of its subsidiaries. 524
U.S. at 60.
[19] The majority attempts to distinguish Bestfoods on the
grounds that the case arose under CERCLA. Slip op. at 30 n.29.
The rule reiterated by the Court in Bestfoods is, however, one of
general applicability, as the Supreme Court cases I cite
demonstrate. See also Tri-State Steel Constr. Co. v. Herman, 164
F.3d 973, 979 (6th Cir. 1999) (citing Bestfoods on this point in
holding that a company's eligibility for an award of fees under
the Equal Access to Justice Act, 5 U.S.C. � 504, must not be
determined on the basis of aggregating the company's net worth
with that of its parent corporation).
[20] For similar reasons, I find several cases cited by
the majority irrelevant to this proceeding. NLRB v. Deena
Artware, for example, involved a corporate actor guilty of
"evading . . . back pay obligation[s]." 361 U.S. at 401 (see
slip op. at 28). Similarly, the corporate actor in Package
Service Co. v. NLRB was guilty of buying another company,
Allegheny Graphics, Inc., with the intent of "making Graphics a
non-union employer." 113 F.3d at 848. The court also noted that
"key executives of PSC personally implemented that strategy,
committing in the process the unfair labor practices" at issue in
the case. Id. (see slip op. at 30-31).
[21] For the reasons stated in my dissent in Cyprus
Cumberland Resources Corp., 21 FMSHRC 722, 737-38 (July 1999), I
find my colleagues' reliance on Chevron inappropriate and
misplaced.
[22] The majority also acknowledges that "[t]he Commission
has long recognized that `the Mine Act is not an employment
statute. The Act's concerns are the health and the safety of the
nation's miners.'" Slip op. at 33 n.33 (quoting UMWA on behalf
of Rowe v. Peabody Coal Co., 7 FMSHRC at 1364).
[23] The Chairman and Commissioner Beatty see Kyber/Jesse
Branch as a unitary operator, while Commissioner Marks sees
Berwind/Kentucky Berwind/Kyber/Jesse Branch as a unitary
operator. Ultimately, a majority finds Kyber/Jesse Branch a
"unitary operator" in part because "the control exercised by [the
two companies] over health and safety at the Elmo No. 5 Mine was
centralized." Slip op. at 38. Yet none of the evidence they
cite in support of this statement has anything to do with health
and safety, but rather all relates to the direction and nature of
mining, preparation of mine maps, and surveying. Id. Moreover,
none of these activities were "centralized within the two
companies." Id. As the majority acknowledges, Kyber made all
decisions with respect to the direction and nature of mining
(id.), while Jesse Branch performed all engineering services (id.
at 17, 38). Indeed, Kyber paid Jesse Branch for these services.
Id. at 15.
For the foregoing reasons, I would thus reverse the judge's
finding that Kyber is an operator, and affirm in result his
rejection of the Secretary's unitary operator theory.
Theodore F. Verheggen, Commissioner
Distribution
Jerald S. Feingold, Esq.
Office of the Solicitor
U.S. Department of Labor
4015 Wilson Blvd., Suite 400
Arlington, VA 22203
Robert I. Cusick, Esq.
Marco M. Rajkovich, Jr., Esq.
Wyatt, Tarrant & Combs
1700 Lexington Financial Center
Lexington, KY 40507
Timothy M. Biddle, Esq.
Thomas C. Means, Esq.
Crowell & Moring LLP
1001 Pennsylvania Ave., N.W.
Washington, D.C. 20004
Judith Rivlin, Esq.
United Mine Workers of America
900 Fifteenth St., N.W.
Washington, D.C. 20005
Harry Tuggle, Esq.
United Steelworkers of America
Five Gateway Center
Pittsburgh, PA 15222
James A. Lastowka, Esq.
McDermott, Will & Emery
600 Thirteenth St., N.W.
Washington, D.C. 20005
Michael F. Duffy, Esq.
National Mining Association
1130 17th St., N.W.
Washington, D.C. 20036
Charles J. Baird, Esq.
(Coal Operators and Associates)
Baird, Baird, Baird & Jones, PSC
P.O. Box 351
415 Second Street
Pikeville, KY 41502
Administrative Law Judge David Barbour
Federal Mine Safety & Health Review Commission
Office of Administrative Law Judges
5203 Leesburg Pike, Suite 1000
Falls Church, VA 22041