16-2055-ag
Sec. of Labor v. Cranesville Aggregate Cos., Inc.


                                     In the
                         United States Court of Appeals
                            For the Second Circuit
                                         __________________

                                          August Term, 2016

                    (Argued: May 11, 2017           Decided: December 18, 2017)

                                        Docket No. 16-2055-ag
                                         __________________

                                        SECRETARY OF LABOR,

                                         Petitioner-Appellant,

                                                    V.


            CRANESVILLE AGGREGATE COMPANIES, INC., DBA SCOTIA BAG PLANT,

                                        Respondent-Appellee.*

__________________

Before:     LEVAL, POOLER, and HALL, Circuit Judges.
__________________

          The Secretary of Labor (the “Secretary”) seeks review of an order of the Oc-
          cupational Safety and Health Review Commission (the “Commission”), vacat-
          ing a number of citations for various workplace violations of Occupational
          Safety and Health Administration (“OSHA”) standards. The Commission
          concluded that the Occupational Safety and Health Act (the “OSH Act”) had
          no application, and OSHA lacked authority over the cited work conditions,
          because the work was covered by the Mine Safety and Health Act (the “Mine
          Act”) and therefore subject to regulation by the Mine Safety and Health Ad-
          ministration (“MSHA”), rather than OSHA. In this appeal we are required to
          decide whether the Secretary's determination that OSHA, rather than
          MSHA, governed the areas in which the workplace conditions existed. In so



*   We respectfully request that the Clerk of Court amend the official caption to conform to that above.
      doing, we conclude that the Secretary reasonably determined that the cited
      workplace conditions were subject to OSHA—rather than MSHA—regulation.

      REVERSED AND REMANDED.

__________________

                                RONALD J. GOTTLIEB (M. Patricia Smith, Ann S.
                                Rosenthal, Charles F. James, on the brief), U.S. De-
                                partment of Labor, Washington, DC, for Petitioner.

                                WALTER BREAKELL, Breakell Law Firm P.C., Alba-
                                ny, New York, for Respondent.
__________________


HALL, Circuit Judge:

      This petition for review arises out of an action brought by the Secretary of

Labor against Cranesville Aggregate Companies, Inc. (“Cranesville”) to enforce cita-

tions for safety hazards that were issued by the Occupational Safety and Health

Administration (“OSHA”) pursuant to the Occupational Safety and Health Act (the

“OSH Act”). The Secretary seeks our review of a decision of the Occupational Safety

and Health Review Commission (the “Commission”), which determined that OSHA

was without authority over the work in question because that work was subject to

the Mine Safety and Health Act (the “Mine Act”), rather than the OSH Act.

      Following receipt of complaints and an inspection, the Occupational Safety

and Health Administration (“OSHA”) issued Cranesville six citations for violations

of various OSHA standards found at Cranesville’s “Bag Plant” at its sand and grav-

el operation. Cranesville contested the citations and argued that OSHA’s authority

over the cited work conditions is governed not by the OSH Act but by Mine Act be-



                                         2
cause the Mine Act gives the Mine Safety and Health Administration (“MSHA”) au-

thority to enforce violations at the Bag Plant. After an administrative hearing, an

Administrative Law Judge (“ALJ”) vacated the citations, concluding that, because

MSHA had authority over the cited working conditions, OSHA’s standards did not

apply to it. The Secretary subsequently sought a petition for discretionary review

by the Occupational Safety & Health Review Commission (the “Commission”). Be-

cause the two Commissioners remaining on the Commission could not agree on

whether the Mine Act or the OSH Act applied to the cited conditions, the ALJ’s de-

cision vacating the citations became final.1

       We conclude that the Secretary reasonably determined that the cited work-

place conditions were subject to OSHA regulation. The ALJ therefore erred in de-

termining that the OSHA citations were not enforceable.

       The Bag Plant is subject to MSHA authority if it is a “mine” within the mean-

ing of the Mine Act. The Mine Act defines the term “mine” to include structures and

facilities used in “milling” minerals. The Mine Act, however, leaves it to the Secre-

tary to define the term “milling.” The Secretary’s reasonable determination regard-

ing which conditions are to be regulated by MSHA and which by OSHA is entitled

to substantial deference. The ALJ gave no deference whatsoever to the Secretary’s

decision to issue the citations for the Bag Plant violations under the authority of

OSHA, but rather imposed his own interpretation of what the Mine Act covered.

1Normally, the Commission is made up of three Commissioners. See About OSHRC, oshrc.gov,
https://www.oshrc.gov/about/how-oshrc-works.html (last visited Dec. 12, 2017). At the time of the
Commission’s decision in this case, however, there were only two Commissioners on the reviewing
panel, and at the time of this writing there are currently three Commissioners. See Current Com-
missioners, oshrc.gov, https://oshrc.gov/about/Commissioners_bios.html (last visited Dec. 12, 2017).

                                                  3
For the reasons that follow, the decision of the Commission upholding the ALJ’s de-

cision is REVERSED AND REMANDED.

                                    I. BACKGROUND

             A. THE STATUTORY AND REGULATORY FRAMEWORK

      This appeal involves the interplay of two federal statutes: the OSH Act and

the Mine Act, both administered under the authority of the Secretary of Labor. The

Secretary of Labor is authorized to enforce the OSH Act, which is designed to en-

sure the safe working conditions for every worker in the nation. 29 U.S.C. § 651(b).

When Congress enacted the OSH Act, however, certain federal agencies already had

authority to regulate occupational safety and health of employees engaged in specif-

ic fields. Accordingly, Congress included section 4(b)(1) in its promulgation of the

OSH Act. 29 U.S.C. § 653(b)(1). Section 4(b)(1) provides: “[n]othing in this Act shall

apply to working conditions of employees with respect to which other Federal agen-

cies . . . exercise statutory authority to prescribe or enforce standards or regulations

affecting occupational safety or health.” 29 U.S.C. § 653(b)(1). Pursuant to this

provision, the OSH Act does not apply when (1) another federal agency has statuto-

ry authority to regulate the cited working conditions and (2) that other agency has

exercised such authority by issuing applicable regulations. Chao v. Mallard Bay

Drilling, Inc., 534 U.S. 235, 241–42 (2002).

      The Secretary also has the authority to enforce, through the Mine Safety and

Health Administration (“MSHA”), the Mine Act. 30 U.S.C. §§ 801–962. Under the

Mine Act, MSHA has jurisdiction to regulate the working conditions at mines, that



                                           4
is, sites used for extracting, milling, or preparing minerals.2                      See 30 U.S.C.

§§ 802(h)(1), 803. While the Mine Act does not explicitly define the term “milling,”

it provides that in determining “what constitutes mineral milling for purposes of

this chapter, the Secretary shall give due consideration to the convenience of admin-

istration resulting from the delegation to one Assistant Secretary of all authority

with respect to the health and safety of miners employed at one physical establish-

ment.” Id.

       Additionally, an interagency Memorandum of Understanding (“MOU”) be-

tween OSHA and MSHA issued in 1979 further explains what constitutes a mine,

subject to MSHA regulation. The MOU defines “milling” as “the art of treating the

crude crust of the earth to produce therefrom the primary consumer derivatives.”

Joint App’x at 394–95. The MOU lists “drying” among the processes that can con-

stitute “milling.”3 Joint App’x at 394–95. “Drying” is defined as “the process of re-

moving uncombined water from mineral products, ores, or concentrates, for exam-



       2   “Coal or other mine” is defined as:

                 (A) an area of land from which minerals are extracted in nonliquid
                 form or, if in liquid form, are extracted with workers underground,
                 (B) private ways and roads appurtenant to such area, and (C) lands,
                 excavations, underground passageways, shafts, slopes, tunnels and
                 workings, structures, facilities, equipment, machines, tools, or other
                 property including impoundments, retention dams, and tailings
                 ponds, on the surface or underground, used in, or to be used in, or re-
                 sulting from, the work of extracting such minerals from their natural
                 deposits in nonliquid form, or if in liquid form, with workers under-
                 ground, or used in, or to be used in, the milling of such minerals, or
                 the work of preparing coal or other minerals, and includes custom
                 coal preparation facilities. . . .

30 U.S.C. § 802(h)(1).
3The ALJ’s conclusion that the Bag Plant was a ‘mine’ depended in part on its finding that sand was
dried there, and that this ‘drying’ constituted mineral milling under the MOU.

                                                   5
ple, by the application of heat, in air-actuated vacuum type filters, or by pressure

type equipment.” Joint App’x at 395.

      The MOU also explains, however, that despite the above definitions, “there

will remain areas of uncertainty regarding the application of the Mine Act, especial-

ly in operations near the termination of the milling cycle and the beginning of the

manufacturing cycle.” Joint App’x at 391. It states, moreover, that the “term mill-

ing may be narrowed to exclude from the scope of the term processes listed . . .

where such processes are unrelated, technologically, or geographically, to mineral

milling.” Joint App’x at 391. The MOU also clarifies that OSHA may have authori-

ty over facilities on mine property when the material from the mine, such as sand,

arrives at the plant stockpile or when milling is completed. In evaluating whether a

particular process might be considered “mineral milling,” and thus covered by

MSHA, the Secretary considers a non-exhaustive list of factors, including:

             [T]he processes conducted at the facility, the relation of
             all processes at the facility to each other, the number of
             individuals employed in each process, and the expertise
             and enforcement capability of each agency with respect to
             the safety and health hazards associated with all the pro-
             cesses conducted at the facility.

Joint App’x at 391.

             B. CRANESVILLE OPERATIONS

      Cranesville is a “mine operator” under the Mine Act and operates a sand and

gravel mine in Scotia, New York (the “Scotia Mine”). Cranesville produces aggre-

gates from sand and gravel pits and sells the aggregates to its parent company

(Cranesville Block Co., Inc.) and other third parties. The Scotia Mine property con-

                                         6
sists of a large quarry pit and a number of related buildings, including buildings lo-

cated in an area known as “Plant 5,” which is adjacent to the quarry pit. Two other

related buildings (Buildings 1 and 2) collectively make up the Bag Plant. Both

Building 1 and Building 2 contain storage areas, conveyors, and related equipment

for “bagging” materials. Building 2 also houses a maintenance shop for repairing

mining equipment, and a sand dryer. The quarry pit, Plant 5, and the Bag Plant

are part of the same parcel of property, have the same street address, and are all

owned by Cranesville.

      For our purposes, it is important to identify where certain mining and manu-

facturing operations are conducted on the property. At Plant 5, which is next to the

quarry pit, Cranesville crushes, sizes, and washes excavated material, which is then

screened and separated into different sized products, one of which is sand. Sand so

produced at Plant 5 is sold in bulk to Cranesville’s customers, and a portion is

stockpiled. A portion of the sand prepared at Plant 5 is transported from Plant 5 to

the Bag Plant to be packaged, either as sand or in combination with concrete or oth-

er materials, and sold in bagged form. The Bag Plant is located approximately 600

feet from the quarry pit, separated by railroad tracks that traverse the mine proper-

ty. A private roadway connects the quarry pit to the Bag Plant. The sand transport-

ed from Plant 5 to the Bag Plant for bagging is in the same condition as the sand

sold at Plant 5 to Cranesville’s customers for bulk sand. At the Bag Plant, the sand

is dried and otherwise prepared to be bagged, either separately or in a mixture with

concrete and other products. The Bag Plant also received materials from other



                                          7
Cranesville-affiliated companies and non-affiliated companies. The sand acquired

by the Bag Plant from other sources was treated there identically to the sand trans-

ferred to the Bag Plant from Plant 5.

      At the Bag Plant, excavated material was dumped into a large barrel that

has a furnace gun at one end, which would spin and fluff the material to dry and

prepare it for its use in concrete. Drying occurred at the Bag Plant twice a week for

approximately three hours each day. Drying was a critical part of the bagging op-

erations conducted at the Bag Plant, both because moist sand was difficult to han-

dle, and because concrete, if mixed with moist sand, would harden and be compro-

mised.

      In addition to the drying operations, the Bag Plant also housed mining

equipment. At the Bag Plant were screens, dryers, elevators, hoppers, and convey-

ors, as well as equipment for bagging the finished product. The Bag Plant also con-

tained a maintenance shop, in which a small maintenance crew repaired mining

equipment, including rock crushers and bucket loaders. While the maintenance

crew did not work exclusively at the Bag Plant maintenance shop, they performed

some maintenance work on equipment housed there and regularly delivered and

removed equipment and other materials from the shop.

             C. OSHA’S INSPECTION AND CITATIONS

      In response to an employee complaint, in May of 2009, OSHA initiated a safe-

ty inspection of the Bag Plant. Based on the compliance officer’s initial observa-

tions, OSHA also conducted a health inspection of the Bag Plant. Following the in-



                                         8
spections, OSHA issued a number of citations for violations of numerous safety and

health standards. Cranesville contested the citations, alleging that its operations

were outside of OSHA’s authority.

      Prior to the hearing on the citations, the Secretary and Cranesville entered

into a settlement agreement regarding a number of the violations. The total penal-

ty for these violations totaled $42,300. The settlement is contingent, however, on

OSHA having authority over the Bag Plant. The remaining citations proceeded to

an administrative hearing.    The proposed penalties for these violations reached

$452,000. The violations concerned electrical hazards, the unsafe operation of fork-

lifts, unguarded elevated platforms, a non-compliant ladder, the lack of personal

protective equipment, overexposure to breathable Portland cement, and general

housekeeping issues at the Bag Plant. Importantly, none of the alleged OSHA vio-

lations dealt with working conditions in the maintenance shop.

      During the administrative proceedings hearing, Cranesville argued that

OSHA lacked authority over the cited workplace conditions because the Bag Plant

operated as a repair facility for mining equipment, and the drying of the sand con-

stituted “milling” under the Mine Act. It was Cranesville’s position that OSHA

lacked authority over the workplace conditions because they fell within MSHA’s au-

thority. Each party presented expert testimony about when drying a mineral might

constitute milling under the Mine Act. The experts agreed that sand leaving Plant

5 (including sand delivered to the Bag Plant) was a “finished product.” Yet, the two




                                         9
disagreed as to whether the drying of the sand at the Bag Plant could be considered

milling.

      The Secretary’s expert explained that the drying at the Bag Plant was per-

formed to make the end-product easier to handle and prevent the hydration of ce-

ment (with which the sand was mixed), and not to upgrade the product to increase

its value. The Secretary’s expert distinguished between drying that is followed by

further milling operations and drying that is incidental to manufacturing process-

es—such as bagging. The Secretary’s expert also explained that the Bag Plant’s op-

erations were similar to those of a “ready-mix” cement plant—an operation over

which OSHA typically exercises authority.

      Cranesville’s expert, on the other hand, explained that the drying that took

place at the Bag Plant constituted “upgrading” the sand because it was “preparing

the product” for commerce. Joint App’x at 348, 359–60.    He also testified that the

drying process employed at the Bag Plant was similar to other drying operations

which were found to make up part of the mining process and therefore was subject

to MSHA authority.

      Both experts agreed that the maintenance shop housed in the Bag Plant was

subject to MSHA authority. The Secretary’s expert explained, though, that OSHA

maintained authority over other parts of the Bag Plant, since agencies could exer-

cise shared authority over facilities in which maintenance activities are performed.

By contrast, Cranesville’s expert concluded that because MSHA had authority over

the maintenance shop, the entire Bag Plant was rendered subject to MSHA jurisdic-



                                        10
tion. He explained that because MSHA standards were adequate to address the

hazards in other parts of the Bag Plant, “convenience of administration” supported

regulation of the Bag Plant under MSHA.

             D. THE ALJ’S DECISION

      Following a nine-day hearing and post-hearing briefing, the ALJ ultimately

vacated the OSHA citations on the grounds that MSHA, not OSHA, had authority

over the cited workplace conditions. The ALJ concluded that, although it was not

the primary operation, the drying process at the Bag Plant constituted milling un-

der the MOU, bringing the plant under MSHA authority. The ALJ further found

that the maintenance shop, which repaired mining equipment and employed

maintenance workers who worked in all areas of the mining property, is sufficient,

on its own, to bring the Bag Plant within the purview of the Mine Act. In holding

that the Bag Plant was within the scope of MSHA’s regulatory authority, the ALJ

emphasized that “it is the intent of Congress that” any doubts about whether an ac-

tivity falls under the Mine Act are to be “resolved in favor of inclusion of . . . cover-

age” under the Act. The Secretary subsequently sought Commission review.

             E. THE COMMISSION’S DECISION

      Because the two commissioners could not agree on whether the Bag Plant

was covered under the Mine Act or subject to OSHA’s jurisdiction, by default, the

ALJ’s decision became the Commission’s final order. Each commissioner wrote to

explain her views.




                                           11
      Chair Attwood determined that Cranesville failed to meet its burden of estab-

lishing that OSHA lacked authority over the cited workplace conditions. She ex-

plained that the Mine Act expressly delegated authority to the Secretary to deter-

mine what constitutes milling under the Mine Act. The Chair also concluded that

the MOU supported the Secretary’s determination that the drying at the Bag Plant

did not qualify as milling and the performance of maintenance in one room of the

Plant was insufficient to bring the entire Plant within the authority of the Mine

Act. She concluded that the Secretary had reasonably “draw[n] the line between

Cranesville’s mining and milling operations on the one hand, and its manufacturing

operations on the other.” Joint App’x at 116.

      In contrast, Commissioner MacDougall concluded that MSHA, not OSHA,

had authority over the cited workplace conditions, reasoning that, under the plain

meaning of the Mine Act, MSHA had jurisdiction over the Bag Plant because it per-

formed maintenance work on mining equipment in Building 2.               Commissioner

MacDougall also concluded that the drying process at the Bag Plant was sufficient

to bring it within MSHA’s authority.

      The Secretary of Labor appeals the decision of the Commission affirming the

decision of the ALJ.

                                   II.   DISCUSSION

      We will “uphold an order of an administrative agency such as the Commis-

sion unless it is ‘arbitrary, capricious, an abuse of discretion, or otherwise not in ac-




                                           12
cordance with the law.’” Chao v. Russell P. Le Frois Builder, Inc., 291 F.3d 219, 226

(2d Cir. 2002) (quoting 5 U.S.C. § 706(2)(A)).

      It is understood that where, as here, the Secretary “has authority to interpret

the statute . . . we . . . defer to the views of the Secretary rather than the Commis-

sion.” Id. at 227. In determining what level of deference we owe the Secretary’s in-

terpretation of the Mine Act (the statute implicated in this case that provides the

exception to OSH Act enforcement), we consider whether “the agency interpretation

claiming deference was promulgated in the exercise of [the Secretary’s rule-making]

authority.” United States v. Mead Corp., 533 U.S. 218, 227 (2001).

      The Supreme Court has recognized that the Secretary’s interpretation of

OSH Act regulations—“when embodied in a citation”—“assumes a form expressly

provided for by Congress.” Martin v. OSHRC, 499 U.S. 144, 157 (1991) (citing 29

U.S.C. § 658). In Martin, the Court explained that when the Secretary’s interpreta-

tion takes the form of a citation for violation of safety standards, the Secretary’s “lit-

igating position before the Commission is as much an exercise of delegated lawmak-

ing powers as is the Secretary’s promulgation of a workplace health and safety

standard.” Id.; see also Sec’y of Labor, MSHA v. Nat’l Cement Co. of Cal., 494 F.3d

1066, 1073 (D.C. Cir. 2007) (“[I]n the statutory scheme of the Mine Act, the Secre-

tary’s litigating position before the Commission is as much an exercise of delegated

lawmaking powers as is the Secretary’s promulgation of a . . . health and safety

standard, and is therefore deserving of [Chevron] deference.”). So it is in the case

before us.



                                           13
      To be clear, we have previously applied “the more limited deference recog-

nized in Skidmore” to the Secretary of Labor’s interpretation of the OSH Act where

it was “expressed only as a position in litigation.” Russell P. Le Frois Builder, Inc.,

291 F.3d at 227 (emphasis added). In Russell, the Secretary articulated the view

that “§ 10 of the [OSH] Act does not confer on the Commission the power to excuse

late filing pursuant to the terms of Fed. R. Civ. Pro. 60(b).” Id. However, unlike

Martin or the circumstances presented here, the Secretary had not issued a citation,

or otherwise taken this position in “regulations, rulings or administrative practice.”

Id. at 227 (quoting Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 212 (1988)).

Rather, the agency had merely adopted its view as a litigation position. Id. Under

those circumstances, we concluded that the Secretary’s view of the OSH Act was en-

titled to deference, but only to the more limited deference reflected in Skidmore, ra-

ther than Chevron. Here, however, the Secretary’s interpretation of the Mine Act

was expressed as more than simply a litigating position—as it was embodied in an

OSHA citation.

      In this case, the Secretary issued a number of citations for various OSHA vio-

lations. By issuing these citations under OSHA, the Secretary has necessarily ruled

that the Mine Act does not except the workplace conditions at the Bag Plant from

scrutiny under OSHA. That is, the Secretary via the citation and enforcement pro-

ceeding has concluded that OSHA, rather than MSHA, had authority over the cited

conditions. The Secretary has maintained this position throughout the ensuing liti-

gation.   Because the Secretary’s interpretation of the Mine and OSH Acts was



                                          14
thereby embodied in a series of citations for safety violations, it is entitled to the

deference described in Chevron, U.S.A., Inc. v. Nat’l Res. Def. Council, Inc., 467 U.S.

837 (1984). Cf. Martin, 499 U.S. at 157 (concluding that “Secretary’s interpretation

of OSH Act regulations is an administrative adjudication [and] . . . when embodied

in a citation, . . . assumes a form expressly provided for by Congress.” (citation omit-

ted)); Nat’l Cement Co. of Cal., 494 F.3d at 1073 (holding Chevron deference applies

to Secretary’s legal determinations under Mine Act, if that position otherwise mer-

its such deference under Chevron’s criteria).

      Under the Chevron two-step framework, we first ask “whether Congress has

directly spoken to the precise question at issue,” in which case we “must give effect

to the unambiguously expressed intent of Congress.” Chevron, 467 U.S. at 842–43.

“[I]f the statute is silent or ambiguous with respect to the specific issue,” however,

we must then determine whether the agency’s interpretation is “based on a permis-

sible construction of the statute.” Id. at 843. Applying Chevron to the circumstanc-

es presented by the Bag Plant and sand and gravel operation, at best, it is unclear

under the Mine Act when the mining process ends—and thus when MSHA authori-

ty terminates and OSHA authority begins—because the operation at the Bag Plant

falls somewhere between the termination of the milling cycle and beginning of the

manufacturing cycle. Reaching step two, we further conclude that the Secretary’s

determination that the cited conditions at the Bag Plant were subject to OSHA au-

thority was a reasonable construction of the Mine Act.




                                          15
      First, we consider the relevant language of the Mine Act, which provides

MSHA with authority over “structures, facilities, equipment, machines, tools, or

other property . . . used in, or to be used in, or resulting from, the milling of [ ] min-

erals, or the work of preparing coal or other minerals.” 30 U.S.C. § 802(h)(1) (em-

phasis added). While the term “milling” is not explicitly defined under the Mine

Act, the Act 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 employed at one physical establish-

ment.” Id. As our sister circuit has noted, “this [convenience of administration

clause] gives the Secretary discretion, within reason, to determine what constitutes

mineral milling, and thus indicates that his determination is to be reviewed with

deference both by the Commission and the courts.” Donovan v. Caroline Stalite Co.,

734 F.2d 1547, 1552 (D.C. Cir. 1984). “Section (h)[1] gives the Secretary power—in

situations such as this, where the company’s operations do not fall exclusively with-

in the province of either mineral ‘milling’ or ‘manufacturing’—to decide which of his

agencies will possess enforcement authority over the facility in question.” Id. at

1553. The convenience of administration clause confirms our conclusion that the

Secretary’s interpretation of the Mine Act in this case is entitled to Chevron defer-

ence. Cf. Mead Corp., 533 U.S. at 229 (recognizing “a very good indicator of delega-

tion meriting Chevron treatment in express congressional authorizations to engage

in the process of rulemaking or adjudication that produces regulations or rulings for

which deference is claimed”).



                                           16
      Having determined that the Mine Act does not unambiguously speak to the

issue of what is and is not included in mining operations, we now turn to whether

the Secretary’s interpretation of the Act was reasonable. In determining whether

certain processes constitute milling or manufacturing, the Secretary applies a func-

tional analysis. See Sec’y of Labor (MSHA) v. Elam, 4 FMSHRC 5, 7 (1982); see also

Joint App’x at 391. Under this analysis, the primary focus is the nature of the ac-

tivities performed at the facility in question. Sec’y of Labor (MSHA) v. Standard

Gravel Co. Inc., 34 FMSHRC 3004, 3008 (2012).         In addition, when evaluating

whether certain operations constitute milling or manufacturing, the Secretary’s dis-

cretion is guided by the interagency MOU, which—while it includes “drying” as a

process that may be considered “milling”—also explains, “There will remain areas of

uncertainty regarding the application of the Mine Act, especially in the operations

near the termination of the milling cycle and the beginning of the manufacturing

cycle.” The MOU adds that the “term milling may be narrowed . . . where such pro-

cesses are unrelated, technologically, or geographically, to mineral milling.” Joint

App’x at 391 (emphasis added). The MOU also clarifies that OSHA may have au-

thority over facilities on mine property when the material from the mine, such as

sand, arrives at the plant stockpile or when milling is completed.

      Considering the nature of the activity at the Bag Plant, we hold that the Sec-

retary reasonably determined that the Bag Plant operations fall under the OSH

Act, and not the Mine Act. The operations at the Bag Plant consisted largely of

mixing and bagging sand that was already fully milled and marketable when deliv-



                                         17
ered to the Bag Plant. The activities conducted there, devoted to the bagging of that

sand, either separately or in combination with cement and other minerals, was both

functionally and geographically distinct from the extracting and milling operations

performed at the quarry pit and Plant 5. Bag Plant employees would bag sand that

was delivered from Plant 5 (where it was crushed, washed, and screened) as well as

a variety of other minerals and materials received from third-party sources, includ-

ing cement and pre-mix aggregates. The employees also mixed the sand with other

aggregates to create cement pre-mix, which was then bagged. Such activities are

functionally and, to a significant extent, geographically distinct from the mineral

extraction and processing operations performed at other locations of the Scotia

Mine.

        Moreover, while sand milled at Plant 5 was dried at the Bag Plant, it was

dried as part of the manufacturing process for producing cement mix and other sur-

face bonds. At the Bag Plant, Cranesville was essentially operating in its capacity

as a manufacturer and not as a mine operator.

        Also of note, Cranesville unquestionably performed milling operations at

Plant 5, where materials excavated from the quarry were crushed, sized, and

washed. See Joint App’x at 394 (listing crushing, sizing, and washing as processes

that may be considered “milling”). The sand produced from Plant 5 constituted a

primary consumer derivative, requiring no further processing to be marketable. See

Joint App’x at 300–01. Indeed, the sand produced from Plant 5 and delivered to the




                                         18
Bag Plant was indistinguishable from the sand delivered to Cranesville’s other cus-

tomers.

      Considering all of these factors, therefore, we conclude that the overall work

at the Bag Plant was unrelated to the milling process. The Secretary reasonably

concluded that the Bag Plant was not part of the mineral processing operation at

the Scotia Mine but rather functioned as a separate manufacturing facility using

milled materials delivered from Plant 5. Because MSHA authority generally termi-

nates once the milling process is complete and OSHA’s begins at manufacturing, see

Joint App’x at 396, the Secretary reasonably concluded that OSHA had jurisdiction

over the Bag Plant.

      Cranesville contends that because “drying” took place at the Bag Plant, the

entire bagging operation should be deemed “milling” and thus subject to MSHA au-

thority. It is true that the MOU lists drying as a process that may fall within

MSHA regulatory authority. But, drying is merely one factor to consider in the

functional analysis. What is more, the MOU discusses that the “term milling may

be narrowed to exclude . . . processes [such as drying] where such processes are un-

related technologically, or geographically, to mineral milling.” Joint App’x at 391.

In determining the application of the Mine Act, the Secretary may consider all pro-

cesses conducted at the facility and their relation to each other. See Joint App’x at

391–92. The Secretary did just that, and we afford his determination considerable

deference.




                                         19
      Cranesville also contends that, because the maintenance shop was located in

Building 2 of the Bag Plant, in which mining equipment was repaired and stored,

the entire Bag Plant is subject to MSHA jurisdiction. The ALJ agreed, concluding

that the presence of the maintenance shop, in and of itself, was sufficient to bring

the entire Bag Plant under MSHA authority. Both Cranesville and the ALJ give

short shrift to the fact that the Secretary is authorized to consider the overall na-

ture and characteristics of the Bag Plant in determining whether the Mine Act ap-

plies. Indeed, the Secretary does not dispute that MSHA, and not OSHA, has au-

thority over the maintenance shop. See 30 U.S.C. § 802(h)(1) (Mine Act authority

extends to “structures, facilities, equipment, . . . and other property . . . used in”

mining process). Rather, the Secretary asserts that he is authorized to distinguish

between mining and non-mining activities. See, e.g., § 802(h)(1) (“convenience of

administration” provision). Because the Secretary found that the majority of the

operations at the Bag Plant were better construed as manufacturing than milling

processes, it was reasonable to conclude that OSHA applied to the cited workplace

conditions. Cf. Standard Gravel, 34 FMSHRC at 3008–09 (“That a minuscule part

of the work it performs is for the benefit of non-mining enterprises is immaterial

and does not detract from the finding that the function of the facility is to support

[Respondent’s] mining activities.”); see also Carolina Stalite, 734 F.2d at 1551 (“It is

clear that every company whose business brings it into contact with minerals is not

to be classified as a mine . . . .”). In fact, none of the alleged OSHA violations dealt

with working conditions in the maintenance shop.



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      The fact that one portion of the Bag Plant may be subject to MSHA does not

defeat the reasonableness of the Secretary’s determination as to the cited workplace

conditions. As explicated above, because the Secretary has authority to distinguish

between mining and non-mining activities for the purposes of enforcement, when

the Secretary reasonably applies a functional analysis, the Secretary’s determina-

tion as to which act governs is entitled to substantial deference. In contravention of

Chevron, the ALJ does not appear to have given the Secretary’s interpretation of

the Mine Act any deference at all, instead imposing his own view of what was rea-

sonable. Because the Commission did not afford proper deference to the Secretary’s

reasonable determination, the Commission’s ruling was not in accordance with the

law. We therefore reverse the Commission’s decision upholding the ALJ’s decision

and order, and remand for entry of an order upholding the OSHA citations and set-

tlement agreement.



                                 III.   CONCLUSION

      For the foregoing reasons, the decision of the Commission upholding the

ALJ’s decision and order is REVERSED, and the case is REMANDED for further

proceedings not inconsistent with this opinion.




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