Kinder Morgan Operating, L.P. v. Chao

Citation: 78 F. App'x 462Docket: No. 02-3052

Court: Court of Appeals for the Sixth Circuit; October 10, 2003; Federal Appellate Court

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Kinder Morgan Operating, L.P. appealed a decision from the Federal Mine Safety and Health Review Commission, which affirmed an Administrative Law Judge's determination that Kinder Morgan's Grand Rivers Terminal is classified as a "mine" under 30 U.S.C. 802(h)(1) and is therefore subject to the Federal Mine Safety and Health Act as outlined in 30 U.S.C. 803. The Terminal, located near Grand River, Kentucky, handles an average of ten million tons of processed coal annually, primarily owned by the Tennessee Valley Authority (TVA), under a bailee agreement. The Terminal comprises various loading and unloading facilities, including GRT-1, GRT-2, and GRT-4, with coal processed without additional washing or sizing.

The coal is moved through the Terminal using three methods: 

1. **Rail-to-stockpile-to-barge** (75% of TVA’s coal): Coal is dumped into a hopper, transferred via belts to stockpiles, and later moved using dozers and dump trucks into a draw-off tunnel for loading onto barges.
2. **Barge-to-stockpile-to-barge** (5% of TVA’s coal): Coal is unloaded from barges, stockpiled, and then loaded onto barges similarly to the first method.
3. **Rail-to-barge** (20% of TVA’s coal): Coal is unloaded from rail cars directly into barges without stockpiling.

The case arose from a Mine Safety and Health Administration (MSHA) inspection on February 2, 2000, which resulted in citations and a civil penalty of $187. Kinder contested these citations, asserting that the Terminal did not fall under the Act's jurisdiction. The Commission's decision to affirm the ALJ's ruling was upheld.

The dispute regarding Kinder Morgan's operations was adjudicated by an Administrative Law Judge (ALJ), who ruled in favor of the Mine Safety and Health Administration (MSHA) and the Labor Secretary on January 26, 2001. The decision was reviewed by the Commission, which resulted in a split vote, allowing the ALJ's ruling to remain in effect. Kinder Morgan appealed the ruling on January 1, 2002, bringing the case under the jurisdiction of this Court as per 30 U.S.C. 816(a).

The central issue is whether Kinder Morgan's Terminal is involved in "the work of preparing coal" as defined by the Federal Mine Safety and Health Act. If so, the Terminal qualifies as a 'mine' under 30 U.S.C. 802(h)(1), thus falling under MSHA's jurisdiction. The Act's coverage includes any coal mine or facility that engages in activities affecting commerce, as detailed in 30 U.S.C. 803. 

The definitions provided in the Act include "work of preparing the coal," which encompasses various processes such as breaking, crushing, sizing, and loading coal (30 U.S.C. 802(i)). The Secretary argued that Kinder's activities—mixing, storing, and loading coal—constitute preparation and thus subject it to the Act. Conversely, Kinder contended it does not prepare coal in a manner typical of a coal mine operator, asserting its role is to handle coal per TVA’s specifications rather than preparing it.

In a split decision on December 14, 2001, two commissioners supported the Secretary's position, while two others disagreed. The Court, after thorough examination of the record, parties' arguments, and relevant legal standards, adopted the opinion of the commissioners favoring the Secretary, affirming that Kinder is subject to the Act for engaging in the work of preparing coal. The Commission's decision was affirmed, underscoring Kinder's operations align with the definitions outlined in the Act.