Hydrocarbon Resources Company

Read the official release (fmshrc.gov)

Plain-English summary

Hydrocarbon Resources was cited for failing to provide bulkhead protection during shaft work, maintain an effective underground telephone, ground a water pump, and ground an electrical wire. Judge John J. Morris found all four violations proven and assessed penalties of $3,000 for the bulkhead violation, $200 for the communication violation, and $500 each for the two grounding violations. The bulkhead violation involved a shaft where falling rock could seriously injure miners, and the judge considered a prior fatality involving the same type of condition when assessing gravity and negligence. The total penalties were $4,200.

Decision snapshot

• Cited standards: 30 C.F.R. §§ 57.19110, 57.20032, and 57.12025
• Outcome: Four citations were affirmed and civil penalties totaling $4,200 were assessed.
• Key point: Temporary alternatives such as ventilation signals, hoist signals, or submerged equipment did not satisfy requirements for protective bulkheads, two-way communication, or grounding.

Full text (FMSHRC public release)

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. WEST 86-15-M
PETITIONER A.C. No. 42-01789-05510

       v.                                Cottonwood #1 Mine

HYDROCARBON RESOURCES COMPANY,
RESPONDENT

                              DECISION

Appearances: James H. Barkley, Esq., Office of the Solicitor,
U.S. Department of Labor, Denver, Colorado,
for Petitioner;
Robert K. Murray, Esq., Golden, Colorado,
for Respondent.

Before: Judge Morris

 The Secretary of Labor, on behalf of the Mine Safety and

Health Administration, charges respondent with violating safety
regulations promulgated under the Federal Mine Safety and Health
Act, 30 U.S.C. § 801 et seq., (the Act).

 A hearing on the merits took place on August 14, 1986 in

Salt Lake City, Utah.

 The Secretary waived his right to file a post-trial brief

but respondent filed a brief.

                               Issues

 The issues concern the appropriateness of the civil

penalties to be assessed.

                           Citation 2360975

 This citation alleges respondent violated 30 C.F.R. § 57.19110 which provides as follows:

     57.19110 Overhead protection for shaft deepening
   work. A substantial bulkhead or equivalent protection
   shall be provided above persons at work deepening a
   shaft.

                   Summary of the Evidence

 The citation and orders in contest here were issued as a

result of inspections that occurred on June 5, June 25, and June
26, 1985.

 Ronald L. Beason, a metal and nonmetal mine inspector

experienced in mining, previously inspected respondent's
Cottonwood mine on December 28, 1982 (Tr. 20 -22).

 The inspection occurred because of a fatal accident at the

mine (Tr. 22). At that time an imminent danger order was issued
to Chad Evans, then vice president of Hydrocarbon Resources. The
order alleged respondent violated 57.19110 in failing to build
and maintain substantial bulkheads (Tr. 23, 72). The citation was
later terminated. The bucket and the bulkhead were used to
protect the miners in the shaft (Tr. 24, 25, 86, 87).

 This particular gilsonite mine had a 4 foot by 12 foot shaft

and it was about 700 feet deep (Tr. 27). The shaft consists of
the skip, manway and utility compartments. The shaft was not
perfectly vertical but it varied from foot to hanging wall (Tr.
27, 28, 68). There were no guides in its 700 foot length (Tr. 36,
69). This would increase the probability of dislodging a rock
(Tr. 36, 38).

 The skip compartment is used to haul ore, men, and materials

in and out of the mine. At the time of this inspection the vacuum
system was transporting the gilsonite. In addition, they were
blasting the rock and mucking it into the skip (Tr. 29, 30).

 Bulkheads are timbers placed five to ten feet from the

bottom of the shaft. They are directly over the miners' heads
when they are in the bottom of the shaft. The bulkheads prevent
the miners from being struck by falling rock (Tr. 30, 31). The
skip itself can dislodge loose and rocks from the foot or hanging
wall (Tr. 37, 38).

 On the June 5, 1985 inspection the first (and only) bulkhead

on the utility shaft was 354 feet from the shaft bottom (Tr. 31,
32, 82). The bulkhead was located approximately at the point
where the Green fatality occurred in 1982 (Tr. 32). In addition
to the single bulkhead there were various other obstructions such
as pipes and lagging in the shaft (Tr. 84).

 There was also a single bulkhead on the manway side 38 feet

above the shaft bottom. There were no bulkheads on the utility
side. Bulkheads are required for the skip compartment but there

were none. Lagging is required under the skip (Tr. 32, 34, 39).
Lagging (3 x 8 timbers) is pulled across the bulkhead so the
miners are protected while the skip travels to, and returns from,
the surface (Tr. 33). There was lagging in isolated places (Tr.
70). The skip can be used as a bulkhead when situated at the
bottom but a bulkhead is required when the skip is at the surface
or descending or ascending (Tr. 33).

 When the inspector arrived at the site the skip was on the

surface. In addition, there was no bulkhead at the bottom of the
shaft (Tr. 33). There was nothing to stop the fall of any rocks
700 feet in the skip compartment and 350 feet in the utility
compartment (Tr. 34).

   At the time of the inspection three shifts were working (Tr.

38).

 When the inspector descended in the skip the miners were 10

to 12 feet (laterally) from the shaft bottom (Tr. 77). There were
not sinking shaft but they were preparing to mine into a stope
(Tr. 78, 81). The inspector questioned each miner and he learned
that the day shift had completed mucking out the bottom of the
shaft. They stated that no bulkheads or timbers had been removed
(Tr. 79).

 Inspector Beason measured and took notes. He indicated there

was no lagging in the skip compartment. His notes directly
contradict witness Jorgensen (Tr. 293 -297; Ex. P3).

 Don E. Jorgensen, testifying for respondent, indicated there

were continuous glancing boards from the surface to the bottom of
the shaft (Tr. 212, 213). There were stulls and lagging every
five feet and 3 x 8's on every landing (Tr. 213). Jorgensen
observed the inspector measure a hole at 13 inches but many
measured two or three inches and they were not covered with pipe
(Tr. 213, 214). On the manway side there were 14 foot ladders
with landings every 10 feet. The first bulkhead was 38 feet from
the bottom of the shaft (Tr. 215). When the June 5 citation was
issued for failure to use bulkheads they had flooring out to the
sides whenever they were working under the bucket for any length
of time. The witness had never seen the bottom of the Cottonwood
shaft without timbers or lagging. On the morning of June 5, 1985
the miners had started to mine gilsonite and they had moved out
of the shaft (Tr. 216, 217).

 Witness Jorgensen claimed bulkheads were used after the

first citation was issued. In fact, Hydrocarbon discharged Royce,
Grant and Dan Green for failing to use bulkheads when sinking a
shaft at another location (Tr. 217 -221, 248, 249, 256, 257).

 Before the June 5 inspection Jorgensen had talked to Royce

Green and his two boys urging them to be sure the bulkhead was
installed (Tr. 221, 222).

                          Discussion

 Respondent's answer admits this violation. Further, the

parties have stipulated that the only issue concerns the
appropriateness of the penalty (Tr. 16 -18).

 Accordingly, the citation should be affirmed. Issues

relating to a civil penalty are discussed hereafter.

                       Citation 2359401

 This citation alleges a violation of 30 C.F.R. § 57.20032

which provides as follows:

     57.20032 Two-way communication equipment for
      underground operations.
   Telephones or other two-way communication equipment
   with instructions for their use shall be provided for
   communication from underground operations to the
   surface.

                   Summary of the Evidence

 During his inspection on June 25, 1985 inspector Beason was

directed by Ken Cooper, shift foreman, to the company telephone.
It was located on the bench in the hoist room under boxes, rags
and other materials (Tr. 39, 40, 43).

 The inspector determined there was no communication with the

bottom of the mine (Tr. 40). He found the telephone did not work
(Tr. 41). They then took it apart. The panels were rusty and the
plug-ins had rusted off. The rust on the phone could not have
accumulated within four days. In addition, the inspector did not
observe any damage to the box itself (Tr. 42).

 Ken Cooper stated the phone had been removed from service

because of water in the shaft (Tr. 42).

 When Mr. Cooper showed the inspector the telephone he made

no claim that it had been damaged by blasting (Tr. 43).

 On the following day company representatives, Don Jorgensen

and Ralph Musick, told the inspector that the phone was new (Tr.
43). It had just been installed, blasted off the wall and rusted
out after two days in a muckpot (Tr. 44). The inspector had the
underground water analyzed by MSHA and contacted MSA (Mine Safety
Appliance), the manufacturer. The company stated the neutral
acidity solution would not cause it to corrode (Tr. 44, 45,
106 -115). The inspector's investigation caused him to conclude
that the phone was not four days old as claimed by the company
(Tr. 45).

 Management also asserted their backup communication system

involved shutting off the ventilation. They did so five times

over 30 to 45 minutes. The men did, in fact, appear 45 minutes
later (Tr. 47). The problem with this system of communication is
that the miners below could not communicate to the surface (Tr.
47).

 In the inspector's opinion the lack of communication could

have aggravated any injury caused to a miner below ground (Tr.
48, 49). On a previous inspection (April 24) the company had a
problem with the phone (Tr. 102, 103). The inspector believed the
Pager 3 telephone in place on June 25th was the same instrument
in use on April 24 (Tr. 104).

 The inspector left the mine by signaling the hoistman for

the skip. But he did not consider such signals nor a signal board
to be effective communication because the hoistman could not
return the signal (Tr. 116, 117). In addition, a signal board
does not have an emergency code (Tr. 118).

 Witness Don Jorgensen disagrees with inspector Beason

concerning the telephone. On May 30th the company ordered a new
phone. On June 5 he pointed out the new phone to the inspector
(Tr. 222, 223).

 The new phone had apparently been dislodged in a Friday

night blast. As a result it was in the water until Monday morning
(Tr. 223).

 The original phone, seen in April, was an old instrument

(Tr. 223). The witness produced an order for a telephone dated
May 30. The order was for a Pager 3 and a battery (Tr. 224). The
order bears a date stamp of May 31, 1985 and the witness
installed it on June 3 (Tr. 224; Ex. R6).

 The company was cited for failing to have a phone on June 25

(Tr. 224, 225). The new phone had to be replaced because it was
corroded and rusted from being in the water and muck caused by
the Friday night blast (Tr. 226).

 Royce Green didn't tell anyone about the phone and Jorgensen

didn't hear about it until Tuesday (Tr. 228).

 On June 25 the company ordered a Pager and a 12 volt battery

(Tr. 229; Ex. R7). The Pager 3 was an MSA phone (Tr. 230).

 Witness Jorgensen indicated the signal code for operating

the hoist directs the hoistman to either stop, start or position
the conveyance at some predetermined location. Nine bells
indicates impending danger or accident (Tr. 230, 231). Turning
the air on and off also constitutes a signal system (Tr. 231).
The signal system is posted at every landing and known to the
miners (Tr. 231).

If the phone isn't available a person can talk down the vent pipe
or suction pipe (Tr. 232).

 The mine had to replace an entire length of galvanized

suction pipe because the corrosion in the water had eaten through
it (Tr. 233).
Discussion

 Respondent's answer and the stipulation of the parties

confirms that this violation occurred. Accordingly, the citation
should be affirmed.

 The evidence in a large degree addresses the issue involving

the replacement to the telephone and the reason for its
replacement. The regulation requires a two-way communication
system. It is clear that there was no effective two-way system.
Accordingly, the violation existed. The Mine Act imposes absolute
liability on the operator. ASARCO, Incorporated, 8 FMSHRC 1632
(1986). Accordingly, the evidence relating to why the telephone
was in-operative and why it became that way is relevant only as
it relates to the imposition of a penalty. On the credible
evidence I find that the telephone was inoperative only for a
short period of time. In addition, it became rusted by lying in
the water after only two days in the muckpot. These elements
reduce the gravity as well as the operator's negligence. These
features are hereafter considered in assessing a penalty.

 Respondent's evidence that they signaled the miners by

turning off the ventilation and by signalling the hoistman
totally fail to comply with the regulation. Section 30 C.F.R. § 57.20032 requires a two-way communication system.

                 Citation 2359512 and 2359405

 These citations allege separate violations of 30 C.F.R. § 57.12025 which provides as follows:

 All metal enclosing or encasing electrical circuits
 shall be grounded or provided with equivalent
 protection. This requirement does not apply to
 battery-operated equipment.

                   Summary of the Evidence

 On June 25, 1985, Mr. Beason inspected a 480 volt

submersible metal water pump in the bottom of the shaft (Tr. 49,
50).

 The previous evening Larry Day, an electrical inspector, had

checked the switch box containing 30 amp fuses and he determined
that the ground wire had been cut (Tr. 50, 51, 60, 61).

 They had abated the citation by connecting the ground wire.

Company representatives also indicated they had conducted a
continuity test (Tr. 51). Such a test will confirm whether there
is an adequate ground to a particular motor (Tr. 52). Based on
the company's representations the inspector terminated the
electrical citation (Tr. 52).

 In continuing his inspection, the inspector observed that

the water pump had been spliced and the ground cut out (Tr. 53;
Ex. P2). At the inspector's request the splice was cut from the
line. It was presented as an exhibit at the hearing (Tr. 53; Ex.
P2). The cable had a four wire splice to the cable. After being
cut off only three wires led to the pump (Tr. 53, 54). The ground
wire terminated in the splice was the same ground wire inspector
Day had required to be connected at the panel box on the surface
(Tr. 55). A continuity test would have determined that the pump
was ungrounded. The pump was ordinarily used to pump out the
bottom of the shaft (Tr. 55, 56, 130, 133).

 Failure to ground this equipment or to provide equivalent

protection presents a shocking hazard (Tr. 56, 60 -62). In
addition, a person could have touched the exposed electrical
conductor (Tr. 58).

 In the inspector's opinion respondent's management was very

neglectful since they resisted the bulkheads, the grounding and
the telephone (Tr. 63 -65, 138).

 The company had received prior citations for failure to

ground (Tr. 65). Respondent extensively examined the inspector
concerning the electrical violation (Tr. 119 -129).

 Cross examination further established that on June 26, 1985

respondent was issued a citation because the company failed to
notify MSHA of changes in the partnership and the operator (Tr.
67, 68).

 Larry G. Day, an electrical specialist for MSHA, inspected

respondent's Cottonwood mine on June 25, 1985 (Tr. 163 -167). He
determined, with a tick tracer, that the metal water pump in the
shaft bottom was not grounded nor was there equivalent protection
(Tr. 167, 169). The grounding wire connected to the switch box on
the surface had been cut (Tr. 168, 168A, 177, 192). An ungrounded
pump submerged in water creates a very hazardous condition (Tr.
170 -179). Submersing the pump in water would be no protection at
all (Tr. 179).

 The panel contained 30 amp fuses. Exposure to a milliamp

could kill a person (Tr. 173).

 The inspector considered that the operator's negligence was

high since someone ignored a grounding conductor (Tr. 177, 178).

Cross examination indicated that the inspector's experience
generally involved 480 volt three phase AC current (Tr. 181). He
further testified extensively in connection with Y and delta
connections, impedence, grounding and continuity tests (Tr.
181 -190).

 Day's citation was issued because of the condition at the

surface. Beason's citation related to the condition at the other
end of the pump (Tr. 192, 193). The number of breaks in the wire
would not affect this condition (Tr. 193, 194, 196).

 Witness Jorgensen testified for respondent and indicated

that the Berkeley pump was installed after the partnership with
Thyssen. The pump was used when the mine filled with water (Tr.
234 -236). They did not pump when there were miners in the mine
(Tr. 235).

 After it was cited the company obtained a letter from the

sales company (Tr. 238 -240; Ex. R5).

 Jorgensen purchased the three wire cable and had it

installed by an electrician (Tr. 245).

 Jorgensen suspected that Jerry Schrup cut the grounding wire

on the pump (Tr. 247, 248).

                          Discussion

 Respondent's answer questions whether this violation

occurred but its post-trial brief asserts that the mineralized
ground water provided a suitable ground. In addition, no miner
was ever exposed to any danger. Further, the two citations are
duplicative since they both involve the same piece of equipment.

 I credit inspector Day's expertise to the effect that an

ungrounded pump submerged in water constitutes no protection.
Further, it is not a requirement of the regulation that miners be
exposed to the violative condition. Finally, respondent's claim
of duplication is rejected. Two separate violative conditions
existed. The fact that it involved the same piece of equipment is
a factor to be considered in assessing a penalty.

The citations should be affirmed.

         Respondent's Evidence as to new Partnership

 Don E. Jorgensen was hired as a miner by respondent

Hydrocarbon Resources on September 1, 1983. In January 1984 he
was promoted to mine superintendent (Tr. 199, 200). His
responsibilities included production and safety (Tr. 201). He
initially reported to Chad Evans, the mine manager (Tr. 207).
Prior to March 1985 a partnership consisting of Miocene

Resources, Hydrocarbon Mining and Ken Wooley operated the mine.
On March 15, 1985 that partnership was terminated and a new
partnership was formed consisting of Thyssen Mining Construction,
Inc. and Hydrocarbon Mining. These partners operated the mine
doing business as Hydrocarbon Resources. Thyssen was the
operating partner. Hydrocarbon Mining Company was a partner in
both ventures (Tr. 201 -206).

 Jorgensen was aware that a citation was issued as a result

of the Green fatality (Tr. 203). After he became superintendent
he learned why the citation was issued (Tr. 204).

 John Edwin McNeeley has been vice chairman of the managing

board of Thyssen Mining Construction, Inc., since November 7,
1985. Thyssen, as managing partner, controls 51 percent of
Hydrocarbon Resources (Tr. 258, 1259, 273).

 McNeeley was responsible for operating the Wild Horse and

Midas mines (Tr. 261). Operations were abandoned at the
Cottonwood mine in the fall of 1985 (Tr. 261). All other
employees of Hydrocarbon Resources were laid off in May 1985 (Tr.
261).

 McNeeley discharged Royce, Danny and Grant Green in November

for failing to use a bulkhead (Tr. 2262 -266). The company has set
a standard of strict compliance with MSHA regulations (Tr. 264).
Subsequently the Greens filed discrimination complaints against
the company. The complaints were unrelated to the use of
bulkheads (Tr. 261 -268).

 Thyssen Mining Construction, Inc., is a wholly owned

subsidiary of Thyssen Mining Construction of Meulheim, West
Germany. The principal company sinks shafts, does contract mining
and production mining (Tr. 269). Thyssen is one of the largest
construction companies in West Germany (Tr. 270). Until it was
terminated the members of the managing board of Hydrocarbon
Resources were Klaus Wagener, Kenneth Wooley and Chad Evans (Tr.
270).

 Lyle D. Weiss, secretary-treasurer of Thyssen Mining

Construction, Inc., testified that he is in charge of all
financial and administrative matters (Tr. 273, 274).

 The partnership agreement between Hydrocarbon Mining, Inc.,

and Thyssen Mining and Construction, Inc., was executed March 15,
1985 Tr. 274; Ex. R8). Other than in evaluating the project
Thyssen was not involved in the operations before March 15, 1985
(Tr. 275). The partnership was designated as Hydrocarbon
Resources Company, (HRC) (Tr. 276; Ex. R8). The parties further
agreed that HRC was identical to a joint venture between
Hydrocarbon and a company called Miocene Resources, Inc. (Tr.
276).

The vein has ceased to exist at this site at a minable width (Tr.
280, 281). For the nine months ending December 31, 1985 the
partnership loss was $1,050,000. A penalty in this case would not
help the situation (Tr. 281).

 The witness further indicated that 58,268 man hours were

involved and 1,830 tons were mined between March 15, 1985 and
December 31, 1985 (Tr. 282, 283; Ex. R9). The man hours included
approximately 9,000 hours of construction work (Tr. 284).

 The witness had prepared and suggested a penalty assessment

based on the Secretary's regulations (Tr. 285 -291; Ex. R10, R11).

 Thyssen is financially sound and a $9,000 penalty would not

impair its ability to continue in business (Tr. 291).

                       Civil Penalties

 The Secretary seeks certain penalties for the violations

herein. The proposed penalties, as originally assessed, were as
follows:

   Citation No.                          Proposed
     2360975        Bulkheads            $1,000.00
     2359401        telephone               750.00
     2359512       water pump               750.00
     2359405      cut ground wire           500.00

 Prior to the hearing the Secretary sought and was granted

leave to amend the bulkhead violation to a proposed penalty of
$9,000.

                          Discussion

 As a threshold matter respondent concedes that the Secretary

may modify his penalty assessment at any time during a penalty
proceeding but it asserts that the Secretary's action, without
new facts, constitute harassment and intimidation especially
after respondent choose to challenge the original proposed
assessment.

 Respondent's arguments are rejected. It is well settled that

the assessment of penalties rests solely with the Commission and
are not based on the Secretary's proposals. The Commission may
raise, lower or affirm the original assessment. Sellerburg Stone
Company v. FSMHRC, 736 F.2d 1147 7th Cir. (1984); Shamrock Coal
Company, 1 FMSHRC 469 (1979); Consolidation Coal Company, 2
FMSHRC 3 (1980).

 For the foregoing reasons respondent's threshold objections

are denied.

Accordingly, it is now necessary to consider the statutory
criteria relating to the assessment of such penalties. Section
110(i) of the Act, now 30 U.S.C. § 820(i), provides as follows:

   The Commission shall have authority to assess all civil
   penalties provided in this Act. In assessing civil
   monetary penalties, the Commission shall consider the
   operator's history of previous violations, the
   appropriateness of such penalty to the size of the
   business of the operator charged, whether the operator
   was negligent, 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.

 The bulkhead violation (Citation 2360975) involves evidence

relating to respondent's negligence and gravity. In 1982 an
identical bulkhead citation was issued against respondent after a
fatality occurred. In the instant case the judge took official
notice of the prior case entitled Hydrocarbon Resources, Inc., 8
FMSHRC 354 (1968), (Order, January 9, 1987).

 I agree with respondent that a change in partners creates a

new legal entity. Fritz et al v. Commissioner of Internal
Revenue, 76 F.2d 460 (1935). I further find from the testimony
and the exhibits that when Thyssen Mining Construction, Inc.,
became the managing and controlling partner on March 15, 1985 a
new and entirely legitmate partnership was formed. The transition
was in no way a sham arrangement such as discussed by the
Commission in Lonnie Jones v. D & R Contractors, 8 FMSHRC 1045,
1054 (1986).

 However, the new partnership involving Thyssen Mining is not

totally insulated from the prior partnership. This is so because
Chad Evans was the mine manager when the bulkhead violation
occurred in 1982 (Tr. 157). Subsequently, he was one of the three
members on the managing board of the Thyssen partnership (Tr.
270).

 The knowledge of supervisory personnel has generally been

imputed to an operator under an agency concept Southern Ohio Coal
Company, 4 FMSHRC 1459 (1982); Nacco Mining Company, 3 FMSHRC 849
(1981). Accordingly, respondent should have known of the 1982
fatality resulting from the bulkhead violation. This knowledge
causes me to conclude that respondent's negligence is high and
the gravity of the violation is apparent since the violative
condition can and did cause a fatality in 1982.

 Respondent's post-trial brief asserts for a number of

reasons that the bulkhead citation should not have been issued.
The credible evidence here clearly establishes that the four
violations occurred.

 The gravity of Citation 2359401 (communication system) is

low. On the other hand, ungrounded equipment such as in

Citations 2359512 and 2359405 presents the possibility of
electrocution. The gravity in such situations should be
considered as high.

 Since respondent is a separate legal entity it has no prior

adverse history.

 The testimony establishes that a civil penalty will not

affect the operator's ability to continue in business.

 Respondent's rapid abatement of all of the violations is to

its credit.

 On balance, I consider that the penalties set forth in order

of this decision are appropriate.

                      Conclusions of Law

 Based on the entire record and the factual findings made in

the narrative portion of this decision, the following conclusions
of law are entered:

1. The Commission has jurisdiction to decide this case.

2. Penalties should be assessed for the violations
   herein.

 Based on the foregoing findings of fact and conclusions of

law I enter the following:

                            ORDER

 The following penalties are assessed for the violations

herein:

Citation 2360975    (bulkheads)                  $3,000
Citation 2359401    (communication system)          200
Citation 2359512    (water pump)                    500
Citation 2359405    (ungrounded wire)               500

                           John J. Morris
                           Administrative Law Judge