Secretary of Labor v. Genesis Alkali, LLC

Plain-English summary

Genesis Alkali operated a Wyoming trona mine where nine citations carried proposed penalties totaling $34,483. The parties sought to reduce that total to $9,494, including cutting a ventilation citation from $12,007 to $729 and removing its significant-and-substantial designation. The citation alleged that an underground ventilation fan had remained inoperative for at least 26 days where hydrogen sulfide was detected and miners had no alarms, warning lights, or gas meters. Judge Margaret Miller denied approval because the fact that gas levels were below the exposure limit during inspection did not address future accumulation during continued mining, and the assertion that no fatal risk existed conflicted with the inspector's account. The Commission later affirmed the settlement denial and remanded the case.

Decision snapshot

• Cited standard: 30 C.F.R. § 57.14100(b); 30 U.S.C. § 820(k)
• Outcome: The amended settlement motion was denied; the Commission later affirmed that denial and remanded the case.
• Subsequent review: The Commission reviewed the ruling in west-2022-0189-commission.
• Key point: A settlement cannot remove gravity and significant-and-substantial findings for a persistent ventilation defect without facts addressing the risk of gas accumulation during continued operations.

Full text (FMSHRC public release)

FEDERAL MINE SAFETY AND HEALTH REVIEW
COMMISSION

721 19th St., Suite 443

Denver, CO 80202-2500

Office: (303)
844-5266/Fax: (303) 844-5268

SECRETARY
OF LABOR,                                 :     CIVIL PENALTY PROCEEDING

MINE
SAFETY AND HEALTH                        :

ADMINISTRATION
(MSHA),                          :     Docket No. WEST 2022-0189

Petitioner,                         :     A.C.
No. 48-00152-548001

:

v.                                                   :    

:    

GENESIS
ALKALI, LLC,                                   :

Respondent.                      :     Mine:
Genesis Alkali @ Westvaco

ORDER DENYING SETTLEMENT

This case is before me
upon a petition for assessment of a civil penalty under Section 105(d) of the
Federal Mine Safety and Health Act of 1977. The parties have notified the Court
that they have reached a settlement agreement in this case. Based on the
drastic penalty reduction and unjustified modifications proposed, I deny the
settlement motion. The terms of the proposed settlement are as follows:

Citation/

Order No.

Originally Proposed Assessment

Settlement Amount

Modification

Docket No. WEST 2022-0189

9479991

$
12,007.00

$  729.00

Modify
gravity from “Reasonably Likely” and “Fatal” to “Unlikely” and “Lost Workdays
or Restricted Duty,” and modify Significant and Substantial from “Yes” to
“No.”

9655723

$   791.00

$    0.00

Vacate.

9655731

$  1,006.00

$  125.00

Modify
gravity from “Reasonably Likely” to “Unlikely,” modify negligence from
“Moderate” to “Low,” and modify Significant and Substantial from “Yes” to
“No.”

9655754

$  3,917.00

$
3,917.00

No
change.

9655756

$  3,917.00

$  530.00

Modify
gravity from “Reasonably Likely” and “Permanently Disabling” to “Unlikely”
and “Lost Workdays or Restricted Duty,” and modify Significant and
Substantial from “Yes” to “No.”

9655867

$  1,385.00

$
1,385.00

No
changes.

9655868

$  4,980.00

$
1,500.00

Modify
negligence from “High” to “Moderate.”

9655907

$  4,980.00

$
1,006.00

Modify
gravity from “Reasonably Likely” to “Unlikely” and modify Significant and
Substantial from “Yes” to “No.”

9655908

$  1,500.00

$  302.00

Modify
gravity from “Reasonably Likely” to “Unlikely” and modify Significant and
Substantial from “Yes” to “No.”

TOTAL

$
34,483.00

$
9,494.00

Section 110(k) of the
Mine Act provides that “[n]o proposed penalty which has been contested before
the Commission under section 105(a) shall be compromised, mitigated, or settled
except with the approval of the Commission.” 30 U.S.C. § 820(k). This provision
of the Act was designed to shed light and scrutiny upon the dealmaking that
takes place between mine operators and government regulators, and to ensure
that settlements further the public interest and the purposes of the Mine Act. See
Black Beauty Coal Co. , 34 FMSHRC 1856, 1860-64.

Commission judges
review settlements to determine whether they are “fair, reasonable, appropriate
under the facts, and protects the public interest.” Am. Coal Co. , 38
FMSHRC 1972, 1976 (Aug. 2016). To enable judges to make this determination,
Commission rules require that a motion to approve a penalty settlement must
include “facts in support of the penalty agreed to by the parties.” 30 C.F.R.
§ 2700.31(b). A judge reviews the submitted facts,
the six penalty criteria set forth in section 110(i) of the Act, and all other
relevant considerations when scrutinizing a settlement. See Am. Coal
Co. , 38 FMSHRC at 1976, 1982.

I.               
The
Assessed Penalty, Proposed Settlement, and Amendments

The Respondent operates
a large trona mine near Green River, Wyoming. This docket includes nine
citations issued to the Respondent between September and November of 2021 for
various alleged violations of MSHA regulations.  The Respondent subsequently
contested these citations. On May 17, 2022, the Secretary of Labor filed his
petition proposing a penalty of $34,483.00 for the citations contained in this
docket. See Pet. for Assess. of Civil Pen. (hereinafter “Pet.”).

On September 16, 2022,
the Secretary filed his original Motion to Approve Settlement for this docket. In
the filing, the Secretary proposed a settlement that would reduce the penalty
to $9,494.00, representing a savings for the mine operator of nearly
$25,000.00 and a penalty reduction of 72.5 percent . The
proposal seeks to modify or vacate seven of the nine citations, and to remove
S&S designations from five of the citations. The facts submitted in support
of the proposed modifications were minimal.

Accordingly, the Court
notified the parties that their settlement could not be approved as submitted
and gave the parties additional time to renegotiate the settlement or provide
more supporting information. The Secretary filed an Amended Motion to Approve
Settlement on September 30, 2022.  The amended motion contains little, if any,
additional information supporting the settlement.

II.            
The
Proposed Settlement is not Fair, Reasonable, Appropriate Under the Facts, or
Protective of the Public Interest

The Court now turns to
the terms of the agreement. The terms are analyzed based on the facts submitted
in the settlement motion as amended by the parties. Consideration is given to
the monetary and nonmonetary terms of the settlement, and to the criteria
established in section 110(i) of the Mine Act, such as negligence and gravity. On
balance, I find that the modified penalty proposed by the Secretary is unfair, unreasonable,
inappropriate under the facts, and unprotective of the public interest. I find
also that the settlement motion does not adequately address the six penalty
criteria. I therefore deny the Secretary’s motion.

A.     The Proposed Modifications to
Citation No. 9479991

Citation No. 9479991
alleges a violation of 30 C.F.R. § 57.14100(b) as follows:

In Sesqui Pumphouse, a fan (Co.#
KF-24) for ventilation in the tunnels under the pumphouse, has not been running
since 10/08/2021. During the inspection of the tunnels 0.5 to 0.9 H 2 S
gas was detected. There are no alarms/warning lights and the miners that work
in the area do not carry meters with them while in the tunnels. During a “Work
Place Exam” conducted on 10/08/2021, the fan was found “Not Running” and
documented and was not resolved. With this condition, exposes miners to fatal
injuries if H 2 S gas was to build up in the tunnels. Standard
57.14100(b) was cited 27 times in two years at mine 4800152 (25 to the
operator, 2 to a contractor).

Pet. at 8. The cited standard
mandates that “[d]efects on any equipment, machinery, and tools that affect
safety shall be corrected in a timely manner to prevent the creation of a
hazard to persons.” 30 C.F.R. § 57.14100(b). The inspector issued this citation
on November 3, 2021, indicating that the fan had been noted as nonfunctional
nearly a month before this inspection. Pet. at 8. Hydrogen sulfide (H 2 S)
gas was observed in the tunnels. Pet. at 8. The inspector found that the
alleged failure to fix the fan was reasonably likely to cause injury, and that
the injury could reasonably be expected to be fatal. Pet. at 8. The inspector
marked the citation as high negligence and S&S. Pet. at 8. The Secretary
assessed a penalty of $12,007.00.

Now, the Secretary
seeks to drastically alter this citation. He proposes the reduction of the
gravity from “Fatal” to “Lost Workdays or Restricted Duty.” He seeks to reduce
the likelihood of injury from “Reasonably Likely” to “Unlikely.” He also
proposes the removal of the S&S designation. Altogether, these changes
would reduce the penalty from $12,007.00 to $729.00.

While the proposed
changes are major, the facts offered in support are minimal. The Secretary has
only submitted two statements to justify the changes proposed for this
citation. The motion states that “[t]he amount of Hydrogen Sulfide detected by
MSHA did not exceed MSHA’s Threshold Limit Value or the General Industry
Ceiling Limit for Hydrogen Sulfide,” and that “there is no evidence that
exposure to a level which could result in a fatality [sic] could result.” Am.
Mot. to App. Settlement at 3.

The position taken by
the Secretary in this case is disconcerting. The Secretary bases the gravity
reductions on the fact that hydrogen sulfide levels did not exceed the
threshold limit value (TLV) at the time of inspection. But the TLV is the point
above which miners are exposed to unsafe concentrations of gas. If hydrogen
sulfide accumulations had exceeded the TLV, miners would have faced an active
risk of major health issues and the operator would have unlawfully exposed
miners to noxious gases. See 30 C.F.R. § 56.5001.  In essence, the
Secretary argues that gravity and S&S should be mitigated because
conditions did not become so dangerous as to violate yet another regulation.

This rationale cannot
support the proposed gravity modifications. And it is not aided by the second
and final fact offered by the Secretary: that there is “no evidence” that the
conditions could lead to fatal exposure. Am. Mot. to App. Settlement at 3. This
statement is overbroad, conclusory, and at odds with the inspector’s account.  The
inspector found that the ventilation fans in an underground tunnel had been defective
for several weeks. He observed the presence of hydrogen sulfide gas, a
substance that MSHA acknowledges as “one of the most poisonous gases known.” [1] Hydrogen sulfide exposure can be
deadly. [2]
The inspector further determined that the extremely hazardous gas could
continue to accumulate in the tunnel and present a risk of fatal injury or
illness for miners. Moreover, miners may not know about the risk due to the
lack of alarms, warning lights, or gas meters in the area. The inspector
supplied a factual basis supporting his gravity findings. In my estimation, the
Secretary has not presented any concrete fact that would mitigate the original
gravity determination.

Nor do the Secretary’s
facts mitigate the S&S finding. Ventilation violations are serious in
underground areas where toxic mine gases can accumulate. A persistent and
consciously overlooked defect in a ventilation fan is reasonably likely to
cause a hazard that could injure a miner. The presence of hydrogen sulfide gas indicates
that an injury could be reasonably serious. This is especially true if considered
in the continued course of normal mining operations, as is required by S&S
case law. See U.S. Steel Mining Co. , 7 FMSHRC 1125, 1130 (Aug. 1985)
(“While it is true that methane measured in the section revealed a nonhazardous
accumulation at the time the citation was issued, an evaluation of the
reasonable likelihood of injury should be made in terms of continued normal
mining operations. The fact that the methane was low when the violation was
cited is not fatal per se to the establishment of reasonable likelihood. If
normal mining operations were to continue, a rapid buildup of methane could
reasonably be expected.”) (internal citations and quotations omitted).

It is important to note
that I am not making formal findings regarding S&S. Neither party has
presented evidence at hearing, and it would be inappropriate to make such
findings. Rather, I am analyzing the basis for S&S as presented in the
original citation and determining whether the Secretary has submitted facts
that would make the removal of the S&S designation “reasonable” or
“appropriate under the facts.” Am. Coal Co. , 38 FMSHRC at 1976; see
id . at 1982. I find that he has not.  

The Secretary further
supports the S&S removal by claiming “discretion to modify the significant
and substantial designation.” Am. Mot. to App. Settlement at 5. He finds
substantive authority for this contention in American Aggregates of
Michigan, Inc ., 42 FMSHRC 570, 576-79 (Aug. 2020), and Mechanicsville
Concrete, Inc ., 18 FMSHRC 877, 879-80 (June 1996). But the Secretary’s
reliance on these cases is misplaced. The Commission in Mechanicsville
held that an ALJ may not add an S&S designation on her own
initiative, and the Commissioners reiterated this holding in American
Aggregates . By contrast, the present case involves the Secretary’s proposal
to remove an S&S designation. The case citations are irrelevant
here. The Secretary’s claim of discretion regarding S&S is erroneous, and
his decision to alter the S&S finding here is unsupported by fact and contradicted
by decades of history and precedent.

In sum, the mine
inspector presented a detailed account of the alleged violation and made his
gravity and S&S findings accordingly. The Secretary now seeks to sweep
these original findings under the rug based on two conclusory and irrelevant
statements. When given an opportunity to submit additional information, the
Secretary declined to put forward any specific or concrete facts to support the
proposed changes. I know that recent Commission case law would have me accept
the Secretary’s changes wholesale, but the Mine Act requires me to use some
experience and judgement in determining whether a settlement motion is
sufficient.

I simply cannot turn my back on something that is so obviously contrary to the
Act and its purposes.  I therefore find that the proposed changes for Citation
No. 9479991 are unreasonable and inappropriate under the facts.

B.     The Proposed Penalty Reduction

The other major defect
in the present motion is the penalty reduction. The Secretary proposes a
drastic penalty reduction from the assessed penalty of $34,483.00 to the
compromised value of $9,494.00. Based on the reasoning below, I find that the
proposed penalty reduction is unfair and contrary to the public interest.

Before passage of the
Mine Act, mine operators were governed by the Coal Act and its regulations. Operators
and regulators negotiated settlements that never saw public scrutiny, and
negotiations often led to large penalty reductions for operators. Senator
Richard Schweiker (R-Pennsylvania) described the dysfunction:

[Mine operators] get slapped [with]
a fine of $100 or $200 or $300. They accumulate a whole lot of them and go back
in court and ultimately settle them at 10 or 20 cents on the dollar… So what
you actually assess them at and what they settle for are worlds apart and is
part of the frustration of dealing with the act.

123
Cong. Rec. S10,277, reprinted in Senate Subcomm. on Labor, Comm. on Human Res., Legislative History of the Federal
Mine Safety and Health Act of 1977 , at 1072-73 (1978) (“ Legis.
Hist. ”). This system failed to deter hazardous workplace conduct, and
devastating mine accidents continued to occur. Members of Congress knew that
paltry settlement amounts would not be sufficient incentive for mine operators
to adopt safe and compliant practices. As Senator Wendell Ford (D-Kentucky)
said:

The
settlement of penalty assessments in the past, often for as little as 30 cents
on the dollar, has been a disgrace, as well as a serious obstacle to effective
use of the civil penalty mechanism to encourage compliance.

123 Cong. Rec. S10,209, reprinted in Legis. Hist. , at 922 . There was bipartisan consensus
that compromised settlements had become an impediment to ensuring miner safety.

Congress decided to
reshape the settlement regime with the Mine Act .
Congress identified the compromise of assessed penalties in settlement as a
problem with prior legislation, and it crafted section 110(k) of the Mine Act
as a solution. By subjecting settlements to judicial review, Congress intended
to avoid “the unwarranted lowering of penalties as a result of off-the-record
negotiations” and to ensure that “the public interest is adequately protected
before approval of any reduction in penalties.” S. Rep. No. 95-181, at 45
(1977), reprinted in Legis. Hist. , at 633.

It is therefore my duty
to review compromised penalties. Motions proposing large penalty
reductions—where the operator would pay only “10 or 20” or “30 cents on the
dollar”—demand particular attention because they are the very settlements that
Congress saw as an obstacle to regulatory compliance. 123 Cong. Rec. S10,277,
S10,209, reprinted in Legis. Hist. , at 1072-73, 922. The parties must
present concrete facts, review the six penalty criteria, and demonstrate how
the proposed settlement will be fair and protective of the public interest.

Here, the public
interest is not adequately protected. Encouraging compliance with safety
regulations was a key public interest motivating Congress to pass the Mine Act,
and it has been a key public interest considered by the Commission when
scrutinizing settlements. Black Beauty , 34 FMSHRC at 1866. I fail to see
how this settlement could promote compliance. The facts presented here simply
cannot support such a finding. Rather, the proposed settlement would undermine
compliance with the Act and its regulations, by taking a meaningful civil
penalty assessment and gutting it on a threadbare factual basis.

I object, in particular,
to the penalty reduction associated with Citation No. 9479991. The Secretary
has lowered the original assessment of $12,007.00 to a mere $729.00. The mine

operator will therefore pay just
six cents on the dollar for this alleged violation. As discussed above, the allegations
are serious and the facts supporting the modification are sparse. The
compromised penalty negates the deterrent effect of the original citation—a
deterrent effect that is sorely needed in this case, where the mine operator
allegedly allowed the violative condition to exist for weeks despite having
knowledge of the defect.

Parties are not
precluded from reaching settlements with large penalty reductions. Such
settlements are approved routinely by the Commission and its judges. However,
large penalty reductions are more likely to undercut the deterrent purposes of the Mine Act , and parties
must present a substantial factual basis showing how the settlement preserves
the public interest. The parties have not done so here. Accordingly, I find that this settlement is neither fair nor in the
public interest.

C.     Non-monetary aspects of the
settlement

I have also considered
the non-monetary aspects of this settlement motion. Just as in all other
settlement motions, the Secretary includes the rote recitation that he “has
evaluated the enforcement value of the compromise and is maximizing his
prosecutorial impact in settling this case on appropriate terms.” Am. Mot. to
App. Settlement at 2. He says that resolution of this case through settlement
is of “significant enforcement value to the Secretary” in part because the
citations, as modified, are “preserved for future enforcement actions and are
not subject to potential vacatur or further downward adjustment after a
hearing.” Am. Mot. to App. Settlement at 2-3.

I accord significant
weight to the value of avoiding litigation and its attendant uncertainty. However,
the Secretary’s boilerplate statements do little more to help me understand how
this particular settlement meets the AmCoal standard. Stripping
citations of their S&S designations also impacts future enforcement
actions, but this is not explained at all in the Secretary’s motion.

Furthermore, “[t]he Commission
recognized that significant non-monetary value flows from accepting the
citations as written.” Solar Sources Mining , 41 FMSHRC 594, 601 (Sept.
2019) (internal citations omitted). Here, the Secretary has elected to modify or
vacate sixteen of the present citations and thus forfeit much of the
non-monetary value that would flow from preserving them as written.

Altogether, although there are some
non-monetary benefits to this settlement, none of the Secretary’s generalized statements
convince me that the particular changes proposed here are “fair, reasonable,
appropriate under the facts, and protect the public interest.” Am. Coal Co. ,
38 FMSHRC 1972

III.          
CONCLUSION

In the petition, the
Secretary alleged that the mine operator knew of a defective ventilation fan in
an underground portion of the mine but refused to fix the fan for at least 26
days. Hydrogen sulfide, a toxic gas, was documented in this underground area. There
were no alarms, warning lights, or gas sensors in the area that could have
alerted miners if the toxic gas accumulated to hazardous or deadly levels.

These facts would
strike any neutral observer as serious. The original penalty for this citation
also indicated the seriousness of the alleged violation. But in his amended
motion, the Secretary has done an about-face. He downplays the gravity of the
citation. He says there is no evidence of a fatal risk, despite the evidence
summarized by his inspector in the original petition. He says the gas had not
yet accumulated to dangerous levels, but fails to demonstrate why it would be
unlikely to do so in the future. He dispenses with the S&S designation, and
he slashes the assessed penalty by 94 percent.

I will not rubber-stamp
such a drastic change. The Secretary is tasked with submitting facts to justify
his proposed changes, and I am charged with the duty to weigh the sufficiency
of those facts. The facts here are insufficient. Approving this settlement
would force me to turn a blind eye to my statutory duty under section 110(k),
to decades of case law regarding gravity and S&S, and to my own knowledge
and experience. Accordingly, I must deny the Secretary’s motion.

WHEREFORE,
the Amended Motion to Approve Settlement is hereby DENIED .

/s/
Margaret A. Miller

Margaret A. Miller

Administrative Law Judge

Distribution:
(Electronic and Certified Mail)

Bruce H.
Jakubauskas, CLR, U.S. Department of Labor, Mine Safety and Health
Administration, Thornhill Industrial Park, 178 Thorn Hill Road, Suite 100,
Warrendale, PA 15086,

[email protected]

Donna
Pryor, Husch Blackwell LLP, 1801 Wewatta Street, Suite 1000, Denver, CO 80202, [email protected]

[1] Mine Safety & Health Administration, U.S.
Dep’t of Labor, Mine Rescue Team Training | Metal and Nonmetal Mines (2008) https://www.msha.gov/sites/default/files/Training_Education/MSHA3027%28Metal%20and%20Nonmetal%29.pdf

[2] One of the
largest modern mass fatalities in a metal/nonmetal mine occurred when hydrogen
sulfide gas was liberated at the Barnett Complex Mine, operated by the
Ozark-Mahoning Company, and killed seven miners on April 12, 1971. A
contributing factor to the mass fatality was the failure of an underground
ventilation fan at the mine. See Bureau
of Mines, U.S. Dep’t of the Interior, Report on Major Hydrogen Sulfide Disaster
Barnett Complex Mine Ozark-Mahoning Company Rosiclare, Pope County, IL
(1971).