Secretary of Labor v. Sierra Rock Products, Inc.

Plain-English summary

Sierra Rock's owner reached into an energized electrical panel and flipped breakers after an MSHA inspector told him to shut off the plant's main power before opening the panel. A judge affirmed the violation and S&S designation but removed unwarrantable failure, reduced negligence from reckless disregard to moderate, converted the section 104(d) order to a section 104(a) citation, and cut the proposed $52,600 penalty to $6,000. The Commission held that the judge improperly borrowed the analysis from a related citation about panel configuration. The duty to de-energize before circuit work was different, and the owner's conduct after the inspector's warning required separate consideration. The Commission vacated the unwarrantable-failure, negligence, and penalty findings and remanded without deciding their proper outcomes.

Decision snapshot

• Cited standards: 30 C.F.R. §§ 56.12017 and 56.12040
• Outcome: The findings of no unwarrantable failure and moderate negligence, along with the $6,000 penalty for Order No. 8561260, were vacated and remanded; the violation and S&S finding remained intact.
• Key point: Related violations under standards imposing distinct duties require separate negligence and unwarrantable-failure analyses because the same facts may carry different weight for each duty.

Full text (FMSHRC public release)

FEDERAL MINE SAFETY
AND HEALTH REVIEW COMMISSION

1331 PENNSYLVANIA AVENUE, NW, SUITE 520N

WASHINGTON, D.C. 20004-1710

SECRETARY
OF LABOR,                            :

MINE
SAFETY AND HEALTH                  :         Docket Nos.   WEST 2010-1390-RM

ADMINISTRATION
(MSHA)                     :                                 WEST 2010-1391-RM

:                                 WEST 2010-1589-M

v.                                              
:                                 WEST 2011-315-M

:                                 WEST 2011-316-M

SIERRA
ROCK PRODUCTS, INC.              :                                 WEST
2011-747-M

:                                 WEST 2011-1029-M

BEFORE:
Nakamura, Acting Chairman; Cohen and Althen, Commissioners

DECISION

BY
THE COMMISSION:

These
proceedings arise under the Federal Mine Safety and Health Act of 1977,

30
U.S.C. § 801 et seq. (2012) (“the Act”). Order No. 8561260, the single order
remaining     before the Commission in this matter, is one of four related
electrical violations for which citations or orders were issued to Sierra Rock
Products by the Secretary of Labor’s Mine Safety and Health Administration
(“MSHA”). The Administrative Law Judge modified the section 104(d) order to a
section 104(a) citation, removed the unwarrantable failure designation, reduced
the degree of negligence attributable to Sierra Rock, and assessed a penalty
substantially lower than proposed by the Secretary.[1] In modifying
the unwarrantability and negligence findings in the order, the Judge explicitly
relied on his reasoning for similarly modifying a related electrical citation,
Citation No. 8561252. 35 FMSHRC 49, 57-58 (Jan. 2013) (ALJ).

The Commission granted the Secretary’s petition for discretionary
review of the Judge’s modifications to Order No. 8561260. The issues raised for
review are whether the Judge erred in vacating the unwarrantable failure
designation and reducing the negligence, and failing to provide a separate
unwarrantability and negligence analysis, for Order No. 8561260.

We
conclude that, in light of the different standards cited in Order No. 8561260 and
Citation No. 8561252, and facts related to the order that were not present when
the citation   was issued, a separate unwarrantability and negligence analysis
was required for the order. Therefore, we vacate the Judge’s penalty assessment
and underlying unwarrantability and negligence findings with respect to Order
No. 8561260, and remand the matter for further consideration consistent with
our decision.

I.       Factual
Background

The facts in
this case are largely undisputed. Sierra Rock Products is owned and operated by
Jim Hatler. His son, Barry, and two hourly employees also worked on the
property on the date the order was issued. Tr. 156. On May 18, 2010, MSHA Inspector
William Edminister asked Barry to demonstrate his usual method for “locking
out” an outdoor electrical panel.  Barry Hatler demonstrated that he or his father
would open the panel door, reach inside and throw the breaker switches to
de-energize the panel, then close and padlock the door. The inspector noted
that the breaker switches were approximately six inches from exposed
electrified components, and concluded that anyone reaching inside to throw the
breaker switches would be exposed to shock hazards. Accordingly, he issued
Citation No. 8561252, which alleges that the panel’s controls were not
installed in such a way as to be operated without danger of contacting
energized conductors, in violation of section 56.12040. [2] 35 FMSHRC
at 50-51.

The inspector
designated the citation as significant and substantial (“S&S”) based on the
proximity of the breaker switches to live 480 volt connectors.[3] Id. at

51. He also attributed the citation to high negligence and an unwarrantable
    failure, noting that the operator was aware of the hazard and failed to correct
    it, that the panel had existed in the cited configuration for some time, and that
    the hazard was obvious once the panel was open. Tr. 36, 42. The citation was subsequently
    terminated by installing a breaker switch on the outside of the panel. Tr. 44.

The next day, Jim
Hatler voluntarily showed the inspector an electrical panel in the Motor
Control Center (“MCC panel”) with the identical configuration, asserting that
another inspector had terminated a citation issued with respect to that panel
when it was in exactly the same configuration 10 to 15 years previously. Tr. 46-47.
The inspector testified that Hatler  did not reach in to the panel at that time,
while Hatler testified that he touched some components in the panel to demonstrate
the de-energizing procedure. Tr. 86-87, 168. Finding that the panel had the
same configuration as the previously cited panel except that the electrified
components were farther from the breaker switches, the inspector informed
Hatler that it violated the same standard. Hatler countered that he believed
the panel was in compliance, because of his claim that a prior inspector had
terminated the citation without requiring changes to the configuration. Hatler
further claimed that for ten years, no inspector had found a problem with the configuration
or his de-energizing procedure. 35 FMSHRC at 51-52.

Later that day,
after checking with his headquarters, the inspector told Hatler that he was
going to issue an order despite the lack of past enforcement, and asked him to
de-energize the MCC panel so it could be opened and the violative condition
documented. The inspector told Hatler that the panel had to be de-energized
before it was opened, by turning off the breaker for the plant’s main power. Hatler
became angry, stated in rude terms that he was not going to shut down the main
power for a non-violative condition, aggressively opened the panel door,
reached in, and flipped the breakers. Concluding that Hatler had exposed
himself to the risk of electrical shock by reaching into the panel, the inspector
issued an imminent danger order. 35 FMSHRC at 51-52; Tr. 48-52, 170-71.

The
next day, the inspector issued two orders as a result of the events described
above. Order No. 8561261 alleges that, like the outdoor panel at issue in
Citation No. 8561252, the MCC panel was not configured to protect miners against
inadvertent contact with energized components. Order No. 8561260, at issue
here, alleges that Hatler failed to de-energize the MCC panel before doing work
on circuits inside the panel, in violation of section 56.12017.[4] The inspector
designated the violation as S&S, on grounds that Hatler’s aggressive manner
of reaching into a panel with live 480 volt components was highly likely to
result in a fatal injury. He also attributed the violation to unwarrantable
failure and reckless disregard, noting that Hatler reached into the energized
panel directly after the inspector instructed him to de-energize first, and that
Hatler had a responsibility to set an example for his employees. 35 FMSHRC at
52.  

II.               
The
Judge’s Findings

With respect to
Citation No. 8561252, the Judge found that the configuration of the outdoor panel
violated section 56.12040, and affirmed the S&S designation. However, he
reduced the degree of negligence from high to moderate, removed the
unwarrantable failure designation, modified the section 104(d) citation to a section
104(a) citation, and imposed a $6,000 penalty rather than the proposed $12,900
penalty. 35 FMSHRC at 55, 57. He reduced the degree of negligence because he
found that MSHA’s lack of prior enforcement with respect to the panel’s
configuration “helped lull Sierra Rock into believing that its procedure was
safe and legal.” Id. at 56. As for unwarrantability, the Judge
determined that the panel existed in a violative configuration for a
considerable length of time, there was a high degree of danger, and the
violation was obvious to a trained electrician. However, he determined that Sierra
Rock  had not been put on notice that greater efforts were necessary for
compliance, and concluded that Sierra Rock had not demonstrated the aggravated
conduct required for an unwarrantable failure. Id.

With
respect to Order No. 8561260, the Judge found that Hatler’s actions in reaching
into the MCC Panel to flip the breakers violated section 56.12017, and affirmed
the S&S designation. Then, “for the same reasons as discussed above,” he reduced
the degree of negligence from reckless disregard to moderate, removed the
unwarrantable failure finding, modified the order  to a section 104(a)
citation, and imposed a penalty of $6,000 rather than the proposed penalty  of
$52,600. The Judge also noted that Order Nos. 8561260 and 8561261 were not duplicative,
because they cited different standards that imposed separate and distinct
duties on the operator. Id. at 57-58.

III.            
Disposition

On
appeal, the Secretary challenges the Judge’s unwarrantable failure and
negligence determinations, contending that the Judge failed to conduct a
separate analysis for Order No. 8561260. The Secretary further contends that
the Judge ignored significant aggravating factors in his unwarrantable failure
determination for this order.

In
modifying the unwarrantability and negligence designations associated with Order
No. 8561260, the Judge referred to the “reasons discussed above” with respect
to Citation No. 8561252. He did not conduct a separate unwarrantability and
negligence analysis for the order. We conclude that a separate analysis was
required.

Unwarrantable failure is aggravated
conduct constituting more than ordinary negligence. Emery Mining Corp.,
9 FMSHRC 1997, 2001 (Dec. 1987). Factors indicating aggravated conduct
include (1) the extent of the violative condition, (2) the length of time that
the violative condition existed, (3) whether the violation posed a high degree
of danger, (4) whether the violation was obvious, (5) the operator’s knowledge
of the existence of the violation, (6) the operator’s efforts in abating the
violative condition, and (7) whether the operator had been placed on notice
that greater efforts were necessary for compliance. Wolf Run Mining Co.,    35
FMSHRC 3512, 3520 (Dec. 2013); IO Coal Co., 31 FMSHRC
1346, 1350-51 (Dec. 2009).

Emphasizing
the need for contextual analysis, the Commission has held that separate unwarrantability
analyses are required, even for factually related violations, where the violations
involve mandatory standards that impose separate and distinct duties on an operator.
Consolidation Coal Co., 23 FMSHRC 588, 597 (June 2001). The
relative significance of a fact or circumstance may change when different
violative conduct is at issue.[5]

Here,
although the panel’s configuration and the de-energizing procedure are related,
the relevant standards clearly impose separate and distinct duties. The
standard at issue in Citation No. 8561252 involves a duty to safely configure
electrical controls, while the standard in Order No. 8561260 involves a duty to
de-energize before working on circuits.[6]
See n. 2, 4, supra. Facts that were given great weight by the
Judge with respect to the configuration violation, such as MSHA’s lack of enforcement,
do not
have the same relevance with respect to a failure to   de-energize before
working on circuits.[7]
35 FMSHRC at 56. Other facts shared by the two violative conditions could have more
or less significance depending on the cited standard. These include the length
of time that the panels existed in their cited configuration, and that the
panels were only de-energized in the cited manner once or twice a month. Analysis
of a shared factual background is not inherently transferrable where the cited
standards address different conduct.

Additionally,
several events occurred after the issuance of Citation No. 8561252, but before the
issuance of Order No. 8561260. On the morning of May 19, 2010, the inspector
saw Hatler open the MCC Panel, may or may not have seen him reach in and touch the
breaker switches depending upon the resolution of conflicting testimony, and informed
him that the panel’s configuration was not in compliance. Apparently, the
inspector did not tell him that throwing the breakers did, or would, violate
section 56.12017 but, again, there is a difference  in testimony as to whether
he touched the breakers at that time. Tr. 86-87, 168-69. Further,    a
few hours later, just before Hatler engaged in the conduct cited in
the order by reaching into  the MCC Panel and flipping the breaker switches, the
inspector informed Hatler that he should turn off the main power switch to
de-energize the panel before opening it. Tr. 48-52, 170-71. These interactions are
relevant as to whether Sierra Rock was on notice regarding compliance with the
cited standard. See, e.g., IO Coal, 31 FMSHRC at 1353; Consolidation
Coal, 23 FMSHRC at 595 (finding that interactions between MSHA and mine
personnel regarding a problem serve to put operators on heightened notice that
they must increase efforts to comply with the relevant standard).  

By merely referring
back to his unwarrantability analysis for Citation No. 8561252,   the Judge thus
failed to consider all of the relevant facts and circumstances with respect to  Order
No. 8561260. As the D.C. Circuit has emphasized, an articulated decision is
essential   to the facilitation of judicial review. Harborlite Corp. v. ICC, 613 F.2d 1088, 1092 (D.C. Cir. 1979). Thus, the Commission has held
that a Judge must analyze and weigh all probative  record evidence, make
appropriate findings, and explain the reasons for his or her decision.  Mid-Continent
Res., Inc., 16 FMSHRC 1218, 1222 (June 1994).
Accordingly, this matter is remanded to the Judge for a separate
unwarrantability analysis for Order No. 8561260. The Judge should particularly
consider the impact on the unwarrantability factors of the different standard
cited and the facts unique to the order.[8]

The Secretary
argues that a remand is unnecessary because the record compels a finding of
unwarrantable failure. See American Mine Servs., Inc., 15 FMSHRC 1830,
1834 (Sept. 1993) (finding remand unnecessary where the record supports only
one conclusion). Specifically, the Secretary alleges that the inspector’s
instruction to Jim Hatler to de-energize before opening the MCC panel clearly
put Sierra Rock on notice and made any belief of compliance when flipping the
internal breaker switches objectively unreasonable. Therefore, the Secretary
claims that Hatler’s actions constituted willful misconduct which, when
combined with other aggravating factors such as the degree of danger posed by
the violation, compels a finding of unwarrantable failure.

Sierra Rock, on
the other hand, argues that the Judge’s finding of no unwarrantable failure
should stand because he properly found that Sierra Rock had a reasonable and
good faith belief that its conduct complied with the standard. The Commission
has held that if an operator has acted on a good faith belief that its cited
conduct was in compliance with applicable law, and that belief was objectively
reasonable under the circumstances, the operator's conduct will not be
considered the result of an unwarrantable failure when it is later determined
that the operator's belief was in error. IO Coal, 31 FMSHRC at 1357-58
(citation omitted).

We find that the
record does not compel a conclusion as to whether Sierra Rock had an
objectively reasonable belief regarding compliance with the standard cited in
Order No. 8561260, or as to the unwarrantability of the violative conduct more
generally. While the record unquestionably establishes that Hatler willfully
acted contrary to the inspector’s instructions,  the issue is whether Hatler
willfully or recklessly acted contrary to the cited standard. The record does
not conclusively establish whether the instructions put Sierra Rock on notice
that de-energizing the panel via the internal breaker switches violated section
56.12017. A determination as to whether Sierra Rock was on notice may also be
affected by a factual finding as to whether Hatler reached into the panel and
flipped the breakers that morning without comment from the inspector.

Just as the
analysis of the unwarrantability factors with respect to Citation No. 8561252
cannot be applied to Order No. 8561260 without further consideration, any
finding of an objectively reasonable good faith belief with respect to the
citation is not transferrable without additional analysis. On remand, the Judge
should consider whether, in light of the totality of circumstances specific to
Order No. 8561260, Sierra Rock had an objectively reasonable and good faith
belief that its actions were in compliance with the cited standard.

It is ordinarily
the province of the Judge to engage in an analysis and balancing of the
unwarrantability factors in the context of the cited standard in the first
instance. Here, further findings are necessary to reach a conclusion as to
Sierra Rock’s objective belief in its compliance with the cited standard and
the reasonableness of that belief, and that determination must then be weighed against
other unwarrantability factors as re-examined in the context of the cited standard.
Accordingly, the unwarrantable failure issue should be remanded to the Judge.[9]  

As for the
Judge’s finding of moderate negligence, the Secretary contends that the same
facts which compel a finding of unwarrantable failure also compel a finding of
reckless disregard. The Commission has recognized that, although unwarrantable
failure and negligence are distinct issues, the same factual circumstances may
be considered for both. Black Diamond, 7 FMSHRC 1117, 1122 (1985); see
also Quinland Coals, Inc., 9
FMSHRC 1614, 1622 & n.11 (Sept. 1987). Notably, “reckless
disregard” is often provided as a definition of unwarrantable failure. Emery
Mining, 9 FMSHRC at 2003. The circumstances discussed above do not compel a
finding of unwarrantable failure or reckless disregard. However, they may be
relevant for a negligence analysis, particularly as they relate to the presence
or absence of a reasonable belief with regard to compliance. Accordingly,
remand for a separate negligence analysis for Order No. 8561260 is appropriate.
In
considering whether Sierra Rock engaged in aggravated conduct
constituting unwarrantable failure in light of the order’s cited standard and
additional facts, the Judge should also consider whether, in light of the same
facts and circumstances, Sierra Rock’s conduct constituted reckless disregard
or high negligence.

As a final
matter, in assessing penalties, judges are to consider the six factors set
forth in section 110(i) of the Act, including the operator’s negligence. 30 U.S.C.
§ 820(i). In remanding for reconsideration of the unwarrantability and
negligence associated with Order No. 8561260, the assessed penalty must also reconsidered
in light of any changes to the Judge’s findings.

In
summary, this matter is remanded to the Judge for a separate consideration of
the unwarrantability factors in light of the totality of circumstances specific
to Order No. 8561260. In particular, the analysis should address: the impact,
if any, of the difference in the cited standards on the various
unwarrantability factors; the impact, if any, of the morning interaction
between Hatler and the inspector regarding the MCC Panel, and the inspector’s
instructions to de-energize before opening the panel; and whether Sierra Rock
had an objectively reasonable belief, based on the above facts and
circumstances, that its conduct was in compliance with the cited standard. This
matter is also remanded for reconsideration of the degree of negligence
attributable to Sierra Rock with respect to the conduct at issue in the order.  

IV.            
Conclusion

For
the reasons above, we vacate the Judge’s findings of no unwarrantable failure
and moderate negligence with respect to Order No. 8561260, and remand for
further analysis in light of the cited standard and the relevant facts and
circumstances discussed above. We also vacate and remand the Judge’s penalty
assessment for Order No. 8561260 for reconsideration in light of any changes to
the unwarrantability and negligence findings.

/s/ Patrick K.
Nakamura

Patrick K.
Nakamura, Acting Chairman

/s/
Robert F. Cohen, Jr.

Robert F. Cohen, Jr., Commissioner

/s/
William I. Althen

William I. Althen, Commissioner

[1]
In
relevant part, section 104(d)(1) of the Act establishes additional sanctions
for any violation caused by “an unwarrantable failure of [an] operator to
comply with . . . mandatory health or safety standards.” 30 U.S.C. § 814(d)(1).
Section 104(a) generally authorizes the Secretary   to issue citations for
violations of “this [Act], or any mandatory health or safety standard, rule,
order, or regulation promulgated pursuant to this [Act].” 30 U.S.C. § 814(a).

[2]
Section
56.12040 states that “[o]perating controls shall be installed so that they can
be operated without danger of contact with energized conductors.” 30 C.F.R. §
56.12040.

[3]
The
“significant and substantial” language is found in section 104(d)(1) of the
Act, which refers to “a violation of any mandatory health or safety standard .
. . of such nature as could significantly and substantially contribute to the
cause and effect of a coal or other mine safety  or health hazard.” 30 U.S.C. §
814(d)(1).

[4]
Section
56.12017 states in relevant part that “[p]ower circuits shall be de-energized
before work is done on such circuits unless hot-line tools are used.” 30 C.F.R.
§ 56.12017. The Judge’s finding that flipping the breaker switches constituted
“work done on such circuits” has not been contested. 35 FMSHRC at 58.

[5]
It is well
recognized that all relevant facts and circumstances of a particular case must
be examined to determine whether an operator has engaged in aggravated conduct
constituting an unwarrantable failure. See IO Coal, 31 FMSHRC at 1351; Consolidation
Coal,
23 FMSHRC at 593.

[6]
The
Judge made an implicit finding that the relevant standards impose separate and
distinct duties. Citation No. 8561252 and Order No. 8561261 allege violations
of the same standard, and the Judge found that Order Nos. 8561260 and 8561261
are not duplicative. 35 FMSHRC at 57; see Western
Fuels-Utah, Inc.,
19 FMSHRC 994, 1003-05 (June 1997) (finding citations non-duplicative where the
standards involved impose separate and distinct duties upon an operator).

[7]
The record
indicates that the evidence regarding the lack of enforcement was primarily in
regard to the panel’s configuration. Hatler testified that he raised the issue
of lack of past enforcement with the inspector in order to contest the
unwarrantability designation for Citation No. 8561252, on grounds that the
panel had existed in the same configuration for years without a problem. Tr.
46-47, 89, 167-68. He also stated that he performed the panel de-energizing procedure
for inspectors over the years and was never cited. Tr. 173. However, MSHA
Inspector John Pereza testified that usually the entire plant was already shut
down during inspections. Tr. 225-26.

[8] Sierra Rock
argues that the citation and order are sufficiently similar that a separate
analysis was unnecessary. Specifically, Sierra Rock claims that the inspector’s
instruction to de-energize does not affect the outcome of the unwarrantability
analysis, because any notice it created does not undo MSHA’s lack of
enforcement. However, the relative weight of those factors, if any, is

a determination
to be made by the Judge.

[9]
Commissioner
Cohen disagrees with his colleagues’ conclusion that the issue of Sierra Rock’s
alleged reasonable good faith belief should be remanded to the Judge. It is
uncontradicted that Inspector Edminister told Jim Hatler to de-energize the
panel by turning off the main power switch before opening the MCC panel. Tr.
50, 170-71. The fact that Hatler did not do so led  to the Inspector’s issuance
of imminent danger Order No. 8561259 under section 107(a) of   the Mine Act. The
Judge affirmed the imminent danger order. 35 FMSHRC at 58-59. It is
inconceivable that Hatler’s angry act of putting his hand inside the electrical
panel in defiance  of the Inspector’s explicit warning, thus creating an
imminent danger, could be determined to  be characterized as an objectively
reasonable act of good faith. See, Consolidation Coal Co.,  14 FMSHRC
956, 970 (June 1992) ( “[N]o operator is free to take the law into its own
hands  by deciding for itself what the law means and how it can best be applied”).
Sierra Rock’s argument that the Judge made a finding of objectively reasonable
good faith, Br. at 9-12,       is simply bogus. The finding by the Judge which
Sierra Rock relies on was that “[t]he fact   that several MSHA inspectors
examined the electrical panel during previous inspections and  did not issue a
citation or even comment on the condition helped lull Sierra Rock into
believing that its procedures  were safe and legal.” 35 FMSHRC at 56. This
finding, made in connection with Citation No. 8561252, led the Judge to reduce
the negligence to moderate and vacate the unwarrantable failure finding with
regard to the configuration of the electrical panel under    30 C.F.R. §
56.12040. Contrary to Sierra Rock’s assertion, the Judge made no finding that
Hatler’s act in creating the violation of 30 C.F.R. § 56.12017 cited in Order
No. 8561260   could be characterized as being done with objectively reasonable
good faith. Indeed, in affirming the imminent danger order as “eminently
reasonable,” the Judge said:

Jim Hatler was
directly in front of the open electrical panel and he was angry. He had just
flipped the breakers to disconnect the power to the stacker and the bypass
conveyor while the conductors at the bottom of the panel were electrified. Given
Hatler’s agitated state, it was not unforeseeable that he would flip the
switches back on again to show the inspector how it was done.

35
FMSHRC at 59. Thus, any belief that Jim Hatler may have had -- when he reached
into the electrical panel to flip the circuit breakers in the MCC room -- that
his action complied with the standard despite Inspector Edminister’s explicit
warning, may have been in good faith, but it certainly was not reasonable.

Nevertheless,
Commissioner Cohen agrees that as to the overall issue of unwarrantable
failure, the record does not compel a finding one way or the other, and that
the case must be remanded to the Judge for consideration of all the factors
bearing on this issue.