[Federal Register: May 9, 2006 (Volume 71, Number 89)]
DEPARTMENT OF LABOR
Mine Safety and Health Administration
Section 110(c) of the Federal Mine Safety and Health Act of 1977;
AGENCY: Mine Safety and Health Administration (MSHA), Department of
ACTION: Interpretive bulletin.
SUMMARY: This Interpretive Bulletin sets forth a statement of the
Secretary of Labor's interpretation of Section 110(c) of the Federal
Mine Safety and Health Act of 1977 (Mine Act), 30 U.S.C. 820(c), as it
relates to agents of Limited Liability Companies (LLCs). The
Interpretive Bulletin is considered an interpretive rule and provides
an explanation of the Secretary's interpretation of Section 110(c) and
the rationale supporting that interpretation. For the reasons set forth
below, the Secretary's interpretation is that Section 110(c) of the
Mine Act is applicable to agents of LLCs. The effect of the Secretary's
interpretation is that agents of LLCs may be held personally liable
under Section 110(c) of the Mine Act if they knowingly authorize,
order, or carry out a violation of any mandatory health or safety
standard under the Act or a violation of or failure or refusal to
comply with any order issued under the Act or any order incorporated in
a final decision issued under certain provisions of the Act.
DATES: Comments on this Interpretive Bulletin are due June 8, 2006. The
Interpretive Bulletin is scheduled to be put into effect July 10, 2006.
ADDRESSES: You may use mail, facsimile (fax), or electronic mail to
send us your comments regarding this Interpretive Bulletin. Clearly
identify your request and send it one of the following ways:
(1) Fax: (202) 693-9441. Include ``Interpretive Bulletin regarding
Limited Liability Companies'' in the subject line of the fax.
(2) By electronic mail to zzMSHAfirstname.lastname@example.org. Include
``Interpretive Bulletin regarding Limited Liability Companies'' in the
subject line of your electronic mail.
(3) Mail/Hand Delivery/Courier: MSHA, Office of Standards,
Regulations, and Variances, 1100 Wilson Blvd., Room 2350, Arlington,
Virginia 22209-3939. If hand-delivered in person or by courier, you
must stop by the 21st floor first to check in with the receptionist.
Docket: To access comments electronically, go to http://www.msha.gov
and click on ``Comments'' under ``Rules and Regulations.''
All comments received will be posted without change at this Web
address, including any personal information provided. Paper copies of
the comments may also be reviewed at the Office of Standards,
Regulations, and Variances, 1100 Wilson Blvd., Room 2349, Arlington,
FOR FURTHER INFORMATION CONTACT: Patricia W. Silvey, Acting Director,
Office of Standards, Regulations, and Variances, MSHA, 1100 Wilson
Boulevard, Room 2350, Arlington, VA 22209-3939. Ms. Silvey can be
reached at Silvey.Patricia@dol.gov. (Internet E-mail), (202) 693-9440 (voice), or (202) 693-9441 (facsimile).
To subscribe to the MSHA listserve and receive automatic
notification of MSHA Federal Register publications, visit the site at
The Secretary of Labor is responsible for interpreting and applying
statutes she is authorized to administer. More specifically, Congress
delegated to the Secretary, acting through MSHA, the authority to
administer the Mine Act. See Secretary of Labor v. Excel Mining, LLC,
334 F.3d 1, 5-7 (D.C. Cir. 2003); Secretary of Labor on behalf of
Wamsley v. Mutual Mining, Inc., 80 F.3d 110, 113-14 (4th Cir. 1996).
The interpretation and application of statutory terms to particular
factual circumstances is an ongoing process. Publication of all
interpretive positions taken by the Secretary is impossible; at times,
however, the Secretary has found it useful as a means of notifying the
public in general, and interested segments of the public in particular,
to publish an Interpretive Bulletin or other documents setting forth
the Secretary's interpretive positions with respect to particular
provisions of statutes she administers.
The question has arisen whether Section 110(c) of the Mine Act is
applicable to agents of LLCs. The LLC is a relatively new business
entity which combines the limited liability provided by a corporation
with the ``pass-through'' tax treatment accorded to a partnership. LLCs
are like corporations in that they shield individuals from personal
liability; for that reason, they raise concerns similar to those which
led Congress to enact Section 110(c).
The status of LLCs under Section 110(c) has become a significant
issue under the Mine Act because, in recent years, the number of mine
operators organized as LLCs has steadily increased. According to MSHA
records, 782 of the Nation's 7,287 active mine operators--approximately
10 percent--now identify themselves as LLCs. The actual number may be
significantly greater because MSHA's mine identification forms do not
list ``LLC'' as an option and many LLCs may not identify themselves as
LLCs. A number of the Nation's large operators are LLCs.
The purpose of this Interpretive Bulletin is to make the public
aware of the Secretary's interpretation of the applicability of Section
110(c) to agents of LLCs--an interpretation the Secretary will apply in
administering and enforcing the Mine Act. The Secretary is soliciting
comments on the Interpretive Bulletin and will carefully review all
comments received. The Secretary believes, however, that the position
set forth in the Interpretive Bulletin represents an ``interpretive
rule'' as that term is used in the Administrative Procedure Act, and is
therefore not required to go through notice-and-comment rulemaking. See
5 U.S.C. Sec. 553(b)(3)(A); AMC v. MSHA, 995 F.2d 1106, 1108-13 (D.C.
Cir. 1993). So that the Secretary may carefully consider all comments
received, the Interpretive Bulletin is scheduled to be put into effect
60 days after it is published in the Federal Register.
Limited Liability Companies
The LLC is a hybrid business entity first recognized in 1977 by the
State of Wyoming. LLCs did not attain any significant popularity until
1988; however, when the Internal Revenue Service announced that LLCs
could be taxed as partnerships despite their corporation-like liability
shield. When the IRS announced in 1997 that LLCs could elect pass-
through taxation without regard to the number of corporation-like
characteristics they possessed, the number of LLCs grew dramatically.
Text and History of Section 110(c)
Section 110(c) of the Mine Act states as follows:
Whenever a corporate operator violates a mandatory health or safety
standard or knowingly violates or fails or refuses to comply with
any order issued under this Act or any order incorporated in a final
decision under this Act, except an order incorporated in a decision issued
under Subsection (a) or Section 105(c), any director, officer, or
agent of such corporation who knowingly authorized, ordered, or
carried out such violation, failure, or refusal shall be subject to
the same civil penalties, fines, and imprisonment that may be
imposed upon a person under subsections (a) and (d).
30 U.S.C. 820(c) (emphases added). Section 110(c) of the Mine Act was
carried over essentially unchanged from the Federal Coal Mine Health
and Safety Act of 1969 (Coal Act). See 30 U.S.C. 819(c) (1969). The
legislative history of the Mine Act, quoting from the legislative
history of the Coal Act, stated:
Civil penalties are not a part of the enforcement scheme of the
Metal Act, but they have been part of the enforcement of the Coal
Act since its enactment in 1969. The purpose of such civil
penalties, of course, is not to raise revenues for the federal
treasury, but rather, is a recognition that: `[s]ince the basic
business judgments which dictate the method of operation of a coal
mine are made directly or indirectly by persons at various levels of
corporate structure, [the provision for assessment of civil
penalties is] necessary to place the responsibility for compliance
with the Act and the regulations, as well as the liability for
violations on those who control or supervise the operation of coal
mines as well as on those who operate them.' In short, the purpose
of a civil penalty is to induce those officials responsible for the
operation of a mine to comply with the Act and its standards.
S. Rep. 95-181, Federal Mine Safety and Health Act of 1977, 95th Cong.
1st Session, at 40 (quoting S. Rep. 91-411, Federal Coal Mine Health
and Safety Act of 1969, 91st Cong. 1st Session, at 39).
Purpose of Section 110(c)
When a ``corporate operator'' violates a mandatory health or safety
standard under the Mine Act, Section 110(c) of the Act imposes personal
liability on ``any director, officer, or agent'' of the corporation who
knowingly authorized, ordered, or carried out the violation. Because a
corporation generally serves as a shield against personal liability,
corporate directors, officers, and agents generally are not personally
liable for legal violations committed by the corporation.\1\ Congress's
enactment of Section 110(c) reflected its concern that corporate mine
operators would have a reduced incentive to comply with Mine Act
standards because a corporation would shield the individuals who
control and supervise the mine--the corporation's directors, officers,
and agents--from personal liability. Section 110(c) imposes liability
for Mine Act violations directly on the individuals responsible for the
violations. As the Sixth Circuit Court of Appeals has explained:
\1\ In contrast, a partnership generally does not shield
individuals from personal liability.
In a practical sense, any non-corporate mining operation is going to
be relatively small, and the probability is that the decision-maker
is going to fit the statutory definition of ``operator.'' In a
larger, corporate structure, the decision-maker may have authority
over only a part of the mining operation. [Section 110(c)] assures
that this makes him no less liable for his actions.
In a noncorporate structure, the sole proprietor or partners are
personally liable as ``operators'' for violations; they cannot pass
off these penalties as a cost of doing business as a corporation
can. Therefore, the noncorporate operator has a greater incentive to
make certain that his employees do not violate mandatory health or
safety standards than does the corporate operator. [Section 110(c)]
attempts to correct this imbalance by giving the corporate employee
a direct incentive to comply with the Act.
Richardson v. Secretary of Labor, 689 F.2d 632, 633-34 (6th Cir. 1982),
cert. denied, 461 U.S. 928 (1983). Accord United States v. Jones, 735
F.2d 785, 792-93 (4th Cir.) (``Congress may have believed that in a
noncorporate coal mining operation the threat of criminal sanctions
against the operator personally would provide a sufficient incentive to
comply with the mandatory safety standards. By contrast, in a corporate
mining operation, those who are in control might well be insulated from
criminal responsibility, the corporation being an impersonal legal
entity.''), cert. denied, 469 U.S. 918 (1984).
The Interpretive Issue
The threshold issue in this situation is ``whether Congress has
spoken to the precise question'' of the applicability of section 110(c)
to agents of LLCs. Chevron U.S.A. Inc. v. Natural Resources Defense
Council, Inc., 467 U.S. 837, 842-43 (1984). If Congress unambiguously
expressed an intent that section 110(c) was not to apply to agents of
LLCs, that is the end of the matter. Ibid. If the Mine Act is silent or
ambiguous with respect to the question, however, an agency
interpretation that section 110(c) is applicable to agents of LLCs
should be accepted as long as it is reasonable. Ibid.
By its terms, Section 110(c) applies when a ``corporate operator''
violates a Mine Act standard and a director, officer, or agent ``of
such corporation'' knowingly authorized, ordered, or carried out the
violation. The threshold issue is thus whether, in enacting section
110(c), Congress unambiguously expressed an intent that section 110(c)
was not to apply to agents of LLCs. The Secretary believes that
Congress did not express, and could not have expressed, any intent with
respect to agents of LLCs because, when Congress enacted Section
110(c), LLCs effectively did not exist.
The courts have recognized that, over time, conditions may come
into existence which Congress did not contemplate when it enacted a
statute, but which implicate the concerns Congress was addressing when
it enacted the statute. As the Supreme Court stated in Browder v.
United States, 312 U.S. 335 (1941):
There is nothing in the legislative history to indicate that
Congress considered the question of use by returning citizens. Old
crimes, however, may be committed under new conditions. Old laws
apply to changed situations. The reach of the act is not sustained
or opposed by the fact that it is sought to bring new situations
under its terms.
312 U.S. at 339 (footnotes omitted). Accord Weems v. United States, 217
U.S. 349, 373 (1910) (``Time works changes, brings into existence new
conditions and purposes. Therefore a principle, to be vital, must be
capable of wider application than the mischief which gave it birth.'').
When confronted with a question of statutory application with respect
to which Congress did not express or could not have expressed an intent
when it enacted the statute, courts have treated the question as one
the resolution of which was delegated to the agency Congress authorized
to administer the statute. See NBD Bank, N.A. v. Bennett, 67 F.3d 629,
632-33 (7th Cir. 1995); Zoelsch v. Arthur Andersen & Co., 824 F.2d 27,
33 (D.C. Cir. 1987). See also Kauthar SDN BHD v. Sternberg, 149 F.3d
659, 663-67 (7th Cir. 1998) (where resolution of the question was not
delegated to any agency, the court itself filled the void created by
Congressional silence by examining the underlying policy concerns),
cert. denied, 525 U.S. 1114 (1999); Robinson v. TI/US West
Communications Inc., 117 F.3d 900, 904-07 (5th Cir. 1997) (same).
Because Congress expressed no intent with respect to agents of
LLCs, the question becomes whether an interpretation that Section
110(c) is applicable to agents of LLCs is reasonable. See Chevron, 467
U.S. at 842-43; Excel Mining, 334 F.3d at 6. The Secretary believes
that it is. LLCs generally create the same sort of shield against
personal liability which led Congress to impose personal liability on
the directors, officers, and agents of corporations. Indeed, LLCs fit
within the legal definition of a ``corporation.''
See Black's Law Dictionary (7th ed. 1999) at 341 (a ``corporation'' is
``[a]n entity (usu. a business) having authority under law to act as a
single person distinct from the shareholders who own it * * *; a group
or succession of persons established in accordance with legal rules
into a legal or juristic person that has legal personality distinct
from the natural persons who make it up [and] exists indefinitely apart
from them * * *''). See also Webster's Third New International
Dictionary (2002) at 510 (a ``corporation'' is ``a group of persons * *
* treated by the law as an individual or unity having rights and
liabilities distinct from those of the persons * * * composing it * *
*''). Significantly, a number of LLCs in the mining industry are the
sort of relatively large and corporately structured entities which
Congress had in mind when it enacted Section 110(c). The Secretary
believes that the underlying objective Congress identified when it
enacted the Coal Act in 1969 and reiterated when it enacted the Mine
Act in 1977--to place responsibility for compliance and liability for
violations ``on those who control or supervise the operation of * * *
mines as well as on those who operate them''--will best be advanced if
Section 110(c) is interpreted as being applicable to agents of LLCs.
For all of the foregoing reasons, the Secretary believes that the
interpretation set forth in this Interpretive Bulletin is permissible
under the Mine Act, and that it will advance the Act's objectives in
cases involving LLCs by imposing legal liability on those individuals
within the LLC who actually make the decisions with regard to safety
and health in the mine.\2\
\2\ The Secretary recognizes that Section 110(c) has been held
not to apply to agents of partnerships because, by its terms,
Section 110(c) applies only to agents of corporations. Paul Shirel
and Donald Guess, employed by Pyro Mining Co., 15 FMSHRC 2440
(1993), aff'd, 52 F.3d 1123 (D.C. Cir. 1995) (unpublished). That
holding has no bearing in this situation, however, because
partnerships, unlike LLCs, existed and were a well-known form of
business organization when Congress enacted the Mine Act.
The Secretary does not address in this Interpretive Bulletin
whether Section 110(c) is applicable to agents of non-traditional
business entities other than LLCs. The Secretary will address the
applicability of Section 110(c) to the agents of such entities as
the question arises.
Dated: May 3, 2006.
David G. Dye,
Acting Assistant Secretary for Mine Safety and Health.
[FR Doc. 06-4317 Filed 5-8-06; 8:45 am]
BILLING CODE 4510-43-P