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Deference due to Labor Secretary’s determination that workplace was subject to OSHA, not MSHA, regulation

By Brandi O. Brown, J.D.

Reviewing an OSHA Commission order vacating citations issued against an employer for violations that included electrical hazards, lack of protective equipment, and overexposure to breathable cement, the Second Circuit ruled that the Secretary’s determination that OSHA, rather than the Mine Safety and Health Act, governed the work being done should have been given deference. The Secretary’s determination deserved deference under Chevron—it was unclear under the Mine Act whether the mining process ended and the Secretary’s determination was a reasonable construction of that Act (Secretary of Labor v. Cranesville Aggregate Companies, Inc., December 18, 2017, Hall, P.).

Bag plant’s activities. In 2009 OSHA initiated a safety inspection of Cranesville’s Bag Plant after receiving employee complaints. Cranesville, a “mine operator” under the Mine Act, operates a sand and gravel mine in New York and produces aggregates from the pits that it sells to its parent company and others. The New York property involved contains a quarry pit and related buildings, including a group of buildings known as “Plant 5″ and two buildings that make up the Bag Plant. One of the buildings in the Bag Plant houses a maintenance shop for repairing mine equipment. The rest of the Bag Plant facility, however, is used for bagging. A portion of the wet sand produced by Plant 5 is sent to the Bag Plant, the remaining wet sand is sold directly from Plant 5 to customers and/or stockpiled. In the Bag Plant the sand is dried and then either bagged separately or mixed with concrete or other materials to create other products.

OSHA citations vacated. After OSHA inspected the Bag Plant it issued several citations for violations of OSHA standards, including citations for electrical hazards, unsafe forklift operation, unguarded platforms, lack of personal protective equipment, and overexposure to breathable Portland cement. None of the alleged violations were related to conditions in the maintenance shop. During an administrative hearing the employer argued, however, that OSHA lacked authority over the cited conditions and that the Bag Plant was instead covered by the Mine Act. Experts for both parties agreed that the sand leaving Plant 5, including that which was delivered to the Bag Plant, was a “finished product.” However, the parties disagreed about whether the drying of the sand constituted “milling” under the Mine Act (the employer relying in part on an interagency Memorandum of Understanding that listed “drying” among the processes that could constitute “milling.”).

An administrative law judge vacated the OSHA citations, ruling that the Mine Act, rather than OSHA, had authority and that the drying process constituted milling. The Secretary sought Commission review, but the two-commissioner panel could not agree and the ALJ’s decision became the final order. The Secretary appealed.

Failed to defer. In this case, the court explained, Chevron deference was due to the Secretary’s interpretation of the Mine Act, but the ALJ gave the Secretary’s decision “no deference whatsoever” and instead imposed his own interpretation of the Mine Act’s coverage. While the Mine Act provides an exception to OSHA enforcement in certain circumstances and the Bag Plant would be subject to that Act if its activities constituted “milling,” the Secretary was left with the authority to define the term “milling.” It exercised its authority in an acceptable way in this case—providing its interpretation in the citations it issued for the employer’s violation of safety standards and then following that up in its litigating position before the Commission.

Moreover, the Mine Act, while it does not define “milling” explicitly, provides that in determining what constitutes mineral mining the Secretary “shall give due consideration to the convenience of administration . . . with respect to the health and safety of miners at one physical establishment.” Other courts have noted that that clause (described as the “convenience of administration clause”) gives the Secretary a certain amount of discretion to determine what constitutes mineral “milling” versus “manufacturing.” That clause, the court explained, confirmed its own conclusion that the Secretary’s interpretation was entitled to Chevron deference.

Reasonable interpretation. The Secretary’s determination, expressed both in the citations and in litigation, regarding whether those conditions were regulated by the Mine Act or OSHA, was reasonable. The Secretary applied a functional analysis, concluding that the activities conducted in the Bag Plant were geographically and functionally distinct from those operations performed at Plant 5 and the quarry pit. Although the interagency MOU included “drying” as a process that may be considered “milling,” it had also clarified that the term “milling’ could be narrowed in certain circumstances, such as where those processes were “unrelated, technologically, or geographically, to mineral milling.”

In this case, the Bag Plant’s activities were “devoted to” the bagging of the sand received from Plant 5, whether alone or in combination with other materials received from third-party sources. Thus, although the sand was dried at the Bag Plant, that drying was part of a manufacturing process and the employer, the court concluded, “was essentially operating in its capacity as a manufacturer and not as a mine operator” and “the overall work at the Bag Plant was unrelated to the milling process.”

The Secretary, however, did not dispute that the Mine Act had authority over the maintenance shop in Building 2 and the court explained that it was within its authority to distinguish between mining and non-mining activities in that way.