Rehearing Denied Oct. 10, 1949.
Messrs. John P. Akolt, Frank N. Bancroft, Denver, Colo., for Farmers Reservoir & Irrigation Co.
Mr. Jeter S. Ray, Washington, D.C., for McComb.
Mr. Chief Justice VINSON delivered the opinion of the Court.
The principal question to be decided in this case is whether the employees of a mutual ditch company are exempt from the provisions of the Fair Labor Standards Act1 as persons employed in agriculture. The company is the Farmers Reservoir & Irrigation Company, a Colorado corporation having an authorized capital stock of $1,050,000 and an authorized bonded indebtedness of [337 U.S. 755 , 757] $850,000, $450,000 of which is presently outstanding in the hands of the public. The company has central offices in Denver. It owns four large and several small reservoirs and a system of canals from 200 to 300 miles long, all in Colorado. The sole activity of the corporation is the collection, storage and distribution of water for irrigation purposes. The water is diverted from the public streams of Colorado, stored in the company's reservoirs and distributed to farmers through the company's canals.
The company is a mutual one. It does not sell water. It distributes it only to its own stockholders, who are each entitled to a limited quantity for each share of stock held. The income of the company is derived largely from assessments levied on the stockholders annually to pay for the costs of operating the system. There are no profits and no dividends.
The company did not comply with either the record keeping or the wages and hours provisions of the Fair Labor Standards Act, and the Administrator sought an injunction directed against continuation of these alleged violations. The company claimed that its employees were not subject to the Act. These employees fall into two categories. First, there are the field employees-ditch riders, lake tenders and maintenance men. Their activity, in general, consists of the physical operation, control and maintenance of the company's canals, reservoirs, and headgates. The second category comprises the company's office force in Denver. For purposes of this case it contains only one occupant-the company's bookkeeper.
The District Court held that the field employees were engaged in the production of goods for commerce, as those terms are defined in 3 of the Act, but that the bookkeeper was not. It held, however, that all of the company's employees were exempt under 13(a)(6) as persons 'employed in agriculture.' This second hold- [337 U.S. 755 , 758] ing was reversed, as to the field employees, by the Court of Appeals for the Tenth Circuit,2 one judge dissenting, and, in No. 128, we granted the company's petition for certiorari on the exemption issue. The Court of Appeals did not pass on the bookkeeper's status. It regarded his case as moot because his salary was said by the company, in its brief, to have been raised to $210 per month while the appeal was pending. The court regarded this as sufficient to establish his exemption as an administrative employee under 13(a)(1) of the Act and therefore limited its consideration and its reversal of the District Court to the field employees. In No. 196, we granted the Administrator's cross-petition with respect to the bookkeeper.
It is conceded here that the courts below were correct in holding that the field employe are engaged in the production of goods for commerce. The company, however, argues that this requires the conclusion that they are employed in agriculture. This argument rests on the fact that the activities of the company and its employees are entirely confined within the State of Colorado. The company diverts water in Colorado, stores it in Colorado, distributes it in Colorado to farmers who, finally, consume it in Colorado. The only products moving in interstate commerce are the agricultural commodities produced by the farmers who consume the company's water. Hence, it is said that we can hold that the company's employees are engaged in the production of goods for interstate commerce only if we say that their work in supplying water to the farmers is an integral part of the production of the farm products which are shipped in interstate commerce. But that production is, of course agriculture. Hence, the company's employees, if they are engaged in the production of goods for commerce, must be exempt as persons employed in agriculture. [337 U.S. 755 , 759] The argument rests on a misconstruction of 3(j) of the Fair Labor Standards Act3-the section which the courts below relied on in concluding that the field employees of the company are engaged in the production of goods for commerce. Section 3(j) provides that 'for purposes of this Act an employee shall be deemed to have been engaged in the production of goods if such employee was employed * * * in any process or occupation necessary to the production thereof.'4 From the beginning, this Court has refused either to read this provision out of the Act by limiting the coverage of the Act to those actually engaged in production or, on the other hand, to expand it so as to include every process or occupation affecting production for commerce. We have held that if an occupation, not itself production for commerce, has 'a close and immediate tie' with the process of production, it comes within the provisions of 3(j).5 Applying this standard, the Court of Appeals quite properly held that the field employees here are engaged in an occupation necessary, in the statutory sense, for the production of agricultural commodities shipped in commerce.