Jim Walter Resources, Inc.

Plain-English summary

Jim Walter Resources operated the No. 7 underground coal mine in Alabama. MSHA cited the mine for extensive combustible accumulations around a belt line, and the ALJ assessed a $15,000 penalty after finding the violation significant and substantial and the result of unwarrantable failure. The Commission vacated that penalty and remanded for reassessment because the ALJ may have treated deterrence as a separate penalty factor and did not make specific findings on all six statutory criteria. The Commission directed the ALJ to reassess the penalty using only the statutory criteria.

Decision snapshot

• Cited provision(s): 30 U.S.C. § 820(i), 30 U.S.C. § 823(c), 30 C.F.R. § 75.400
• Outcome: The $15,000 penalty assessment was vacated and remanded for reassessment.
• Key point: Mine Act penalties must be supported by findings on each statutory criterion. Deterrence is not a separate additional factor.

Full text (FMSHRC public release)

FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION
1730 K STREET NW, 6TH FLOOR
WASHINGTON, D.C. 20006

                                     March 27, 1997

SECRETARY OF LABOR, :
MINE SAFETY AND HEALTH :
ADMINISTRATION (MSHA) :
:
v. : Docket No. SE 95-459
:
JIM WALTER RESOURCES, INC. :

BEFORE: Jordan, Chairman; Marks and Riley, Commissioners1

                                       DECISION

BY: Marks and Riley, Commissioners

    This civil penalty proceeding arises under the Federal Mine Safety and Health Act of 1977,

30 U.S.C. ' 801 et seq. (1994) (AMine Act@ or AAct@), and involves the question whether
Administrative Law Judge William Fauver erred in assessing a civil penalty by considering
Adeterrence,@ a factor not among those set forth in section 110(i) of the Mine Act, 30 U.S.C.

   1
     Pursuant to section 113(c) of the Federal Mine Safety and Health Act of 1977, 30

U.S.C. ' 823(c), this panel of three Commissioners has been designated to exercise the powers of
the Commission.

Page 2

' 820(i).2 The judge assessed a civil penalty of $15,000, more than double the penalty proposed
by the Secretary of Labor. 18 FMSHRC 906, 912 (June 1996) (ALJ). The Commission granted
the petition for discretionary review filed by Jim Walter Resources, Inc. (AJWR@) challenging the
penalty assessment. For the reasons that follow, we vacate the judge=s penalty assessment and
remand for reassessment.

                                              I.

                             Factual and Procedural Background

    JWR owns and operates the No. 7 mine, an underground coal mine in Alabama. 18

FMSHRC at 906; JWR Prehearing Resp. at 1, Stip. 1; Tr. 109, 163. On June 8, 1995, John
Terpo, an inspector for the Department of Labor=s Mine Safety and Health Administration,
observed substantial accumulations of coal, coal dust and float coal dust around the West A belt
line. 18 FMSHRC at 907. Twelve rollers were totally submerged in coal dust, and 32 were
turning in combustible accumulations. Id. Three other rollers were locked up and Aextremely
hot.@ Id. At the seventh discharge point, the bottom belt was running on top of the accumula-
tions, which at this point averaged two feet deep for about 300 feet. Id. Based on his observa-
tions, Inspector Terpo issued Order No. 3194917 under section 104(d)(2) of the Act, 30 U.S.C.
' 814(d)(2), for violation of 30 C.F.R. ' 75.4003 based on extensive combustible accumulations in
the West A belt entry. Id.4 JWR admitted the violation, but challenged the inspector=s designa-
tion of the violation as significant and substantial and resulting from JWR=s unwarrantable failure.

   2
       Section 110(i) provides in pertinent part:

                     The Commission shall have authority to assess all civil
            penalties provided in this [Act]. In assessing civil monetary penal-
            ties, the Commission shall consider the operator=s history of previ-
            ous violations, the appropriateness of such penalty to the size of the
            business of the operator charged, whether the operator was negli-
            gent, the effect on the operator=s ability to continue in business, the
            gravity of the violation, and the demonstrated good faith of the
            person charged in attempting to achieve rapid compliance after
            notification of a violation.
   3
       Section 75.400 states:

                    Coal dust, including float coal dust deposited on rock-
            dusted surfaces, loose coal, and other combustible materials, shall
            be cleaned up and not be permitted to accumulate in active work-
            ings, or on electric equipment therein.
   4
      Inspector Terpo also issued JWR four citations for accumulations of combustible

material on the two section belts that dumped material onto the West A belt, for failing to

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maintain the West A belt in safe condition, and for an inadequate preshift examination. 18
FMSHRC at 907. These citations are not at issue in this appeal.

                                            3

Page 4

    The judge concluded that the violation was S&S and the result of JWR=s unwarrantable

failure. 18 FMSHRC at 908-10. With respect to the civil penalty, the judge specifically discussed
three of the six penalty criteria: the operator=s history of previous violations, negligence, and
gravity. Id. at 910-12.5 As to the operator=s history of previous violations, the judge found that
JWR had a Avery poor record of violations of ' 75.400[,]@ that JWR=s record in this regard had
worsened over the previous two-year period, and that its Aoverall compliance history under the
Mine Act . . . is very poor.@ Id. at 910-11. The judge also concluded that, in view of the
Aobvious, extensive and dangerous@ accumulations, JWR=s negligence was high. Id. at 911.
Based on the presence of extremely hot rollers, rubbing points creating friction due to contact
between the belt and the steel belt structure, and substantial accumulations, the judge determined
that the gravity of the violation was high. Id. The judge further stated:

                   Respondent=s prior history and the instant violation demon-
           strate a serious disregard for the safety requirement to prevent
           combustible accumulations in an underground coal mine. Respon-
           dent=s repeated violations of ' 75.400 indicate that there has been
           no deterrent effect from prior civil penalties.

                    Considering Respondent=s very poor compliance history, the
           need for an effective deterrent, and the six statutory criteria as a
           whole, I find that a civil penalty significantly greater than the
           $7,000 proposed by the Secretary should be assessed. Accordingly,
           I find that a civil penalty of $15,000 is appropriate for the violation
           proved in this case.

Id. at 912.

                                             II.

                                        Disposition

    JWR argues that in A[c]onsidering . . . the need for an effective deterrent, and the six

statutory criteria as a whole,@ the judge enhanced the penalty based on a factor, deterrence, not

    5
     The judge introduced his discussion of the penalty factors by stating, ASection 110(i) of

the Act provides the following six criteria for assessing civil penalties[.]@ 18 FMSHRC at 910.
However, he went on to discuss only three of the section 110(i) factors. Id. at 910-12.

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set forth in section 110(i). PDR at 2.6 The Secretary responds that, although the judge may not
rely on deterrence as Aa penalty consideration that is in addition to the six statutory criteria,@ in
this case all the judge did was make explicit that he was assessing a penalty, based on the six
criteria, that provided an effective deterrent. S. Br. at 7-8. The Secretary asserts that this is
consistent with the deterrent purpose of penalties under the Mine Act. Id. at 6-7.

    Commission judges are accorded broad discretion in assessing civil penalties under the

Mine Act. Westmoreland Coal Co., 8 FMSHRC 491, 492 (April 1986). Such discretion is not
unbounded, however, and must reflect proper consideration of the penalty criteria set forth in
section 110(i) of the Mine Act. Id. (citing Sellersburg Stone Co., 5 FMSHRC 287, 290-94
(March 1983), aff=d, 736 F.2d 1147 (7th Cir. 1984)). In Sellersburg, the Commission stated that,
in assessing a civil penalty, A[f]indings of fact on each of the statutory criteria@ must be made by
the judge Anot only [to] provide the operator with the required notice as to the basis upon which it
is being assessed a particular penalty, but also [to] provide the Commission and the courts . . .
with the necessary foundation upon which to base a determination as to whether the penalties
assessed by the judge are appropriate, excessive, or insufficient.@ Sellersburg, 5 FMSHRC at
292-93.

    The Commission has also held that a judge may not go beyond the six criteria set forth in

section 110(i). In Ambrosia Coal & Constr. Co., 18 FMSHRC 1552 (September 1996), the
Commission vacated an assessment of civil penalties based in part on deterrence, stating:

            [A]lthough deterring future violations is an important purpose of
            civil penalties, deterrence is achieved through the assessment of a
            penalty based on the six statutory penalty criteria. . . . Deterrence
            is not a separate component used to adjust a penalty amount after
            the statutory criteria have been considered.

Id. at 1565 (citing Dolese Bros. Co., 16 FMSHRC 689, 695 (April 1994)).

     The judge=s statements that Athere has been no deterrent effect from prior civil penalties[,]@

and that his penalty assessment was based in part on Athe need for an effective deterrent, and the
six statutory criteria as a whole[,]@ 18 FMSHRC at 912 (emphasis added), indicate that he may
well have considered deterrence as a separate factor in his analysis. Accordingly, we vacate his
penalty assessment and remand with instructions to reassess the penalty considering only the six
criteria set forth in section 110(i).

   6
       JWR designated its petition as its brief.



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     On remand, the judge should make specific findings on all six penalty criteria. Although

stipulations in the record contain facts pertaining to the size of the operator=s business and the
effect of the penalty on its ability to continue in business, the judge failed to make the requisite
findings in his decision.7 With respect to the criterion of the operator=s good faith attempts to
achieve rapid compliance, the judge recited in his findings of fact and discussion of the unwarrant-
able failure issue that JWR assigned 20 miners to clean up the accumulations after notification of
the order and that it took the miners seven hours to clean up the accumulations. 18 FMSHRC at
907, 910. He also stated:

                   The abatement work was prompt, but this must be consid-
           ered in relation to the withdrawal order, which stopped the belt line
           until the accumulations were removed. There was no evidence of
           clean up work at the time the order was issued.

Id. at 910. Because the judge did not indicate how or whether these findings and conclusions
relate to his penalty assessment, he should do so on remand.

                                            III.

                                        Conclusion

    For the foregoing reasons, we vacate the judge=s penalty assessment and remand for

reassessment.

                                          ________________________________
                                          Marc Lincoln Marks, Commissioner




   7
      The parties agreed that JWR is a large operator and that payment of the proposed

assessment will have no effect on the operator=s ability to continue in business. JWR Prehearing
Resp. at 1, Stips. 3, 5; S. Resp. to Prehearing Order at 1, Stips. 3, 5.

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James C. Riley, Commissioner

7

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Jordan, Chairman, dissenting:

   The majority opinion effectively reads the deterrent function of civil penalties out of the

Federal Mine Safety and Health Act of 1977, 30 U.S.C. ' 801 et seq. (1994) (AMine Act@). It
vacates the judge=s penalty assessment, fearing that he might have Aconsidered deterrence as a
separate factor in his analysis.@ Slip op. at 4.

     To the contrary, I believe that the judge properly evaluated the role that deterrence must

play in setting a penalty, and accordingly would affirm his penalty determination.1 He did not
include it among the initial criteria (set forth in the Mine Act) he used to determine the penalty.
He did not include it as a Aseventh penalty criterion@ or a subsequent multiplier. Rather, he
applied the statutory criteria, and, at the same time, rightfully acknowledged that the resulting
penalty must provide an effective deterrent, consistent with Commission case law and the
legislative history of the Mine Act.2 He did state that the operator=s past history of violations

   1
      Unlike my colleagues in the majority, I believe that there is no need to remand for

further analysis of the six statutory criteria. The judge adequately addressed four of the criteria in
his decision. The parties stipulated as to the remaining two criteria. Slip op at 4, n.7. Thus, we
can enter findings on these questions instead of remanding them to the judge. See Sunny Ridge
Mining Co., 19 FMSHRC 254, 262-68 (February 1997); Sellersburg Stone Co., 5 FMSHRC 287,
294 (March 1983), aff=d, 736 F.2d 1147 (7th Cir. 1984).
2
In Ambrosia Coal & Constr. Co., the Commission, quoting the legislative history of the
Mine Act, noted that Athe purpose of civil penalties is to >convinc[e] operators to comply with the
Act=s requirements.@ 18 FMSHRC 1565, n.17 (September 1996) (also citing Consolidation Coal
Co., 14 FMSHRC 956, 965 (June 1992) (recognizing importance of civil penalties as deter-

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showed that prior civil penalties had not effectively deterred safety violations. 18 FMSHRC 906,
912 (June 1996) (ALJ). But in taking this into consideration, he was simply articulating a basic
premise of the Mine Act C that the point of a civil penalty is to ensure that the violation does not
reoccur.3 As the D.C. Circuit noted in Coal Employment Project v. Dole, 889 F.2d 1127, 1133
(D.C. Cir. 1989), ACongress was intent on assuring that the civil penalties provide an effective
deterrent against all offenders, and particularly against offenders with records of past violations.@

    The record of past violations in this case is substantial. During the preceding two years,

the Department of Labor=s Mine Safety and Health Administration issued 291 citations and orders
to the No. 7 mine charging violations of this very same standard. 18 FMSHRC at 911. Even
more disturbing, however, is the fact that the violations increased rather than decreased during
this time. From June 8, 1993, through June 7, 1994, JWR was issued 123 citations and orders
charging violations of section 75.400. The following year the number of charges increased to

168. Id.

     The judge carefully looked at this compliance history, took into account the instant
     

     accumulation violation, and found the operator to have demonstrated a Aserious disregard for the
     safety requirement to prevent combustible accumulations in an underground coal mine.@ 18
     FMSHRC at 912. He understood that in the process of employing the statutory criteria to set a
     penalty, he could acknowledge the need for deterrence, particularly in considering the factors of
     history and negligence. The judge simply applied the standards, and subsumed in that analysis
     was the proper realization that the final outcome must, consistent with fundamental Mine Act
     principles, discourage future health and safety violations.

     My colleagues, however, seem to view any express reference to deterrence as an
     

     indication that the judge has gone beyond the six criteria set forth in section 110(i), 30 U.S.C.

rence)).
3
In reviewing penalty regulations under the Mine Act=s predecessor legislation, the
Federal Coal Mine Health and Safety Act of 1969, 30 U.S.C. ' 801 et seq. (1976), the Supreme
Court observed that a Amajor objective of Congress was prevention of accidents and disasters; the
deterrence provided by monetary sanctions is essential to that objective.@ National Indep. Coal
Operators= Ass=n v. Kleppe, 423 U.S. 388, 401 (1976).

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' 820(i). Apparently, our judges must treat the deterrent function of a penalty like the proverbial
emperor=s new clothes. Although it is an obvious consideration when assessing a penalty, the
judges must never publicly acknowledge that fact.

                                          ______________________________________
                                          Mary Lu Jordan, Chairman




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