**FEDERAL MINE SAFETY AND HEALTH REVIEWCOMMISSION**

Office of the Chief AdministrativeLaw Judge

721 19thStreet, Suite 443

Denver, CO 80202-2536

303-844-3577 FAX303-844-5268

 

 

**ORDERDENYING RESPONDENT’S**

**MOTIONFOR SUMMARY DECISION ON JURISDICTION**

**AND**

**ORDERGRANTING THE SECRETARY’S**

**MOTIONFOR SUMMARY DECISION ON JURISDICTION**

** **

Thesecases are before me upon petitions for assessment of civil penalty filed by theSecretary of Labor, acting through the Mine Safety and Health Administration(“MSHA”), against Arepet Industries, LLC (“Arepet”) pursuant to sections 105and 110 of the Federal Mine Safety and Health Act of 1977, 30 U.S.C. §§ 815 and820 (the “Mine Act”). 

 

InJune 2022 MSHA conducted an inspection of Arepet’s Von Ormy plant (“the plant”)and issued the four citations that are the subject of these proceedings. Duringconference calls with the court, the parties represented that there is aquestion whether the Von Ormy plant is subject to MSHA’s jurisdiction. As aresult, and at the request of the parties, the court ordered the parties tofile joint stipulations and simultaneous cross-motions for summary decision onthe issue of jurisdiction. On September 7, 2023, the parties filed jointstipulations of fact, cross-motions for summary decision on jurisdiction, andother documents. Subsequently, each party filed an opposition to the otherparty’s motion for summary decision. 

 

Thesingular topic at issue in this order is whether summary decision can begranted for either party on the question of jurisdiction.  For reasons setforth below, the Secretary’s Motion for Summary Decision on Jurisdiction is **GRANTED**and Respondent’s Motion for Summary Decision on Jurisdiction is **DENIED**. 

 

**STIPULATEDFACTS**

 

Theparties submitted the following joint stipulations of fact:

 

1.    Arepet Industries, LLC owns and operates the Von Ormy plant which is thesubject of the citations at issue in this case.

2.    The Von Ormy plant is the only operation owned and operated by ArepetIndustries, LLC.

3.    Arepet Industries, LLC is owned by partners Cesar Saenz and Ruben Garza.

4.    Arepet Industries, LLC does not own or operate any mine pits orexcavations.

5.    Arepet Industries, LLC currently purchases wet sand from an unrelatedcompany.

6.    Arepet Industries’ current supplier of wet sand is Madden Materials.

7.    Arepet Industries purchases sand that is commercially available tobuyers of sand. Sand is delivered to Arepet Industries by end dump trailer.

8.    Sand brought to Arepet Industries is initially stockpiled to reducemoisture content before processing.

9.    From stockpiles, sand is carried to and loaded into a hopper thenconveyed to a Starkaire gas heated fluid air bed dryer.

10. The air dryer reduces the moisture content of the sand.

11. Drying the sand assists in the process of shipping sand to oil and gasdrilling sites and makes the sand more usable as an ingredient in the frackingprocess.

12. From the dryer, sand is carried by conveyor to a mineral separator,manufactured by Rotex.

13. The purpose of the mineral separator, manufactured by Rotex, is toremove any remaining waste material from the sand.

14. The mineral separator, manufactured by Rotex, does not separate sandinto different sizes of sand.

15. The removal of any waste material is done to protect equipment at theoil and gas drilling sites which receive sand from Arepet Industries.

16. Any waste material removed by the Rotex is put in piles and periodicallyremoved from the Von Ormy plant by a third party.

17. Arepet Industries has an arrangement with Cuatro-T that periodicallyhauls off the waste material at no charge. Sand is carried by conveyor beltfrom the Rotex into the warehouse.

18. The sand is then picked up from the warehouse floor by a front-endloader and placed into the loadout hopper.

19. The Pneumatic trucks mount on to a weight scale and are loaded with thesand via conveyor and through a spout.

20. Arepet Industries currently sells its sand to EOG Resources, Inc., whichuses the sand at oil and gas drilling sites.

21. From June 2, 2021, to June 2, 2022, Arepet Industries also sold sand toHalliburton Energy Services, Inc., Liberty Oilfield Services, Marathon Oil EF,LLC, Nextier Completion Solutions, and Laredo Energy Operating, LLC.

22. Arepet Industries began operations in 2008.

23. Before 2019, Arepet Industries operated under OSHA’s jurisdiction, andtrained its employees according to OSHA’s standards and regulations.

24. The Von Ormy plant was inspected by OSHA two times in 2016.

25. The Von Ormy plant was inspected by OSHA in 2018.

26. As a result of OSHA’s three inspections of the Von Ormy plant, ArepetIndustries received a total of seven (7) citations.

27. Arepet Industries and OSHA entered informal settlement agreementsregarding the seven citations, pursuant to which Arepet Industries paid penaltiesto OSHA totaling $12,580.

28.  MSHA did not conduct any inspections of the Von Ormy plant any timebetween the time the Von Ormy plant began operations and 2019.

29. The Von Ormy plant did not change its operations or process after 2013.

30. Since 2019, MSHA has conducted 22 inspections of Arepet’s Von Ormyplant, including follow-up inspections.

31. In June 2022, MSHA conducted an “E01” inspection of the Von Ormy plant.MSHA issued Arepet Industries, LLC seven citations as a result of MSHA’sinspection.

32. Arepet Industries, LLC timely contested the June 2022 MSHA citations.

33. Arepet Industries, LLC has asserted that MSHA does not have jurisdictionof the Von Ormy plant.

34. Exhibit 1 is an accurate drawing of the process that Arepet Industriesoperates at the Von Ormy plant.

35. Exhibit 2 is an accurate copy of the deposition of Cesar Saenz, partnerand co-owner of Arepet Industries.

36. Exhibit 3 is an accurate copy of the deposition of Fabien Crossland.

37. Exhibit 4 is an accurate copy of the deposition of Thomas Balch.

38. Exhibit 5 is an accurate copy of the deposition of William Clark.

39. Exhibit 6 includes accurate copies Arepet Industries, LLC’s sand sievetests.

 

**SUMMARYOF THE PARTIES’ ARGUMENTS**

 

***Arepet’sMotion for Summary Decision on Jurisdiction***

 

 Arepet,in its motion, argues the Von Ormy plant is not subject to MSHA jurisdiction. Specifically,Arepet argues the plant is not a “coal or other mine” under the Act becauseneither mineral extraction nor the milling of minerals in the form of “sizing”or “drying” occurs there. 

 

Arepetasserts, and the MSHA inspectors’ depositions confirm, that no mineralextraction occurs at the plant. The plant is “not located on mine property noradjacent to land where extraction takes place” and all sand processed at theplant is “delivered . . . from third party mines that are geographicallyseparated (by many miles) from . . . [the] plant.” Arepet Mot. 7. Although oneof Arepet’s two owners also owns a sand mine, the operations are separatebusinesses and Arepet has not purchased sand from that sand mine in years. 

 

Arepet argues the plant does not engage in the milling ofminerals via “sizing” as that term is used in the Interagency Agreement. Thesand purchased by Arepet has already been screened and sized before beingdelivered to the plant. All sand purchased and sold by Arepet is “100 mesh”sand and “only oversized material (typically less than 2 percent of the wetsand purchased based on quality control data) is removed and it is regarded astrash material and it is not sold by Arepet to any customers.” Arepet Mot. 10. Arepet,citing the Commission’s decision in *State of Alaska, Dept. of Transp.*,36 FMSHRC 2642, 2649 (2014), argues that “‘scalping’ to remove unwanted wastefrom the mineral material is not ‘milling.’” Arepet Mot. 10. Here, Arepet usesthe Rotex mineral separator to “scalp” waste stones and rock from the sand. ArepetMot. 10-11. The waste scalped from the sand is not commercially valuable and,after stockpiled, is removed by a third party at no cost to Arepet and,possibly, used as fill material by that third party. Arepet Mot. 11. Moreover, Arepetasserts that one MSHA inspector acknowledged during his deposition that “thistype of borrow pit providing scalped fill material falls under OSHA, ratherthan MSHA.” Arepet Mot. 11. 

Arepetargues that the plant does not engage in the milling of minerals via “drying”as that term is defined in the Interagency Agreement. In support of itsargument, Arepet cites the U.S. Court of Appeals for the Second Circuit (“Courtof Appeals”) decision in *Sec'y of Labor v. Cranesville Aggregate Companies,Inc., dba Scotia Bag Plant*, 878 F.3d 25 (2d Cir. 2017) (“*Cranesville*”)and argues that the Department of Labor has declined to apply a literal readingof the Agreement’s definition of “drying” and has instead said that twoadditional considerations are necessary to determine whether drying sand isconsidered “milling.” First, “drying is a milling activity if the drying isperformed to render sand a marketable commodity.” Arepet Mot. 12 (internalquotations and citations omitted). Second, “any subsequent drying of marketablesand that is done to produce a specialty product or to make the sand suitablefor a particular purpose is not ‘milling.’” Arepet Mot. 13. Here, thecommercially available sand purchased by Arepet is already “milled andmarketable” and the subsequent drying at the plant is only to “make the sandsuitable for a particular and specialty purpose, to transport the sand to theoil and gas well drilling sites and to use in the fracking process.” ArepetMot. 14. 

 

Arepetargues that the history of enforcement at the plant does not support Mine Actjurisdiction. Arepet notes that for approximately 80% of the plant’soperational history it has been under OSHA jurisdiction and Arepet has basedits compliance efforts and employee training on OSHA standards. Nevertheless,despite no change in the activities performed at the plant, MSHA startedinspecting the plant in 2019 in place of OSHA. At that time, Arepet was notrepresented by counsel and was unaware of the 2017 *Cranesville*decision.Further, Arepet asserts that it is not clear whether the process outlined inthe Interagency Agreement for addressing questions of jurisdiction between MSHAand OSHA was followed.[1]Had that process been followed and the *Cranesville* decision taken intoconsideration, “it is likely that the U.S. Department of Labor officials . . .would have determined that the process at the Von Ormy plant . . . shouldremain under OSHA jurisdiction.” Arepet Mot. 16.

 

Finally,Arepet argues OSHA’s regulations “are more applicable to, and protective of,the safety and health of workers at the . . . plant than are those of MSHA[.]”Arepet Mot. 17. Specifically, Arepet argues OSHA’s respirable silica andequipment standards are more protective of employees at the plant, and thatArepet has geared its programs and training toward compliance with OSHAstandards. 

            Accordingly, Arepet requests that the court grant its Motion for SummaryDecision on Jurisdiction and determine that MSHA does not have jurisdictionover the Von Ormy plant. 

 

***TheSecretary’s Opposition to Arepet’s Motion for Summary Decision on Jurisdiction***

 

            TheSecretary, in her opposition to Arepet’s motion, makes three primary points. First,the Secretary asserts Arepet mischaracterized the court’s holding in *Cranesville*.In *Cranesville*, the sand delivered to the plant required no additionalprocessing to be marketable, whereas here the sand had to be “upgraded” viadrying and sizing so that the oil and gas companies could use it without fearof damaging machinery used in the fracking process. 

 

Second,the Secretary argues Arepet overstates the importance of discussions betweenOSHA and MSHA. Even if there was a failure to follow a jurisdictional decisionprocess, it is not fatal to any jurisdictional determination. Moreover, theCourt of Appeals in *Cranesville* held that the Secretary’s jurisdictionaldetermination is entitled to substantial deference. 

 

Third,the Secretary avers that Arepet’s suggestion that OSHA standards are moreprotective than MSHA standards is not relevant to the question of jurisdiction.Arepet is free to enact more stringent safety standards than either OSHA orMSHA mandate, both of which “provide a minimal safety standard.” Sec’y Opp’n.4. 

 

***TheSecretary’s Motion for Summary Decision on Jurisdiction***

 

TheSecretary argues that Arepet’s Von Ormy plant is a “mine” under Section 3(h)(1)of the Mine Act and, therefore, subject to MSHA jurisdiction. Under the MineAct, “lands, structures, facilities, equipment, machines, tools, etc. used inthe work of extracting *or* milling minerals are considered a ‘mine,’ andthere is no requirement that milling facilities and equipment be in proximityto, or affiliated with an extraction operation.” Sec’y Mot. 7 (emphasis inoriginal).[2]Here, although Arepet did not extract the mineral it processed, it did engagein “milling” as that term is understood in the MSHA-OSHA Interagency Agreement(“Interagency Agreement”) and case law.

 

Accordingto the Interagency Agreement, “milling is the process of separating valuableminerals from worthless material or ‘treating the crude crust of the earth toproduce the primary consumer derivatives[,]’” and includes the processes of“sizing” and “drying.” Sec’y Mot. 8. (citing 44 Fed. Reg. at 22829). 

 

Arepetengaged in “drying” as that term is defined by the Interagency Agreement whenit used a “Starkaire gas heated fluid air bed dryer . . . [to] reduce[] themoisture content of the sand.” Sec’y Mot. 9. Although Arepet cites *Cranesville*for its argument that it did not engage in “drying,” that reliance ismisplaced. Unlike the facility at issue in *Cranesville*, “drying” isessential to how Arepet processes the sand and is not the only activityperformed at the plant.[3]Sec’y Mot. 9-10.

Inaddition to “drying”, Arepet engaged in “sizing” as that term is defined by theInteragency Agreement by “running the sand through a Rotex mineral separator to‘separate usable from unusable sand,’ and remove waste material described as‘oversize’ by one of Arepet’s owners.” Sec’y Mot. 10 (Internal citationsomitted). Arepet’s attempt to characterize this process as “scalping,” anactivity associated with “borrow pits,” is also misplaced because there areother “aspects of milling in Arepet’s sand process.” Sec’y Mot. 11. 

 

Basedon the above arguments, the Secretary asserts that there is no genuine issue ofmaterial fact and her “interpretation . . . of the term ‘milling’ is proper[]and clearly within the bounds of her discretion.” Sec’y Mot. 14. Accordingly,the Secretary requests that the court grant her Motion for Summary Decision onJurisdiction. 

 

***Arepet’sOpposition to the Secretary’s Motion for Summary Decision on Jurisdiction***

 

Arepet,in its opposition, argues that the plant is not a “sand mill,” as alleged bythe Secretary, and that it does not engage in extraction or milling at thelocation. Despite a history of OSHA jurisdiction at the plant, and no change inthe operations or processes, MSHA took over jurisdiction without “any officialconsideration of the issue or the participation by any person within MSHAknowledgeable of the Department of Labor’s application of the InteragencyAgreement.” Arepet Opp’n. 3. 

 

            Althoughthe Secretary’s motion cites this court’s decision in *Cactus Canyon* assupport for her argument, Arepet argues that the facts and factors of this caseare clearly different and distinguishable. Unlike the plant at issue in *CactusCanyon*, Arepet’s plant does not engage in crushing or sizing. There is nocrusher at Arepet’s plant and the sand purchased by Arepet has already beenscreened and sized. The sand sold by Arepet is the same size as that purchasedby Arepet, i.e., “100 mesh.” Arepet “uses the Rotex to remove harmful oversizeor trash materials prior to sale” in order to “ensure that as pure sand aspossible is shipped” to its customers “for the specialty use of oil and gasfracking.” Arepet Opp’n. 5-6. The waste materials removed from the sand are setaside and ultimately removed from the plant by a third-party contractor“apparently to use as fill material.” Arepet Opp’n. 6. 

 

            Inaddition, Arepet argues that its plant does not engage in “drying” as theDepartment of Labor interpreted that term in the *Cranesville*case. In *Cranesville*the Court of Appeals found that the Mine Act was ambiguous with regard wherethe milling cycle ends and the manufacturing cycle begins and determined thatthe Secretary’s distinction between “‘drying’ which is ‘milling’ and covered bythe Interagency Agreement and ‘drying’ which is not ‘milling’ under theInteragency Agreement, was reasonable.” Arepet Opp’n. 9. There, the Secretaryasserted that “drying” is not milling under the Interagency Agreement when the“drying is not necessary to make the mineral a marketable commodity” and isdone “to make the sand more suitable for a particular purpose or use[.]” ArepetOpp’n. 7. Although the Secretary, in her motion, asserts that Court of Appeals basedits decision on the “substantial deference” it gave to the Department of Laborregarding OSHA and MSHA jurisdiction, she ignores that what the court actuallygave deference to was the Secretary’s definition of the term “drying.” Ignoringthe definition of “drying” the Secretary advocated before the Court of Appealsis not “reasonable.” 

 

            Finally,Arepet argues that, contrary to the Secretary’s assertion, the history ofenforcement at the plant supports a finding that OSHA has jurisdiction. Failureto object to MSHA jurisdiction when Arepet was not aware of the *Cranesville*decision does not give MSHA jurisdiction. Rather, any jurisdictionaldetermination must be decided based on the facts of this case.

 

**DISCUSSIONAND ANALYSIS**

 

Commission Procedural Rule 67 setsforth the grounds for granting summary decision, as follows:

 

A motion forsummary decision shall be granted only if the entire record, including thepleadings, depositions, answers to interrogatories, admissions, and affidavits,shows:

(1) That there isno genuine issue as to any material fact; and

(2) That the movingparty is entitled to summary decision as a matter of law.

 

29 C.F.R. § 2700.67(b).

 

The Commission has long recognizedthat “summary decision is an extraordinary procedure.” *Energy West MiningCo.,*16 FMSHRC 1414, 1419 (July 1994) (quoting *Missouri Gravel Co.,*3FMSHRC 2470, 2471(Nov.1981)). The Commission has analogized CommissionProcedural Rule 67 to Federal Rule of Civil Procedure 56. *Hanson AggregatesNew York, Inc.*, 29 FMSHRC 4, 9 (Jan. 2007); *See also Energy West*, 16FMSHRC at 1419 (citing *Celotex Corp v. Catrett*, 477 U.S. 317, 327(1986)). When the Commission reviews a summary decision under Rule 67, it looks“‘at the record on summary judgment in the light most favorable to . . . theparty opposing the motion,’ and that ‘the inferences to be drawn from theunderlying facts contained in [the] materials [supporting the motion] must beviewed in the light most favorable to the party opposing the motion.’” *HansonAggregates New York Inc.*, 29 FMSHRC at 9 (quoting *Poller v. ColumbiaBroadcasting Sys., Inc.*, 368 U.S. 464, 473 (1962); *United States v.Diebold, Inc.*, 369 U.S. 654, 655 (1962)).

 

The singularissue in this order is whether MSHA had jurisdiction to inspect Arepet’s VonOrmy plant on the date the subject citations were issued. The Secretary arguesthat the plant is subject to Mine Act jurisdiction because mineral millingtakes place at the facility. Arepet contends, among other things, that it isnot a “coal or other mine” under Section 3(h)(1) of the Mine Act because itdoes not extract minerals or engage in the milling of minerals at the plant. 30U.S.C. § 802(h)(1).[4]

Section 4 of theMine Act states that “[e]ach coal or other mine, the products of which entercommerce, or the operations or products of which affect commerce, and eachoperator of such mine, and every miner in such mine shall be subject to theprovisions of this Act.” 30 U.S.C. § 803. Accordingly, for MSHA to have hadjurisdiction to inspect the Von Ormy plant, the evidence must establish, first,that the plant was a “coal or other mine” under the Act and, second, that theproducts of the plant enter commerce, or the operation or products of the plantaffect commerce.

 

***PreliminaryConsiderations***

 

            Somepreliminary matters are worth noting. First, an operator is permitted to raisejurisdictional issues at any time. It is immaterial that Arepet did not raisethe issue of MSHA jurisdiction following the first MSHA inspection at theplant. Second, as set forth in Arepet’s brief, Section (B)(8) of theInteragency Agreement provides a mechanism for resolving questions surroundingMSHA vs. OSHA jurisdiction. I find it troubling that this procedure was apparentlynot followed when jurisdiction over the plant was transferred from OSHA to MSHAin 2019. Indeed, although there may have been behind the scenes discussionsbetween MSHA representatives and OSHA representatives when this decision wasmade, it would appear that the decision was based primarily on the inclinationof one MSHA inspector. Nevertheless, the only question before me is whetherMSHA had jurisdiction to inspect the plant at the time the citations wereissued. Finally, I acknowledge that the facts put forth by the parties presenta close jurisdictional issue. As discussed below, I find that the jointlystipulated facts establish that MSHA had jurisdiction to inspect the plant.

 

***Is the plant a “coal orother mine” under the Mine Act?***

 

In the case at hand, the Secretary seeks to establish MineAct jurisdiction over the Von Ormy plant via subsection (C) of section 3(h)(1)of the Act, which, in pertinent part, defines a “coal or other mine” to include“structures, facilities, equipment, machines, [and] tools . . . used in ... themilling of ... minerals.” 30 U.S.C. § 802(h)(1).

 

The Mine Actdoes not define the term “milling.” When a statutory term is not expresslydefined it should be accorded its commonly understood definition. *Drillex Inc.*,16 FMSHRC 2391, 2395 (Dec. 1994). In *Watkins Eng’rs & Constructors*, 24 FMSHRC 669, 674-675 (July 2002) the Commission,when analyzing the commonly understood definition of “milling” and relatedterms, stated the following:

 

Within theindustry, milling is defined as: “The grinding or crushing of ore. The term *may*include the operation of removing valueless or harmful constituents ... ,” whilemill is defined as a “mineral treatment plant in which crushing, wet grinding,and further treatment of ore is conducted.” . . . [*Dictionary of Mining,Mineral, and Related Terms* 344 (2d ed. 1997) (“*DMMRT*”)] (emphasisadded); *see also Alcoa Alumina & Chems., L.L.C.*, 23 FMSHRC 911, 914(Sept. 2001) (using *DMMRT* to determine usage in mining industry). 

Although the Mine Act does notexpressly define the term “milling,” it does grant the “Secretary discretion,within reason, to determine what constitutes mineral milling. . . [.]” *Donovanv. Carolina Stalite Co.*, 734 F.2d 1547, 1552 (D.C. Cir. 1984).[5] In 1979 theSecretary exercised that discretion when MSHA and OSHA entered into aninteragency agreement to delineate certain areas of authority between the twoagencies and set forth guidelines for resolving jurisdictional questionsinvolving milling.  MSHA-OSHA Interagency Agreement, 44 Fed. Reg. 22827 (April17, 1979) amended by 48 Fed. Reg. 7,521 (Feb. 22, 1983) (“InteragencyAgreement” or “the Agreement”). Among other things, the Interagency Agreementclarifies the agencies’ intent that the Mine Act, as opposed to the OSH Act, beapplied to milling operations, and reiterates Congress’s intent thatjurisdictional doubts be resolved in favor of inclusion of a facility withincoverage of the Mine Act.*Id*. 

 

Appendix A to the Agreementdescribes “milling” as a process “to effect a separation of the valuableminerals from the gangue constituents of the material mined” as well “the artof treating the crude crust of the earth to produce therefrom the primaryconsumer derivatives. The essential operation in all such processes isseparation of one or more valuable desired constituents of the crude from theundesired contaminants with which it is associated.” 44 Fed. Reg. at 22829. 

 

In addition, Appendix A alsocontains a list of “general definitions of milling processes for which MSHA hasauthority to regulate[,]” which includes the terms “drying” and “sizing.”  

Although the Interagency Agreement is not dispositive, itcan assist in determining whether the Secretary’s application of the term“milling” to a particular facility is reasonable. *See**Donovan v.Carolina Stalite Co.*, 734 F.2d 1547, 1552 (D.C. Cir. 1984). 

 

For purposes of this analysis, itis helpful to first determine whether Arepet engaged in “sizing” as that termis defined in the Interagency Agreement. “Sizing” is defined as “[t]he processof separating particles of mixed sizes into groups of particles of all the samesize, or into groups in which particles range between maximum and minimumsizes.” 44 Fed. Reg. at 22829-22830. In *State of Alaska,Dept.of Transp.*, 36 FMSHRC 2642, 2649 (Oct. 2014), the Commission citedthe Interagency Agreement’s inclusion of “sizing” in its list of millingprocesses and found that the operator “clearly engag[ed] in ‘milling’ undersection (h)(1)” where it used a screen to separate material “based on size,with oversized rock separated out entirely.” Here, the Von Ormy plant used theRotex “to remove any remaining waste material from the sand.” Jt. Stip. 12. Althoughthe Rotex “does not separate *sand* into different sizes of sand,” it doesremove “oversize” waste material, i.e., rocks, pebbles, and a small amount ofoversized sand, from the sand Arepet purchases. Jt. Stip. 14, Ex. A-2 pp.16-17. In doing so, it separated material of all the same size, i.e., the 100mesh sand, from material which was not of the same size. I find that thisamounted to “sizing” as that term is defined in the Interagency Agreement.  

I note that Arepet asserts thematerial it purchases is “all 100 mesh size when it is purchased and is sold as100 mesh sand.” Arepet Mot. 10. However, it is quite clear that the product deliveredto the Von Ormy plant is not the same as the product sold by Arepet, even ifthey share the same description as 100 mesh sand.[6]While Arepet attempts to explain away the “oversize material” which, accordingto it, typically accounts for less than 2% of the purchased product, as deminimis waste, it is clear that removal of that material was critical to theoil and gas companies who purchased the sand from Arepet. 

 

            I find Arepet’s argument that it engaged in“scalping,” and that scalping is not milling, to be unavailing. Arepet citesthe Commission’s decision in *State of Alaska, Dept. of Transp.*, 36FMSHRC 2642 (2014) (“*Alaska DOT*”), for the position that “‘scalping’ toremove unwanted waste from the mineral material is not ‘milling.’” However,Arepet’s argument lacks context and is an incorrect reading of that decision. 

 

In *Alaska DOT* the Commissionconsidered whether the Interagency Agreement’s “borrow pit” exception to MSHAjurisdiction applied to an operation. While the Commission cited theAgreement’s language regarding “scalping” as it relates to “borrow pits” it didnot hold that “scalping,” as a general matter, is not “milling.” Rather, the Commission,at most, simply recognized that the language of the Interagency Agreement allowslimited milling in the form of a scalping screen to remove large rocks, woodand trash from the material extracted *from a borrow pit*. *Id*.

 

The Interagency Agreement makesclear that an operation must meet certain criteria to be considered a “borrowpit” subject to OSHA, and not MSHA, jurisdiction.[7]Then, and only then, is “scalping” the single excepted form of milling thatwill not bring the operation within MSHA’s jurisdiction. *See also**KerrEnterprises, Inc.*, 26 FMSHRC 953, 956-957 (Dec. 2004) (ALJ).[8]Here, Arepet does not argue, and the stipulated facts do not establish, thatthe Von Ormy plant is a borrow pit. Even so, as discussed above, I have alreadydetermined that the plant’s use of the Rotex amounted to “sizing.” 

 

            Having found that Arepet engaged in milling viause of the Rotex, I now consider the second alleged milling process, i.e.,drying. “Drying” is defined as “the process of removing uncombined water frommineral products, ores, or concentrates, for example, by application of heat,in air-actuated vacuum type filters, or by pressure type equipment.” 44 Fed.Reg. at 22830. I find that Arepet engaged in “milling,” as that term is definedin the Interagency Agreement, by “drying” the sand. The parties stipulated thatthe sand at the plant was conveyed to a “gas heated fluid air bed dryer” forthe purpose of reducing the moisture content of the sand. Jt. Stip. 8-10. Unquestionably,the application of heat via the gas heated dryer removed uncombined water fromthe sand and satisfied the Interagency Agreement’s definition of “drying.” However,further discussion is warranted.

 

Much of Arepet’s Motion andOpposition is spent arguing that the Secretary is bound by an interpretation ofthe term “drying” advanced in the *Cranesville* case. In *Cranesville*,the Court of Appeals found that the Secretary reasonably determined that operationsat a bag plant fell under OSH Act and not the Mine Act. There, operations atthe bag plant consisted of drying sand, sometimes mixing the sand with otherminerals to create a concrete pre-mix, and bagging the material that hadalready been “fully milled.” The court noted that the sand had been “crushed,washed, and screened” at another plant and was “fully milled” prior to arrivalat the bag plant.[9]878 F.3d. at 34. In finding that the Secretary reasonably concluded that thebag plant was not a mineral processing operation, but rather a manufacturingfacility using milled materials delivered from the other plant, the courtstated that “drying is merely one factor to consider in the functionalanalysis” and “the Secretary may consider all processes conducted at thefacility and their relation to each other.” *Id*. at 35. 

 

Here, unlike in *Cranesville*,the sand had not been “fully milled” upon arrival at the Von Ormy plant. Rather,and as discussed above, the Rotex machine milled the sand and separated theoversize waste material from the sand. Critically, the milling of the sand bythe Rotex occurred *after* the sand had been dried.  Because the millingprocess was not yet complete at the Von Ormy plant at the time the sand wasdried, the facts in the *Cranesville* case are substantially different.[10]

The Interagency Agreement states “therewill remain areas of uncertainty regarding the application of the Mine Act,especially in operations near the termination of the milling cycle and the beginningof the manufacturing cycle.”[11]44 Fed. Reg. at 22828. However, common sense dictates that the manufacturingcycle involves the “making” of something, whereas both the InteragencyAgreement and the Commission have recognized that “milling,” as a generalmatter, often involves the removal of waste or impurities from a valuablemineral. 44 Fed. Reg. at 22829; *Watkins Eng’rs & Constructors*, 24FMSHRC 669, 674-675 (July 2002). Here, I find the Secretary reasonablyconcluded that Arepet’s “drying” and “sizing” processes were part of themineral milling cycle, and not the manufacturing cycle given that they involvedremoving moisture and oversized waste material from the valuable sand.[12]

 

Based on the above analysis, I findthat “milling,” as that term is understood in the mining industry and definedin the Interagency Agreement occurred at the Von Ormy plant. I further findthat “sizing” and “drying,” as those terms are defined in the InteragencyAgreement, occurred at the Von Ormy plant. Based on these findings, theSecretary reasonably determined that Arepet’s operation engaged in “milling” asthat term is used in the Mine Act. 

 

The Commission has explained that“milling” “independently qualifies . . . [an] operation as a ‘mine’ within themeaning of the Act.” *Drillex Inc.*, 16 FMSHRC 2391, 2395 (Dec. 1994). Moreover,the legislative history of the Act makes clear Congress intended “that what isconsidered to be a mine and to be regulated under this Act be given thebroadest possibl[e] interpretation, and . . . that doubts be resolved in favorof inclusion of a facility within the coverage of the Act.” S. Rep. No. 95-181,at 14 (1977), *reprinted in* Senate Subcomm. on Labor, Comm. on HumanRes., L*egislative History of the Federal Mine Safety and Health Act of 1977*,at 602 (1978) (“Legis. Hist”). Accordingly, I find that the Von Ormy plant is amine under the Act because “milling” occurred at the facility.

 

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***Do the products of the Von Ormy plant enter commerceor the operation or products of the plant affect commerce?***

 

            The Commission has recognized that “[b]ecauseCongress, in the Mine Act, intended to exercise the full reach of its authorityunder the Commerce Clause, the Secretary has a minimal burden to show that . ..[a mine’s] operations or products affect interstate commerce.” *Jerry IkeHarless Towing, Inc. and Harless Inc.*, 16 FMSHRC 683 (Apr. 1994); *Stateof Alaska Dept. of Transp.*, 36 FMSHRC 2642, 2645 (Oct. 2014). 

 

            I find that the Von Ormy plant’s products affect“commerce” as that term is used in the Act.[13]The joint stipulations make clear that Arepet currently sells its sand to EOGResources, which uses the sand at oil and gas drilling sites. Jt. Stip. 20. Moreover,Arepet has in the past sold sand to other customers, including HalliburtonEnergy Services, Inc., Liberty Oilfield Services, Marathon Oil EF, LLC, NextierCompletion Solutions and Laredo Energy Operating, LLC. Jt. Stip. 21. TheSecretary asserts, and Arepet does not dispute, that EOG Resources hasoperations in several other states. Moreover, Arepet’s past customers includemultinational corporations with oil and gas related operations throughout theworld. *See* 29 C.F.R. § 2700.67(a). Accordingly, I find that the sandproduced at the Von Ormy plant both enters and affects commerce.

            

            Having determined that the Von Ormy plant is a“coal or other mine” and that its products affect commerce, I find that the plantis subject to Mine Act jurisdiction. 

** **

**ORDER**

 

            Forreasons set forth above, the Secretary’s Motion for Summary Decision onJurisdiction is **GRANTED** and Respondent’s Motion for Summary Decision onJurisdiction is **DENIED**. The parties are **ORDERED** to confer and, byNovember 7, 2023, suggest multiple potential hearing dates in the months of December2023 and February 2024.

 

 

 

 

                                                                        /s/Richard W. Manning

Richard W. Manning

Administrative Law Judge

 

** **

 

 

Distribution(First Class Mail and email):

 

John M. Bradley, Esq., U.S. Department of Labor, Office ofthe Solicitor

525 S Griffin Street, Suite 501, Dallas, Texas 75202 (bradley.john.m@dol.gov) 

 

Adelle L. Abrams, Esq., Law Office of Adele L. Abrams, P.C.,

4740 Corridor Place, Suite D, Beltsville, MD 20705 (Safetylawyer@gmail.com) 

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[1]Section (B)(8) of the Interagency Agreement provides, in part: “When anyquestion of jurisdiction between MSHA and OSHA arises, the appropriate MSHA DistrictManager and OSHA Regional Administrator or OSHA State Designee in those Stateswith approved plans shall attempt to resolve it at the local level inaccordance with this Memorandum and existing law and policy.”

[2]The Secretary cites this court’s recent decision in *Cactus Canyon QuarriesInc.*, 2023 WL 3790763 (“*Cactus Canyon*”).

 

[3]The Secretary argues that in *Cranesville* the court held that “theSecretary’s decision over jurisdiction was entitled to Chevron deference, thatthe Mine Act did not unambiguously speak to the issue of whether theCranesville Bag Plant was under MSHA or OSHA jurisdiction, and that theSecretary’s determination that the Bag Plant was under OSHA jurisdiction wasreasonable.” Sec’y Mot. 13. Moreover, the Secretary asserts that the decision“reiterates the longstanding principle that the Secretary of Labor is entitledto substantial deference regarding OSHA and MSHA jurisdiction. Sec’y Mot. 13. 

[4]The parties agree that no extraction occurs at the Von Ormy plant. Accordingly,I have limited my analysis to whether milling occurred at the site such that itis subject to Mine Act jurisdiction. 

 

[5]Section 3(h)(1) of the Act states that “[i]n making a determination of whatconstitutes mineral milling for purposes of this Act, the Secretary shall givedue consideration to the convenience of administration resulting from thedelegation to one Assistant Secretary of all authority with respect to thehealth and safety of miners employed at one physical establishment[.]” 30U.S.C. § 802(h)(1). 

 

[6]Many of Arepet’s arguments are based upon a “fact” that is not included in theparties’ agreed-upon stipulations. The parties stipulated that Arepet purchasescommercially available wet sand that it initially stockpiles and did not agreeupon the mesh size of the sand. Jt. Stips. 7 & 8. Nevertheless, forpurposes of this order, I assume that Arepet contracted with Madden Materials,its sand supplier, to purchase a product described as 100 mesh sand.

 

[7]Section (B)(7) of the Interagency Agreement states that “‘[b]orrow pit’ means anarea of land where the overburden, consisting of unconsolidated rock, glacialdebris, or other earth material overlying bedrock is extracted from thesurface. Extraction occurs on a one-time only basis or only intermittently asneed occurs, for use as fill materials by the extracting party in the form inwhich it is extracted. *No milling is involved, except for the use of ascalping screen to remove large rocks, wood and trash*. The material is usedby the extracting party more for its bulk than its intrinsic qualities on landwhich is relatively near the borrow pit.” 44 Fed. Reg. at 22828. (emphasisadded)

 

[8]In *Kerr*, the ALJ stated that “scalping would ordinarily give rise to MineAct jurisdiction. However, the Interagency Agreement exempts a ‘borrow pit’from the broad reach of the Mine Act if certain conditions are met.”

[9]Notably, the *Cranesville* court stated that the operator of Plant 5,where the sand was processed prior to its arrival at the bag plant, had“unquestionably performed milling operations . . . where [the excavatedmaterials] . . . were crushed, *sized,* and washed.” 878 F.3d. at 35(emphasis added).

 

[10]It is important to recognize that the court in *Cranesville* did notconsider the jurisdiction issue de novo. Rather it concluded that “because theSecretary has authority to distinguish between mining and non-mining activitiesfor purposes of enforcement, when the Secretary reasonably applies a functionalanalysis, the Secretary’s determination as to which act governs is entitled tosubstantial deference.” 878 F.3d. at 35. As a consequence, Arepet’sconsiderable reliance on this case is misplaced. Indeed, the Secretary’sreasonable interpretation of Mine Act jurisdiction in this case is alsoentitled to deference. 

[11]In *Donovan v. CarolinaStalite Co*. the D.C. Circuit Court of Appeals recognized “every companywhose business brings it into contact with minerals is not to be classified asa mine within the meaning of section 3(h). The jurisdictional line drawn by thestatute rests upon the distinction, which is somewhat elusive, to say theleast, between milling and preparation, on the one hand, and manufacturing, onthe other. Classification as the former carries with it Mine Act coverage;classification as the latter results in Occupational Safety and Health Actregulation.” 734 F.2d 1547, 1551 (D.C. Cir. 1984).

 

[12]The milling processes utilized at the Von Ormy plant can be distinguished from themanufacturing processes used at the bag plant in *Cranesville*. In *Cranesville*,the sand was already fully milled and was only being “dried as part of themanufacturing process” which included, at times, mixing the sand with otherminerals, i.e., adding material to make a new product, and then bagging. 878F.3d at 35 (2d Cir. 2017). In contrast, the processes at the Von Ormy plantinvolved removing unvaluable waste from the valuable sand.

 

[13]Section 3(b) of the Mine Act defines “commerce” as “trade, traffic, commerce,transportation, or communication among the several States, or between a placein a State and any place outside thereof, or within the District of Columbia ora possession of the United States, or between points in the same State butthrough a point outside thereof[.]” 30 U.S.C. § 802(b).