Star Mine Operations, LLC v. Secretary of Labor and Secretary of Labor v. Star Mine Operations, LLC and Secretary of Labor v. Rory Williams (ALJ decision, March 20, 2017)

Read the official release (fmshrc.gov)

Plain-English summary

The consolidated cases covered 172 citations and orders issued after two accidents at Star Mine's underground silver mine. Two miners died from carbon monoxide poisoning after entering an unventilated area following a large explosives detonation, and two other miners were injured in a later planned blast. A related criminal plea required $1,333,000 in restitution, and Star Mine and its principals agreed to a permanent bar from participating in United States mining businesses. Judge Richard W. Manning approved reducing Star Mine's proposed civil penalties from $2,010,614 to $300,000 because the company was insolvent, no longer operated mines, and higher penalties could impair victim restitution without adding deterrence. The separate $10,000 penalty against agent Rory Williams remained unchanged, and Star Mine withdrew its imminent-danger contest.

Decision snapshot

• Cited authority: Sections 105 and 110 of the Mine Act, 30 U.S.C. §§ 815 and 820
• Outcome: Star Mine agreed to all citations and orders, paid $300,000, Rory Williams paid $10,000, and the contest docket was dismissed.
• Key point: Settlement penalties may account for insolvency, permanent exit from mining, criminal sanctions, and the need to preserve funds for victim restitution while still serving the Mine Act's deterrent purpose.

Full text (FMSHRC public release)

FEDERAL MINE SAFETY AND HEALTH
REVIEW COMMISSION

721 19 th
Street, Suite 443

Denver, CO 80202-2500

303-844-3577/FAX
303-844-5268

March 20, 2017

STAR MINE OPERATIONS, LLC,

Contestant

v.

SECRETARY OF LABOR

MINE SAFETY AND HEALTH   

ADMINISTRATION (MSHA),

Respondent

SECRETARY OF LABOR

MINE SAFETY AND HEALTH   

ADMINISTRATION (MSHA),

Petitioner

v.

STAR MINE OPERATIONS, LLC,

Respondent

CONTEST PROCEEDING

Docket No. WEST 2014-592-RM

Order No. 8754779;
04/01/2014

Revenue Mine

Mine ID 05-03528

CIVIL PENALTY PROCEEDINGS

Docket No. WEST 2014-994-M

A.C. No. 05-03528-359228-01

Docket No. WEST 2014-995-M

A.C. No. 05-03528-359228-02

Docket No. WEST 2015-023-M

A.C. No. 05-03528-360911-01

Docket No. WEST 2015-024-M

A.C. No. 05-03528-360911-02

Docket No. WEST 2015-025-M

A.C. No. 05-03528-360911-03

Docket No. WEST 2015-030-M

A.C. No. 05-03528-361952-01

Docket No. WEST 2015-031-M

A.C. No. 05-03528-361952-02

Docket No. WEST 2015-037-M

A.C. No. 05-03528-363546-01

Docket No. WEST 2015-038-M

A.C. No. 05-03528-363546-02

Docket No. WEST 2015-098-M

A.C. No. 05-03528-365154

SECRETARY OF LABOR

MINE SAFETY AND HEALTH   

ADMINISTRATION (MSHA),

Petitioner

v.

RORY WILLIAMS, agent of

STAR MINE OPERATIONS, LLC,

Respondent

Docket No. WEST 2015-127-M

A.C. No. 05-03528-365446-01

Docket No. WEST 2015-128-M

A.C. No. 05-03528-365446-02

Docket No. WEST 2015-304-M

A.C. No. 05-03528-369866-01

Docket No. WEST 2015-305-M

A.C. No. 05-03528-369866-02

Docket No. WEST 2015-306-M

A.C. No. 05-03528-369866-03

Docket No. WEST 2015-370-M

A.C. No. 05-03528-372806

Docket No. WEST 2015-440-M

A.C. No. 05-03528-375046

Docket No. WEST 2015-462-M

A.C. No. 05-03528-376084

Docket No. WEST 2015-547-M

A.C. No. 05-03528-378328

Docket No. WEST 2015-596-M

A.C. No. 05-03528-379026

Docket No. WEST 2015-670-M

A.C. No. 05-03528-381766

Revenue Mine

CIVIL PENALTY PROCEEDING

Docket No. WEST 2017-093-M

A.C. No. 05-03528-423306 A

Revenue Mine

ORDER LIFTING STAY

DECISION APPROVING SETTLEMENT

Before:             Judge
Manning

These
cases are before the Federal Mine Safety and Health Review Commission (the “Commission”) on one contest case brought by Star Mine Operations, LLC (“Star Mine”), 21 petitions for assessment of civil penalty filed by the Secretary of Labor, acting through the Mine Safety and Health Administration (“MSHA”), against Star Mine pursuant to sections 105 and 110(c) of the Federal Mine Safety and Health Act of 1977, as amended (the “Mine Act”), and one petition for assessment of civil penalty brought by the Secretary against Rory Williams under section 110(c) of the Mine Act. 30 U.S.C. §§ 815 and 820. The parties have filed a Joint Motion to Approve Settlement and Order Payment (“Joint Motion”).

Star
Mine began operating the Revenue Mine (the “Mine”), an underground silver mine in Ouray County, Colorado, in 2011. These cases involve 172 citations and orders that were issued by MSHA following two separate accidents at the Mine that were subject to MSHA investigations.

On
November 17, 2013, two miners died of carbon monoxide poisoning in an unventilated portion of the Mine. Other miners were taken to a hospital and subsequently released. The deaths occurred when miners entered an area where there had been an exceptionally large detonation of explosives the previous day. The Secretary referred this accident to the United States Attorney for the District of Colorado for a criminal investigation. On August 29, 2014, two miners sustained injuries following a planned underground blast. This second accident was not the subject of a criminal investigation but this settlement includes citations and orders issued following that accident.

The
cases before me were stayed pending the completion of a criminal investigation, which has now been completed. The parties have entered into a Plea Agreement resolving all criminal matters arising out of the November 17, 2013 accident. The Plea Agreement was approved by the Honorable Christine M. Arguello of the United States District Court for the District of Colorado on March 16, 2017 in Case No. 16-CR-00350.

Star
Mine and other entities with ownership interests in the Mine contracted with Fortune Revenue Silver Mines, Inc. (“Fortune’) to sell to Fortune all the assets related to the operation of the Mine and to transfer operational responsibility to Fortune effective October 1, 2014. Following that effective date, Star Mine and its owners and managers ceased to hold any interest in the Mine.

The
parties have proposed a settlement that resolves all matters pending before me. Star Mine has agreed to accept all the citations and orders as written. The parties state that since October 1, 2014, the closing date of the sale to Fortune, Star Mine has not directly or indirectly participated in the mining business in the United States and Star Mine agrees to be permanently barred from the mining business in the United States. Star Mine’s co-owners and managers, Rory Williams and James W. Williams, Jr., agree that they will not, directly or indirectly, actively participate in or manage, or hold any controlling interest in any mining business or operation in the United States. These two individuals owned the entities that were majority participants in the ownership of Star Mine. [1]

The Plea
Agreement is attached as an exhibit to the Joint Motion and is incorporated herein by reference. It contains a section entitled “Stipulation of Factual Basis and Facts Relevant for Sentencing” at pages 5-12. This section summarizes the facts agreed upon by the parties with respect to the November 2013 fatal accident. In the Plea Agreement, Star Mine agrees to plead guilty to felony Count One of the criminal information that charged a violation of section 110(f) of the Mine Act for making false statements, representations, or certifications. 30 U.S.C. § 820(f). These false statements, representations or certifications relate to information Star Mine provided to MSHA with respect to the ventilation provided in certain areas of the Mine. The parties to the Plea Agreement recommended a sentence of probation for a period of up to five years, restitution in the amount of $1,333,000 to the surviving families of the deceased miners, and a small fine. The Plea Agreement also asks the court to consider the settled penalty amount to be paid in the cases before me to “satisfy the requirement of a fine in [the criminal] case.” (Plea Agreement at 14). As stated above, District Court Judge Arguello approved the Plea.

The
parties are proposing a substantial reduction in the total civil penalty to be assessed against Star Mine. The proposed penalty was $2,010,614 and the proposed amended penalty is $300,000, which is about an 85% reduction. The
$10,000 penalty proposed against Rory Williams is not being reduced. The breakdown of the amended penalties is set forth in a table attached to this decision approving settlement. The parties state that given the terms of the settlement, “the deterrent purpose of the Mine Act is no longer served by imposing penalties greater than the agreed-upon amount on an insolvent operator that will no longer participate in the mining business and where the above-referenced criminal sanctions have been imposed.” (Draft Decision Approving Settlement prepared by counsel for the Secretary at paragraph 5).

The
sentencing recommendations made by the parties to the District Court in the Plea Agreement took into consideration the guidelines issued by the United States Sentencing Commission. Pursuant to those guidelines, the parties state that “the payment of an additional amount in fine may not be appropriate in
[the criminal] case as that could interfere with the Defendant’s ability to pay restitution” to the families of the deceased miners. (Plea Agreement at 14). It is clear that the parties in the criminal proceeding considered restitution to the families of the deceased miners to be a principal element of the sentence. Whether there would be sufficient funds for restitution once a civil penalty is paid is not one of the elements in section 110(i) of the Mine Act, but I find that it is a factor that should be considered by me in assessing civil penalties in these cases. Although a Commission judge is “bounded by consideration of the statutory criteria” when assessing a penalty he is also permitted to factor in the “deterrent purpose underlying the Act’s penalty scheme.” Sellersburg Stone Co., 5 FMSHRC 287, 294 (Mar. 1983), aff'd, 736 F.2d 1147, 1152 (7th Cir. 1984). In this instance, the mine operator is no longer in business and the operator and its principals are barred from reentering the mining business. Higher penalties would not serve a deterrent purpose and could well “increase the burden on the victims of the offense.” (Plea Agreement at 14).

I
have considered the representations and documentation submitted and I conclude that the proposed settlement is appropriate under the criteria set forth in section 110(i) of the Act.  In accepting the penalty reduction, I have taken into consideration the following factors.

1. Ability
   to Continue in Business – Star Mine provided the Secretary with information regarding its financial condition before and after the two accidents, including information relating to the asset sale to Fortune. This information shows that Star Mine is insolvent because it has no assets and all proceeds from the sale of the Mine were reserved to pay creditors. There is no evidence to show that it discontinued business operations to avoid paying the proposed civil penalties. Since the sale to Fortune, Star Mine and its managers Rory Williams and James W. Williams, Jr., have not participated in the mining business and agree that they will be permanently barred from participating in the mining business in the United States. “[T]he purpose of a civil penalty is to induce those officials responsible for the operation of a mine to comply with the Act and its standards.” S. Rep. No. 95-181 at 41, reprinted in Senate Subcomm. on Labor, Comm, on Human Res., Legislative History of the Federal Mine Safety and Health Act of 1977 , at 629 (1978). Given the above, I find that the amended penalty proposed by the parties will not affect Star Mine’s ability to continue in business.

2. History
   of Previous Violations – The citations and orders in these cases were issued between November 2013 and October 2014 for conditions that arose between November 17, 2013 and August 29, 2014. Star Mine was issued 17 section 104(a) citations during the 15 months prior to November 17, 2013, based on information at MSHA’s Mine Data Retrieval System on its website. The history of previous violations for citations and orders issued after that date would include the previously issued citations listed in the table.

3. Size
   of the Mine Operator – In calendar years 2013-14, Star Mine employed about 95 miners and worked just over 200,000 hours each year based on information at MSHA’s Mine Data Retrieval System on its website. MSHA’s penalty point system assigned the Mine 7 points out of 15 for the size of the mine and 3 points out of 9 for the size of the controlling entity. The mine was mid-sized.

4. Negligence
   - The negligence attributable to Star Mine for each violation is set forth in
   the citations and orders at issue.

5. Gravity
   – The gravity of each violation is set forth in the citations and orders at issue.

6. Good
   Faith – The parties agree that all the violations were timely abated in good faith.

Star
Mine has agreed to withdraw its contest of Imminent Danger Order No. 8754779 in Docket No. WEST 2014-592-RM. As a consequence, that docket is dismissed.

ORDER

I have considered
the representations and documentation submitted and I conclude that the proposed settlement is appropriate under the criteria set forth in section 110(i) of the Mine Act. The stay entered in the cases involving Star Mine is LIFTED , the Joint Motion to Approve Settlement and Order Payment is GRANTED , Star Mine Operations, LLC, is ORDERED TO PAY the Secretary of Labor the sum of $300,000 within 40 days of the date of this order, and Rory Williams is ORDERED TO PAY the Secretary of Labor the sum of $10,000 within 40 days of the date of this order. Docket No. WEST 2014-592-RM is DISMISSED .

/s/ Richard W. Manning

Richard W. Manning

Administrative Law Judge

Distribution:

Tyler P. McLeod, Esq., Office of the Solicitor, U.S. Department of Labor, 1244 Speer Blvd., Suite 515, Denver, CO 80204 (Certified Mail)

Peter S. Gould, Esq., and Matthew S. Cooper, Esq., Squire Patton Boggs LLP, 1801 California Street, Suite 4900, Denver, CO 80202-2613 (Certified Mail)

RWM

TABLE SETTING FORTH SETTLED CITATIONS

STAR MINE OPERATIONS

DOCKET NOS. WEST 2014-994-M et. al.

Citation/Order

Modification to Citation/Order

Proposed Penalty

Amended Penalty

WEST 2014-994-M

8769616

Penalty reduction

$51,900

$2,000

WEST 2014-995-M

8769617

$5,000

$5,000

WEST 2015-023-M

92 Citations

$25,664

$25,664

WEST 2015-024-M

6582222

Penalty reduction

$5,645

$4,000

8754780

$4,000

$4,000

8754781

$4,000

$4,000

8754788

$4,000

$4,000

8761624

$4,000

$4,000

WEST 2015-025-M

8769605

Penalty reduction

$112

$100

WEST 2015-030-M

8769586

$2,000

$2,000

8792289

Penalty reduction

$6,624

$2,000

8769600

$2,000

$2,000

WEST 2015-031-M

8769574

Penalty reduction

$207

$100

8769577

Penalty reduction

$207

$100

WEST 2015-037-M

8792285

$100

$100

WEST 2015-038-M

8769568

$2,000

$2,000

8769569

$2,000

$2,000

8792278

Penalty reduction

$6,624

$2,000

8792275

$2,000

$2,000

8792277

Penalty reduction

$6,624

$2,000

8792281

$2,000

$2,000

8792282

$2,000

$2,000

8769588

$2,000

$2,000

8756393

$2,000

$2,000

8792292

Penalty reduction

$6,624

$2,000

8769602

$2,000

$2,000

8769603

$2,000

$2,000

8757031

Penalty reduction

$5,645

$2,000

WEST 2015-098-M

8769606

Penalty reduction

$156,300

$16,175

8769607

Penalty reduction

$156,300

$16,175

8769608

Penalty reduction

$156,300

$16,175

8769609

Penalty reduction

$70,000

$7,243

8769610

Penalty reduction

$156,300

$16,175

8769611

Penalty reduction

$70,000

$7,243

8769613

Penalty reduction

$156,300

$16,175

8769614

Penalty reduction

$156,300

$16,175

WEST 2015-127-M

8769566

Penalty reduction

$6,600

$2,000

8769567

Penalty reduction

$7,700

$2,000

8769575

Penalty reduction

$7,700

$2,000

8769597

Penalty reduction

$7,700

$2,000

8769581

Penalty reduction

$7,700

$2,000

8769582

Penalty reduction

$7,700

$2,000

8769593

Penalty reduction

$8,400

$2,000

8756382

Penalty reduction

$7,700

$2,000

8769592

Penalty reduction

$12,500

$2,000

8756392

Penalty reduction

$9,100

$2,000

8792294

Penalty reduction

$32,800

$2,000

8757027

Penalty reduction

$7,700

$2,000

8757029

Penalty reduction

$27,900

$2,000

8757030

Penalty reduction

$27,900

$2,000

8757032

Penalty reduction

$27,900

$2,000

8757033

Penalty reduction

$27,900

$2,000

WEST 2015-128-M

8769565

Penalty reduction

$3,000

$100

8761663

Penalty reduction

$20,000

$5,000

WEST 2015-304-M

8757026

Penalty reduction

$1,842

$100

8769599

Penalty reduction

$6,624

$100

WEST 2015-305-M

8756373

$2,000

$2,000

8756375

$2,000

$2,000

8792276

$2,000

$2,000

8792279

Penalty reduction

$6,624

$2,000

8792280

$2,000

$2,000

8769587

Penalty reduction

$5,645

$2,000

8756383

$2,000

$2,000

8756385

$2,000

$2,000

8792290

Penalty reduction

$6,624

$2,000

8792293

Penalty reduction

$6,624

$2,000

WEST 2015-306-M

8761658

$4,000

$4,000

WEST 2015-370-M

8756380

Penalty reduction

$25,800

$2,000

8769585

Penalty reduction

$30,200

$2,000

WEST 2015-440-M

8754775

$4,000

$4,000

8754776

$4,000

$4,000

8754778

$4,000

$4,000

WEST 2015-462-M

8769615

Penalty reduction

$70,000

$2,000

WEST 2015-547-M

8761659

Penalty reduction

$15,971

$4,000

8761660

Penalty reduction

$15,971

$4,000

8761664

Penalty reduction

$15,971

$100

8761665

Penalty reduction

$15,971

$4,000

WEST 2015-596-M

8761661

Penalty reduction

$15,971

$4,000

WEST 2015-670-M

8761657

Penalty reduction

$125,400

$4,000

8761662

Penalty reduction

$122,700

$4,000

WEST 2017-093-M

8769608

Rory Williams

§ 110(c) violation

$10,000

$10,000

TOTAL SETTLEMENT AMOUNT                         $310,000              

[1]
At all relevant times, Star Mine was owned by
Silver Star Resources, LLC (“SSR”) (100% owned by the Williams’), Revenue-Virginius Mines (“RVM”) (98% owned by the Williams’ and the remainder 2% owned by three individuals), and Yankee Boy Resources, LLC (“YBR”) (owned by another individual). SSR and RVM jointly owned 98% of Star Mine.