Before HASTINGS, Chief Judge, and SCHNACKENBERG and CASTLE, Circuit Judges.*fn1
In an attempt to compel S. A. Healy Company, an Ohio corporation, defendant, to pay compensation at overtime rates for work performed in excess of 40 hours per week, James P. Mitchell, Secretary of Labor of the United States Department of Labor, plaintiff, filed this action for injunction in the district court, under § 15 (a)(2) of the Fair Labor Standards Act of 1938, as amended, 29 U.S.C.A. 201, et seq .
The complaint charged that defendant employs*fn2 about 205 persons in and about the city of Chicago, Illinois, in the construction, reconstruction, enlargement, alteration, improvement and replacement of existing segments of the water supply system of said city, to facilitate and improve the supply of water to persons and firms in and about the city.A substantial portion of the water so supplied is sold to and used by instrumentalities of interstate commerce, to facilitate such commerce, and is sold to and used by persons and firms engaged in the production of goods for interstate commerce, to facilitate such production. These activities of defendant's employees constitute the engagement in commerce and in the production of goods for commerce within the meaning of the Act. Defendant denies these allegations.
The stipulated facts, sufficiently condensed, are as follows:
Defendant was a general contractor engaged in constructing a new tunnel (called the 79th Street tunnel) which was to become a part of the Chicago Water Works System. The 79th Street tunnel was to be 4.6 miles in length, extending from the filter plant reservoir in Lake Michigan at 79th Street to connections with the State Street and Stewart Avenue tunnels. The Chicago Water Works System was made up of three districts - North, Central and South - and each was supplied by its own system of water cribs and tunnels. The system had 61 miles of water tunnels connecting with 11 pumping stations and 4000 miles of water mains. The water was obtained from Lake Michigan through six water cribs.
The location of the 79th Street tunnel was within the area of the South District Filtration Plant, completed in 1945, which plant received raw, unfiltered water, by tunnel from the Edward F. Dunn Crib, opposite 68th Street and the Lake. This plant filtered and treated the raw water so received, which was then discharged into the water tunnel system and then conveyed to the pumping stations*fn3 by the tunnels. The water was then pumped by these stations into water mains which distributed the water to consumers within the City of Chicago and, at the city limits, large water mains delivered the water to 58 suburban communities and to 10 other consumers located outside the city limits, such as railroads and industrial establishments.
Defendant's contract provided not only for construction of the tunnel itself, but also for the construction of the tunnel and connections in the Filtered Water Reservoir, and the connections to the existing State Street and Stewart Avenue tunnels. This involved substantial work in the existing filtration plant itself and directly on the existing tunnels in operation.
The purpose of the construction of the 79th Street tunnel was to provide additional tunnel capacity to conduct greater amounts of water from the existing filtration plant to the Roseland and Western Avenue Pumping Stations to meet "an immediate need for a greater water supply within the South Water District" arising from an increase in the population and industrial development of the area which had strained the water distribution system to the limit of its capacity. The additional tunnel will provide a greater supply of water to the consumers served by the Roseland and Western Avenue Pumping Stations, which had previously been pumping a combined daily average of only 236 million gallons of water in 1957, although their installed capacity exceeded 600 million gallons per day. During the three years preceding the construction of the new tunnel, approximately 30% of the total daily quantity of water distributed by the South District has been sold to commercial and industrial users, amounting in volume to over 100 million gallons daily.
The question presented is whether or not defendant's employees engaged in construction of the 79th Street tunnel were covered by the Fair Labor Standards Act.
Section 3 of that Act, 29 U.S.C.A. § 203, provides:
As used in this chapter -
(b) "Commerce" means trade, commerce, transportation, transmission, or communication among the several States or between any ...