Ella Coal Company

Plain-English summary

Ella Coal Company, a small family-operated underground mine, conceded five alleged violations involving examination records, machine guarding, ventilation, ventilation-plan compliance, and explosive storage. Judge George A. Koutras found that the violations occurred and that the operator had promptly abated them. He rejected the company's claim that it could not pay because it did not provide current financial information showing that the penalties would threaten its ability to remain in business. The five citations were affirmed and penalties totaling $208 were ordered.

Decision snapshot

• Cited standard(s): 30 C.F.R. §§ 75.305, 75.1722(a), 75.302(a), 75.316, and 75.1306
• Outcome: Five citations were affirmed, and civil penalties totaling $208 were assessed.
• Key point: A small operator seeking a penalty reduction based on inability to pay must provide credible, current financial evidence.

Full text (FMSHRC public release)

CCASE:
SOL (MSHA) v. ELLA COAL
DDATE:
19850828
TTEXT:

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Federal Mine Safety and Health Review Commission
Office of Administrative Law Judges

SECRETARY OF LABOR, CIVIL PENALTY PROCEEDING
MINE SAFETY AND HEALTH
ADMINISTRATION (MSHA), Docket No. KENT 84-181
PETITIONER A.C. No. 15-13732-03512
v.
Ella Coal Mine
ELLA COAL COMPANY,
RESPONDENT

Appearances: Mary Sue Ray, Esq., Office of the Solicitor,
U.S. Department of Labor, Nashville,
Tennessee, for Petitioner;
Ella Smith, President; Alan Smith, Jr.,
Vice-President, Ella Coal Company,
Manchester, Kentucky, Pro Se.

                            DECISION

Before: Judge Koutras

                     Statement of the Case

 This proceeding concerns proposals for assessment of civil

penalties filed by the petitioner against the respondent pursuant
to section 110(a) of the Federal Mine Safety and Health Act of
1977, 30 U.S.C. 820(a), seeking civil penalty assessments in
the amount of $208, for five alleged violations of certain
mandatory safety standards found in Part 75, Title 30, Code of
Federal Regulations.

 The respondent filed an answer to the civil penalty

proposals and stated that it is a small family owned company
mining approximately 75 tons of coal daily "when our equipment
isn't broken down." Respondent also stated that it employs
"mostly family employees," and that after paying debts, has no
money to retain an attorney. Respondent asserts that it timely
corrected all of the cited conditions.

 This case was originally assigned to Judge Charles C. Moore,

Jr., but was reassigned to me upon Judge Moore's retirement. In
response to a pretrial order issued by Judge

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Moore, the petitioner's counsel advised him that the mine
operator informed counsel that he was having severe financial
problems, and that this may merit a reduction of the proposed
civil penalty assessments. Counsel also advised that the operator
was having a financial statement prepared by his accountant and
that pending its receipt, the parties contemplated a settlement
of the matter.

 An exchange of correspondence in the file reflects that the

respondent submitted its income tax return for the year 1982 to
the petitioner's counsel, and that counsel rejected it as
inadequate to support the respondent's contention that he is
unable to pay the assessed penalties. Subsequently, by motion
filed May 22, 1985, petitioner's counsel requested that the case
be scheduled for trial. Counsel stated that she was informed that
the respondent is still in business producing coal.

 A hearing was convened in London, Kentucky, on July 25,

1985, and the parties appeared and participated fully therein.
Respondent appeared pro se through three of its corporate
officers, all members of the same family.
Applicable Statutory and Regulatory Provisions

 1. The Federal Mine Safety and Health Act of 1977, Pub.L.

95-164, 30 U.S.C. 801 et seq.

2. Section 110(i) of the 1977 Act, 30 U.S.C.   820(i).

3. Commission Rules, 29 C.F.R.   2700.1 et seq.

                            Issues

 The respondent has conceded that the violations occurred as

charged in the citations issued by the inspector upon inspection
of the mine. The only issue presented is whether or not the
respondent has established that it is financially unable to pay
any of the civil penalties assessed in this case, and whether the
payment of such penalties will affect its ability to remain in
business.

                          Discussion

The citations issued in this case are as follows:

 Section 104(a) Citation No. 2198132, was issued on March 20,

1984, and it cites a violation of 30 C.F.R. 75.305. The
inspector states that the violation was issued because of
inadequate records of the weekly hazardous conditions
examinations in that the records were not up to date and the last
recorded examination was on February 27, 1984.

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Section 104(a) "S & S" Citation No. 2198134, was issued on March
20, 1984, and it cites a violation of 30 C.F.R. 75.1722(a). The
inspector states that the belt pulley drive assembly (belt and
fly wheels), on an electric water pump located approximately 200
feet outby the No. 2 face in the No. 2 entry on 001 section, was
not guarded. The inspector stated that the pump stays "in almost
constant use and is attended to regularly, which would require a
person to be in close proximity to the drive assembly."

 Section 104(a) Citation No. 2198135, was issued on March 20,

1984, and it cites a violation of 30 C.F.R. 75.302(a). The
inspector states that the No. 1 and 3 working faces on the 001
section were inadequately ventilated in that no line brattice, or
"inadequately installed" brattice, were provided at the faces to
provide a perceptible movement of air to the faces.

 Section 104(a) Citation No. 2197043, issued on March 26,

1984, cites a violation of 30 C.F.R. 75.316. The inspector
states that the mine approved ventilation system and methane and
dust control plan was not complied with in the old, abandoned
headings on the right of the main entries approximately 300 feet
inby the portal, in that (1) three stoppings were missing and no
air was reaching the end of the workings, and (2) a crosscut was
not provided at the face of 3 of the 5 old faces as required by
the plan. The inspector indicates that these entries extend for
approximately 500 feet, and are located on the intake-air side of
current active workings.

 Section 104(a) "S & S" Citation No. 2197044, issued on March

26, 1984, cites a violation of 30 C.F.R. 75.1306. The inspector
states that an explosive and detonator storage box located in the
last open crosscut between the No. 3 and 4 entries in the 001
section was improperly stored in that it was located 2 feet from
two energized trailing cables. The inspector indicted that the
box contained 12 tubes of permissible explosives (water gel), and
one box of electric detonators, which were stored in separate
compartments.

             Petitioner's Testimony and Evidence

 MSHA Inspector Gary Paul testified that he is currently

assigned to inspect the Ella Coal Mine and that he last inspected
the mine on the evening of July 24, 1985, as part of his regular
weekly inspection. Mr. Paul described the mine as a small
non-union family operated underground coal mine employing a total
of 14 miners. Two of the employees

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are the son and daughter of Mr. Alan Smith, Sr., and two are his
son-in-laws. The remaining 10 employees are non-family members.

 Mr. Paul stated that the mine operates on one production

shift, and produces approximately 75 to 100 tons a day. During
his past two recent inspections he observed that the mine was
still in production. Although he has found that the mine has been
down in the past during his inspections for 2 hours or so because
of equipment breakdowns, it has been a "running and operating"
mine.

 Mr. Paul stated that the mine is in good condition and that

the respondent conducts a safe operation. To his knowledge, all
prior citations which have been issued at the mine have always
been timely abated and the cited conditions corrected. The
citations in question in these proceedings were promptly abated
in good faith.

 MSHA Inspector James Brashear, confirmed that he issued the

citations in question in this case and that they were terminated
after the conditions were timely abated by the respondent. Mr.
Brashear agreed with Inspector Paul's assessment of the
respondent's mining operation. He identified the Wagon Fork
Mining Company as another similar small mining operation in his
district, and he has heard "through the office grapevine" that it
has paid none of the civil penalties which have been assessed by
MSHA.

             Respondent's Testimony and Evidence

 Alan Smith, Sr., stated that he has no connection with the

operation of the mine. He confirmed that he owns the equipment,
but that he leases it to his son Alan Smith, Jr., who serves as
the Vice-President of the company. Mr. Smith stated that the mine
is in poor financial condition and that he has received no
payments from the company for the leased equipment. He indicated
that his son works the mine, and his daughter is also employed
there as a surface worker. His son makes $10 an hour, and his
daughter is paid $5 an hour, and he confirmed that all employees
who work underground are paid $10 an hour, and that surface
employees are paid $5 an hour.

 Mr. Smith stated that at one time he operatd the mine but

turned it over to his son because his son wanted to be a miner.
Mr. Smith stated that the mine provides employment for 14 local
families, and in his opinion, the company cannot afford to pay
any civil penalties. He stated further

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that he has advised his son to get out of the business, and that
the company is attempting to sell the mine to someone who is
better able to financially support the operation.

 Mrs. Ella Smith stated that she is the mother of Alan Smith,

Sr., and that she serves as president of the company. She stated
that she receives no salary or compensation from the company. She
confirmed that the current price of the coal which the company
sells is $28 a ton. She stated that the mine is in poor financial
condition, and she could not afford to pay the penalties which
have been assessed by MSHA. Although she agreed that the mine is
in current operation and is producing, she stated that it was
flooded and out of production for 3 months during April or May,
1984, and that it has been out of production for intermittent
periods in the past because of equipment breakdowns.

 Alan Smith, Jr., stated that he is the Vice-President of the

company and is also a salaried employee. The mine provides
employment for him, as well as the other miners working there,
and he receives a salary for his work. He indicated that while
the mine is currently operating, its finances are strained and he
is currently negotiating to sell the coal lease and turn the
equipment lease over to another operator. He stated that if this
is done the company will receive no money compensation, but that
he expects to stay on as a salaried employee if the proposed deal
is consumated.

 Mr. Smith stated that the company retains an accountant to

prepare its financial statements, but that it could not afford to
pay him to come to the hearing to testify. Mr. Smith stated that
he did not bring any financial statements with him to the
hearing, and when asked why this was not done, he indicated that
he believed that the statements were previously submitted to
MSHA's counsel.

 Mr. Smith confirmed that the mine employs 14 individuals,

and he estimated the daily production as 65 to 75 tons. He also
confirmed that he leases the equipment from his father, Alan
Smith, Sr. He also indicated that the company cannot afford to
pay any amount which may be assessed in these proceedings, and he
confirmed that prior assessments have not been paid because the
company cannot afford it. He stated that the company has no
reserve funds, and that any "extra money" which may be generated
by the company is used to keep the equipment operating, and if
this were not done he would have to shut down his operation and
the miners working there would be without employment.

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Mr. Smith did not dispute the fact that the conditions or
practices described by the inspector on the face of the citations
constituted violations of the cited mandatory standards. He
conceded that the violations occurred as stated by the inspector,
and he pointed out that the conditions were promptly corrected
and abated.

                    Findings and Conclusions

Fact of Violations

 The respondent did not contest the violations and conceded

that the conditions or practices cited by the inspector occurred.
Under the circumstances, all of the citations ARE AFFIRMED as
issued.

History of Prior Violations

 Exhibit G-2, is an MSHA computer print-out which reflects

that during the period March 20, 1982 through March 19, 1984,
respondent was assessed a total of $666, for 26 section 104(a)
citations issued at the mine. Except for the payment of one $20
"single penalty assessment," the information provided in the
print-out reflects that the respondent has not paid any of the
remaining 25 penalty assessments.

 Petitioner's counsel confirmed this information, and

explained that the respondent has been issued MSHA "default
letters" for the unpaid civil penalty assessments, and that they
have been forwarded to the Department of Justice for collection
action.

Good Faith Compliance

 The record here establishes that the cited conditions or

practices were promptly abated in good faith by the respondent,
and this has been taken into account by me as well as by MSHA's
initial civil penalty assessment proposals.

Negligence

 The respondent does not dispute the fact of violations and

does not take issue with any of the inspectors findings as stated
on the face of the citations. Under the circumstances, the
inspector's negligence findings are affirmed, and I conclude and
find that the violations resulted from the respondent's failure
to take reasonable care, and that this amounts to ordinary
negligence.

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Gravity

 The respondent has not disputed the inspector's gravity

findings. Upon review of the cited conditions or practices, I
conclude and find that with the exception of the record keeping
citation (No. 2198132), the remaining violations were all
serious. Although two of those citations resulted in automatic
"single penalty" assessments of $20, this obviously was the
results of the inspector's finding that they were not
"significant and substantial" violations. However, I am not bound
by those findings, and I note that the conditions or practices
described deal with lack of adequate ventilation and inadequately
stored explosives.

Size of Business and Effect of Civil Penalty Assessments on the
Respondent's Ability to Continue in Business

 The record establishes that the respondent is a small,

family operated mining operation. Petitioner's counsel does not
dispute the respondent's contention that the officers of the
company receive no compensation in their capacities as officers.
Counsel indicated that the only information furnished by the
respondent to support its contention that it is unable to pay the
$208 which has been assessed for the five citations in question
is a 1982 tax return. Although that return indicated a loss for
tax purposes, counsel stated that no current information has been
forthcoming from the respondent to indicate any real or net
operating losses. Absent this information, counsel is of the view
that the respondent has not carried its burden in establishing
that it is financially unable to pay the proposed assessments.

 Petitioner's counsel also pointed out that the proposed

assessments have already taken into account the fact that the
respondent is a small operator, and in counsel's opinion the
proposed assessments are reasonable. Since the respondent has
furnished no additional information concerning its financial
condition, counsel is of the view that any additional decreases
in the assessments are not warranted.

 Petitioner's counsel offered a letter dated October 29,

1984, from Mrs. Ella Smith, exhibit G-1. That letter includes a
copy of the respondent's 1982 tax return, and copies of certain
payroll taxes information. Although the letter makes reference to
a 1984 tax return for the period ending August 31, 1984, it has
not been produced.

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Although I have no reason to doubt that this small operation has
a cash flow problem and that it has encountered some problems
with the mine being down for relatively short periods due to
flooding or mechanical breakdowns, it is still a productive mine
and there is no evidence that the operators have failed to meet
their payrolls or other daily operational expenses, or have had
to lay off workers because of their financial condition. Further,
the operators identified several of their customers, and Mrs.
Smith indicated that the company receives $28 a ton for its coal.
Although Mr. Smith, Jr., indicated that the coal supply may be
diminishing, Mr. Smith, Sr., indicated that there is a ready
supply of coal reserves, and that the company is negotiating with
a potential buyer who may be in a better position to invest more
capital in the venture.

 The burden is on the respondent to establish that payment of

the assessed civil penalties will adversely affect its ability to
continue in business. In this case, petitioner's counsel has been
most patient with the respondent in her attempts to have the
respondent produce more current financial information to support
its plea of poverty; all to no avail. In the absence of proof
that the imposition of civil penalties will adversely affect its
ability to continue in business, it is presumed that no such
adverse affect would occur. Sellersburg Stone Co., 2 MSHC 2010
(1983); aff'd, 736 F.2d 1147 (7th Cir.1984); 3 MSHC 1385 (1984).

 On the facts of this case, I conclude and find that the

respondent has failed to establish through any credible evidence
or testimony that the payment of the $208 assessments in this
case, which I find are reasonable, will adversely affect its
ability to continue in business. I remain unconvinced that the
respondent will go out of business if it pays these assessments.
The respondent has been actively and productively mining coal
since at least 1982, and has provided gainful employment for at
least 14 individuals and their families. The testimony here
establishes that the Smith family operates a safe and relatively
efficient mine, and while it appears that they are meeting their
expenses, it has paid only one of the civil penalties previously
assessed against it. With the exception of three citations, all
of the remaining citations have been "single penalty" assessments
of $20 each. However, according to Mr. Smith, Jr., all "extra
money" is put back into the business, and he apparently has opted
to ignore his obligations to pay these assessments on the ground
that they do not contribute to his coal production.

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ORDER

 On the basis of foregoing findings and conclusions, and

taking into account the requirements of section 110(i) of the
Act, I conclude and find that the proposed civil penalty
assessments made by the petitioner in this proceeding are
appropriate and reasonable for the section 104(a) citations which
have been affirmed. The respondent IS ORDERED to pay the penalty
assessments in question within thirty (30) days, as follows, and
payment is to be made directly to MSHA:

                             30 C.F.R.
    Citation No.   Date      Section      Assessment

     2198132       3/20/84   75.305        $ 20
     2198134       3/20/84   75.1722(a)      63
     2198135       3/20/84   75.302(a)       20
     2197043       3/26/84   75.316          20
     2197044       3/26/84   75.1306         85
                                          -----
                                           $208



                                  George A. Koutras
                                  Administrative Law Judge