.
L & T FABRICATION & CONSTRUCTION, INC.
January 21, 1999
WEST 98-243
           FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION
                 OFFICE OF ADMINISTRATIVE LAW JUDGES
                        2 Skyline, Suite 1000
                          5203 Leesburg Pike
                     Falls Church, Virginia 22041
                           January 21, 1999
SECRETARY OF LABOR,             :  CIVIL PENALTY PROCEEDING
  MINE SAFETY AND HEALTH        :
  ADMINISTRATION (MSHA),        :  Docket No. WEST 98-243
                Petitioner      :  A. C. No. 48-00992-03502 LLO
          v.                    :
                                :  Cordero Mine
L & T FABRICATION &             :
  CONSTRUCTION, INC.,           :
                Respondent      :
                               DECISION
Appearances:  Mark W. Nelson, Esq., Office of the
              Solicitor, U.S. Department of Labor,
              Denver, Colorado, for Petitioner;
              David M. Arnolds, Esq., Jackson &
              Kelly, Denver, Colorado, for Respondent.
Before:  Judge Hodgdon
     This case is before me on a Petition for Assessment
of Civil Penalty filed by the Secretary of Labor, acting
through her Mine Safety and Health Administration
(MSHA),  against  L & T Fabrication & Construction, Inc.,
pursuant to section 105 of the Federal Mine Safety and
Health Act of 1977, 30 U.S.C.  815.  The petition alleges
a violation of the Secretary's mandatory health and safety
standards and seeks a penalty of $40,000.00. A hearing was
held in Gillette, Wyoming. For the reasons set forth below,
I affirm the citation and assess a penalty of $20,000.00.
                              Background
     Production Industry Corporation (PICOR) entered into
a contract to remove all of the old silo load-put facilities
at the Cordero Mine, located in Campbell County, Wyoming,
and to install a new batch weigh system. The Respondent,
L & T Fabrication & Construction, Inc., contracted with
PICOR to do the structural portion of the project.
Edward Loren and Catherine C. Crain own 100 percent of
the shares in L & T.
     On the morning of August 6, 1997, L & T employees were
working in silo number 2 at the mine installing a deck in the
north half of the silo. The deck was approximately 18 and one
half feet above the floor. After the deck plates had been placed
and  hot-tacked, Glen Belt, the foreman, decided to begin
installing a handrail on the deck while the deck was being
welded. Belt carried a five foot long by four foot high section
of the handrail up to the deck. The section weighed between 60
and 90 pounds.  Shayne DeGaugh, who had worked for the company
for three weeks, went to get bolts for the handrail.
     Belt set the handrail over the barricade at the top of the
stairs. As he was crossing the barricade himself, the piece of
handrail slid on the deck and went over the edge. At the same
time, DeGaugh was returning with the bolts, walking directly
under the deck. The handrail hit DeGaugh in the head.  As a
result, his neck was broken and he is permanently paralyzed from
the neck down.
     After an MSHA investigation of the accident, Citation No.
7608502, alleging a violation of section 77.203, 30 C.F.R. 
77.203, was issued.[1]  The citation stated that: "Adequate
protection was not provided in silo number 2 where people were
working on an elevated walkway 18.5 feet above the concrete
floor. A section of handrail measuring 5.5 feet long by 4 feet
high fell and struck a person walking underneath the elevated
platform." (Govt. Ex. 1.) The inspector found the violation to
be "significant and substantial" and to have resulted from high
negligence and an "unwarrantable failure" on the part of the
operator.[2]
               Findings of Fact and Conclusions of Law
     At the hearing, the parties stipulated that the violation
occurred as alleged in the citation, that it was "significant and
substantial" and resulted from high negligence and the operator's
"unwarrantable failure" to comply with the regulation.[3] (Tr.
12, 19, 25-26.) Accordingly, I affirm the citation.
                       Civil Penalty Assessment
     The only issue contested at the hearing was the amount of
civil penalty to be assessed for this violation. The Secretary
has proposed a penalty of $40,000.00. However, it is the judge's
independent responsibility to determine the appropriate amount of
penalty in accordance with the six penalty criteria set out in
section 110(i) of the Act, 30 U.S.C.  820(i).[4] Sellersburg
Stone Co. v. FMSHRC, 736 F.2d 1147, 1151 (7th Cir. 1984); Wallace
Brothers, Inc., 18 FMSHRC 481, 483-84 (April 1996).
     The parties have stipulated that the operator demonstrated
good faith in abating the violation, that L & T worked 32,933
man-hours on the mine site in 1997, and, as previously noted,
that the violation was "significant and substantial" and occurred
because of the operator's high negligence and "unwarrantable
failure" to conform to the regulation.  (Tr. 25-26.)  The
evidence further indicates that L & T had received only two
citations in the two years preceding the violation in this case,
those being the May 21, 1997, citation and the one at issue in
this case, that the company had only been cited six times in its
18 year history, and that three of those were subsequently
vacated. (Tr. 71, 79.)
     To show that the proposed $40,000.00 penalty will adversely
affect its ability to continue in business, L & T has submitted
its fiscal year 1996 and 1997 financial statements,[5] it's tax
returns for 1995 and 1996 and a current, as of October 31, 1998,
balance sheet and income statement.  (Resp. Exs. B, C, D, E and
F.) The financial statements are accompanied by an "Independent
Accountants Report on the Financial Statements" stating:
     We have reviewed the accompanying balance
     sheets of L & T Fabrication & Construction,
     Inc. as of November 30, 1997 and 1996, and
     the related statements of income, retained
     earnings and cash flows for the years then
     ended, in accordance  with Statements on
     Standards for Accounting and Review Services
     issued by the American Institute of Certified
     Public Accountants. All of the information
     included in these financial statements is the
     representation of the management of L & T
     Fabrication & Construction, Inc.
     A review consists principally of inquiries of
     Company personnel and analytical procedures
     applied  to  financial  data.   It  is
     substantially less in scope than an audit
     conducted  in  accordance  with generally
     accepted auditing standards, the objective of
     which  is  the expression of an opinion
     regarding the financial statements taken as a
     whole. Accordingly, we do not express such
     an opinion.
     Based on our reviews, we are not aware of any
     material modifications that should be made to
     the accompanying financial  statements in
     order for them to be in conformity with
     generally accepted accounting principles.
(Resp. Ex. B.)
     It is apparent from this letter  that  the financial
statements are not reliable information on which to determine
whether the civil penalty will adversely affect L & T's ability
to remain in business. The statements are unaudited; everything
in them is the representation of the company. There is no way to
know whether that information is complete, true and correct.
Indeed, the accountants specifically declined to express an
opinion regarding the financial statements taken as a whole. The
burden is on the operator to show that the penalty will adversely
affect its ability to remain in business. Sellersburg at n.14.
Unaudited financial statements are not sufficient to do so. See
Spurlock Mining Co, Inc., 16 FMSHRC 697, 700 (April 1994).
     Furthermore, the submitted documents do not establish that L
& T's ability to continue in business will be adversely affected
if it has to pay the full $40,000.00. The company's balance
sheet indicates that the company's current assets increased from
$396,038.00 in 1996 to $438,431.00 in 1997, while its current
liabilities decreased from $347,489.00 in 1996 to $214,958.00 in
1997.  (Resp. Ex. B.)  More significantly, the most recent
balance sheet, as of October 31, 1998, shows current assets had
increased  to  $549,327.05,  with  current  liabilities  of
$181,681.72.  (Resp. Ex. E.) Thus, it appears that the company
has the capacity to absorb the penalty and still remain in
business, just as it absorbed a loss of $85,000.00 on a project
in 1996 and still remained in business. (Resp. Ex. B, n.9; Tr.
97.)
     Although L & T has not shown that the proposed penalty will
adversely affect its ability to remain in business, I do not
agree with the penalty proposed by the Secretary. I find that
the gravity of this violation was extremely serious. It resulted
in a young man being permanently paralyzed from the neck down and
could easily have been a fatality.  The company was highly
negligent in failing to barricade the area below the deck after
having been cited for the same violation some three months
before.  Without more, these factors would justify the proposed
$40,000.00 penalty. However, I find that the company's very good
history of prior violations, its small size and the fact that it
rapidly abated the violation mitigate the penalty. Accordingly,
taking all of the penalty criteria into consideration, I conclude
that a penalty of $20,000.00 should be assessed.
                                Order
     Citation No. 7608502 is AFFIRMED.  L & T Fabrication &
Construction, Inc., is ORDERED TO PAY a civil penalty of
$20,000.00 within 30 days of the date of this decision.
                                 T. Todd Hodgdon
                                 Administrative Law Judge
                                 (703) 756-6213
Distribution:
Mark W. Nelson, Esq., Office of the Solicitor,  U.S.
Department  of Labor, 1999 Broadway, Suite 1600,
Denver, CO 80202-5716 (Certified Mail)
David M. Arnolds, Esq., Laura E. Beverage, Esq.,
Jackson & Kelly, 1600 Lincoln Street, Suite 2710,
Denver, CO 80264 (Certified Mail)
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**FOOTNOTES**
     [1]:  Section 77.203 provides: "Where overhead
repairs are being made at surface installations and
equipment or material is taken into such overhead
work areas, adequate protection shall be provided
for all persons working or passing below the overhead
work areas in which such equipment or material is
being used."
     [2]:  The "significant and substantial" and
"unwarrantable failure" language is taken from section
104(d)(1) of the Act, 30 U.S.C.  814(d)(1), which
distinguishes as more serious any violation that
"could significantly and substantially contribute
to the cause and effect of a . . . mine safety or
health hazard" and which was "caused by an unwarrantable
failure . . . to comply      with . . . mandatory health
or safety standards . . . ."
     [3]:  The operator had been cited for the same
violation on May 21, 1997. (Govt. Ex. 2.)
     [4]: The section 110(i) penalty criteria are:
"[T]he 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."
     [5]: L & T's fiscal year ends on November 30 of
the year being reported.