he Sixth Circuit Court of Appeals Overruled MSHA and the Commission. Find Out Why.

By Brian Hendrix

MSHA’s appetite for authority is nearly insatiable. Granted, gluttony of this sort is rather common amongst administrative agencies, and the struggle to control their intake is a never-ending one. Nevertheless, it is rather satisfying to see the Sixth Circuit Court of Appeals force MSHA to back away from the buffet table.

In its Feb. 13, 2017, decision in Maxxim Rebuild Co. LLC v. Federal Mine Safety and Health Review Commission, a unanimous panel of judges held that the Mine Act’s definition of “‘coal or other mine” refers to locations, equipment and other things in above, beneath or appurtenant to active mines.” Thus, MSHA does not have jurisdiction over a shop that makes and repairs mining equipment and machine parts that is not located on mine property.

The case centered on a repair shop located in Sidney, Ky., on land owned by a mining company. Maxxim Rebuild LLC moved the shop from West Virginia to the Sidney site in January of 2012, after it expanded and updated the shop area on the property. The property had previously been home to mining operations, but those operations had been abandoned. Offices above the shop were occupied by engineers employed by a coal company.

Maxxim employed seven people at the shop. The shop devoted about 75 percent of its time working on mining equipment owned by Maxxim’s parent, a coal company. The rest was spent repairing mining equipment owned by other mining companies.

The Sidney shop was one of seven repair shops operated by Maxxim in six locations in two states. One of the seven shops was an underground repair shop that was also adjacent to a coal preparation plant. That shop was the only shop out of the seven that MSHA regulated before MSHA arrived to inspect the Sidney shop. OSHA regulated the other shops.

First Inspection

MSHA’s first inspection of the Sidney shop produced three citations.

• One citation alleged that the shop did not have a complete copy of its Hazard Communication Program on-site.
• The second citation alleged that one of the shop’s bathrooms and the change room were dirty.
• The third citation alleged that an accumulation of grease, diesel and dust on a loader at the shop constituted a Significant & Substantial violation.

MSHA inspected the facility again and again issued a handful of citations to Maxxim. Maxxim contested both sets of citations, arguing that MSHA did not have jurisdiction over the Sidney shop.

MSHA maintained that the Sidney shop qualifies as a “coal or other mine” under the Mine Act because it is a “facility” that is “used in” the process of extracting and preparing coal. It maintains, repairs and fabricates equipment that is used in the mining process, including belt heads, highwall miners, loaders, excavators and other equipment used the extraction process. To MSHA, the “activities conducted at the Maxxim shop [were] an integral part of the mining process.” Judge Miller completely agreed with MSHA, and so did the Commission.

In fact, the Commission unanimously affirmed Judge Miller’s decisions, noting that “Commission case law strongly supports” the conclusions that shop qualified as a “mine.” The Commission held seventeen years ago that MSHA had jurisdiction over a Jim Walter Resources Inc. machine shop that was similar to the Sidney repair shop.

As the Commission explained it, “the Sidney shop constitutes a ‘mine,’ because, despite being loaded off-site, it fabricates, repairs and stores equipment that is used in conjunction with the extraction and preparation of coal.”

Last Word

Fortunately for Maxxim (and the mining industry), the Commission did not have the last word. On appeal, the Sixth Circuit took a very different approach than the Commission. It identified “two linking concepts” in the Mine’s Act’s definition of “coal or other mine.”

• The first is related to mine related places, e.g. ‘lands, excavations, underground passageways , shafts, slopes, tunnels and workings, [and] facilities . . . used in or to be used in . . . excavating . . . minerals.”
• The second concept relates to “mine related thinks that serve a mine-related function in those places,” i.e. “equipment, machinery, tools or other property . . . used in or to be used in” the process of extraction.

For the Sixth Circuit, the key is that “[b]oth concepts are joined together by their connection to a working mine – places and things in and around the mine. Just as these words do not cover ‘lands’ disconnected from an active mine (even lands that might one day be purchased ‘to be used’ as a mine), they do not cover equipment that is not part of a working mine (even equipment that might one day be sold to someone ‘to be used in a mine.’

Whether it is a place or functional thing, it must be connected to a working mine.” If it is not connected to a working mine, MSHA does not have jurisdiction over it.

The Sixth Circuit also recognized that “[t]his is not a case in which the regulated entity seeks to hide from any regulation. It just thinks, quite reasonably, that the Secretary [of Labor’s] authority applies to it through the Occupational Safety and Health Administration, not [MSHA].” OSHA’s regulations apply and address the types of hazards one might encounter in the Sidney shop. Of course, MSHA argued that the Sixth Circuit should defer to its interpretation of the Mine Act, just as the Commission deferred to MSHA’s interpretation. When the meaning of a statute is ambiguous, the Supreme Court has held that courts must defer to an agency’s reasonable interpretation.

In most cases, it is easy for an agency to convince a court that its interpretation is reasonable. This was not most cases. Here, the Sixth Circuit held that MSHA’s interpretation “is not a reasonable one—and not just because it overlooks all the textual and procedural clues . . . The Secretary’s interpretation also has no stopping point.”

Overall, this was a big win for Maxxim and for industry. The Sixth Circuit’s decision conflicts with Commission case law. Arguably, the Commission is bound to follow the decision only in cases originating in the Sixth Circuit (Ohio, Michigan, Kentucky and Tennessee). Nevertheless, since at least 2000 MSHA has assumed that it could take jurisdiction over a site or facility even if it had no connection to a working mine. It has gobbled up all sorts of facilities in that time. The Sixth Circuit’s decision may provide those facilities with the opportunity to argue that they should be regulated by the agency best suited to address the safety and health hazards that they might encounter: OSHA.

Brian Hendrix, a member of Husch Blackwell’s Energy & Natural Resources group, advises clients on environmental, health and safety law, with a focus on litigation, incident investigations, enforcement defense and regulatory compliance counseling. He has extensive experience with federal and state agencies and has represented numerous clients in manufacturing, natural resource production and service-related industries. [email protected], 202-378-2417.