i 

March 2016 

TABLE OF CONTENTS 

COMMISSION DECISIONS 

03-03-16 HIBBING TACONITE COMPANY LAKE 2013-231-RM Page 393 

03-30-16 SCOTT D. MCGLOTHLIN v. 

DOMINION COAL CORPORATION 

VA 2014-233-D Page 401 

COMMISSION ORDERS 

03-03-16 IN RE: DISCIPLINARY REFERRAL D 2016-0001 Page 405 

03-08-16 SEC. OF LABOR O/B/O JENNIFER 

MORREALE v. VERIS GOLD USA, 

INC. 

WEST 2014-793-D Page 410 

03-08-16 TEN-MILE COAL COMPANY, INC. WEVA 2014-532 Page 416 

03-08-16 ALEX ENERGY, INC. WEVA 2014-1100 Page 420 

03-09-16 PINNACLE MINING COMPANY, 

LLC 

WEVA 2014-963 Page 422 

ADMINISTRATIVE LAW JUDGE DECISIONS 

03-04-16 TRAYLOR MINING, LLC EAJA 2016-0002 Page 427 

03-09-16 PRAIRIE STATE GENERATING 

COMPANY, LLC 

LAKE 2013-187 Page 437 

03-22-16 CLINTWOOD ELKHORN MINING 

COMPANY, INC. 

KENT 2011-0515 Page 458 
ii 

03-24-16 CONSOL PENNSYLVANIA COAL 

COMPANY LLC 

PENN 2015-41 Page 470 

03-31-16 AMFIRE MINING CO., LLC PENN 2013-374 Page 496 

ADMINISTRATIVE LAW JUDGE ORDERS 

03-04-16 MATTHEW A. VARADY v. VERIS 

GOLD USA, INC., and JERRITT 

CANYON GOLD, LLC 

WEST 2014-307-DM Page 513 

03-04-16 SEC. OF LABOR O/B/O CHERYL 

GARCIA v. VERIS GOLD USA, INC. 

WEST 2014-905-DM Page 531

03-07-16 SEC. OF LABOR O/B/O JEFFREY S. 

BREWER v. MONONGALIA 

COUNTY CO., CONSOLIDATION 

COAL CO., MURRAY AMERICAN 

ENERGY INC., and MURRAY 

ENERGY CORP. 

WEVA 2016-238-D Page 534

03-09-16 AUSTIN POWDER COMPANY PENN 2012-172 Page 539 

03-11-16 ROSEBUD MINING CO. PENN 2015-318 Page 557 

03-14-16 DANIEL B. LOWE v. VERIS GOLD 

USA, INC., and JERRITT CANYON 

GOLD, LLC 

WEST 2014-614-DM Page 565 

03-18-16 NORTH AMERICAN QUARRY AND 

CONSTRUCTION SERVICES, LLC 

YORK 2013-212-M Page 583 

03-21-16 MATTHEW A. VARADY v. VERIS 

GOLD USA, INC., and JERRITT 

CANYON GOLD, LLC 

WEST 2014-307-DM Page 590
iii 

Review was granted in the following case during the month of March 2016: 

Scott D. McGlothlin v. Dominion Coal Corporation, Docket No. VA 2014-233-D (Judge 

Feldman, February 8, 2016) 

Review was denied in the following case during the month of March 2016: 

Michael Wilson v. Jarrod Farris, et al, Docket No. KENT 2015-672-D (Judge Moran, February 

3, 2016) 

COMMISSION DECISIONS

FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION 

1331 PENNSYLVANIA AVENUE, NW, SUITE 520N 

WASHINGTON, D.C. 20004-1710 

March 3, 2016 

SECRETARY OF LABOR, Docket Nos. LAKE 2013-231-RM 

 MINE SAFETY AND HEALTH LAKE 2013-232-RM 

 ADMINISTRATION (MSHA) LAKE 2013-233-RM 

LAKE 2013-234-RM 

v. LAKE 2013-348-M 

HIBBING TACONITE COMPANY 

BEFORE: Jordan, Chairman; Young, Cohen, Nakamura, and Althen, Commissioners 

DECISION

BY THE COMMISSION: 

In this consolidated contest and civil penalty proceeding, arising under the Federal Mine 

Safety and Health Act of 1977, 30 U.S.C. § 801 et seq. (2012) (“Mine Act” or “Act”), a 

Commission Administrative Law Judge sustained four orders which were issued to Hibbing 

Taconite Company pursuant to section 104(b) of the Mine Act.1

 The orders were issued by the 

1

 Section 104 provides in relevant part: 

(a) If, upon inspection or investigation, the Secretary or his

authorized representative believes that an operator of a coal or 

other mine . . . has violated . . . any mandatory health or safety 

standard, . . . he shall, with reasonable promptness, issue a citation 

to the operator. Each citation shall be in writing and shall describe 

with particularity the nature of the violation . . . . In addition, the 

citation shall fix a reasonable time for the abatement of the 

violation. . . . 

(b) If, upon any follow-up inspection of a coal or other

mine, an authorized representative of the Secretary finds (1) that a 

violation described in a citation issued pursuant to subsection (a) 

has not been totally abated within the period of time as originally 

fixed therein or as subsequently extended, and (2) that the period 

of time for the abatement should not be further extended, he shall 

determine the extent of the area affected by the violation and shall 

promptly issue an order requiring the operator of such mine . . . to 

immediately cause all persons . . . to be withdrawn from. . . such 

area until an authorized representative of the Secretary determines 

that such violation has been abated. . . . 

30 U.S.C. § 814(a), (b). 

38 FMSHRC Page 393
Department of Labor’s Mine Safety and Health Administration (“MSHA”) because of Hibbing 

Taconite’s failure to abate three housekeeping violations and one violation that alleged a failure 

to maintain a fan housing. 35 FMSHRC 2535, 2553 (Aug. 2013) (ALJ). Hibbing Taconite asserts 

that the inspector abused his discretion in issuing the orders. For the reasons discussed more fully 

below, we vacate the failure to abate orders on the basis that the inspector abused his discretion 

by setting arbitrary times for abatement of the underlying citations. 

I. 

Factual and Procedural Background 

Hibbing Taconite operates a large plant in St. Louis County, Minnesota. The plant 

produces taconite pellets by filtering powder material, forming it into small balls, and hardening 

the balls through an indurating process.2 The facility has multiple levels and sublevels, some of 

the floors between levels are grates, and the bottom floor is cement. There is regular spillage, and 

material from the upper levels falls to the lower levels, including while the upper levels are 

hosed down during the cleaning process. During the week, approximately 50 miners work at the 

plant, while during the evenings and weekends, an operating crew of approximately eight or nine 

miners works at the plant. 

Beginning on December 12, 2012, an MSHA inspector, Thaddeus Sichmeller, inspected 

the plant and, over the course of a few days, issued various citations and the subject orders. As 

stated more particularly below, the inspector verbally issued citations each day based on 

conditions he observed. On each following day, upon arriving at the mine, the inspector issued 

the written version of the citations he had verbally issued the day before, and reexamined the 

cited areas. 

At approximately 5:30 p.m. on December 12, Inspector Sichmeller issued a verbal 

citation for a significant and substantial (“S&S)3

 violation of 30 C.F.R. § 56.20003(a)4 for 

conditions he observed inside the 505 mandoor of the pellet plant. 35 FMSHRC at 2538; Tr. 99. 

Inspector Sichmeller believed that a housekeeping violation existed because there were pellets, 

entangled hoses, and slurry in the walkway near a conveyor, and that those conditions created 

slip and fall hazards. Tr. 28, 31-32. 

2

 Induration is the “hardening of a rock or rock material by heat, pressure, or the 

introduction of cementing material.” American Geological Institute, Dictionary of Mining, 

Mineral and Related Terms 279 (2d ed. 1997). 

3

 The S&S terminology is taken from section 104(d)(1) of the Act, 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.” 30 U.S.C § 814(d)(1). 

4

 30 C.F.R. § 56.20003(a) provides that, at all mining operations, “[w]orkplaces, 

passageways, store-rooms, and service rooms shall be kept clean and orderly.” 

38 FMSHRC Page 394
The following morning, December 13, the inspector returned to the mine to continue the 

inspection. He was accompanied by the operator’s safety representative of the pellet plant, Tiara 

Marcus. The inspector then issued the written versions of the verbal citations he had issued on 

December 12, including Citation No. 8665946 for the violation of section 56.20003(a). Citation 

No. 8665946 set forth an abatement time of 8:00 a.m. that morning. Upon re-inspecting the cited 

area, the inspector verbally issued an extension to abate the citation because he observed miners 

cleaning the area and progress had been made. Tr. 37. 

At approximately 10:30 or 11:00 the following morning, Friday, December 14, the 

inspector arrived and met with safety representative Marcus, and Tim Angelo, the pellet plant’s 

operations manager, among others. Tr. 116. At that meeting, the operator received the written 

extension for Citation No. 8665946, which had an abatement time of 8:00 a.m. In addition, they 

discussed the citation and Angelo’s concerns about the abatement times set by the inspector. Tr. 

116. Inspector Sichmeller explained that he was setting short abatement times in order to get

immediate corrective action. Tr. 70.

The inspector continued his inspection, and traveled to the cited area. Upon re-inspecting 

the area, the inspector verbally issued another extension of time to abate the condition because, 

although progress had been made, more corrective action needed to be taken. Tr. 38. 

In addition, the inspector issued other verbal citations. As relevant to this proceeding, on 

December 14, the inspector issued a verbal citation (later written as Citation No. 8665957) 

alleging a housekeeping violation of section 56.20003(b)5

 because he observed an accumulation 

of wet slurry and taconite pellets on the north walkway of the scrubber pump area. The inspector 

considered the violation to be non-S&S because the scrubber pump was down for maintenance 

and the condition did not extend the entire width of the walkway. 

That same day, Inspector Sichmeller issued another verbal citation for a housekeeping 

violation of section 56.20003(a) (later written as Citation No. 8665959) because he observed an 

accumulation of taconite pellets in an area that was about 8x8 feet and 3 to 4 inches deep in front 

of an electrical disconnect. He believed the condition was not S&S because miners were not in 

the area. 

The inspector also verbally issued a citation (later written as Citation No. 8665960) 

alleging a violation of 30 C.F.R. § 56.14100(b)6

 because he observed that the metal housing of 

an exhaust fan was not being properly maintained. The inspector believed that the condition was 

not S&S because there was little access by miners to the area. 

5

 30 C.F.R. § 56.20003(b) provides in part that, at all mining operations, “[t]he floor of 

every workplace shall be maintained in a clean and, so far as possible, dry condition.” 

6

 30 C.F.R. § 56.14100(b) provides 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.” 

38 FMSHRC Page 395
At approximately 3:00 p.m. later that day, all of the mine’s crew except for the operating 

crew of eight to nine miners left for the weekend. At the end of the inspection day on December 

14, there were 12 open enforcement actions. 

On the following day, Saturday, December 15, at approximately 11:45 a.m., the inspector 

issued the written version of eight citations that had been verbally issued on December 14, 

including Citation Nos. 8665957, 8665959, 8665960, and some extensions, including the 

extension for Citation No. 8665946. The time listed for abatement on each of the enforcement 

actions was 8:00 a.m. Tr. 133. 

The inspector then re-inspected the areas that were the subject of Citation Nos. 8665946, 

8665957, 8665959, and 8665960. The inspector noted that there were no miners working on the 

cited conditions in the areas, the conditions had not been abated, there were no posted barricades 

or warnings, and he found no mitigating circumstances. Tr. 40-41, 51, 57, 65. The operator 

explained that the plant was being cleaned from top to bottom, which impacted some of the cited 

areas. Tr. 140, 150, 215. 

Pursuant to section 104(b) of the Act, Inspector Sichmeller issued Orders Nos. 8665965, 

8665970, 8665968, and 8665969 for the operator’s failure to abate Citation Nos. 8665946, 

8665957, 8665959, and 8665960, respectively. At the end of that inspection day, Sichmeller 

indicated in a close-out conference that, going forward, Hibbing Taconite should assume that 

abatement times would be set for 8:00 a.m. the following day. Tr. 152, 163, 215-16. 

The operator challenged the failure to abate orders, and the matter proceeded to hearing 

before the Judge. 

The Judge sustained the four section 104(b) orders. She found that the inspector did not 

abuse his discretion in issuing the orders and that, in refusing to grant the extensions, the 

inspector had a clear understanding of the law and that his primary concern was the safety of 

miners. 35 FMSHRC at 2542-43, 2546, 2548, 2551. In so holding, the Judge credited the 

inspector’s testimony regarding the condition of the cited areas and lack of abatement efforts. Id. 

Hibbing Taconite filed a petition for discretionary review challenging the Judge’s 

decision. The operator argues in part that the inspector arbitrarily set abatement times and that 

the inspector’s refusal to extend the abatement times was unreasonable given various 

circumstances relevant to the citations underlying the orders. We granted the petition and heard 

oral argument. 

II. 

Disposition 

Under section 104(b) of the Mine Act, it is the operator’s duty to abate the “violation 

described in [the] citation issued pursuant to [section 104(a)].” 30 U.S.C. § 814(b). When issuing 

a section 104(a) citation, the inspector must “describe with particularity the nature of the 

violation” as well as “fix a reasonable time for the abatement of the violation.” 30 U.S.C. 

38 FMSHRC Page 396
§ 814(a). Section 104(b) provides that an inspector shall issue a failure to abate order when a 

cited violation has not been “totally abated” within the abatement time originally fixed or as 

subsequently extended, and if he determines “that the period of time . . . should not be further 

extended.” See n.1, supra. 

The Commission has held that it is the Secretary, as the proponent of a section 104(b) 

order, who bears the burden of proving that the violation has not been abated within the time 

period originally fixed or as subsequently extended. Mid-Continent Res., Inc., 11 FMSHRC 505, 

509 (Apr. 1989). The Secretary establishes a prima facie case that a section 104(b) order is valid 

by proving by a preponderance of the evidence that the violation described in the underlying 

section 104(a) citation existed at the time the section 104(b) withdrawal order was issued. The 

operator may rebut the prima facie case by showing, for example, that the violative condition 

described in the citation had been abated within the time period fixed in the citation, but had 

recurred. Id.

In contesting a section 104(b) order, an operator may challenge the reasonableness of the 

time set for abatement or the Secretary’s failure to extend that time. Clinchfield Coal Co.., 11 

FMSHRC 2120, 2128 (Nov. 1989). The Commission has applied an “abuse of discretion” 

standard in reviewing an inspector’s issuance of a failure to abate order.7 See Energy West, 18 

FMSHRC at 569 (applying an abuse of discretion standard in reviewing Secretary’s failure to 

extend abatement time). An abuse of discretion has been found when “there is no evidence to 

support the decision or if the decision is based on an improper understanding of the law.” Id.

(citations omitted). 

Here, Hibbing Taconite challenges both the reasonableness of the times set for abatement 

in the underlying section 104(a) citations and the Secretary’s failure to extend those times. 

Because we conclude that the inspector set arbitrary abatement times, we need not reach Hibbing 

Taconite’s remaining arguments. 

When considering an operator’s challenge to a section 104(b) order, the Commission has 

clarified that “in fixing a reasonable time for abatement, the inspector must necessarily specify 

the violative conditions found and determine the time reasonably required for the abatement of 

the specified conditions.” Mid-Continent, 11 FMSHRC at 510. We conclude that the record 

reveals that the inspector failed to set abatement times that were based upon those times 

reasonably required for the abatement of the cited conditions. 

 7

 The Secretary must prove by a preponderance of the evidence that the inspector did not 

abuse his discretion in issuing the section 104(b) orders. Mid-Continent, 11 FMSHRC at 509; 

Energy West Mining Co., 18 FMSHRC 565, 569 (Apr. 1996). The Commission thereafter applies 

a substantial evidence standard in reviewing the Judge’s factual determinations. Cf. Island Creek 

Coal Co., 15 FMSHRC 339, 346 (Mar. 1993). The Judge erroneously applied a substantial 

evidence standard in affirming the four failure to abate orders. 35 FMSHRC at 2542-43, 2546, 

2548, 2551. 

38 FMSHRC Page 397
Rather, Inspector Sichmeller testified that he universally set abatement times of 8:00 a.m. 

the morning after he verbally issued citations in order to prompt the operator to quickly abate the 

violations. Tr. 70. The inspector explained that, for instance, he did not want to give an 

abatement time of three days and have the operator not take any action on abating the condition 

until the third day.8 Tr. 89. 

On December 14, the inspector verbally issued eight citations and set an abatement time 

of 8:00 a.m. on December 15 for each of the eight citations. Tr. 133. The inspector’s field notes 

set forth the explanation that he gave Angelo for setting the abatement times: 

Tim [Angelo] has brought up issues about termination times & 

extensions. Discussed that due to past experiences that when given 

extended termination time I’ve found conditions are not being 

tended to within allotted time frame so the basis of short 

termination times is to ensure that items are being addressed. 

[D]iscussed that I understood that sometimes that all conditions

may not be taken care of in that time & if finding appropriate

action is being done have no reason for not extending citation at

that time.

Gov’t Ex. P13 at pp. 30-31. Thus, the inspector conceded that the cited conditions may not be 

capable of being abated within the abatement times that he set.

With respect to the citations that led to three of the subject orders, the record reveals that 

the inspector was aware that setting an abatement time of 8:00 a.m. the next morning would not 

have provided the operator with sufficient time to correct conditions. For instance, Inspector 

Sichmeller verbally issued Citation No. 8665946 at approximately 5:30 p.m. on December 12, 

set an abatement time of 8:00 a.m. on December 13, and thereafter extended the abatement time 

until 8:00 a.m. on Dec. 14 and until 8:00 a.m. on December 15. Tr. 36-39, 99, 113, 117; Gov’t 

Exs. P1-3, P1-4, P1-5 at p. 5. In his notes for December 12, the inspector acknowledged “[t]his is 

a vast area affected due to the multiple conditions present.” Gov’t Ex. P1-5. The inspector also 

testified that it took the operator from December 15, the date the order was issued, until 

December 18 to abate the order due to the “extensiveness” of the cleanup required. Tr. 68. He 

stated that he was “surprised they got it done in three days as extensive as it was.” Tr. 68. Safety 

Representative Marcus also described the condition as “obviously a pretty massive project.” Tr. 

113. 

Similarly, the inspector verbally issued Citation No. 8665957 for pellets and slurry in the 

walkway of the scrubber pump area on December 14 at approximately 1:30 p.m., and set an 

abatement time of December 15 at 8:00 a.m. Gov’t Ex. P3-1. The inspector testified that after the 

order was issued on December 15, it “took them to the 17th to get this done because of the 

extensiveness of the conditions.” Tr. 53. 

8

 The Secretary referred to the inspector’s practice of setting an 8:00 a.m. abatement time 

as the inspector’s abatement “policy.” S. Br. at 7 n.8; see also Oral Arg. Tr. at 38. 

38 FMSHRC Page 398
Inspector Sichmeller verbally issued Citation No. 8665960 for the deteriorated condition 

of the fan housing at approximately 2:15 p.m. on December 14, and set the abatement time for 

8:00 a.m. on December 15. Gov’t Ex. P7-1. The inspector explained that the operator “had to get 

some manlifts and stuff in there” and grind down the rough edges of the fan housing, and that the 

order was terminated on December 17. Tr. 66-67; Gov’t Ex. P8-3. 

Inspector Sichmeller also failed to set an abatement time that reflected the time 

reasonably required for the abatement of the conditions cited in Citation No. 8665959 involving 

the 8x8 feet accumulation of pellets in the walkway by the electrical disconnect. The inspector 

verbally issued the citation at approximately 2:00 p.m. on December 14, and set an abatement 

time of 8:00 a.m. on December 15. Gov’t Exs. P5-1, P5-2 at p. 104. Sichmeller acknowledged, 

however, that the cited conditions would only take about five minutes to clean up. Tr. 57, 60. 

The inspector conceded that “sometimes [the] eight o’clock termination time is way too long 

based on the conditions and the hazard that’s presented.” Tr. 71. 

We conclude that the inspector did not fix the abatement times based upon “the time 

reasonably required for abatement of the specified conditions,” as he is required to do by the 

Mine Act and Commission precedent. Mid-Continent, 11 FMSHRC at 510. The record indicates 

that the inspector did not base the abatement times on such factors as the extent of the violative 

conditions, the availability of miners to undertake cleaning work, and competing safety concerns. 

Rather, the inspector set an arbitrary abatement time of 8:00 a.m. the next morning, regardless of 

the amount of time that the conditions required for abatement.9

 The inspector’s issuance of the 

failure to abate orders was based upon a misunderstanding of the law, and amounted to an abuse 

of discretion. 

While the inspector’s concern with exacting immediate corrective action from the 

operator in order to keep miners safe is a laudable and important concern, the Mine Act sets forth 

a scheme in sections 104(a) and (b) by which to achieve that end. The inspector must take 

enforcement action consistent with those provisions. For instance, the inspector must set an 

abatement time based upon the amount of time necessary to fully abate a violation. Thereafter, if 

the operator does not fully abate within that time, the inspector must determine whether an 

extension in abatement time is warranted or whether he should issue a section 104(b) order. In 

making that determination, the inspector may consider information such as whether the operator 

delayed beginning the abatement process and whether any delay was justified, giving priority to 

the safety of miners exposed to the unabated condition. Thus – responsive to Inspector 

Sichmeller’s concern about delaying commencement of abatement – if, for example, the 

conditions reasonably require three days to complete abatement, and the operator unjustifiably 

fails to begin the process until the third day, an inspector may determine that further extension of 

the abatement time is not warranted, and instead issue a section 104(b) order. 

9

 The arbitrary nature of the 8:00 a.m. termination time is apparent from Inspector 

Sichmeller’s statement during the close-out conference on December 15, which the operator has 

not disputed, that the inspector would set an 8:00 a.m. abatement time on all citations going 

forward. Tr. 152, 215-16. The inspector could not have known what conditions would be cited, 

let alone that 8:00 a.m. the following morning would be a reasonable time for abatement. 

38 FMSHRC Page 399
Accordingly, for the reasons discussed above, we hold that the inspector abused his 

discretion in issuing Orders Nos. 8665965, 8665970, 8665968, and 8665969. 

III. 

Conclusion 

For the foregoing reasons, we hereby reverse the Judge’s decision and vacate Orders Nos. 

8665965, 8665970, 8665968, and 8665969. 

/s/ Mary Lu Jordan 

Mary Lu Jordan, Chairman 

/s/ Michael G. Young 

Michael G. Young, Commissioner 

/s/ Robert F. Cohen, Jr.

Robert F. Cohen, Jr., Commissioner 

/s/ Patrick K. Nakamura

Patrick K. Nakamura, Commissioner 

/s/ William I. Althen

William I. Althen, Commissioner 

38 FMSHRC Page 400
FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

1331 PENNSYLVANIA AVENUE, NW, SUITE 520N 

WASHINGTON, DC 20004-1710

March 30, 2016 

SCOTT D. MCGLOTHLIN 

v. Docket No. VA 2014-233-D 

DOMINION COAL CORPORATION 

BEFORE: Jordan, Chairman; Young, Cohen, Nakamura, and Althen, Commissioners 

DECISION 

BY THE COMMISSION: 

In this discrimination proceeding arising under section 105(c)(3) of the Mine Act, 30 

U.S.C. § 815(c)(3), a Commission Administrative Law Judge issued a decision granting 

summary decision in favor of the Complainant, Scott D. McGlothlin, and affirming his 

discrimination complaint. 37 FMSHRC 1256, 1265 (June 2015) (ALJ). In September 2015, the 

parties filed a Joint Motion to File under Seal and to Dismiss, which included a proposed 

settlement agreement regarding relief for McGlothlin. On October 21, 2015, the Judge issued an 

order denying the motion. 37 FMSHRC 2511, 2514 (Oct. 2015) (ALJ). 

On November 11, 2015, in response to the Judge’s denial, the parties filed a Joint Motion 

to Approve Settlement, to File under Seal and to Dismiss, which included a revised settlement 

agreement proposal. Thereafter, following the issuance and filing of various orders and 

pleadings, the Judge issued a Decision on Relief and Final Order. 38 FMSHRC ___ (Feb. 8, 

2016). In that decision, the Judge awarded McGlothlin back pay, consistent with the terms of the 

revised settlement agreement, and ordered other relief. Id. at ___, slip op. at 8. 

However, the Judge rejected the attorneys’ fees portion of the revised settlement 

agreement and awarded attorneys’ fees to the Complainant’s attorneys in an amount 

approximately 35 percent less than the amount agreed to by the parties. Id. at ___, slip op. at 4-5, 

15. The Commission subsequently granted McGlothlin’s petition for discretionary review,

challenging the Judge’s rejection of those provisions.

Oversight of proposed settlements is committed to the Commission’s sound discretion. 

Sec’y of Labor on behalf of Hopkins v. Asarco, Inc., 18 FMSHRC 2081, 2082 (Dec. 1996) 

(citations omitted). The Commission has exercised this discretion in the past in section 105(c)(3) 

discrimination proceedings. See, e.g., Reid v. Kiah Creek Mining Co., 15 FMSHRC 390 (Mar. 

1993). The Commission has explained that the grant of authority set forth in section 105(c) to 

provide appropriate relief necessarily includes the authority to review settlement agreements in 

38 FMSHRC Page 401
discrimination cases. Sec’y of Labor on behalf of Maxey v. Leeco, Inc., 20 FMSHRC 707 (July 

1998).1

In the matter before us, our review is limited to the Judge’s rejection of the proposed 

settlement terms, agreed to by the parties, regarding attorneys’ fees. In his February decision, the 

Judge determined that the revised settlement proposal provided appropriate relief to the 

discriminatee, Mr. McGlothlin. Furthermore, this proceeding does not involve the review of a 

proposed settlement of a civil penalty. 

1

 Commissioner Cohen notes that in Secretary of Labor on behalf of Maxey v. Leeco, 

Inc., 20 FMSHRC 707, 708 (July 1998), in response to a partial dissent by Commissioner Beatty 

which questioned the Commission’s authority to review settlement agreements in discrimination 

cases, the Commission made clear that the purpose of its authority to review settlement 

agreements under section 105(c) of the Mine Act was “to ensure that discriminatees are made 

whole.” The Commission stated, “ . . . for if no such authority existed, the ability of the 

Commission and its judges to ensure that discriminatees are made whole would be severely 

curtailed, a result at odds with the intent of the Mine Act.” (citing S. Rep. No. 95-181, at 13 

(1977), reprinted in Senate Subcommittee on Labor, Committee on Human Resources, 95th 

Cong., Legislative History of the Federal Mine Safety and Health Act of 1977, at 625 (1978)). Id. 

38 FMSHRC Page 402
Where, as here, the parties have agreed to a stipulated amount of attorneys’ fees and there 

are no allegations or evidence that such an amount would adversely affect the remedy afforded 

the discriminatee, the Judge erred in rejecting the settlement based upon the agreed upon amount 

of attorneys’ fees. 

Accordingly, we vacate those portions of the Judge’s decision rejecting the revised 

settlement agreement as to attorneys’ fees, and we approve the settlement agreement as to those 

provisions.2 

/s/ Mary Lu Jordan 

Mary Lu Jordan, Chairman 

/s/ Michael G. Young 

Michael G. Young, Commissioner 

/s/ Robert F. Cohen, Jr. 

Robert F. Cohen Jr., Commissioner 

/s/ Patrick K. Nakamura 

Patrick K. Nakamura, Commissioner 

/s/ William I. Althen 

William I. Althen, Commissioner

2 We are approving the provisions in the revised settlement agreement filed on November 

11, 2015, relating to attorneys’ fees. Because of our disposition, we do not reach any other 

matters discussed in McGlothlin’s petition for discretionary review, including the recovery of 

attorneys’ fees incurred after submission of the revised settlement agreement. 

38 FMSHRC Page 403

COMMISSION ORDERS
38 FMSHRC Page 404
FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION 

1331 PENNSYLVANIA AVENUE, N.W., SUITE 520N 

WASHINGTON, DC 20004-1710 

March 3, 2016 

IN RE: DISCIPLINARY REFERRAL Docket No. D 2016-0001 

BEFORE: Jordan, Chairman; Young, Cohen, Nakamura, and Althen, Commissioners 

ORDER 

BY: Jordan, Chairman; Young, Nakamura, and Althen, Commissioners 

In this proceeding arising under the Federal Mine Safety and Health Act of 1977, 30 

U.S.C. § 801 et seq. (2012) (“Mine Act”), the Complainant referred this matter for a 

determination of whether circumstances involving an attorney’s statements during a June 18, 

2015, hearing warrant disciplinary proceedings under 29 C.F.R. § 2700.80.1 The Commission 

1

 29 C.F.R. § 2700.80 provides in relevant part: 

(a) Standards of conduct. Individuals practicing before the

Commission or before Commission Judges shall conform to the 

standards of ethical conduct required of practitioners in the courts 

of the United States. 

(b) Grounds. Disciplinary proceedings may be instituted

against anyone who is practicing or has practiced before the 

Commission on grounds that such person has engaged in unethical

or unprofessional conduct; has failed to comply with these rules or 

an order of the Commission or its Judges; has been disbarred or 

suspended by a court or administrative agency; or has been 

disciplined by a Judge under paragraph (e) of this section.

(c) Disciplinary proceedings shall be subject to the

following procedure: 

(1) Disciplinary referral. Except as provided in

paragraph (e) of this section, a Judge or other person having 

knowledge of circumstances that may warrant disciplinary 

proceedings against an individual who is practicing or has 

practiced before the Commission shall forward to the Commission

for action such information in the form of a written disciplinary 

referral. Whenever the Commission receives a disciplinary referral, 

the matter shall be assigned a docket number. 

(continued...)

38 FMSHRC Page 405
subsequently received a response to the referral from the attorney and the Complainant’s reply to 

the attorney’s response. For the following reasons, we conclude that disciplinary proceedings are 

not warranted. 

In 2014, the Complainant filed a complaint, pursuant to section 105(c)(3) of the Mine 

Act, 30 U.S.C. § 815(c)(3), alleging that the operator of the mine at which he was employed had 

discriminated against him in violation of section 105(c)(1) of the Mine Act, 30 U.S.C. 

§ 815(c)(1). A hearing on the discrimination complaint was ultimately scheduled for June 18,

2015.

A few days prior to the hearing, the attorney, on behalf of his law firm, filed a motion to 

withdraw as counsel for the operator in the discrimination proceeding. In the motion, the firm 

explained in part that the operator had filed for bankruptcy protection in Canada the prior year, 

and the Canadian proceedings had been subsequently recognized in the United States pursuant to 

Chapter 15 of the U.S. Bankruptcy Code. Based upon information provided by the bankruptcy 

monitor regarding the operator’s lack of financial resources, the operator instructed the firm to 

perform no further work for it. 

On the morning of the hearing, the attorney reiterated his firm’s request to withdraw from 

representation. The Judge and attorney engaged in a colloquy, in which the Judge inquired about 

the attorney’s continuing role in representing the operator or in representing the successor 

operator. Tr. 6-9. The attorney essentially indicated that his firm still had an ongoing attorneyclient relationship with the operator, although they were in the process of winding down the 

relationship, and that he “hoped” that he and his firm would represent the successor-in-interest at 

the mine. Tr. 6-9. The Judge subsequently granted the motion to withdraw and, after receiving 

the Complainant’s evidence, held that the operator had impermissibly discriminated against the 

Complainant. 37 FMSHRC 2337, 2339, 2347 (Oct. 2015) (ALJ). 

On October 7, 2015, the Complainant filed the subject disciplinary referral with the 

Commission. In the referral, the Complainant alleged that the attorney had provided false 

testimony to the Judge because although the attorney stated that he “hoped” his firm would 

represent the successor owner of the mine, the attorney’s firm was listed as a registered agent for 

the successor owner since June 9, 2015. 

On November 16, 2015, the Commission received the attorney’s response to the 

Complainant’s disciplinary referral. In the response, the attorney asserts that he never indicated 

that his firm did not represent the successor in any capacity at the time of the hearing, and he did 

(2) Inquiry by the Commission. The Commission

shall conduct an inquiry concerning a disciplinary referral and 

shall determine whether disciplinary proceedings are warranted.

The Commission may require persons to submit affidavits setting

forth their knowledge of relevant circumstances. If the 

Commission determines that disciplinary proceedings are not 

warranted, it shall issue an order terminating the referral. 

1 (...continued)

38 FMSHRC Page 406
not understand the Judge to be asking that question. The attorney stated that he was aware that 

the new ownership of the mine had already retained a different law firm to assist with the 

transfer of property in the event the sale of the mine and other assets out of bankruptcy closed. 

He noted that the only matter in which his firm was involved on behalf of the successor was in 

the capacity of being the Nevada registered agent. 

Commission Procedural Rule 80 provides that individuals practicing before Commission 

Judges must conform to standards of ethical conduct required of practitioners, and that 

disciplinary proceedings may be instituted against anyone who is practicing before the 

Commission who has engaged in unethical conduct. 29 C.F.R. §2700.80(a), (b). Rule 3.3(a)(1) of 

the Model Rules of Professional Conduct, which has been adopted by the Nevada Rules of 

Professional Conduct, provides that “A lawyer shall not make a false statement of fact or law to a 

tribunal or fail to correct a false statement of material fact or law previously made to the tribunal 

by the lawyer.” Thus, if the attorney made a false statement of fact to the Judge, disciplinary 

proceedings may be warranted. 

The attorney’s statement that he hoped that his firm would represent the successor 

operator when his firm was acting as the successor’s registered agent does not warrant 

disciplinary proceedings. Acting as a registered agent is essentially an administrative action. In 

order to be a registered agent in Nevada, an individual must be a resident of Nevada, but need 

not be an attorney. See Nev. Rev. Stat. § 77.305 (2013) (a provision of the Model Registered 

Agents Act, adopted by Nevada). The purpose of a registered agent is to provide the Secretary of 

State with a Nevada address where process may be served and certain forms may be received. 

Nev. Rev. Stat. § 77.390 (2007), Nev. Rev. Stat. § 77.400 (2013). We accept the attorney’s 

statement that although his firm was acting as a registered agent for the successor, his firm was 

not providing legal services.2

2

 We take administrative notice of the fact that pleadings filed in the discrimination 

proceeding since the Judge issued his decision by alleged successors to the operator have been 

filed by law firms other than the attorney’s law firm. 

38 FMSHRC Page 407
We further observe that the Complainant was not prejudiced by the firm’s withdrawal as 

counsel to the operator. After the attorney withdrew as the operator’s counsel in the proceeding, 

the operator was not represented at the hearing. As a result, the Complainant submitted evidence 

of the alleged discrimination without rebuttal by the operator.

Accordingly, we conclude that no disciplinary proceedings are warranted. 

/s/ Mary Lu Jordan 

Mary Lu Jordan, Chairman 

/s/ Michael G. Young 

Michael G. Young, Commissioner 

/s/ Patrick K. Nakamura 

Patrick K. Nakamura, Commissioner 

/s/ William I. Althen 

William I. Althen, Commissioner 

38 FMSHRC Page 408
Commissioner Cohen, dissenting: 

I dissent on the basis that I would have the Commission conduct further inquiry pursuant 

to 29 C.F.R. § 2700.80(c)(2). 

/s/ Robert F. Cohen, Jr. 

Robert F. Cohen, Jr., Commissioner 

38 FMSHRC Page 409
FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION 

1331 PENNSYLVANIA AVENUE, NW, SUITE 520N 

WASHINGTON, D.C. 20004-1710

March 8, 2016 

SECRETARY OF LABOR, 

 MINE SAFETY AND HEALTH 

 ADMINISTRATION (MSHA), 

 on behalf of JENNIFER MORREALE 

v. Docket No. WEST 2014-793-D 

VERIS GOLD USA, INC. 

BEFORE: Jordan, Chairman; Young, Cohen, Nakamura and Althen, Commissioners 

ORDER 

BY THE COMMISSION: 

This discrimination proceeding arises under the Federal Mine Safety and Health Act of 

1977, 30 U.S.C. § 801 et seq. (1982) (“Mine Act” or “Act”). The case was dismissed by an 

Administrative Law Judge who denied, for lack of jurisdiction, complainant Jennifer Morreale’s 

motion to compel payment of monetary damages by the operator, Veris Gold USA, Inc. (“Veris 

Gold”), pursuant to a settlement agreement. Subsequently, Morreale filed with the Commission a 

motion to reopen this proceeding. For the following reasons, we reopen this matter and remand 

this case to the Judge for further proceedings. 

I. 

Factual and Procedural Background 

Morreale was employed by Veris Gold at the Jerritt Canyon Mill in Elko, Nevada. 

Morreale alleged that she was discriminated against by Veris Gold on March 11, 2014 for raising 

health and safety concerns at the mine. Subsequently, she filed a complaint with the Department 

of Labor’s Mine Safety and Health Administration (“MSHA”) alleging that she was discharged 

in violation of section 105(c)(1) of the Mine Act. 30 U.S.C. § 815(c)(1). On July 28, 2014, the 

Secretary of Labor filed a discrimination complaint on Morreale’s behalf pursuant to section

38 FMSHRC Page 410
105(c)(2) of the Act. 30 U.S.C. § 815(c)(2).1

 The Secretary’s complaint alleged that Morreale 

was constructively discharged2

 for raising health and safety concerns. 

On February 20, 2015, the Secretary, the complainant, and Veris Gold entered into a 

confidential settlement agreement. The agreement provided in relevant part that Veris Gold 

would pay a civil penalty of $1000 to MSHA and an undisclosed amount of damages to 

Morreale. Within the agreement, Veris Gold represented that it had received approval from a 

bankruptcy monitor to make the payment, as the operator had previously filed U.S. Chapter 15 

bankruptcy proceedings concurrent with Canadian bankruptcy filings and was subject to the 

financial oversight of a bankruptcy monitor. The Judge issued a decision approving the 

settlement agreement, which required payment of $1000 to MSHA within 30 days, and payment 

of the undisclosed amount to Morreale in accordance with the terms of the settlement agreement. 

Three months later, however, Morreale filed a pro se motion to compel claiming that she never 

received the payment. 

On June 1, 2015, the Judge presided over a conference call with the Secretary, the 

complainant, and Veris Gold’s counsel in order to discuss the issue of the operator’s failure to 

make the payment. During the course of the call, it became clear that the bankruptcy monitor 

overseeing the bankruptcy proceedings had withheld payment to both the Secretary and Ms. 

Morreale pending the resolution of an asset sale of the mine by the operator to a separate entity, 

Jerritt Canyon Gold, LLC (“Jerritt Canyon”). Given the limited ability of the Commission to 

enforce its own judgments, the Judge requested an update within 30 days regarding the status of 

Veris Gold’s ability to make the payment. The Judge also notified the parties that he was 

reserving judgment on Morreale’s motion to compel the payment until he received the update. 

1

 30 U.S.C. § 815(c)(2) provides in pertinent part: 

Any miner . . . who believes that he has been discharged, 

interfered with, or otherwise discriminated against by any person 

in violation of this subsection may, within 60 days after such 

violation occurs, file a complaint with the Secretary alleging such 

discrimination. Upon receipt of such complaint, the Secretary shall 

forward a copy of the complaint to the respondent and shall cause 

such investigation to be made as he deems appropriate. Such 

investigation shall commence within 15 days of the Secretary’s 

receipt of the complaint, and if the Secretary finds that such 

complaint was not frivolously brought, the Commission, on an 

expedited basis upon application of the Secretary, shall order the 

immediate reinstatement of the miner pending final order on the 

complaint. 

2

 The Secretary claims that Morreale was constructively discharged because she was 

transferred to a prior position at the mine, in which she had been previously exposed to sexual 

harassment from her supervisor. 

38 FMSHRC Page 411
On June 15, 2015, Morreale notified the Judge that she had filed a motion to stay the sale 

of the operator’s assets with the U.S. Bankruptcy Court for the District of Nevada. The 

bankruptcy monitor subsequently objected to Morreale’s motion to stay, stating that it never 

consented to making the payment to Morreale absent approval of the Canadian Bankruptcy 

Court. Based on this objection, the U.S. Bankruptcy Court denied Morreale’s motion to stay and 

finalized Veris Gold’s asset sale. 

On June 24, 2015, Jerritt Canyon commenced operations at the mine site in order to 

ensure that there would be no disruption to operations once Veris Gold was to cease operations. 

The next day, Veris Gold ceased operations at the mine. 

On July 8, 2015, the Judge denied Morreale’s motion to compel because he believed that 

the Commission lacked jurisdiction. The Judge reasoned that, pursuant to section 113(d)(1) of 

the Act, 30 U.S.C. § 823(d)(1), his February 27, 2015 decision approving settlement had become 

a final order of the Commission on April 9, 2015, and that enforcement of the payment could 

only be sought in the federal courts by the Secretary or Morreale. The Judge stated that he was 

nevertheless “troubled that the [operator] specifically assured the [Judge] that payment would be 

made promptly when obtaining approval for the settlement motion and then failed to honor that 

commitment.” Unpublished Order at 3 (July 8, 2015). The Judge was “especially concerned that 

the change in circumstances cited by the U.S. bankruptcy monitor to justify withdrawing 

payment to Ms. Morreale occurred in ‘mid-February,’ apparently before the parties submitted 

their joint settlement motion on February 20, 2015.” Id. (emphasis added). The Judge stated that 

the Secretary or Morreale may petition the Commission directly to obtain relief. 

On October 9, 2015, the Commission received Morreale’s motion to reopen. The motion 

requests that the case be reopened so that the Commission could decide whether Jerritt Canyon, 

Eric Sprott3

 and Whitebox Asset Management4 are successor entities that should be held liable 

for the actions of the predecessor entity, Veris Gold. 

On January 6, 2016, the Commission also received Morreale’s Motion for Expedited 

Consideration from the Commission, Motion to Reopen Case, and Motion to Amend. In the 

motion, Morreale seeks to expedite the case and add Jerritt Canyon as a successor-in-interest. On 

February 3, 2016, the Commission also received a Motion to Amend and Request for Expedited 

Consideration, which requests that the complaint be amended to add Jerritt Canyon, Eric Sprott 

and Whitebox Asset Management as parties. 

3

 Eric Sprott is a principal asset manager of Jerritt Canyon who, according to the motion 

to reopen, “owned a percentage of Veris Gold before it became Jerritt Gold LLC.” Mot. Reopen 

at 3. 

4

 Whitebox Asset Management was the controlling DIP (“debtor in possession”) Lender 

that provided ongoing funding of $15 million for Veris Gold’s operations during its insolvency. 

Subsequently, Whitebox acquired Veris Gold’s assets. According to Morreale’s subsequent 

February 3, 2016 Motion to Amend and Request for Expedited Consideration, Whitebox Asset 

Management is “comprised of Eric Sprott and others.” 

38 FMSHRC Page 412
On February 17, 2016, the Commission received from Jerritt Canyon a Special Limited 

Appearance on behalf of Jerritt Canyon Gold, LLC to Contest Jurisdiction in Response to 

Complainant’s Motion to Amend. Jerritt Canyon asserts that the Commission lacks jurisdiction 

over the complainant’s motion to reopen because the complainant is time-barred from petitioning 

the Commission for discretionary review under the 30-day rule in section 113 of the Mine Act. 

Jerritt Canyon further asserts that, due to the effect of the Chapter 15 bankruptcy proceedings, 

successor liability cannot attach to Jerritt Canyon. 

II. 

Disposition 

We reopen this case under the “catch all” or “extraordinary circumstances” provision in 

Rule 60(b)(6) of the Federal Rules of Civil Procedure in the interest of justice. Rule 60(b)(6) 

states that a court may relieve a party or its legal representative from a final judgment, order, or 

proceeding, even though the case does not fit into one of the other, more specific provisions of 

Rule 60(b), if there is “any other reason that justifies relief.”5

 Fed. R. Civ. P. 60(b)(6). 

The Commission has previously reopened a case under Rule 60(b)(6) where an operator 

repudiated a settlement agreement and the case had been dismissed on the basis of that 

agreement. Specifically, the Commission in Johnson v. Lamar Mining Co. reopened a case 

arising from a discrimination claim when an underlying settlement agreement was materially 

breached by the operator’s failure to pay monetary damages owed to the complainant. 10 

FMSHRC 506, 508-09 (Apr. 1988). We hold that Johnson is directly on point here and strongly 

supports reopening under Rule 60(b)(6). See also Tolbert v. Chaney Creek Coal Corp., 12 

FMSHRC 615 (Apr. 1990) (reopening case under Rule 60(b)(6) when operator refused to 

comply with Judge’s order to pay penalty to complainant upon a finding of discrimination). 

Federal court case law further supports reopening this case under Rule 60(b)(6). In 

Fairfax Countywide Citizens Ass’n. v. Fairfax County, 571 F.2d 1299, 1302-03 (4th Cir.), cert. 

denied, 439 U.S. 1047 (1978), the Fourth Circuit affirmed a district court’s authority to reopen a 

case where a settlement agreement had been breached. See also Aro Corp. v. Allied Witan Co., 

531 F.2d 1368, 1371-72 (6th Cir.), cert. denied, 429 U.S. 862 (1976). The Sixth Circuit in Aro 

Corp., 531 F.2d at 1371, reasoned that reopening cases in such scenarios may be required in the 

interests of justice. Similarly, the Commission has a firm basis for reopening this case under 

Rule 60(b)(6). Accordingly, we conclude that this case should be reopened. 

5

 In analyzing the applicability of Rule 60(b)(6), it is important to recognize that the 

Commission is not strictly bound by the language of this provision nor the case law interpreting 

it. Specifically, under 29 C.F.R. § 2700.1(b), “the Commission and its Judges shall be guided 

[only] so far as practicable by the Federal Rules of Civil Procedure.” Jim Walter Res., Inc., 15 

FMSHRC 782, 787 (May 1993) (emphasis added). Thus, the Commission has discretion in 

tailoring the rules to fit within the Mine Act framework and implementing the authority granted 

by Congress.

38 FMSHRC Page 413
No person filed an opposition to Morreale’s motion to reopen. However, Jerritt Canyon 

opposed Morreale’s subsequently filed motion to amend. Because we remand the motion to 

amend to the Administrative Law Judge for review, we need not address all of Jerritt Canyon’s 

arguments here. We do find, however, that Jerritt Canyon’s argument contesting jurisdiction is 

unavailing. We construe Morreale’s request as a motion to reopen the case – not as a petition for 

discretionary review of a final decision. The Commission has long held that it has the authority 

to reopen cases under appropriate circumstances. Johnson, 10 FMSHRC at 508-09; Tolbert, 12 

FMSHRC at 618-19. Based upon the circumstances of this case, the case is not time barred by 

section 113 and warrants reopening. 

We also hold that Morreale filed her motion to reopen within a “reasonable time,” as 

required by Rule 60(b)(6). The Judge issued his order dismissing Morreale’s case for lack of 

jurisdiction on July 8, 2015. Morreale filed her motion to reopen on October 9, 2015, three 

months later. We hold that this constitutes a “reasonable time” under the circumstances of this 

case. The remaining arguments in Jerritt Canyon’s opposition to the motion to amend may be 

considered by the Judge on remand.  

38 FMSHRC Page 414
III. 

Conclusion 

We grant Morreale’s motion to reopen and remand this case to the Judge for further 

proceedings. The Judge shall consider Morreale’s motion to amend her complaint to add Jerritt 

Canyon Gold, LLC; Eric Sprott; and Whitebox Asset Management as successors-in-interest. 

/s/ Mary Lu Jordan 

Mary Lu Jordan, Chairman 

/s/ Michael G. Young 

Michael G. Young, Commissioner 

/s/ Robert F. Cohen, Jr. 

Robert F. Cohen, Jr., Commissioner 

/s/ Patrick K. Nakamura 

Patrick K. Nakamura, Commissioner 

/s/ William I. Althen 

William I. Althen, Commissioner 

38 FMSHRC Page 415
FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

1331 PENNSYLVANIA AVENUE, NW, SUITE 520N 

WASHINGTON, DC 20004-1710

March 8, 2016 

SECRETARY OF LABOR, 

 MINE SAFETY AND HEALTH 

 ADMINISTRATION (MSHA) 

Docket No. WEVA 2014-532 

v. A.C. No. 46-09060-334458 

TEN-MILE COAL COMPANY, INC. 

BEFORE: Jordan, Chairman; Young, Cohen, Nakamura, and Althen, Commissioners 

ORDER 

BY: Jordan, Chairman; Young, Nakamura, and Althen, Commissioners 

This matter arises under the Federal Mine Safety and Health Act of 1977, 30 U.S.C. § 

801 et seq. (2012) (“Mine Act”). On February 3, 2014, the Commission received from Ten-Mile 

Coal Company, Inc. (“Ten-Mile”) a motion seeking to reopen a penalty assessment that had 

become a final order of the Commission pursuant to section 105(a) of the Mine Act, 30 U.S.C. 

§ 815(a).

Under section 105(a) of the Mine Act, an operator who wishes to contest a proposed 

penalty must notify the Secretary of Labor no later than 30 days after receiving the proposed 

penalty assessment. If the operator fails to notify the Secretary, the proposed penalty assessment 

is deemed a final order of the Commission. 30 U.S.C. § 815(a). 

We have held, however, that in appropriate circumstances, we possess jurisdiction to 

reopen uncontested assessments that have become final Commission orders under section 105(a). 

Jim Walter Res., Inc., 15 FMSHRC 782, 786-89 (May 1993) (“JWR”). In evaluating requests to 

reopen final orders, the Commission has found guidance in Rule 60(b) of the Federal Rules of 

Civil Procedure, under which the Commission may relieve a party from a final order of the 

Commission on the basis of mistake, inadvertence, excusable neglect, or other reason justifying 

relief. See 29 C.F.R. § 2700.1(b) (“the Commission and its Judges shall be guided so far as 

practicable by the Federal Rules of Civil Procedure”); JWR, 15 FMSHRC at 787. We have also 

observed that default is a harsh remedy and that, if the defaulting party can make a showing of 

good cause for a failure to timely respond, the case may be reopened and appropriate 

proceedings on the merits permitted. See Coal Prep. Servs., Inc., 17 FMSHRC 1529, 1530 (Sept. 

1995). 

 Records of the Department of Labor’s Mine Safety and Health Administration 

(“MSHA”) indicate that the proposed assessment was delivered on November 5, 2013, and 

38 FMSHRC Page 416
became a final order of the Commission on December 5, 2013. Ten-Mile asserts that while the 

mine manager at the mine received the assessment, it became lost when the manager sent the 

assessment to the office of the Secretary and Treasurer of the company, which was located 60 

miles away. The operator asserts that it has since changed it procedures by instructing the mine 

manager to scan and e-mail all future assessments to the Secretary and Treasurer’s office. The 

Secretary does not oppose the request to reopen, however he urges Ten-Mile to take steps to 

ensure that future penalty contests are timely filed. 

Having reviewed Ten-Mile’s request and the Secretary’s response, in the interest of 

justice, we hereby reopen this matter and remand it to the Chief Administrative Law Judge for 

further proceedings pursuant to the Mine Act and the Commission’s Procedural Rules, 29 C.F.R. 

Part 2700. Accordingly, consistent with Rule 28, the Secretary shall file a petition for assessment 

of penalty within 45 days of the date of this order. See 29 C.F.R. § 2700.28. 

/s/ Mary Lu Jordan 

Mary Lu Jordan, Chairman 

/s/ Michael G. Young 

Michael G. Young, Commissioner 

/s/ Patrick K. Nakamura 

Patrick K. Nakamura, Commissioner 

/s/ William I. Althen 

William I. Althen, Commissioner 

38 FMSHRC Page 417
Commissioner Cohen, dissenting: 

I dissent from my colleagues’ decision because I believe that Ten-Mile has failed to 

demonstrate that its failure to timely contest the proposed assessment was the result of excusable 

neglect. My review of Ten-Mile’s previous motions to reopen previous assessments, along with 

its current filing, demonstrates to me that the operator’s failure to timely file was the result of an 

inadequate or unreliable internal processing system. 

On September 26, 2011, the Commission granted Ten-Mile’s request to reopen a civil 

penalty proceeding. Ten-Mile Coal Co., Inc., 33 FMSHRC 2188 (Sept. 2011). Notably, in its 

motion to reopen, Ten-Mile stated prospectively that it would use a computer system to process 

civil penalty assessments. Id. at 2189-90. 

On February 14, 2013, the Commission again granted a request from Ten-Mile to reopen 

a civil penalty case. Ten-Mile Coal Co., Inc., 35 FMSHRC 356 (Feb. 2013). The operator 

asserted that its superintendent inadvertently mixed the proposed assessment with other paper 

work. The Commission granted the motion, but “urg[ed] Ten-Mile to take all steps necessary to

ensure that future penalty contests are timely filed.” Id. at 357. 

This leads us to the filing currently before the Commission. On February 3, 2014, TenMile filed a motion to reopen a civil penalty proceeding, asserting that the proposed assessment 

was lost after it arrived at the mine site. Mot. at 1. Ten-Mile once again assures the Commission 

that it will prospectively amend its procedures for contesting citations; specifically, once 

assessments arrive at the mine site Ten-Mile plans to scan the form and email it to the 

appropriate office. 

The Commission has made it clear that where a failure to contest a proposed assessment 

results from an inadequate or unreliable internal processing system, the operator has not 

established grounds for reopening the assessment. Shelter Creek Capital, LLC, 34 FMSHRC 

3053, 3054 (Dec. 2012); Oak Grove Res., LLC, 33 FMSHRC 103, 104 (Feb. 2011); Double 

Bonus Coal Co., 32 FMSHRC 1155, 1156 (Sept. 2010); Highland Mining Co., 31 FMSHRC 

1313, 1315 (Nov. 2009); Pinnacle Mining Co., 30 FMSHRC 1066, 1067 (Dec. 2008); Pinnacle 

Mining Co., 30 FMSHRC 1061, 1062 (Dec. 2008). 

In examining the operator’s asserted justifications for reopening a particular case, the 

Commission has also explored whether the operator has demonstrated a pattern of behavior in 

other cases that is attributable to inadequate or unreliable internal processing systems. See Oak 

Grove Res., LLC, 33 FMSHRC 2378, 2379-80 (Oct. 2011). 

38 FMSHRC Page 418
For these reasons, I conclude that Ten-Mile has not demonstrated good cause to reopen 

the captioned matter and would deny its motion to reopen. 

/s/ Robert F. Cohen, Jr. 

Robert F. Cohen, Jr., Commissioner 

 While a single lost penalty assessment form may be the result of excusable neglect, this 

is the third time that Ten-Mile has come before the Commission and contended that it missed a 

filing deadline because of misplaced documents. In fact, Ten-Mile has previously recognized 

that its own filing system was inadequate and volunteered to use a computer system rather than 

paper copies. Moreover, less than a year before this current motion was filed, the Commission 

urged the operator to take all necessary steps to ensure timely filings. 

38 FMSHRC Page 419
FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

1331 PENNSYLVANIA AVENUE, NW, SUITE 520N 

WASHINGTON, DC 20004-1710

March 8, 2016 

SECRETARY OF LABOR, 

 MINE SAFETY AND HEALTH 

 ADMINISTRATION (MSHA) 

Docket No. WEVA 2014-1100 

v. A.C. No. 46-08977-347009

ALEX ENERGY, INC. 

BEFORE: Jordan, Chairman; Young, Cohen, Nakamura, and Althen, Commissioners 

ORDER 

BY THE COMMISSION: 

This matter arises under the Federal Mine Safety and Health Act of 1977, 30 U.S.C. § 

801 et seq. (2012) (“Mine Act”). On July 2, 2014, the Commission received from Alex Energy, 

Inc. (“Alex Energy”) a motion seeking to reopen a penalty assessment that had become a final 

order of the Commission pursuant to section 105(a) of the Mine Act, 30 U.S.C. § 815(a). 

Under section 105(a) of the Mine Act, an operator who wishes to contest a proposed 

penalty must notify the Secretary of Labor no later than 30 days after receiving the proposed 

penalty assessment. If the operator fails to notify the Secretary, the proposed penalty assessment 

is deemed a final order of the Commission. 30 U.S.C. § 815(a). 

We have held, however, that in appropriate circumstances, we possess jurisdiction to 

reopen uncontested assessments that have become final Commission orders under section 105(a). 

Jim Walter Res., Inc., 15 FMSHRC 782, 786-89 (May 1993) (“JWR”). In evaluating requests to 

reopen final orders, the Commission has found guidance in Rule 60(b) of the Federal Rules of 

Civil Procedure, under which the Commission may relieve a party from a final order of the 

Commission on the basis of mistake, inadvertence, excusable neglect, or other reason justifying 

relief. See 29 C.F.R. § 2700.1(b) (“the Commission and its Judges shall be guided so far as 

practicable by the Federal Rules of Civil Procedure”); JWR, 15 FMSHRC at 787. We have also 

observed that default is a harsh remedy and that, if the defaulting party can make a showing of 

good cause for a failure to timely respond, the case may be reopened and appropriate 

proceedings on the merits permitted. See Coal Prep. Servs., Inc., 17 FMSHRC 1529, 1530 (Sept. 

1995). 

Records of the Department of Labor’s Mine Safety and Health Administration 

(“MSHA”) demonstrate that the proposed assessment was delivered on April 9, 2014, and 

became a final order of the Commission on May 9, 2014. Alex Energy asserts that it has no 

38 FMSHRC Page 420
record of ever having received the proposed assessment, and that its lack of any record of receipt 

was attributable either to an external mailing error or internal clerical error. Alex Energy’s 

counsel further asserts (without an affidavit) that two days after receiving the underlying citation, 

its safety supervisor wrote to MSHA to dispute the citation and to request a safety and health 

conference. The Secretary does not oppose the request to reopen. However, he notes that the 

proposed assessment was mailed by certified mail and signed for by the operator on April 9, 

2014. The Secretary offers a copy of a certified mail receipt to this effect and urges Alex Energy 

to ensure that future penalty assessments are contested in a timely manner. 

Having reviewed Alex Energy’s request and the Secretary’s response, in the interest of 

justice, we hereby reopen this matter and remand it to the Chief Administrative Law Judge for 

further proceedings pursuant to the Mine Act and the Commission’s Procedural Rules, 29 C.F.R. 

Part 2700. Accordingly, consistent with Rule 28, the Secretary shall file a petition for assessment 

of penalty within 45 days of the date of this order. See 29 C.F.R. § 2700.28. 

/s/ Mary Lu Jordan 

Mary Lu Jordan, Chairman 

/s/ Michael G. Young 

Michael G. Young, Commissioner 

/s/ Robert F. Cohen, Jr. 

Robert F. Cohen, Jr., Commissioner 

/s/ Patrick K. Nakamura 

Patrick K. Nakamura, Commissioner 

/s/ William I. Althen 

William I. Althen, Commissioner 

38 FMSHRC Page 421
FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

1331 PENNSYLVANIA AVE., N.W., SUITE 520N 

WASHINGTON, DC 20004-1710 

March 9, 2016 

 LLC 

BEFORE: Jordan, Chairman; Young, Cohen, Nakamura and Althen, Commissioners 

ORDER

BY: Jordan, Chairman; Young, Nakamura and Althen, Commissioners 

This matter arises under the Federal Mine Safety and Health Act of 1977, 30 U.S.C. § 

801 et seq. (2012) (“Mine Act”). On May 20, 2014, the Commission received from Pinnacle 

Mining Company, LLC (“Pinnacle”) a motion seeking to reopen a penalty assessment that had 

become a final order of the Commission pursuant to section 105(a) of the Mine Act, 30 U.S.C. § 

815(a). 

Under section 105(a) of the Mine Act, an operator who wishes to contest a proposed 

penalty must notify the Secretary of Labor no later than 30 days after receiving the proposed 

penalty assessment. If the operator fails to notify the Secretary, the proposed penalty assessment 

is deemed a final order of the Commission. 30 U.S.C. § 815(a). 

We have held, however, that in appropriate circumstances, we possess jurisdiction to 

reopen uncontested assessments that have become final Commission orders under section 105(a). 

Jim Walter Res., Inc., 15 FMSHRC 782, 786-89 (May 1993) (“JWR”). In evaluating requests to 

reopen final orders, the Commission has found guidance in Rule 60(b) of the Federal Rules of 

Civil Procedure under which the Commission may relieve a party from a final order of the 

Commission on the basis of mistake, inadvertence, excusable neglect, or other reason justifying 

relief. See 29 C.F.R. § 2700.1(b) (“the Commission and its Judges shall be guided so far as 

practicable by the Federal Rules of Civil Procedure”); JWR, 15 FMSHRC at 787. We have also 

observed that default is a harsh remedy and that, if the defaulting party can make a showing of 

good cause for a failure to timely respond, the case may be reopened and appropriate 

proceedings on the merits permitted. See Coal Prep. Servs., Inc., 17 FMSHRC 1529, 1530 (Sept. 

1995). 

Records of the Department of Labor’s Mine Safety and Health Administration 

(“MSHA”) indicate that the proposed assessment was delivered on December 27, 2013, and 

became a final order of the Commission on January 27, 2014. Pinnacle asserts that it failed to 

timely contest the proposed assessment because its safety manager, who is responsible for 

handling proposed assessments, was on Christmas vacation when the proposed assessment was

SECRETARY OF LABOR, 

 MINE SAFETY AND HEALTH 

 ADMINISTRATION (MSHA), 

v. 

PINNACLE MINING COMPANY, 

Docket No. WEVA 2014-963 

A.C. No. 46-01816-339181

38 FMSHRC Page 422
delivered. Another individual at the company signed for the proposed assessment but failed to 

give it to the safety manager, who was thus unaware of the proposed assessment. The Secretary 

opposes the request to reopen and notes that a delinquency notice was mailed to the operator on 

March 13, 2014. 

In response, Pinnacle has submitted the affidavit of its safety manager who represents 

that Pinnacle has no record of having received the delinquency notice, and that Pinnacle was 

unaware of such delinquency until being notified by counsel in May 2014.1

Having reviewed Pinnacle’s request and the Secretary’s response, in the interest of 

justice, we hereby reopen this matter and remand it to the Chief Administrative Law Judge for 

further proceedings pursuant to the Mine Act and the Commission’s Procedural Rules, 29 C.F.R. 

Part 2700. Accordingly, consistent with Rule 28, the Secretary shall file a petition for assessment 

of penalty within 45 days of the date of this order. See 29 C.F.R. § 2700.28. 

/s/ Mary Lu Jordan 

Mary Lu Jordan, Chairman 

/s/ Michael G. Young 

Michael G. Young, Commissioner 

/s/ Patrick K. Nakamura 

Patrick K. Nakamura, Commissioner 

/s/ William I. Althen

William I. Althen, Commissioner 

1

 The dissent notes that we have held that a failure to explain a delay in responding to a 

delinquency notice may be grounds for denial of a motion to reopen. Slip op. at 4, citing 

Highland Mining Co., 31 FMSHRC 1313, 1317 (Nov. 2009). While this is true, Pinnacle has 

provided an explanation for its delay. Nothing in our decision today excuses an operator from 

acting promptly once it has discovered its failure to timely respond, or to explain any delay in 

acting later than 30 days from discovery of the delinquency. 

38 FMSHRC Page 423
Commissioner Cohen dissenting: 

 I dissent from my colleagues’ decision and would deny Pinnacle’s motion to reopen. 

 In its motion, Pinnacle argues that it failed to timely file the contest form due to mistake, 

inadvertence or excusable neglect. Pinnacle represents that customarily an employee of the 

operator picks up mail at the mine’s Post Office Box and then distributes its contents to the 

appropriate employees. For instance, Pinnacle’s past practice is for an MSHA proposed 

assessment to be delivered to the internal company mailbox of the mine’s safety manager, David 

Meadows, after it is picked up from the Post Office Box. Mot. at 2. 

 However, in this instance, Mr. Toler, an employee from the human resources department, 

picked up the mail from the Post Office, signed for the proposed assessment, but neglected to 

deliver it to Mr. Meadows. Pinnacle represents that Mr. Meadows’ absence on December 27, 

2013 (the date Mr. Toler signed for the proposed assessment), somehow contributed to Mr. 

Toler’s failure to deliver the assessment to the appropriate mailbox. Mot. at 2. 

As a result of Pinnacle’s failure to file the associated contest form, the proposed 

assessment became a final order on January 26, 2014. 

Although Pinnacle submitted affidavits from Mr. Meadows, it did not submit an affidavit 

or other evidence from Mr. Toler, the person with actual knowledge. Hence, Pinnacle has not 

provided any information regarding what Mr. Toler actually did with the proposed assessment 

after he received it. This makes it difficult for the Commission to determine whether Pinnacle 

actually established excusable neglect in failing to timely contest the proposed assessment. 

On March 13, 2014, MSHA notified the operator that it was delinquent in payment of the 

assessed civil penalties by a letter addressed to the mine’s Post Office Box. Pinnacle represents 

that this letter also failed to reach the desk of Mr. Meadows. Included in Pinnacle’s filings to the 

Commission is an affidavit from Mr. Meadows stating that he did not receive the letter. 

However, absent from its filings is an affidavit from any individual actually responsible for 

processing the mail. 

The rule is well settled that proof that a letter properly directed was placed in a post 

office creates a presumption that it reached its destination in usual time and was actually 

received by the person to whom it was addressed. Maggio v. Wisconsin Ave Psychiatric Center, 

Inc., 987 F.Supp.2d 38, 41 (D.C. Cir. 2013) (citing Hagner v. United States, 285 U.S. 427, 430 

(1932), Rosenthal v. Walker, 111 U.S. 185 (1884)). I conclude that Pinnacle failed to rebut the 

presumption that the delinquency letter was delivered.

The Commission has repeatedly held that when a failure to contest a proposed assessment 

results from an inadequate or unreliable internal processing system, the operator has not 

established grounds for reopening the assessment. Oak Grove Res., LLC, 33 FMSHRC 103, 104 

(Feb. 2011); Double Bonus Coal Co., 32 FMSHRC 1155, 1156 (Sept. 2010); Highland Mining 

Co., 31 FMSHRC 1313, 1315 (Nov. 2009); Pinnacle Mining Co., 30 FMSHRC 1066, 1067 

(Dec. 2008); Pinnacle Mining Co., 30 FMSHRC 1061, 1062 (Dec. 2008). 

38 FMSHRC Page 424
I conclude that the facts demonstrate that Pinnacle continues to exhibit an inadequate or 

unreliable internal processing system. In this case, Pinnacle failed to timely respond to either the 

proposed assessment or the delinquency letter. See Highland Mining Co., 31 FMSHRC 1313, 

1317 (Nov. 2009) (“Motions to reopen filed more than 30 days after receipt of such information 

from MSHA should include an explanation for why the operator waited so long to file for 

reopening. The lack of such an explanation is grounds for the Commission to deny the motion.”). 

The motion to reopen was filed more than two months after receipt of the delinquency letter. 

I dissent from my colleagues’ decision. A closer examination of the operator’s 

representations demonstrates that Pinnacle has failed to establish grounds warranting reopening. 

/s/ Robert F. Cohen, Jr. 

Robert F. Cohen, Jr., Commissioner 

38 FMSHRC Page 425

ADMINISTRATIVE LAW JUDGE DECISIONS
38 FMSHRC Page 426
FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

OFFICE OF ADMINISTRATIVE LAW JUDGES 

721 19TH STREET, SUITE 443 

DENVER, CO 80202-2536 

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

March 4, 2016

DECISION

Before: Judge Manning 

This case is before me upon an application for an award of fees and expenses under the 

Equal Access to Justice Act (“EAJA”) 5 U.S.C. § 504 and the Commission’s regulations at 29 

C.F.R. Part 2704. Traylor Mining, LLC (“Traylor”) filed the application against the Department

of Labor’s Mine Safety and Health Administration based upon my decision in Traylor Mining,

LLC, 37 FMSHRC 2307 (Oct. 2015) (ALJ). Traylor was an independent contractor performing

work at the Bulldog Mine, which was an underground silver mine near Creede, Colorado.

Traylor seeks an award in the amount of $43,615.09 under 29 C.F.R. § 2704.105(a) and 

alternatively 29 C.F.R. § 2704.105(b). Traylor attests that it satisfies the eligibility requirements 

of 29 C.F.R. § 2704.104. The Secretary argues that its decisions to try the citation as an 

unwarrantable failure and high negligence citation and to specially assess a penalty of $52,500 

are substantially justified. 

I find that while Traylor is an eligible party under EAJA, Traylor is not entitled to an 

EAJA award under 29 C.F.R. § 2704.105(a) because the Secretary’s position with respect to the 

citation at issue was substantially justified. Consequently, I do not consider the parties’ 

arguments concerning the reasonableness of the fee request. 

I. BACKGROUND

The underlying case concerned Citation No. 8597320 that MSHA issued under section 

104(d)(1) of the Federal Mine Safety and Health Act of 1977, 30 U.S.C. §814(d)(1) (the “Mine 

Act” or “Act”). A hearing was held on June 30, 2015, in Denver, Colorado. The parties presented 

testimony and documentary evidence and filed post-hearing briefs. 

On June 3, 2013, MSHA Inspector David M. Sinquefield issued Citation No. 8597320 

alleging a violation of section 57.9100(a) of the Secretary’s safety standards. Section 57.9100(a) 

provides in part that “[r]ules governing speed, right-of-way, direction of movement, and the use 

TRAYLOR MINING, LLC, 

Applicant 

v. 

SECRETARY OF LABOR 

 MINE SAFETY AND HEALTH 

 ADMINISTRATION (MSHA), 

Respondent 

EQUAL ACCESS TO JUSTICE ACT 

PROCEEDING 

Docket No. EAJA 2016-0002 

Formerly WEST 2014-351-M 

Mine ID: 05-00413 X940 

Bulldog Mine 

38 FMSHRC Page 427
of headlights to assure appropriate visibility, shall be established and followed at each mine[.]” 

30 C.F.R. § 57.9100(a). The standard requires mines to establish and follow right-of-way 

procedures to ensure the safe movement of mobile equipment. The inspector designated Citation 

No. 8597320 as significant and substantial (“S&S”) and reasonably likely to cause an injury that 

could reasonably be expected to be fatal. He also alleged that the violation was the result of 

Traylor’s high negligence and unwarrantable failure. The Secretary proposed a specially assessed 

penalty of $52,500 for this citation. 

 Citation No. 8597320 alleged that Lowell Hicks, Traylor’s production supervisor, was 

injured by the roadheader on a Bobcat excavator when the boom on the excavator was 

inadvertently activated by the excavator operator as he backed out of a mucked out area. After 

Hicks and the excavator operator, Michael Reagan, determined that no further cutting was 

necessary, Hicks removed the water line and Reagan, once certain that all miners were clear of 

the excavator, began to tram backwards. At this time, Hicks walked inby on the left side of the 

excavator. Reagan did not see Hicks advance and, as the excavator moved over uneven ground, 

Reagan turned to his right to look behind him and inadvertently hit the swing lever. The lever 

caused the boom to swing and strike Hicks. Hicks was evacuated from the mine and taken to a 

hospital in Denver to address his injuries. 

Following the accident, Inspector Sinquefield traveled to the Bulldog Mine to take photos 

and measurements at the scene of the accident. He did not interview the miners that were present 

at the accident. Inspector Sinquefield based his conclusions upon his inspection of the accident 

site and his interview with Hicks that occurred the following day at the Denver hospital. The 

inspector interpreted Hicks to say that standing in front of the blade of the operating excavator 

during cleanup was his normal practice. The citation alleged that Hicks was standing too close to 

the excavator during its operation and, as a result, failed to follow the right-of-way rules 

established in Traylor’s Job Hazard Analysis (“JHA”). The citation also alleged that Hicks 

engaged in aggravated conduct by failing to yield the right-of-way to the excavator while it was 

in operation. 

 At hearing, Traylor conceded the violation, the S&S designation, and gravity-related 

designations, but contested (1) the unwarrantable failure designation, (2) the high negligence 

designation, and (3) the $52,500 special assessment. (Tr. 6-7).1

 Traylor provided evidence to 

show that the Secretary based its high negligence and unwarrantable failure designations on 

Inspector Sinquefield’s misinterpretation of Hicks’s statement made during the interview at the 

hospital following the accident, as well as the inspector’s failure to interview other miners 

present during the accident. Traylor Mining, 37 FMSHRC at 2313. Traylor also argued that the 

Secretary’s special assessment procedures constituted substantive rules that should have 

undergone notice and comment rulemaking, and thus should be disregarded. (Traylor Br. at 19-

20). 

I issued a decision on the merits on October 15, 2015. I vacated the unwarrantable failure 

designation, modified the violation to a 104(a) citation, reduced the negligence designation from 

high to moderate, and reduced the penalty from a special assessment of $52,500 to a regular 

 1

 Transcript and exhibit references are to the record in the June 30, 2015 hearing on the 

merits. 

38 FMSHRC Page 428
assessment of $1,000. As a result of these modifications, I did not address the parties’ arguments 

regarding the proposed specially assessed penalty or the Secretary’s special assessment process. 

Traylor Mining, 37 FMSHRC at 2317. 

II. PARTIES’ ARGUMENTS 

On December 14, 2015, Traylor submitted an application for fees and expenses under 

EAJA. Traylor argues that it is entitled to fees and expenses under 29 C.F.R. § 2704.105(a) 

because it was a prevailing party and the position of the Secretary was not substantially justified. 

Traylor notes that the judge vacated the Secretary’s unwarrantable failure designation and 

modified Citation No. 8597320 to a 104(a) citation because the violative condition “was not 

extensive, did not exist for a long period of time, the operator did not have notice that greater 

efforts were necessary for compliance, and [Traylor] had taken significant steps towards 

preventing an accident of just this kind.” Traylor Mining, 37 FMSHRC at 2316. Traylor also 

argues that the Secretary’s high negligence designation relied upon the inspector’s incomplete 

investigation and incorrect interpretation of Hicks’s statements during his post-accident 

interview.2

 (Traylor App. at 3). Finally, Traylor notes that upon modifying the negligence and 

unwarrantable failure claims, the judge reduced the penalty from its special assessment amount 

of $52,500 to $1,000, and that the reduction indicates that the Secretary’s decision to issue a 

specially assessed penalty and the amount of that penalty were not substantially justified. 

(Traylor App. at 5). 

In addition, Traylor argues that it is entitled to attorney’s fees in excess of EAJA’s 

prescribed $125 per hour maximum because its attorney, Jason Hardin, is one the few attorneys 

in the nation with significant experience contesting MSHA violations, charges a competitive 

hourly rate relative to the market in which he practices, and possesses a unique science and 

engineering background that enhances his practice in this area. (Id. at 6-8). 

On January 27, 2016, the Secretary filed an objection to Traylor’s application, arguing 

that even as a prevailing party, Traylor was not eligible under EAJA to receive attorney’s fees, 

and even if it were eligible, the Secretary’s positions were substantially justified. (Sec’y Obj. at 

2-3). The Secretary also questioned Traylor’s rationale for raising the fees to be awarded above 

the statutory limit. (Id. at 3). Traylor filed a reply to the Secretary’s objection on February 19. 

On March 1, 2016, the Secretary withdrew its contest of Traylor’s eligibility in light of 

additional documentation provided by Traylor in its Reply. (Sec’y Letter, at 1). The Secretary 

continues to argue that his position was substantially justified because the judge found that a 

 2

 Traylor argues alternatively that if it is not a prevailing party it is entitled to relief under 

section 2704.105(b). I find that because Traylor was the prevailing party in the underlying case, I 

need not consider it. A party that does not prevail may be entitled to attorney’s fees under EAJA 

if “the demand of the Secretary is substantially in excess of the decision of the Commission and 

is unreasonable when compared with such decision[.]” 29 C.F.R § 2704.105(b). Section 

2704.105(b) does not apply to prevailing parties because prevailing parties “could argue that they 

meet the requirements of the ‘excessive demand’ prong of section 504(a)(4) in nearly every 

instance, rendering it essentially meaningless (although the Secretary's demand must also be 

determined to be ‘unreasonable’).” Colorado Lava, Inc., 27 FMSHRC 186, 189 (Mar. 2005). 

38 FMSHRC Page 429
number of the criteria in designating unwarrantable failures were present based on the facts and 

circumstances of the case, that the violation presented a high degree of danger, and that Traylor 

had knowledge of the danger. (Sec’y Obj. at 8-10). The Secretary argues that his high negligence 

designation was substantially justified because the judge modified the designation based on 

crediting the testimony of Traylor’s witnesses over that of the Secretary’s. (Id. at 11). The 

Secretary also notes that Traylor’s settlement offer prior to the hearing supported a high 

negligence designation. (Id. at 11-12). In addition, the Secretary argues that the special

assessment of $52,500 was substantially justified. (Id. at 12-13). 

 The Secretary also argues that Traylor’s claim for fees is excessive. The Secretary cites 

Traylor’s failure to provide sufficient documentation of fees and expenses and a full itemized 

statement showing the hours connected to making the prevailing arguments. (Id. at 14). Without 

full documentation, the Secretary argues that it is impossible to exclude hours dedicated to issues 

that Traylor conceded during hearing, hours that were inadequately documented, or hours that 

were “excessive, redundant, or otherwise unnecessary.” (Id. at 14, quoting Precision Concrete v. 

NLRB, 362 F.3d 847, 853 (D.C. Cir. 2004); Hensley v. Eckerhart, 461 U.S. 434, 443 (1983)). 

Finally, the Secretary argues that Traylor’s assertions of attorney specialization, educational 

background, and complexity of the underlying litigation are insufficient to justify a request 

exceeding the EAJA maximum. (Id. at 16-17). 

III. DISCUSSION AND ANALYSIS 

Commission procedural rules state that “[a] prevailing applicant may receive an award of 

fees and expenses incurred in connection with a proceeding, or in a significant and discrete 

substantive portion of the proceeding, unless the position of the Secretary was substantially 

justified.” 29 C.F.R. § 2704.105(a). The “position of the agency” includes the “position taken by 

the Secretary in the adversary adjudication” and “the action or failure to act by the Secretary 

upon which the adversary adjudication is based.” Id. 

The applicant bears the burden to establish eligibility under EAJA. 29 C.F.R. § 

2704.104(a). The applicant must show that it has a net worth of less than $7 million and employs 

fewer than 500 employees. 29 C.F.R. § 2704.104(b)(3)(iii). The applicant must also provide a 

detailed exhibit in any form “convenient to the applicant that provides full disclosure of the 

applicant’s assets and liabilities[.]” 29 C.F.R. § 2704.202(c). Requests for attorney’s fees should 

not result in major litigation, and thus “some informality of proof is appropriate.” United States 

v. 88.88 Acres of Land, 907 F.2d 106, 108 (9th Cir. 1990) (citation omitted). If the underlying 

litigation bestowed significant benefits on entities other than the applicant, the worth of those 

entities should be aggregated to determine eligibility under EAJA. Lion Raisins, Inc. v. United 

States, 57 Fed. Cl. 505, 509 (2003). 

Once a party is established as an eligible prevailing party, EAJA mandates that the 

Commission award fees and expenses to the prevailing party unless the Secretary proves that 

“the position of the agency was substantially justified or that special circumstances make an 

award unjust.” 29 C.F.R. § 2704.100. The Government bears the burden to show that its position 

was substantially justified. Scarborough v. Principi, 541 U.S. 401, 414 (2004). The Secretary is 

not required to justify his position to a high degree, but must justify his position “to a degree that 

38 FMSHRC Page 430
could satisfy a reasonable person” to prove that his actions were substantially justified. Pierce v. 

Underwood, 487 U.S. 552, 564-566 (1988). The position must be “substantially justified on the 

law and the facts.” Contractor's Sand and Gravel, Inc. v. FMSHRC, 199 F.3d 1335, 1340 (D.C. 

Cir. 2000) (quoting Cinciarelli v. Reagan, 729 F. 2d 801, 806 (D.C. Cir. 1984)). A position may 

still be justified even if incorrect, and it may be substantially justified if a reasonable person 

could think it is correct. Pierce, 487 U.S. at 564-66. 

As Commission Judge McCarthy observed: “Litigation is a crapshoot. The parties 

relinquish control, and when the dust settles, reasonable minds can differ about the legal import 

of the facts established and the cogency of the legal arguments advanced.” McGruder Limestone 

Co., Inc., 36 FMSHRC 3288 (Dec. 2014) (ALJ). “[i]t would be a war with life’s realities to 

reason that the position of every loser in a lawsuit upon final conclusion was unjustified.” United 

States v. Paisley, 957 F. 2d 1161, 1167 (4th Cir. 1992) (quoting Evans v. Sullivan, 928 F. 2d 109, 

110 (4th Cir 1991)). 

 Traylor’s Eligibility and Prevailing Party Status 

Both parties now agree that Traylor Mining is an eligible prevailing party under 29 

C.F.R. § 2704.105(a). (Traylor App. at 3; Sec’y Letter at 1). Traylor has met its burden under 29 

C.F.R. § 2704.104(b) because it has established that it has a net worth of less than $7 million, 

employs less than five hundred employees, and is the only party to which the underlying 

litigation bestowed significant benefits. Traylor’s December 14, 2015 EAJA application for 

attorney’s fees and expenses included balance sheets indicating that it had a net worth well 

below the threshold and no more than 80 employees. (Traylor App. at 2; Ex. A). In its February 

19, 2016 Reply, Traylor also provided sworn declarations from its Secretary and Treasurer, a 

general ledger, asset depreciation report, and trial balance. (See Traylor Reply Exs. A, B). These 

materials properly supplemented Traylor’s position as an eligible party and established Traylor’s 

net worth and employee count as well below EAJA eligibility limits. 

Traylor also established that it had sole direct interest in the underlying decision. Net 

worth of an applicant’s related corporate entities should not be aggregated in determining EAJA 

eligibility unless the underlying litigation substantially benefited the related entities. See Lion 

Raisins, Inc. 57 Fed. Cl. at 510. Traylor’s sworn declarations state that Traylor was in no way 

indemnified or reimbursed by Traylor Bros. for legal fees, and that Traylor is a separately 

incorporated entity. (Traylor Reply Ex. A ¶¶ 5-9; Ex. B ¶¶ 12-13). Aggregation of additional 

financial information is therefore improper. 

Traylor has sufficiently met its burden of eligibility under EAJA. 

 Substantial Justification 

After the applicant proves prevailing party status and eligibility, the government bears the 

burden of proving that its position in the underlying litigation was substantially justified. 29 

C.F.R. § 2704.100. The Secretary must substantially justify his position on both the law and facts 

to satisfy a reasonable person. Pierce v. Underwood, 487 U.S. at 564-66. Here, the Secretary has 

met that burden. The Secretary provided evidence that the facts and circumstances reasonably 

38 FMSHRC Page 431
justified the inspector’s determination that the violation was the result of Traylor’s unwarrantable 

failure and high negligence, and that the Secretary’s decision to specially assess a penalty of 

$52,500 was reasonable. While the investigator did not perform the most comprehensive 

investigation, his consideration of the high level of danger and that Hicks, the production 

supervisor, knew he was committing a violation indicate that the Secretary’s assertions of fact 

and law were reasonable. 

Unwarrantable Failure 

The Secretary’s position that the violation constituted an unwarrantable failure was 

substantially justified. Proper designation of unwarrantable failure must be based on the facts and 

circumstances of each case and consider the (1) obviousness of the violation, (2) length of time 

the violation existed, (3) the extent of the violative condition, (4) the degree of danger of the 

violative condition, (5) the operator’s knowledge of the existence of the violation, (6) the extent 

of operator’s notice that greater efforts were necessary for compliance, and (7) efforts to abate 

the violative condition. I.O. Coal Co., Inc., 31 FMSHRC 1346 (2009). No single factor of the 

test is dispositive and the presence of a majority of the factors is not always necessary to 

determine an unwarrantable failure. See Windsor Coal Co., 21 FMSHRC 997, 1001 (1999). 

I determined that three factors supported the unwarrantable failure decision while four 

factors did not. Traylor Mining, 37 FMSHRC at 2314-17. The high degree of danger associated 

with Hicks placing himself in front of the blade between the excavator and the rib, the obvious 

nature of the violation, and the operator’s imputed knowledge that Hicks’s position posed a 

danger, all supported finding an unwarrantable failure. Id. at 2316. The fact that the violation 

was not extensive, that Traylor was not put on sufficient notice of the violative condition, and 

that Traylor properly enforced its safety standards all mitigated an unwarrantable failure finding. 

Id. at 2315. The decision to vacate the unwarrantable failure designation essentially turned on 

crediting the testimony of Traylor’s witnesses that Hicks did not have a history of walking in 

front of the blade when the excavator was operating. Id. at 2314-15. 

I find that the Secretary’s reliance on his inspector’s investigation of the violation and 

post-accident interview with Hicks do not render the unwarrantable failure designation 

unjustified. The Secretary argued that Hicks’s own statements during the post-accident interview 

indicated that walking in front of the blade while the excavator was running constituted a normal 

practice. (Tr. 36). Traylor’s witnesses persuasively claimed that they only ever saw Hicks violate 

the safety standard on the day of the accident. (Traylor Mining, 37 FMSHRC at 2314-15). Yet 

persuasive witness testimony on one factor does not render the entire unwarrantable failure 

designation unreasonable. While the Secretary failed to prove that Hicks normally walked in 

front of the blade, he nonetheless established that Hicks knowingly stood in an area of danger 

while the excavator was running. Id. at 2317. 

Traylor argues that the inspector’s misinterpretation of an “innocuous” comment by 

Hicks during post-accident interview was due to his failure to fully investigate the matter and his 

misunderstanding of the equipment and the JHA. (Traylor Reply at 18). The Secretary’s 

investigation may not have been as fully comprehensive as Traylor believes it should have been, 

but the JHA does contemplate that the excavator must stop operating if “personnel need to be in 

38 FMSHRC Page 432
the area.” (Ex. G-7, p. 2). The JHA explicitly recognizes a zone of danger around the excavator. 

The fact that the inspector did not understand that the blade was more than two feet in front of 

the cab does not render the Secretary’s investigation insufficient. 

The Secretary’s unwarrantable failure designation was substantially justified in law and 

fact. 

High Negligence 

The Secretary was substantially justified in applying MSHA’s section 100 regulations to 

designate the violation as highly negligent.3 Section 100 designates a violation as constituting 

high negligence when the operator “knew or should have known of the violative condition or 

practice, and there are no mitigating circumstances.” 30 C.F.R. § 100.3. 

Commission Judges, however, are not limited to a restricted evaluation of allegedly 

mitigating circumstances, but may take the opportunity to consider all of the evidence presented 

after a full hearing to “take a more nuanced approach to the degree of negligence.” Brody 

Mining, LLC, 37 FMSHRC 1687, 1701-02 (Aug. 2015) (citation omitted). “In determining 

whether an operator met its duty of care, we consider what actions would have been taken under 

the same circumstances by a reasonably prudent person familiar with the mining industry, the 

relevant facts, and the protective purpose of the regulation.” Id. at 1702 (citations omitted). As 

discussed above, I credited Traylor’s witnesses in finding that the violation was an isolated 

incident under the reasonably prudent person standard and modified the negligence designation 

accordingly. 37 FMSHRC at 2313. This modification does not render the Secretary’s high 

negligence determination under section 100.3 unjustified. 

Traylor argues that the Inspector failed to interview the other miners present during the 

accident to corroborate Hicks’s statements and this failure resulted in an unreasonable 

designation of high negligence. (Traylor Reply at 16). While the Inspector undoubtedly could 

have conducted a more thorough investigation, the Secretary’s decision to rely upon Hicks’s 

interview and the Inspector’s examination of the accident scene was nevertheless reasonable. 

While the judge determined that walking in front of the excavator blade was not a normal 

practice, Hicks’s testimony indicated that he knew his action was dangerous. Hicks’s knowledge 

of the danger of the violative behavior sufficiently supports the Secretary’s high negligence 

determination under section 100.3. 

 3

 In addition to the following arguments, the Secretary asserts that Traylor’s settlement 

offer to pay a reduced penalty and accept high negligence indicate the validity of the designation. 

(Sec’y Obj. at 12). I decline to consider the settlement negotiation in determining whether the 

Secretary’s position was substantially justified. The Secretary argues that judges may exercise 

their discretion in considering an “undisputed, fully documented settlement proposal as an 

element of determining whether a demand is excessive. (Sec’y Obj. at 11-12, citing Georges 

Collieries, Inc., 24 FMSHRC 572 (Jun. 2002) (ALJ) (subsequent history omitted)). Aside from 

choosing to exercise my discretion to the contrary, it is disputed whether the settlement 

negotiation is fully documented. Traylor Mining asserts that the exhibit is merely one of 

approximately 20 emails discussing settlements. (Traylor Reply at 4). 

38 FMSHRC Page 433
The Secretary’s high negligence designation was justified in law and fact. 

The Secretary’s Decision to Specially Assess the Penalty 

 The Secretary proposes penalties using its special assessment procedures in accordance 

with 30 C.F.R. § 100.5, which was promulgated after notice and comment rulemaking. This 

provision simply provides that MSHA may elect to waive its regular assessment regulation “if it 

determines that conditions warrant a special assessment.” 30 C.F.R.§ 100.5(a). 

 Two factors contributed to the Secretary’s decision to specially assess the penalty in this 

case. First and foremost was the fact that someone was seriously injured as a direct result of the 

violation. The Secretary’s criteria for determining whether to consider specially assessing a 

violation lists “violations that contributed to a fatal or serious injury” as a key factor. (Tr. 99-

101; Ex. G-12 p. 1). Although the criteria used by the Secretary was not promulgated as a 

regulation and therefore was not subjected to notice and comment rulemaking, it is contained in 

MSHA’s Program Policy Manual. The violation here was directly responsible for a very serious 

injury that could have been fatal. The Secretary followed its published procedures when electing 

to specially assess the penalty. As a consequence, the Secretary’s decision to specially assess the 

violation was reasonable. 

 Second, because the violation was committed by the supervisor of the crew, the citation 

alleged that Traylor unwarrantably failed to comply with the safety standard. This fact played a 

significant part in the Secretary’s decision to specially assess the penalty. As stated above, the 

Secretary’s decision to issue the citation under section 104(d)(1) was reasonable and 

substantially justified. 

 Commission administrative law judges have criticized the rather opaque nature of the 

special assessment process. See e.g. Douglas R. Rushford Trucking, 23 FMSHRC 1418, 1419-20 

(Dec. 2001) (ALJ); American Coal Co., 35 FMSHRC 1774, 1821-24 (June 2013) (ALJ). These 

criticisms have arisen because Commission judges, in exercising their authority to assess a civil 

penalty, are required to explain the basis for the penalty addressing the six penalty criteria and 

must justify significant deviations from the Secretary’s proposed penalty. Performance Coal Co., 

35 FMSHRC 2321, 2322-23 (Aug. 2013); Cantera Green, 22 FMSHRC 616, 620-21 (May 

2000). I agree that this task is more difficult when a proposed penalty has been specially assessed 

by the Secretary. Nevertheless, it does not follow that the Secretary’s reliance on his special 

assessment procedure in this case was unreasonable. 

 I find that the Secretary presented a reasonable explanation for his decision to specially 

assess the violation 

The Secretary’s Proposed Specially Assessed $52,500 Penalty 

 MSHA’s Office of Assessments prepared a “Special Assessment Narrative Form” to 

calculate the proposed penalty. (Ex. G-14, p. 3). In completing this form, the assessment officer 

relied upon MSHA’s general procedures for calculating special assessments. (Tr. 101-04; Ex. G13). Although these procedures are not part of the Program Policy Manual, they are presently 

38 FMSHRC Page 434
available on MSHA’s website. These calculations take into account the six penalty criteria set 

forth in section 110(i) of the Mine Act. 30 U.S.C. § 820(i). The MSHA assessment officer has 

little discretion in assigning penalty points when calculating special assessments, but there is 

some discretion in adjusting the penalty at the bottom of the form. (Tr. 108; Ex. G-14, p 3). 

Without these adjustments, the proposed penalty in this case would have been $70,000. 

 I find that the proposed penalty in this case was calculated in accordance with MSHA’s 

special assessment guidelines. The Secretary called a witness at the hearing with knowledge of 

the special assessment process who explained how the special assessment was applied and 

calculated with respect to the subject citation. (Tr. 94-112). I credit his testimony. His testimony 

and the exhibits he relied upon establish that the Secretary did not deviate from the guidelines. 

(Tr. 103-04). 

 There is no question that the $52,500 proposed penalty was substantially higher than 

what the Secretary would have proposed if it the regular assessment formula were used, $2,000. I 

reduced the penalty to $1,000 when I vacated the unwarrantable failure designation. Evidence in 

the record establishes that the $52,500 penalty was calculated correctly using the formula 

developed by MSHA. (Tr. 103-04; Exs. G-13 & 14). This formula considered all six penalty 

elements specified in the Mine Act. Consequently, I find that the Secretary’s proposed penalty 

was substantially justified.4

 

 

 4

 My holding in this case is consistent with my decision in North County Sand & Gravel, 

Inc., 36 FMSHRC 1214, 1221-23 (May 2014). In that case I granted an application for attorney’s 

fees filed by counsel for the mine operator because, in large part, I determined that the 

Secretary’s proposed special assessment was not substantially justified. In that case, the 

Secretary did not seek to justify his special assessment at the hearing and, indeed, withdrew the 

special assessment after the close of the hearing upon a motion filed by the operator to strike the 

special assessment. 36 FMSHRC at 1222. 

38 FMSHRC Page 435
Conclusion 

As discussed above, the result on the merits of the citation could have been different 

depending upon credibility resolutions and the weighing of the evidence presented. The 

Secretary’s litigating position and proof could have satisfied a reasonable person. The 

Secretary has met its burden in establishing that its position was substantially justified in law 

and in fact. Accordingly, an EAJA award is not appropriate and I need not discuss either 

party’s arguments regarding fee claims. 

IV. ORDER

For the reasons set forth above, it is ORDERED that Traylor’s EAJA application for 

attorney’s fees and expenses is DENIED. 

/s/ Richard W. Manning 

Richard W. Manning 

Administrative Law Judge 

Distribution: 

Beau Ellis, Esq. and Kristi L. Henes, Esq., Office of the Solicitor, U.S. Department of Labor, 

1244 Speer Blvd., Suite 515, Denver, CO 80204-3516 (Certified Mail) 

Jason W. Hardin, Esq., Fabian VanCott, 215 S. State St., Suite 1200, Salt Lake City, UT 84111-

2323 (Certified Mail) 

38 FMSHRC Page 436
FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION 

OFFICE OF ADMINISTRATIVE LAW JUDGES 

1331 PENNSYLVANIA AVENUE, N.W., SUITE 520N 

WASHINGTON, D.C. 20004 

March 9, 2016 

SECRETARY OF LABOR, CIVIL PENALTY PROCEEDING 

MINE SAFETY AND HEALTH 

ADMINISTRATION (MSHA), Docket No. LAKE 2013-187 

Petitioner, A.C. No. 11-03193-296240

v. 

PRAIRIE STATE GENERATING 

COMPANY, LLC, 

Mine: Lively Grove 

Respondent. 

SECRETARY OF LABOR, CIVIL PENALTY PROCEEDING 

MINE SAFETY AND HEALTH 

ADMINISTRATION (MSHA), Docket No. LAKE 2015-130 

Petitioner, A.C. No. 11-03193-366707A

v. 

STEVEN B. REES, employed by PRAIRIE 

STATE GENERATING COMPANY, LLC, 

Respondent. 

Mine: Lively Grove 

SECRETARY OF LABOR, CIVIL PENALTY PROCEEDING 

MINE SAFETY AND HEALTH 

ADMINISTRATION (MSHA), Docket No. LAKE 2015-144 

Petitioner, A.C. No. 11-03193-366708A

v. 

MICHAEL WELCH, employed by PRAIRIE 

STATE GENERATING COMPANY, LLC, 

Mine: Lively Grove 

Respondent. 

DECISION 

Appearances: Emelda Medrano, Esq., Office of the Solicitor, U.S. Department of Labor, 

Chicago, Illinois, for Petitioner; 

Arthur M. Wolfson, Esq., Jackson Kelly, PLLC, Pittsburgh, Pennsylvania, for 

Respondent. 

Before: Judge Paez 

This case is before me upon the petitions for assessment of civil penalty filed by the 

Secretary of Labor (“Secretary”) pursuant to sections 105(d) and 110(c) of the Federal Mine 

Safety and Health Act of 1977, 30 U.S.C. §§ 815(d), 820(c). In dispute are one section 104(d)(1) 

order issued to Prairie State Generating Company, LLC (“Prairie State”) and two companion 

38 FMSHRC Page 437
section 110(c) penalty assessments issued to Steven B. Rees (“Rees”) and Michael Welch 

(“Welch”), alleging their personal liability as agents of Prairie State. To prevail, the Secretary 

must prove any cited violation “by a preponderance of the credible evidence.” In re: Contests of 

Respirable Dust Sample Alteration Citations, 17 FMSHRC 1819, 1838 (Nov. 1995) (citing 

Garden Creek Pocahontas Co., 11 FMSHRC 2148, 2152 (Nov. 1989)), aff’d sub nom. Sec’y of 

Labor v. Keystone Coal Mining Corp., 151 F.3d 1096, 1106–07 (D.C. Cir. 1998). This burden of 

proof requires the Secretary to demonstrate that “the existence of a fact is more probable than its 

nonexistence.” RAG Cumberland Res. Corp., 22 FMSHRC 1066, 1070 (Sept. 2000) (citations 

and internal quotation marks omitted), aff’d, 272 F.3d 590 (D.C. Cir. 2001). To establish a 

violation under section 110(c), the Secretary must prove that (1) an agent knew or had reason to 

know of a violative condition, and (2) failed to act to correct the condition. See 30 U.S.C. 

§ 820(c); Kenny Richardson, 3 FMSHRC 8, 16 (Jan. 1981), aff’d on other grounds, 689 F.2d 632 

(6th Cir. 1982), cert. denied, 461 U.S. 928 (1983). 

I. STATEMENT OF THE CASE 

Chief Administrative Law Judge Robert J. Lesnick assigned to me Docket No. LAKE 

2013-187, which I stayed on January 31, 2014, pending MSHA’s completion of a related section 

110(c) investigation. In separate orders, Chief Judge Lesnick assigned to me Docket Nos. LAKE 

2015-130 and LAKE 2015-144, which contain the Secretary’s petitions for the assessment of 

civil penalty under section 110(c), and I consolidated them with Docket No. LAKE 2013-187 for 

hearing and disposition. Docket No. LAKE 2013-187 involved two violations. The parties settled 

one of these violations, Citation No. 8440270, and I disposed of it in a separate Decision 

Approving Partial Settlement on September 21, 2015. 

The remaining alleged violation in Docket No. LAKE 2013-187 was issued at Lively 

Grove Mine on June 26, 2012. Order No. 8440269 charges Prairie State with a violation of 

30 C.F.R. § 75.360(a) for failing to conduct a pre-shift examination before sending miners to 

work underground.1

 The Secretary designated the order as significant and substantial (“S&S”)2

and characterized Prairie State’s negligence as high. The Secretary also determined that the 

violation resulted from Prairie State’s unwarrantable failure to comply with a mandatory health 

 1

 Section 75.360(a) provides, in relevant part: “[A] certified person designated by the 

operator must make a pre-shift examination within [three] hours preceding the beginning of any 

[eight]-hour interval during which any person is scheduled to work or travel underground. No 

person other than certified examiners may enter or remain in any underground area unless a preshift examination has been completed for the established [eight]-hour interval.” 

30 C.F.R. § 75.360(a). 

2

 The S&S terminology is taken from section 104(d)(1) of the Mine 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.” 

38 FMSHRC Page 438
or safety standard.3

 The Secretary proposes that Prairie State pay a penalty of $2,000.00. 

Additionally, in Docket Nos. LAKE 2015-130 and LAKE 2015-144, the Secretary proposes that 

Rees and Welch each pay a penalty of $1,500.00 under section 110(c) of the Mine Act in 

connection with Order No. 8440269. Thereafter, I held a hearing on September 23, 2015, in 

St. Louis, Missouri. 

At the hearing, the parties stipulated to the following: 

1. Prairie State is engaged in mine operations in the United States, and its mining

operations affected interstate commerce.

2. Rees was the afternoon shift mine manager at the times relevant to this matter.

3. Welch was the midnight shift mine manager at the times relevant to this matter.

4. Prairie State is the owner and operator of the subject mine, Mine ID No. 11-03193.

5. Prairie State, Rees, and Welch are subject to the jurisdiction of the Federal Mine

Safety and Health Act of 1977, 30 U.S.C. § 801 et seq.

6. The administrative law judge has jurisdiction in this matter.

7. Order No. 8440269 was properly served by a duly authorized representative of the

Secretary upon an agent of Prairie State on the date and place stated therein and may

be admitted into evidence for the purposes of establishing its issuance.

8. The assessed penalties, if affirmed, will not impair Prairie State’s ability to remain in

business.

(Ex. S–1.)4

 The Secretary then presented testimony from MSHA inspector Robert Hatcher and 

MSHA special investigator Robert Bretzman, as well as Prairie State mine examiner Daniel 

Bertelsman. Prairie State presented testimony from shift managers Rees and Welch. The parties 

each filed post-hearing briefs and reply briefs. 

II. ISSUES

For Order No. 8440269, the Secretary asserts that Respondents failed to fulfill the duty 

imposed by 30 C.F.R. § 75.360(a) by not examining an area of the mine for hazardous conditions 

3

 The unwarrantable failure terminology is taken from section 104(d)(1) of the Mine Act, 

30 U.S.C. § 814(d)(1), which establishes more severe sanctions for any violation that is caused 

by an “unwarrantable failure of [an] operator to comply with . . . mandatory health or safety 

standards.” 

4

 In this decision, the hearing transcript, the Secretary’s exhibits, and Respondent’s 

exhibits are abbreviated as “Tr.,” “Ex. S–#,” and “Ex. R–#,” respectively. 

38 FMSHRC Page 439
before miners were sent to work there. (Sec’y Br. at 7.) Testimony at the hearing established that 

Prairie State did not record a pre-shift or supplemental examination of this area in any of its logs. 

(Exs. S–3, R–10 at 7 [20]; Tr. 42:17–43:4.) The Secretary also contends that his section 110(c) 

allegations and his proposed penalties against Rees and Welch are valid and appropriate. (Sec’y 

Br. at 20–23.) 

 In response, Prairie State does not contest its failure to conduct the required examination 

but challenges the Secretary’s gravity and negligence determinations, specifically the S&S and 

unwarrantable failure designations. (Resp’t Br. at 7–17.) Rees and Welch deny the section 110(c) 

allegations against them. (Id. at 17–22.) Specifically, Rees argues that he did not know he needed 

to conduct a pre-shift examination of the area because his supervisor never told him when and 

where miners would be sent to work. (Id. at 18–19.) Additionally, Welch asserts that due to his 

limited experience as a mine manager, he reasonably believed the required pre-shift examination 

had occurred based on his reading of the mine’s examination book. (Id. 20–22.) 

 Accordingly, the following issues are before me: (1) whether Order No. 8440269 issued 

for a violation of 30 C.F.R. § 75.360(a) is S&S; (2) whether Prairie State’s negligence in 

committing the violation is “high” and constitutes an unwarrantable failure; (3) whether Rees is 

liable under section 110(c); (4) whether Welch is liable under section 110(c); and (5) whether the 

Secretary’s proposed penalties against Prairie State, Rees, and Welch are appropriate. 

 For the reasons set forth below, Order No. 8440269 is AFFIRMED. Additionally, the 

section 110(c) liability of Steven B. Rees is AFFIRMED, and the section 110(c) liability of 

Michael Welch is AFFIRMED. 

III. FINDINGS OF FACT 

A. Operations at Lively Grove Mine 

 Lively Grove Mine is an underground bituminous coal mine located in Marissa, Illinois. 

(Sec’y Pet.; Tr. 11:5–6.) The mine contains long, corridor-like entries and perpendicular 

crosscuts driven through the coal seam, with rectangular pillars of coal remaining in place to 

support the mine’s roof and keep it from collapsing. (See Ex. S–4.) The distance between each 

crosscut measures approximately 100 feet. (Tr. 48:10–49:15.) Together, the entries and crosscuts 

form a grid if viewed from above. (Exs. S–4, R–3(b).) The entry and crosscut walls, which are 

called ribs, may over time loosen or separate from the pillars that support the mine roof, creating 

a hazard of falling rock to miners working in those areas. (Tr. 46:19–21, 54:18–25.) Pre-shift 

examinations help to identify such hazards before miners are sent into areas to work. (Tr. 54:23–

55:3.) 

During the time at issue, Lively Grove Mine operated on three overlapping 10-hour 

shifts. (Tr. 157:3–18.) During the time at issue, the first shift operated from 6:30 a.m. to 4:30 

p.m. (Tr. 139:18–19, 157:10–14.) The second, or afternoon, shift operated from 3:30 p.m. to 1:30 

a.m. (Tr. 139:19, 157:18.) The third, or midnight, shift operated from 10:30 p.m. to 8:30 a.m. 

(Tr. 156:19–20, 157:4–9, 189:23–24.) The third shift was a maintenance shift that did not 

produce coal. (Tr. 170:21–22, 188:14–24.) Each shift had a manager responsible for executing 

38 FMSHRC Page 440
the work orders received from Superintendent Aaron Jackson. (Tr. 160:12–23, 161:10–22, 

189:6–10, 189:24–190:10.) On the dates of the inspection in this case, Rees was the shift 

manager for the second shift from 3:30 p.m. to 1:30 a.m., and Welch was the shift manager for 

the third shift from 10:30 p.m. to 8:30 a.m. (Ex. S–1.) 

Whenever Prairie State has planned work for an upcoming shift, its examiners must 

perform a pre-shift examination of the work area to ensure the area is safe for miners. 

(Tr. 27:13–17, 36:8–10, 121:4–15.) Miners are not permitted to work or travel underground 

unless an examiner has conducted a pre-shift examination of that area within three hours prior to 

the shift’s start. (Tr. 27:13–17, 28:1–2, 36:8–10.) If, during a shift, miners must enter an area that 

has not undergone a pre-shift examination, the mine operator must conduct a supplemental 

examination before miners enter that area. (Tr. 181:9–14, 220:24–221:3.) Each shift’s manager is 

responsible for assigning pre-shift and supplemental examinations and ensuring work areas have 

been properly examined. (Tr. 105:3–13.) 

Additionally, mine operators must maintain records of pre-shift examinations. 

30 C.F.R. § 75.360(g). Prairie State’s examiners recorded examinations in a book kept in the 

mine’s office aboveground. (Tr. 25:13–16, 168:10–15; Exs. S–3, R–2(a), R–2(b).) A shift 

manager must sign the examination book every shift. (Tr. 168:10–18, 190:22–25.) Moreover, 

mine examiners must record dates, times, and initials (“DTIs”) throughout the mine to certify 

that an area has been examined. 30 C.F.R. § 75.360(f). At Lively Grove, examiners listed their 

DTIs on date boards located underground throughout the mine. (Tr. 41:3–43:14.) 

Federal and state laws also require Prairie State to conduct routine examinations of the 

mine’s escapeways. (Tr. 29:15–23, 124:14–15, 125:18–24.) In the mine’s Main North Intake 

section, Prairie State maintained a primary escapeway to provide miners a safe pathway to exit in 

the event of an emergency. (Ex. R–4; Tr. 137:3–11.) Along the escapeway, the mine installed a 

lifeline, a cable hung from the mine’s roof to guide miners out of the mine. (Tr. 137:12–138:3.) 

In this section, the escapeway route began at a mechanical escape hoist called the Avro. (Ex. R–

4(a); Tr. 42:11–16.) Escapeway examinations must be performed once every 24 hours under 

state law and once a week under federal law. (Id.) During an escapeway examination, examiners 

at Lively Grove follow the escapeway’s lifeline, inspecting for hazards. (Tr. 135:12–20; Ex. S–

4(a).) 

B. Hatcher’s Inspection of the Lively Grove Mine 

 

 Inspector Robert Hatcher arrived at Lively Grove for a routine quarterly inspection at 

approximately 8:25 p.m. on June 25, 2012. (Ex. R–10 at 1 [1]; Tr. 22:1–5.) Upon his arrival, 

Inspector Hatcher visited the mine’s office to review the mine’s examination books for hazards 

and violations that had been reported by the mine’s pre-shift and on-shift examiners. (Tr. 25:13–

16.) Inspector Hatcher found no hazards listed in the books. (Tr. 32:6–10.) 

Hatcher then went underground to inspect the mine with Kim Morgan, a safety technician 

at Prairie State. (Tr. 36:15–24.) During the inspection at around 1:05 a.m., a group of miners 

complained to Hatcher about rockdust coming into the area where they were working. 

(Tr. 93:24–94:14, 37:9–13; Ex. R–10 at 5–6 [14–15].) By this time, the third shift that began at 

38 FMSHRC Page 441
10:30 p.m. was well under way, so Hatcher asked third shift manager Welch where rockdusting 

was taking place. (Tr. 38:1–8.) Welch informed Hatcher that miners were rockdusting in the 

Main North Intake area. (Tr. 38:4–8; 199:13–19.) Indeed, by 10:00 p.m. Welch had received 

written orders from Jackson to rockdust an area of the Main North Intake, consisting of Entry 

Nos. 7, 8, 9, 10, and 11 from crosscut No. 6 to the Avro, or an area of at least 5,200 feet. (Exs. 

S–4(a), S–11, R–8(b); Tr. 48:10–49:15, 192:21–193:6, 212:7–14.) 

Hatcher then traveled a few thousand feet to the Main North Intake area, where he found 

three miners rockdusting.5(Tr. 39:5–18, 40:15–16, 198:17–200:22; Ex. R–3(b).) This area being 

rockdusted was not an area normally traveled. (Tr. 203:23–204:5.) As Hatcher approached the 

three miners, he came across an area of loose, unsupported rib. (Ex. S–4(a), Tr. 39:19–21, 40:8–

10.) The loose rib was large, measuring 15 feet in length, seven feet in height, and one to 12 

inches in thickness after being scaled down. (Exs. S–5, S–6.) Hatcher issued Citation No. 

8440268 for failing to support the loose rib. (Ex. S–6.) Hatcher designated the violation as S&S 

and characterized Prairie State’s negligence as high.6 (Id.) 

Hatcher then checked whether an examiner had conducted a pre-shift examination of the 

area being rockdusted. (Tr. 40:23–41:6.) Hatcher started searching for DTIs at the Avro located 

at the end of the Main North Intake escapeway. (Ex. S–4(a); Tr. 42:6–20.) Inspector Hatcher 

weaved throughout an area that appeared to be freshly rockdusted, covering Entry Nos. 8, 9, and 

10 and Crosscut Nos. 3, 4, 5, 6, and 7. (Tr. 44:7–16; Ex. S–4(a).) He found DTIs at only two 

locations along the Main North Intake escapeway but none outside the escapeway. (Tr. 42:17–

21, 43:2–4; Ex. R–10 at 7 [20].) Although DTIs were absent outside the escapeway, the entire 

area, including areas outside the escapeway, appeared to have a fresh coating of rockdust. 

(Tr. 45:8–13; Ex. S–4(a).) 

Hatcher learned that earlier during the second shift, Superintendent Aaron Jackson 

instructed Rees to send equipment for rockdusting to the Main North Intake section. (Tr. 67:8–

14; Exs. R–10 at 6 [17], R–8(a), S–10 at 1.) When Hatcher later summoned Welch and asked 

him whether a pre-shift examination had been conducted, Welch could not confirm that an 

examiner had conducted one of the area. (Tr. 46:22–25, 94:18–21, 199:21–22; Ex. R–10 at 6 

[16].) Hatcher then asked Welch whether he had conducted a supplemental examination, and 

Welch replied he had not. (Tr. 47:1–2, 222:17–20.) 

5

 Hatcher learned that these three miners had relatively little experience. Two of the 

miners had approximately one year of experience working in an underground mine, and the third 

miner had only five months of experience. (Tr. 45:24–10.) None of these miners were certified to 

examine for hazards. (Tr. 46:12–13.) 

6

 Citation No. 8440268, originally issued as a section 104(d)(1) citation, was modified to 

a section 104(a) citation as part of a later settlement. Prairie State Gen. Co., LLC, FMSHRC 

Docket No. LAKE 2012-900 (Mar. 20, 2013) (ALJ) (order approving settlement). The citation 

retains its S&S designation but is no longer designated as an unwarrantable failure. Id.

38 FMSHRC Page 442
Three miners were observed working in the intake air course and 

had been rockdusting from cross cut #6 in entries #7 through #11 

to the intake air shaft. A pre-shift examination for hazardous 

conditions had not been conducted in this area as required on the 

previous shift. Also the shift manager failed to conduct a 

supplemental examination for hazardous conditions for the miners. 

Citation #8440268 has been issued in conjunction with this order. 

This violation is an unwarrantable failure to comply with a 

mandatory standard constituting more than ordinary negligence. 

(Ex. S–8.) Hatcher designated the order as an S&S violation that was reasonably likely to result 

in lost work days or restricted duty for three affected miners. (Ex. S–8; Tr. 62:11–24.) He also 

characterized Prairie State’s level of negligence as high. (Ex. S–8; Tr. 62:25–63:4.) 

When back on the surface, Hatcher reviewed the mine’s examination book once more. 

(Tr. 60:19–25.) This time, Hatcher noted an entry under the pre-shift side of the mine’s 

examination book, indicating that the Main North Intake escapeway had been examined during 

the afternoon shift. (Ex. S–3 at 1; Tr. 26:4–8, 60:22–25.) However, Hatcher did not find any 

entries indicating that the area where rockdusting took place had been examined. (Tr. 83:22–

84:3.) 

To abate Order No. 8440269, Prairie State examined the affected area and removed all 

hazards. (Tr. 60:11–18; Ex. S–8 at 2.) Large loose ribs were found and scaled down in nine 

different locations. (Exs. S–8 at 2, S–4(a); Tr. 69:7–74:4.) Each of the three entryways and five 

of the six crosscuts that Prairie State’s miners rockdusted contained these loose ribs. (Exs. S–

4(a), S–8 at 2.) After Prairie State removed the hazards, Hatcher re-inspected the affected area 

and terminated the order. (Tr. 84:7–12; Ex. S–8 at 2.) 

Hatcher’s issuance of the section 104(d)(1) violation triggered an investigation of Rees 

and Welch under section 110(c) conducted by MSHA special investigator Bretzman. 

(Tr. 102:24–103:12.) Bretzman interviewed Rees and Welch, as well as superintendent Jackson 

and Prairie State’s staff and mine examiners, including Bertelsman. (Tr. 103:13–22.) Bretzman 

reported his findings and recommendations on liability, resulting in the decision by MSHA to 

file civil penalties against the two shift managers, Rees and Welch. (Tr. 128:10–129:16.) 

IV. PRINCIPLES OF LAW

A. Pre-Shift Examinations under 30 C.F.R. § 75.360(a)

Section 75.360(a) requires operators to conduct a pre-shift examination in the three hours

preceding the beginning of any shift during which any person is scheduled to work or travel 

underground. 30 C.F.R. § 75.360(a)(1). The person conducting the pre-shift examination shall 

examine for hazardous conditions in all areas where work or travel during the oncoming shift is 

 Hatcher subsequently issued Order No. 8440269 for the failure to conduct a pre-shift 

examination in the area miners were rockdusting. (Tr. 47:3–4; Ex. S–8.) Hatcher wrote: 

38 FMSHRC Page 443
scheduled. 30 C.F.R. § 75.360(b). If an operator has not conducted a pre-shift examination of an 

area, the operator must perform a supplemental examination for hazardous conditions before any 

miner may enter that area. 30 C.F.R. § 75.361(a). The pre-shift examination is intended “to 

prevent hazardous conditions from developing” in a mine. Enlow Fork Mining Co., 19 FMSHRC 

5, 15 (Jan. 1997). The pre-shift examination requirement “is of fundamental importance in 

assuring a safe working environment underground.” Buck Creek Coal Co., 17 FMSHRC 8, 15 

(Jan. 1995). 

B. Significant and Substantial (S&S)

A violation is S&S “if, based on the particular facts surrounding that violation, there

exists a reasonable likelihood that the hazard contributed to will result in an injury or illness of a 

reasonably serious nature.” Cement Div., Nat’l Gypsum Co., 3 FMSHRC 822, 825 (Apr. 1981). 

To establish a S&S violation, the Secretary must prove: “(1) the underlying violation of a 

mandatory safety standard; (2) a discrete safety hazard—that is, a measure of danger to safety—

contributed to by the violation; (3) a reasonable likelihood that the hazard contributed to will 

result in an injury; and (4) a reasonable likelihood that the injury in question will be of a 

reasonably serious nature.” Mathies Coal Co., 6 FMSHRC 1, 3–4 (Jan. 1984) (footnote omitted); 

see also Buck Creek Coal, Inc. v. Fed. Mine Safety & Health Admin., 52 F.3d 133, 135-36 (7th 

Cir. 1995) (affirming ALJ’s application of the Mathies criteria); Austin Power, Inc. v. Sec’y of 

Labor, 861 F.2d 99, 104 (5th Cir. 1988) (approving the Mathies criteria). 

In providing guidance for the application of the Mathies test, the Commission has 

observed that “the reference to ‘hazard’ in the second element is simply a recognition that the 

violation must be more than a mere technical violation – i.e. that the violation present a measure

of danger.” U.S. Steel Mining Co., 6 FMSHRC 1834, 1836 (Aug. 1984). The Commission also 

has indicated that “[t]he correct inquiry under the third element of Mathies is whether the hazard 

identified under element two is reasonably likely to cause injury.” Black Beauty Coal Co., 

34 FMSHRC 1733, 1742-43 & n.13 (Aug. 2012). The Commission further has found that “the 

absence of an injury-producing event when a cited practice has occurred does not preclude a 

determination of S&S.” Musser Eng’g, Inc., 32 FMSHRC 1257, 1280–81 (Oct. 2010) (citing Elk 

Run Coal Co., 27 FMSHRC 899, 906 (Dec. 2005); Blue Bayou Sand & Gravel, Inc., 

18 FMSHRC 853, 857 (June 1996)). Finally, the Commission has specified that evaluation of the 

reasonable likelihood of injury should be made assuming continued mining operations. U.S. Steel 

Mining Co., 7 FMSHRC 1125, 1130 (Aug. 1985) (quoting U.S. Steel Mining Co., 6 FMSHRC 

1573, 1574 (July 1984)). 

The S&S designation of a pre-shift violation must be evaluated apart from an associated 

violation that led to its issuance. Brody Mining, LLC, 37 FMSHRC 1687, 1700 (Aug. 2015) 

(vacating and remanding ALJ’s decision that removed pre-shift violation’s S&S and 

unwarrantability designations solely because underlying violation had neither designation). 

However, factors associated with an underlying condition are relevant to whether an inadequate 

examination that failed to detect that condition was S&S. Id. Additionally, unknown hazards that 

“may have existed at the time the area should have been examined” may be relevant to a preshift violation’s S&S determination. See Jim Walter Res., Inc., 28 FMSHRC 579, 604 (Aug. 

2006) (affirming ALJ’s S&S designation for pre-shift violation despite no hazards discovered 

during supplemental exam performed on next shift).

38 FMSHRC Page 444
C. Unwarrantable Failure 

The Commission has determined that unwarrantable failure is aggravated conduct 

constituting more than ordinary negligence. Emery Mining Corp., 9 FMSHRC 1997, 2001 

(1987). It is characterized by “indifference,” a “serious lack of reasonable care,” “reckless 

disregard,” or “intentional misconduct.” Id. at 2003-04; see also Buck Creek Coal, 52 F.3d at 136 

(approving the Commission’s unwarrantable failure test). Whether conduct is “aggravated” in the 

context of unwarrantable failure is determined by looking at all the facts and circumstances of a 

case to see if aggravating or mitigating factors exist. See IO Coal Co., 31 FMSHRC 1346, 1350–

51 (Dec. 2009). The Commission has identified several such factors, including: the length of 

time a violation has existed, the extent of the violative condition, whether the operator has been 

placed on notice that greater efforts are necessary for compliance, the operator’s efforts in 

abating the violative condition, whether the violation was obvious, whether the violation posed a 

high degree of danger, and the operator’s knowledge of the existence of the violation. See id. 

These factors are viewed in the context of the factual circumstances of each case. Consolidation 

Coal Co., 22 FMSHRC 340, 353 (Mar. 2000). All relevant facts and circumstances of each case 

must be examined to determine whether an actor’s conduct is aggravated or if mitigating 

circumstances exist. Id. 

 In applying these factors to a pre-shift violation, the Commission analyzes the pre-shift 

violation in context with any associated violation that led to the pre-shift violation’s issuance. 

Brody Mining, LLC, 37 FMSHRC at 1700. However, the unwarrantability of a pre-shift violation 

is not entirely dependent on the unwarrantability of an underlying violation. Id. 

D. Section 110(c) of the Mine Act – Agent Liability

Section 110(c) liability “is generally predicated on aggravated conduct constituting more 

than ordinary negligence.” Ernest Matney, 34 FMSHRC 777, 783 (Apr. 2012). Under section 

110(c), a violation committed “knowingly” constitutes aggravated conduct. BethEnergy Mines, 

Inc., 14 FMSHRC 1232, 1245 (Aug. 1992). “Knowing” in the context of section 110(c) does not 

require specific intent, and includes both actual and constructive knowledge. Freeman United 

Coal Mining Co. v. FMSHRC, 108 F.3d 358, 363 (D.C. Cir. 1997). 

Thus, corporate directors, officers, or agents are liable under section 110(c) when they 

know or had reason to know of a violative condition, and fail to act to correct the condition. See

30 U.S.C. § 820(c); Kenny Richardson, 3 FMSHRC at 16 (Jan. 1981). Agents of an LLC may 

also be held liable under section 110(c). Sumpter v. Sec’y of Labor, 763 F.3d 1292, 1298 (11th 

Cir. 2014). An unreasonable belief that a practice is safe does not serve as a defense to section 

110(c) liability, even if held in good faith. Lafarge Constr. Materials, 20 FMSHRC 1140, 1150 

(Oct. 1998). 

38 FMSHRC Page 445
V. ADDITIONAL FINDINGS OF FACT, ANALYSIS, AND 

CONCLUSIONS OF LAW 

A. Order No. 8440269 – Failure to Conduct Pre-Shift Examination

 Prairie State violated section 75.360(a) by not conducting a pre-shift examination of the 

Main North Intake section that Prairie State assigned miners to rockdust on June 25, 2012. 

Prairie State did not record a pre-shift or supplemental examination of this area in either its 

examination book or by DTIs on its date boards underground. (Exs. S–3, R–10 at 7 [20]; 

Tr. 42:17–43:4.) Prairie State does not deny that it failed to conduct the required examination but 

disputes the violation’s S&S and unwarrantable failure designations. (See Resp’t Br. at 1–6.) 

1. Gravity and S&S 

 To establish the first element of the Mathies test, the Secretary must prove an underlying 

violation of a mandatory safety standard. Prairie State’s violation of section 75.360(a) establishes 

the first element of an S&S violation. 

As for the second Mathies element, the Secretary must show that the violation 

contributed to a discrete safety hazard. Prairie State exposed miners to dangerous conditions by 

failing to identify safety hazards in the working area through a pre-shift examination. (Tr. 85:13–

18) These hazards included multiple instances of loose rib that could fall and strike a miner. (Ex. 

S–8 at 2.) Sending miners into the unexamined area contributed to these safety hazards, thus 

satisfying the second element of the Mathies test. 

With regard to the third Mathies element, the Secretary must demonstrate a reasonable 

likelihood the hazard will result in an injury. Prairie State claims the Secretary has not proven 

that the loose rib material would be reasonably likely to injure a miner.7

 (Resp’t Br. at 9–10.) 

Additionally, Prairie State asserts that the area was not a regular travelway, and the work 

assignment required the miners to pass through the area only once. (Id.) 

The miners assigned to rockdust in the Main North Intake covered an area spanning 

multiple entries and crosscuts. (Ex. S–4(a).) Within this area, Prairie State found nine different 

locations where loose rib had to be scaled down. (Exs. S–4(a), S–8 at 2.) The numerous locations 

of loose rib greatly increased the likelihood of rib material striking miners as they traversed the 

section. Indeed, at one location, the scaled rib covered over half an entry and measured 15 feet in 

length, seven feet in height, and one to 12 inches in thickness. (Tr. 54:8–9; Exs. S–5, S–6.) 

 7

 Contrary to Prairie State’s assertion that the loose rib conditions do not warrant the preshift violation’s S&S designation, the underlying violation—Citation No. 9440268—retained its 

S&S designation as part of a settlement. Prairie State Gen. Co., LLC, FMSHRC Docket No. 

LAKE 2012-900 (Mar. 20, 2013) (ALJ) (order approving settlement). Moreover, the loose rib 

was just one of nine problematic locations Hatcher identified in his inspection. (Ex. S–4(a); 

Tr. 69:7–74:4.) 

38 FMSHRC Page 446
Moreover, certain mine conditions are transitory in nature; thus, a later examination of an 

area is not sufficiently indicative of the hazards that may have existed at the time the area should 

have been examined. Jim Walter Res., Inc., 28 FMSHRC at 604 (citing Manalapan Mining Co., 

18 FMSHRC 1375, 1382 (Aug. 1996)). An operator’s failure to conduct a pre-shift examination 

allows various hazardous conditions in a mine to develop without notice. These hazards include 

poor roof conditions, low oxygen, and high methane concentrations. (Tr. 85:13–18.) Because 

Prairie State did not perform an examination, its miners did not know of all the potential hazards 

that might have existed in the area at the time the miners were sent down to work. Furthermore, 

the miners assigned to rockdust were relatively inexperienced and were not certified to perform 

examinations to identify hazards on their own. (Tr. 45:20–46:18.) 

Consequently, I determine that the hazard of loose ribs falling and striking a miner, in 

conjunction with exposing miners to unknown hazards, was reasonably likely to result in injury, 

thus satisfying the third element of the Mathies test. 

Lastly, under the fourth Mathies element, the Secretary must prove a reasonable 

likelihood the resulting injury will be of a reasonably serious nature. With regard to this element, 

Prairie State asserts that any injury caused by the loose ribs would not be serious because the 

miners traveled in a ram car equipped with a steel canopy and side panels. (Resp’t Br. at 9–10.) 

If loose rib falls and strikes a miner, the resulting injuries may include lacerations, 

fractures, and contusions. (Tr. 62:20–24.) Although the miners traveled in a semi-protected ram 

car, the car still left the miners exposed along the front and sides of the vehicle. (Exs. R–5(a), R–

5(b); Tr. 55:14–56:15.) Moreover, additional preventive safety measures do not eliminate the 

S&S nature of a violation. See Consolidation Coal Co., 35 FMSHRC 2326, 2330 (Aug. 2013) 

(rejecting operator’s argument that other equipment safety measures reduced the degree of 

danger and rendered an accumulations violation non-S&S). 

Given the magnitude and numerous locations of loose rib Prairie State had failed to 

identify before sending miners into the area for rockdusting, I determine that the injuries which 

could have resulted from these hazards would have been reasonably serious, thus satisfying the 

fourth Mathies element. 

Accordingly, the Secretary has satisfied all four elements of the Mathies test. I therefore 

conclude that Order No. 8440269 was appropriately designated as S&S. 

2. Unwarrantable Failure and Negligence 

 The Secretary asserts that Prairie State’s conduct amounted to high negligence and was 

an unwarrantable failure. (Sec’y Br. at 10–20.) The Secretary states that the violation was highly 

negligent because prior incidents where examinations had not been conducted placed Prairie 

State on notice that it needed to be more careful in conducting pre-shift examinations before 

sending miners underground. (Id. at 10.) Additionally, the Secretary asserts Prairie State’s 

actions were highly negligent and an unwarrantable failure particularly because two supervisors 

engaged in violative conduct, the violation was obvious, the supervisors should have known of 

the violation, and the violative condition posed a high degree of danger. (Id. at 13.) 

38 FMSHRC Page 447
In contrast, Prairie State asserts that the negligence and unwarrantable failure 

designations are inappropriate because Rees did not know to perform a pre-shift examination, 

and Welch believed, in good faith, that an examiner had checked the area prior to the third shift. 

(Resp’t Br. at 10–17.) Specifically, Prairie State argues that the violation was not extensive, did 

not last an extended length of time, was not obvious, and did not pose a high degree of danger. 

(Id. at 12–14.) Additionally, Prairie State asserts it was not on notice and had no knowledge of 

the violation. (Id. at 13–17.) 

 In analyzing an unwarrantable failure, I must consider the Commission’s factors for 

determining aggravated conduct. See IO Coal Co., 31 FMSHRC at 1350–51. When applying 

these factors to a pre-shift violation, the Commission considers the pre-shift violation’s 

unwarrantable failure designation in context with any underlying violative conditions the 

operator failed to identify as a result of its insufficient examination. See Brody Mining, LLC, 

37 FMSHRC at 1700; Consolidation Coal Co., 23 FMSHRC 588, 597–98 (June 2001) 

(remanding for consideration of the extent, duration, and obviousness of an underlying 

accumulations violation when assessing unwarrantable failure of an inadequate pre-shift 

examination). 

Prior to the June 25 inspection, MSHA twice told Prairie State that it needed to make 

better efforts to comply with the pre-shift examination requirement. On May 30, 2012, Inspector 

Hatcher cited Prairie State for failing to conduct a pre-shift examination of a work area for two 

shifts. (Ex. S–7.) A week later, on June 4, 2012, Hatcher again discovered that Prairie State had 

failed to record a pre-shift examination prior to sending miners into a work area. (Tr. 63:9–25, 

66:6–7.) Although an examiner had performed a supplemental examination of the area in this 

June instance, Hatcher warned Superintendent Jackson that the operator needed to do a better job 

of performing and recording its pre-shift examinations. (Tr. 63:9–64:9.) Specifically, Hatcher 

warned Jackson that a superintendent should have a contingency plan for mine examinations, 

even for work assignments he had not anticipated. (Tr. 66:14–21.) Hatcher told Jackson that if 

the superintendent knows he has work planned in an area not normally examined, then the area 

needed to be pre-shifted. (Tr. 64:1–3.) Past violations and discussions with an MSHA inspector 

regarding a safety standard may demonstrate that an operator had notice of its need for greater 

compliance efforts. Enlow Fork Mining Co., 19 FMSHRC at 11–12. Based on the facts here, I 

determine that Prairie State had notice of the need for greater compliance efforts with the preshift examination requirement. 

In terms of the extent and danger of the violation, examiners identified loose ribs in nine 

different locations. (Ex. S–8.) Prairie State’s miners actually completed rockdusting in an area 

that spanned three entryways (Entry Nos. 8, 9, 10) and six crosscuts (Crosscut Nos. 2 through 7), 

an area somewhat different from Jackson’s written instructions. (Exs. S–4(a), R–8(b).) The area 

actually rockdusted covered approximately 3,000 feet. (See Tr. 192:23–193:6; Exs. S–4(a), S–9, 

S–10 at 2, R–8(b).) Jackson’s written orders instructed Welch to rockdust an even larger area 

covering at least 5,200 feet across five entryways (Entry Nos. 7 through 11) and seven crosscuts 

(Crosscut No. 6 to the Avro). (Ex. R–8(b); see Tr. 48:10–49:7; Exs. S–4(a), R–8(b).) Yet Prairie 

State’s examination of the primary escapeway at 4:30 p.m. covered only 800 feet, or about 15 

percent of the assigned work area. (See Tr. 48:10–49:7; Exs. S–4(a), R–8(b).) Significantly, the 

Main North Intake’s escapeway examination cannot be credited as a pre-shift because it took 

38 FMSHRC Page 448
place outside the three-hour window prior to the start of the third shift at 10:30 p.m. (Tr. 42:17–

43:4, 142:24–143:1; 149:6–8, 17:2–3; 148:19–149:1; see Ex. R–10 at 7 [20].) As a result, Prairie 

State failed to identify loose ribs located in each of the three entryways and five of the six 

crosscuts that its miners had rockdusted. (Exs. S–4(a), S–8 at 2.) In sum, loose ribs posing a high 

degree of danger to miners were located in numerous places those miners were required to work 

and travel. See discussion supra Part V.A.2. 

Regarding the obviousness of the violation, upon entering the Main North Intake area, 

Inspector Hatcher found before him a significant unsupported rib that, when scaled down, 

covered half the entryway. (Tr. 38:19–41:2, 54:3–17.) The unsupported piece of rib Hatcher 

discovered was 15 feet long, seven feet high, and up to a foot thick. (Exs. S–5, S–6.) The 

operator’s subsequent examination uncovered nine roof and rib hazards that required scaling. 

(Tr. 69:7–75:4, 120:19–121:3.) Given the number and size of the discovered hazards, these 

underlying conditions were obvious to a reasonably prudent miner in the area. Similarly, these 

obvious hazards make Prairie State’s failure to conduct a pre-shift examination obvious. The date 

boards in the Main North Intake section compounded the obviousness of the missing pre-shift 

examination, as all but two date boards contained no DTIs whatsoever. (Tr. 77:14–78:24, 

111:17–112:9.) 

Nevertheless, Prairie State asserts that its failure to perform a pre-shift examination was 

not obvious because the escapeway entry in the examination book suggested a pre-shift 

examination had been completed for the entire area. (Resp’t Br. at 2–3, 10–14.) In support, 

Prairie State points to Welch’s testimony, asserting that he believed in good faith a pre-shift 

examination had been performed. (Id. at 2–3, 13–14.) Prairie State further argues that because 

the violation was not obvious, the operator did not know and did not have reason to know that it 

had failed to conduct a pre-shift examination. (Id. at 13–14.) 

 Welch testified that he mistakenly believed the escapeway examination entry in the 

aboveground examination book showed a full pre-shift examination had been performed for the 

Main North Intake area. (Tr. 194:4–198:1.) Although Rees did not specifically recall his June 25 

shift, he stated that he would have reviewed the recorded escapeway examination. (Tr. 168:10–

169:16.) Rees suggested that based on the escapeway exam book entry he would not have 

believed a pre-shift examination of the North Main Intake area was necessary. (Tr. 170:23–

171:10.) In contrast, however, MSHA Investigator Bretzman and Prairie State’s Bertelsman, who 

conducted the Main North Intake escapeway examination, testified that any reasonable miner 

would have understood from the entry that a full pre-shift examination had not been completed 

for the Main North Intake area. (Tr. 116:13–20, 142:15–144:22.) I credit the testimony of 

Bretzman and Bertelsman and determine that a reasonable shift manager should have known that 

the escapeway examination in the examination book did not mean the mine examiner had 

conducted a full pre-shift of the section. See also discussion, infra, Part V.B. Accordingly, both 

Welch and Rees’s readings of the escapeway examination entry were unreasonable. 

Furthermore, any confusion created by the escapeway examination’s listing was created 

by Prairie State’s insufficient policy. At the time of the violation, Prairie State kept its pre-shift 

examination records in the same column as its on-shift escapeway examination records. 

(Tr. 17:2–3, 148:19–149:1; Ex. S–3.) The Commission has recognized that a lack of obviousness 

38 FMSHRC Page 449
does not mitigate an operator’s negligence when the operator’s actions caused the violation to be 

less obvious. E. Associated Coal Corp., 32 FMSHRC 1189, 1200 (Oct. 2010) (rejecting 

operator’s argument that violative condition was not obvious because operator had clear control 

over an obstruction’s removal). Here, Prairie State had clear control over its procedures for 

recording pre-shift and on-shift examinations. The operator chose to keep these records in the 

same column, despite the risk of confusing the mine’s supervisors and thus endangering the lives 

of miners working in unexamined areas. Indeed, Prairie State’s new manager, Welch, sent three 

miners with minimal experience to work in an area with significant unidentified hazards. If I am 

to believe any actual confusion occurred due to the escapeway exam book entry, Prairie State 

does not merit sympathy for maintaining poor recordkeeping that allowed such a mistake to 

happen. The missing pre-shift examination was obvious, and Prairie State reasonably should 

have known that it needed to conduct a full examination of the Main North Intake area prior to 

sending miners there to rockdust. See San Juan Coal Co., 29 FMSHRC 125, 134 (Mar. 2007) 

(considering whether an operator “reasonably” should have known of a violation when analyzing 

the operator’s knowledge of the violation). 

 With regard to the violation’s duration, any amount of time a miner spends in an 

unexamined portion of a mine is prohibited, unless the miner is a certified examiner. 30 C.F.R. 

§ 75.360(a). Here, an examination was only conducted after the violation was discovered and an 

order issued by Inspector Hatcher. However, the pre-shift violation lasted for less than one shift.8

Accordingly, I determine that the duration of the violation is neither a mitigating nor aggravating 

factor. 

 In considering the abatement factor, the Commission focuses on compliance efforts made 

prior to the issuance of the citation or order. Enlow Fork Mining Co., 19 FMSHRC at 17. Here, 

the record provides no evidence of any abatement efforts made prior to the order’s issuance. In 

terms of being a mitigating factor, therefore, I afford it no weight. 

 Prairie State exposed miners to dangerous mine conditions by failing to conduct the 

required pre-shift examination. The unexamined area was extensive, covering over a 5,200-foot 

area, and posed risks to miners at each entryway they traveled. Prairie State’s examination 

records in the aboveground book made it obvious that no pre-shift examination occurred, and 

thus Prairie State should have known of the violation. Despite prior warnings, Prairie State again 

failed to comply with the pre-shift requirement, leading the inspector to issue this withdrawal 

order. Although the duration of the violation and the operator’s abatement efforts do not 

necessarily weigh in favor of either party, the notice that greater efforts were required, the 

 8

 The violation began when Prairie State failed to conducted the required pre-shift 

examination. See Jim Walter Res., Inc., 28 FMSHRC at 602. Prairie State should have conducted 

the pre-shift examination by the start of the third shift at 10:30 p.m. (See Tr. 156:4–24.) Inspector 

Hatcher issued Order No. 8440269 at 3:15 a.m., nearly five hours into the third shift, and 

withdrew the miners from the area until Prairie State examined the area. (Ex. S–8 at 1; Tr. 47:4–

6.) The violation, therefore, lasted at least four hours and 45 minutes. See Old Ben Coal Co., 1 

FMSHRC 1954, 1959 (Dec. 1979) (finding unwarrantable failure where violative accumulations 

had existed for less than one shift). 

38 FMSHRC Page 450
operator’s knowledge of the violation, the extent, danger and obviousness of the violation, and 

all the facts and circumstances considered as a whole support a finding of aggravated conduct. 

Accordingly, for Order No. 8440269 I conclude that Prairie State’s violation of section 

75.360(a) was an unwarrantable failure to comply with a mandatory health or safety regulation. 

For the same reasons explained above, I also conclude that Prairie State was highly negligent in 

failing to conduct a pre-shift examination. 

B. Section 110(c) Liability 

 The Secretary seeks separate civil penalties against shift managers Rees and Welch for 

their conduct in connection with Order No. 8440269.9

 To hold either Rees or Welch liable under 

section 110(c) of the Mine Act, the Secretary must prove that each miner (1) knew or had reason 

to know that Prairie State needed to conduct a pre-shift examination; and (2) failed to have the 

required examination performed before sending miners into the area. See Kenny Richardson, 

3 FMSHRC at 16. 

1. Rees – Section 110(c) Liability 

The Secretary argues that Rees had reason to know an examination needed to be 

performed in the area. (Sec’y Br. at 21.) In support, the Secretary asserts that Rees’s belief that 

the escapeway examination listed in the mine’s aboveground book showed the entire work area 

had been pre-shifted was unreasonable. (Id. at 21–22.) The Secretary further asserts that Rees 

failed to act by neither ordering the pre-shift examination during his shift nor alerting Welch to 

perform a supplemental examination before workers were sent down to perform rockdusting. (Id.

at 21–22.) The Secretary notes that Rees normally had the opportunity to speak to Welch prior to 

the midnight shift about conditions in the mine and any needed examinations. (Id. at 21.) The 

Secretary asserts that Rees’s behavior resulted in exposing miners to danger and therefore 

amounts to reckless disregard. (Id. at 22.) 

Rees claims he was not in a position to know that a pre-shift examination of the area was 

needed. (Resp’t Br. at 18.) Rees asserts he should not be held liable under section 110(c) because 

he did not know when or where the rockdusting would occur. (Id.) Rees also implied the 

escapeway examination recorded in the mine’s examination book meant that the area had 

undergone the required pre-shift examination. (Tr. 170:23–171:3.) 

 9

 In their post-hearing brief, Respondents Rees and Welch again assert that the 110(c) 

civil penalties in this case should be dismissed because of MSHA’s delay in completing its 

section 110(c) investigation. (Resp’t Br. at 18–19.) On August 26, 2015, I issued an Order 

Denying Respondents’ Motion to Dismiss 110(c) Dockets based on the same argument. Docket 

Nos. LAKE 2015-130 and LAKE 2015-144, unpub. order at 1–4 (Aug. 26, 2015) (ALJ). Given 

the Secretary’s non-frivolous explanation for his delayed investigation and Respondents’ failure 

to show they were prejudiced by the delay, I determined that the 110(c) dockets should not be 

dismissed. (Id.) Because Respondents have not presented any new evidence regarding this issue, 

my prior determination stands. 

38 FMSHRC Page 451
Prairie State superintendent Jackson left the authority to order examinations and assign 

examiners solely to the mine’s shift managers. (Tr. 104:5–10, 105:2–7, 167:14–168:5.) Rees, the 

second shift mine manager, has 31 years of mining experience and is considered a very 

knowledgeable mine manager. (Tr. 172:14–15; 122:13–17.) On June 25, 2012, Jackson 

instructed Rees in a written note to haul dust to the Main North Intake during the second shift. 

(Ex. R–8(a).) Jackson’s instructions directed Rees to a map but did not specifically indicate when 

miners would rockdust.10 (Id.; Tr. 173:8–14.) However, rockdusting typically occurred during

the third shift, which was a maintenance shift. (Tr. 193:14–17.) Rees directed his miners to set up 

the equipment in the Main North Intake area. (Tr. 105:18–25, 177:7–11, 212:15–213:1; Exs. S–4 

at 1, R–10 at 6 [17].) 

A reasonable miner with Rees’s experience would be familiar with the mine’s normal 

work routine and would have known that the rockdusting equipment would likely be used in the 

area where it was set up. Inspector Hatcher learned from Welch that Jackson at 10:00 p.m. 

instructed him to rockdust in the Main North Intake area where Rees had set up the rockdusting 

equipment. (Ex. R–10 at 6 [15–17].) Rees ended his shift at 1:30 a.m. (Tr. 190:5–7, 139:19.) 

Rees therefore had the opportunity to talk with Welch about the third shift’s assignment to 

rockdust the area and use the equipment Rees had set up. Based on these facts, I find Rees 

reasonably should have known rockdusting would occur in the Main North Intake section during 

the subsequent third shift. Accordingly, Rees should have known an examiner needed to perform 

a pre-shift examination of the area prior to that shift. 

Given this knowledge, Rees was responsible for ordering the pre-shift examination of the 

areas in the Main North Intake that Jackson scheduled to have rockdusted for the oncoming third 

shift. (Tr. 105:2–13, 167:20–168:5.) Because Rees was responsible for ordering pre-shift 

examinations for the next shift, he normally reviewed the third shift’s pre-shift examination 

report to see what his examiners entered into the book. (Tr. 168:10–169:16.) This review 

typically occurred toward the end of his shift when he returned aboveground from the mine. 

(Tr. 169:4–6.) The third shift’s pre-examination report on the night of Hatcher’s inspection had 

no pre-shift examinations listed for the Main North Intake area.

11 (Ex. S–3.) 

Rees maintains he did not believe a pre-shift examination of the area was necessary 

because the aboveground examination book showed that an examiner examined the Main North 

Intake escapeway during that night’s second shift. (Tr. 170:23–171:3.) However, special 

investigator Bretzman and examiner Bertelsman both testified that an experienced mine manager 

would know that escapeway examinations were limited to only the escapeway route. 

 10 Although Jackson’s instructions mentioned a map, the map was no longer available at 

hearing, and Rees did not recall whether it was attached to the instruction sheet. (Tr. 183:2–

184:3.) Nevertheless, Rees had the equipment delivered to the proper area. (Tr. 105:18–25, 

177:7–11; Exs. S–4 at 1, R–10 at 6 [17].) 

11 Although the report listed an examination for the Main North Intake escapeway, the 

escapeway examination was not a pre-shift examination, but an on-shift examination. 

(Tr. 142:20–143:1.) At that time, Prairie State’s practice was to list its on-shift escapeway 

examinations in the same section as its pre-shift examinations. (Tr. 17:2–3; 148:19–149:1.)

38 FMSHRC Page 452
(Tr. 116:13–20, 142:15–144:22.) In fact, Bertelsman conducted a portion of the Main North 

Intake escapeway examination that day and only followed the normal route of the escapeway 

during such examinations unless a shift manager instructed him otherwise. (Tr. 134:12–18, 

135:12–20.) According to Bertelsman, unless an examination was part of a routine daily duty, 

mine examiners only examined areas upon a shift manager’s request. (Tr. 134:11–18.) The Main 

North Intake area was not a normal travel area and thus was not routinely pre-shifted. 

(Tr. 203:23–204:5, 214:3–6.) In order to have a pre-shift examination performed in the Main 

North Intake, Rees therefore would have had to specifically ordered an examiner to conduct one. 

Rees did not order any examiners to perform such a pre-shift examination. (Tr. 186:19–25.) 

Given this evidence, it was not reasonable for Rees to believe a pre-shift was performed 

for the Main North Intake on June 25. Accordingly, I do not credit Rees’s testimony regarding 

the escapeway examination book entry based on his inconsistent statements. Rather, I credit 

Bretzman and Bertelsman’s testimony and determine that Rees, an experienced mine manager, 

should have known the escapeway examination was not a pre-shift examination and did not 

include the areas outside the escapeway route.

As the second shift manager, part of Rees’s duties entail checking the examination books 

for hazards and other abnormalities and bringing them to the attention of the third shift manager, 

Welch. (Tr. 169:25–170:20.) When Rees had reason to know an examiner needed to perform a 

supplemental examination during the next shift, he normally would tell the oncoming shift 

manager. (Tr. 170:4–20.) In particular, Rees would discuss anything out of the ordinary, such as 

“equipment out of place or whatever.” (Tr. 169:22–170:20.) Such conversations allowed the 

managers to tie up any loose ends left from the previous shift. (Id.) Rees usually had ample 

opportunity to speak with Welch, as both managers were at the mine for four and one-half hours 

from Welch’s arrival at 9:00 p.m. until Rees ended his overlapping second shift at 1:30 a.m. 

(Tr. 190:5–7, 139:19.) Indeed, on the night of Hatcher’s inspection, Rees spoke with Welch at 

some point during their overlap. (Tr. 187:1–4, 190:5–7, 139:19.) Rees had delivered rockdusting 

equipment to an infrequently traveled area of the mine. Yet Rees never put the pieces together to 

inform Welch that a full pre-shift examination had not been performed for the Main North Intake 

and that a supplemental examination was necessary. (Tr. 185:18–21.) 

The Mine Act demands a high level of care from mine supervisors. See Lion Mining Co., 

19 FMSHRC 1774, 1778 (Nov. 1997). Given the evidence before me, I determine that Rees had 

a duty to either order a pre-shift examination or alert Welch that a supplemental examination was 

necessary. By neither conducting a pre-shift examination nor informing Welch that he needed to 

perform a supplemental examination, Rees failed in his responsibility to pass the baton to the 

oncoming shift and ensure that the necessary safety precautions took place before the third shift 

began work. A simple, brief conversation about each manager’s work assignments would have 

revealed that miners were headed to an unexamined work area, blind of the hazards that could be 

lurking therein. That simple conversation did not take place. 

I therefore conclude that Rees should have known that a pre-shift examination was 

necessary for the Main North Intake area before the third shift on June 25, 2012. By neglecting 

to either order the pre-shift himself or inform the third shift manager that a supplemental 

examination was necessary, Rees failed to act as required by the Mine Act to protect miners. 

38 FMSHRC Page 453
Rees’s inaction exposed miners to serious hazards. A simple discussion with Welch would have 

avoided such a dangerous situation. Given the danger presented and the ease of the solution, I 

conclude that Rees exhibited a serious lack of reasonable care constituting more than ordinary 

negligence. Accordingly, Rees engaged in aggravated conduct and is liable under section 110(c) 

of the Mine Act. 

2. Welch – Section 110(c) Liability 

The Secretary argues that Welch had reason to know an examination of the Main North 

Intake area needed to be performed and that Welch’s reliance on the recorded escapeway 

examination was unreasonable. (Sec’y Br. at 23.) The Secretary asserts that Welch knew the 

escapeway examination was limited to the escapeway route and failed to act by not performing a 

supplemental examination of the other areas. (Id.) The Secretary claims that Welch exhibited 

reckless disregard in exposing miners to danger. (Id.) 

In contrast, Welch asserts that he should not be held liable under section 110(c) because 

he reasonably believed the required examination had been performed. (Resp’t Br. at 20.) Welch 

argues that his belief that the escapeway examination covered the entire work area was 

reasonable because the mine’s examiners routinely listed pre-shift examinations by general 

location, rather than specific location. (Resp’t Br. at 20–22; Tr. 195:7–17.) Welch also claims he 

was inexperienced as a mine manager, having only been in that position for a month at the time 

of the violation, and performed his duties in good faith to the best of his ability. (Resp’t Br. at 

20–22; Tr. 189:11–14.) 

Upon arriving at the mine around 9:00 p.m. prior to the start of the third shift, Welch 

reviewed his work orders, which included Jackson’s instructions to rockdust the Main North 

Intake. (Tr. 189:24–190:4, 190:5–7.) Jackson’s written instructions were detailed about the area 

needing rockdusting, specifying exact entries and crosscuts. (Ex. R–8(b).) Welch subsequently 

checked the pre-shift examination book to see whether an examiner had examined the area where 

rockdusting was going to occur. (Tr. 194:14–18.) Welch saw that the second shift mine 

examiners had examined the Main North Intake escapeway and incorrectly concluded that the 

examination covered the entire area to be rockdusted. (Tr. 194:22–195:14.) However, most of the 

entries and crosscuts Jackson specified in Welch’s instructions were outside of the Main North 

Intake escapeway. (Ex. S–4.) 

Though a few examination book entries describe general areas, such as “Third North 

Construction Area,” nearly all of the entries describe areas with specificity, listing particular 

entryway numbers, travelways, and belts. (See Exs. S–3, R–2(a), R–2(b).) Although Welch had 

only been a mine manager for one month before the violation, he had 17 years of mining 

experience. (Tr. 209:6–8.) Moreover, Welch obtained his mine examiner’s papers before he 

began working in Prairie State’s safety department in 2010. (Tr. 208:8–209:5.) Thus, Welch had 

significant experience, particularly in mine safety and in performing examinations. 

A reasonably prudent mine manager would know that escapeway examinations do not 

include the areas outside the escapeway route. (Tr. 122:23–123:9.) If Welch was unfamiliar with 

Prairie State’s examination procedures, as a mine manager he had a duty to inquire and know 

38 FMSHRC Page 454
about those practices, as they are fundamental to protecting the safety of the miners who work 

under him. Indeed, Welch had opportunities to do so before sending miners underground to 

rockdust. Not only did Welch speak to his superior, Superintendent Jackson, that evening, he 

could have checked with Rees, a more seasoned shift manager, about whether a pre-shift 

examination in the Main North Intake area had occurred. (Tr. 187:1–4, 190:5–7, 139:19, 213:2–

7, 219:9–15.) Given the facts before me, I determine that Welch’s reliance on the Main North 

Intake escapeway examination as a pre-shift examination was unreasonable. Consequently, I 

determine that Welch should have known an examination of the area had not been performed. 

Despite his reason to know an examination was necessary, Welch did not conduct a 

supplemental examination of the area during his shift. (Tr. 46:25–47:2, 197:21–198:1.) As a 

result, Welch sent miners down into an area that had not been examined and contained serious 

hazards. I therefore determine that Welch failed to act in protecting those miners. 

Welch’s mistaken belief that the area had undergone a pre-shift examination does not 

satisfy the high duty of care required of mine supervisors. Welch knew or had reason to know an 

examination of the work area had not been performed, and he failed to act by not ordering a 

supplemental examination before miners began working in the area. Welch exhibited a serious 

lack of reasonable care by sending miners into an unexamined area and exposing them to serious 

danger. Accordingly, I conclude that the Secretary has also proven Welch engaged in aggravated 

conduct and is liable under section 110(c) of the Mine Act. 

VI. PENALTY 

 Under Section 110(i) of the Mine Act, I must consider six criteria in assessing a civil 

penalty: (1) the operator’s history of previous violations; (2) the appropriateness of the penalty 

relative to the size of the operator’s business; (3) the operator’s negligence; (4) the penalty’s 

effect on the operator’s ability to continue in business; (5) the violation’s gravity; and (6) the 

demonstrated good faith of the operator in attempting to achieve rapid compliance after 

notification of a violation. 30 U.S.C. § 820(i). These same section 110(i) factors are also 

applicable when assessing penalties under section 110(c) cases. Mize Granite Quarries, Inc., 

34 FMSHRC 1760, 1764 (Aug. 2012). In the section 110(c) context, the “relevant inquiries 

include whether the penalty will affect the individual’s ability to meet his financial obligations 

and whether the penalty is appropriate in light of the individual’s income and net worth” but 

should “not include the size of the mine [or] . . . the penalties levied against the corporation.” Id. 

at 1764–65. 

 

A. Prairie State’s Penalty 

The Secretary has proposed that Prairie State pay a penalty of $2,000.00 for Order No. 

8440269, the minimum penalty for an unwarrantable failure violation under section 104(d)(1). 

30 U.S.C. § 110(a)(3)(A). Nothing in the record suggests that the proposed penalty is 

inappropriate for the size of Prairie State’s business, and the parties have stipulated that the 

proposed penalty will not affect Prairie State’s ability to remain in business. (Ex. S–1.) 

Additionally, nothing suggests that Prairie State failed to make a good faith effort to achieve 

rapid compliance with the safety standard after Inspector Hatcher issued the order. In fact, Prairie 

38 FMSHRC Page 455
State has since changed its examination recording procedures in order to help eliminate any 

possible confusion as to whether a pre-shift examination has been conducted in the mine. (Tr. 

149:2–8; Ex. R–11.) 

 On the other hand, I have upheld the Secretary’s S&S, unwarrantable failure, and 

negligence designations. Such conclusions ordinarily support the Secretary’s proposed penalty. 

In addition, I considered the mine’s history of violations concerning this safety standard. (Exs. 

S–2, S–7.) MSHA cited Prairie State for another violation of section 75.360(a) less than one 

month prior to the issuance of Order No. 8440269. (Ex. S–7.) 

Prairie State’s systemic failure to ensure that required examinations took place at the 

mine placed miners in grave danger, putting them at risk of serious injury. Prairie State had 

direct control over training its managers on the mine’s examination recording procedures; yet it 

put in charge a new shift manager who apparently did not know how to read the examination 

book properly. Superintendent Jackson then gave written instructions to both Rees (second shift) 

and Welch (third shift) and was in the best position to know when work was to be done and 

when pre-shifts should be ordered. Yet Jackson not only failed to communicate adequately with 

Rees about work to be done on the third shift that would trigger a pre-shift examination, he also 

failed to adequately oversee Welch, a new shift manager, thus raising serious questions about the 

operator’s procedures. These failures of Prairie State’s management warrant an increased 

penalty. Given the gravity of the hazardous conditions found, coupled with Prairie State’s failure 

to coordinate and supervise adequately its shifts to ensure compliance with examination 

requirements, I determine that a higher penalty is appropriate for Prairie State’s unwarrantable 

conduct. Considering all of the facts and circumstances set forth above, I hereby assess a civil 

penalty of $4,000.00. 

B. Steven B. Rees’s Penalty 

The Secretary has proposed that Rees pay a penalty of $1,500.00 under section 110(c). 

Rees did not present evidence regarding his ability to meet his financial obligations or his 

individual income and net worth. Rees’ failure to either conduct a pre-shift examination or 

inform the oncoming shift manager an examination was needed resulted in a violation of the preshift standard that was S&S, highly negligent, and an unwarrantable failure. However, no 

evidence in the record shows that Rees has engaged in any past violative conduct. The Secretary 

did not prove Rees’s action or inaction was intentional. Nonetheless, the facts and circumstances 

establish that Rees failed to meet his high duty of care. Accordingly, I conclude a penalty smaller 

than the Secretary’s proposal is appropriate in this case. Thus, I assess a civil penalty of $500.00 

against Rees under section 110(c). 

C. Michael Welch’s Penalty 

The Secretary has proposed that Welch pay a penalty of $1,500.00 under section 110(c). 

Welch did not present evidence regarding his ability to meet his financial obligations or his 

individual income and net worth. Welch’s failure to act resulted in a pre-shift violation that was 

S&S, highly negligent, and an unwarrantable failure. His mistake in this case was objectively 

unreasonable and resulted in a serious hazard to miners. However, the absence of intentional 

38 FMSHRC Page 456
misconduct and the fact Welch had only been a manager for a short period before the violation 

occurred suggests some leniency is appropriate. In addition, the record contains no evidence 

demonstrating Welch’s involvement in any past violative conduct. In light of the above criteria, I 

conclude a penalty smaller than the Secretary’s proposal is appropriate in this case. Thus, I 

assess a civil penalty of $500.00 against Welch under section 110(c). 

VII. ORDER 

In light of the foregoing, it is hereby ORDERED that Order No. 8440269 is 

AFFIRMED. The section 110(c) liability of Steven B. Rees and Michael Welch is 

AFFIRMED. Prairie State is ORDERED to PAY a civil penalty of $4,000.00 within 40 days of 

the date of this decision. Steven B. Rees is ORDERED to PAY a civil penalty of $500 within 40 

days of this decision. Likewise, Michael Welch is ORDERED to PAY a civil penalty of $500 

within 40 days of this decision.12

 /s/ Alan G. Paez 

Alan G. Paez 

Administrative Law Judge 

Distribution: 

Emelda Medrano, Esq., Office of the Solicitor, U.S. Department of Labor, 230 South Dearborn 

Street, Room 844, Chicago, Illinois 60604 

Arthur M. Wolfson, Esq., Jackson Kelly, PLLC, Three Gateway Center, 401 Liberty Avenue, 

Suite 1500, Pittsburgh, Pennsylvania 15222 

/ivn 

 12 Payment should be sent to: U.S. Department of Labor, MSHA, Payment Office, 

P.O. Box 790390, St. Louis, MO 63179-0390. Please include docket and A.C. numbers. 

38 FMSHRC Page 457
FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

OFFICE OF ADMINISTRATIVE LAW JUDGES 

1331 PENNSYLVANIA AVE., N.W., SUITE 520N 

WASHINGTON, DC 20004-1710 

TELEPHONE: 202-434-9958 / FAX: 202-434-9949 

March 22, 2016 

DECISION ON REMAND

Appearances: Matthew S. Shepherd, Esq., U.S. Dept. of Labor, Office of the Solicitor, 

Nashville, TN, for the Petitioner, 

Melanie Kilpatrick, Esq., Rajkovich, Williams, Kilpatrick & True, PLLC, 

Lexington, KY, for the Respondent. 

Before: Judge L. Zane Gill 

This case is before me on remand by the Commission. Docket No. KENT 2011-0041-R 

was the subject of an expedited hearing held on October 19, 2010. The hearing took place 13 

days after the events that led to Citation No. 6660595 and five days after the citation was issued. 

At the close of the Secretary’s evidence, Clintwood Elkhorn Mining Co., Inc., moved for 

dismissal of Citation No. 6660595 and three other citations and orders that are not at issue here. 

The dismissal was granted, and only the dismissal of Citation No. 6660595 was appealed to the 

Commission. 

CLINTWOOD ELKHORN MINING 

COMPANY, INC, 

 Contestant, 

 v. 

SECRETARY OF LABOR 

 MINE SAFETY AND HEALTH 

 ADMINISTRATION (MSHA), 

 Respondent, 

SECRETARY OF LABOR 

 MINE SAFETY AND HEALTH 

 ADMINISTRATION (MSHA), 

 Petitioner, 

v. 

CLINTWOOD ELKHORN MINING 

COMPANY, INC., 

 Respondent. 

CONTEST PROCEEDING 

Docket No. KENT 2011-0041-R 

Citation No. 6660595; 10/14/2010 

Mine ID: 15-16734 

CIVIL PENALTY PROCEEDING 

Docket No. KENT 2011-0515 

A.C. No. 15-16734-240621

Mine: Clintwood Elkhorn II 

38 FMSHRC Page 458
In its decision, the Commission found that Clintwood violated 30 C.F.R. § 77.1607(b) 

because the operator failed to maintain full control of his haul truck while it was in motion. 

Clintwood Elkhorn Mining Co., Inc., 35 FMSHRC 365, 370 (Feb. 2013). Citation No. 6660595 

was remanded to me to determine whether the violation was significant and substantial, whether 

it was an unwarrantable failure to comply by the operator, and to assess an appropriate penalty. 

Id. at 371. After the remand, the record was reopened, a supplementary evidentiary hearing was 

held on October 15, 2014, in Pikeville, Kentucky.1

 

Findings of Fact2

Clintwood operated a coal preparation plant in Pike County, Kentucky. Clintwood 

Elkhorn Mining Co., Inc., 32 FMSHRC 1880, 1882 (Dec. 2010)(ALJ Gill). A steeply graded 

haul road, Coal Haul Road A, ran from the prep plant to a nearby coal mine operated by Hubble 

Mining. Id. at 1882-83; Tr.II 255:10-12.3 Clintwood owned the mineral rights to the coal that 

Hubble mined. Clintwood leased the mine property to Hubble to mine the coal, and contracted 

with Hubble to purchase the coal it mined. (Ex. R-3; Tr.I 38:17-19; Tr.II 239:19-21; Tr.II 240-5-

7) Hubble contracted with Tattoo Trucking to haul the coal it mined to Clintwood’s prep plant

using Coal Haul Road A. (Tr.I 38:23- 39:1) Clintwood also owned Coal Haul Road A and leased

it to Hubble. (Tr.II 240:8-10)

On the morning of October 6, 2010, Shane Bishop, an employee of Tattoo Trucking, was 

hauling coal in a Mack 800 haul truck on Haul Road A from the Hubble mine down to 

Clintwood's prep plant. 32 FMSHRC at 1882-84. On his ninth trip down to the prep plant, 

Bishop encountered mine equipment occupying the road. (Tr.I 187:2-17) He braked and waited 

for the equipment to clear and then continued on his way. (Tr.I 187:20 – 188:2) While 

descending the hill, Bishop heard a loud sound from the truck engine. He attempted to shift 

1

 The contest docket was consolidated with the related penalty docket KENT 2011-0515. 

2

 These findings of fact are based on the record as a whole and my careful observation of 

the witnesses during their testimony. In resolving any conflicts in the testimony, I have taken 

into account the interests of the witnesses, or lack thereof, and consistencies, or inconsistencies 

in each witness’s testimony and between the testimonies of other witnesses. In evaluating the 

testimony of each witness, I have also taken into account his or her demeanor. Any perceived 

failure to provide detail about any witness’s testimony is not a failure on my part to consider it. 

The fact that some evidence is not discussed does not mean that it was not considered. See Craig 

v. Apfel, 212 F.3d 433, 436 (8th Cir. 2000) (administrative law judge is not required to discuss all

evidence and failure to cite specific evidence does not mean it was not considered). I have also

fully considered the contents of the official file, including the pre- and post-hearing submissions

of the parties, and the exhibits admitted into evidence.

3

 Tr.I refers to the hearing transcript from 2010 and Tr.II refers to the hearing transcript 

from 2014. 

38 FMSHRC Page 459
gears, the engine died, and the brakes failed.4

 (Tr.I 187:20 – 188:2; Tr.I 188:12-17; Tr.I 203:1-5; 

Tr.I 204:1-5; Tr.II 60:13-20) The truck accelerated down Haul Road A about 100 to 150 feet 

before crashing through a berm and a utility pole at the base of the hill. 32 FMSHRC at 1884. 

The truck rolled onto its passenger side, where it came to rest with its front axle suspended over 

the 30-foot drop-off to the prep plant's dump area. (Tr.I 32:12-23) Bishop suffered only an 

abrasion and some bruising, despite not wearing his seatbelt. 32 FMSHRC at 1884. He was taken 

to a hospital emergency room, examined by a doctor, and released without treatment. Id.

Preliminary Matter: Jurisdiction

At the close of the evidentiary hearing in 2014, Clintwood moved to dismiss the case and 

requested the citation be vacated. I declined to rule on the record, and directed the parties to brief 

the issue. Clintwood argued that MSHA did not have jurisdiction to issue Citation No. 6660595 

because Clintwood was not an “operator” of Tattoo’s truck. (Resp. Br. at 1) Clintwood further 

argued that its relationship with Tattoo was too tenuous for it to be an operator vis-à-vis Tattoo’s 

violation.5 Id. at 4. 

The Secretary countered that Clintwood was an “operator” as defined by Section 3(d) of 

the Mine Act, 30 U.S.C. § 802(d). (Sec’y Br. at 5-6) Further, the Commission had already 

determined that Clintwood violated Section 77.1607(b),6 and that Clintwood misinterpreted the 

law. (Sec’y Br. at 5; Sec’y Reply Br. at 2) The Secretary argued that the test to determine 

whether Clintwood was an “operator” was whether Clintwood had “substantial involvement” 

with the mine, not with the truck. (Sec’y Reply Br. at 2) I agree with the Secretary. 

In Berwind Natural Res. Corp., the Commission held that the definition of “operator” 

must be resolved on a case-by-case basis using a “totality of the circumstances” test to determine 

whether the “entity has substantial involvement with the mine.” 21 FMSHRC 1284, 1293 (Dec. 

1999)(emphasis added). The resulting Commission guidance is to “evaluate the participation and 

involvement of the entity in the mine's engineering, financial, production, personnel, and health 

and safety matters to determine whether that entity qualified as an operator under the Act.” Id. 

There is no dispute here that Clintwood owned and operated the coal preparation plant. 

Clintwood owned the mineral rights to the coal that Hubble mined and leased the property to 

Hubble to mine the coal. Clintwood also owned the land under Coal Haul Road A and leased it 

to Hubble. The accident happened on this road. 

4

 The circumstances of the engine and brake failure will be discussed in more detail 

below. 

5

 Clintwood argued that it did not have a contractual relationship with Tattoo Trucking, 

did not own the truck that was involved in the accident, did not employ the truck driver, and the 

truck was not in its supervision or control. (Resp. Br. at 4) 

6

 Despite the Secretary’s argument, subject matter jurisdiction can never be waived. Fed. 

R. Civ. P. 12(h)(3).

38 FMSHRC Page 460
According to the agreement between Clintwood and Hubble, Hubble was responsible for 

mining the coal and transporting it to Clintwood’s prep plant. (Ex. R-3, §§ 1.2, 3.1) Clintwood 

retained the right to use Coal Haul Road A and required Hubble to have a transportation plan for 

the haul road. Id. at §§1.4, 1.10. Additionally, Clintwood retained the right to enter the mine and 

inspect “any [...] aspect of [Hubble’s] operations,” and required its consent prior to Hubble 

subcontracting out any work required by the contract. (Id. at §§ 1.15, 12.2) 

Hubble contracted with Tattoo Trucking, the owner of the truck involved in the accident, 

to haul the coal mined at Hubble along Coal Haul Road A to the Clintwood prep plant. (Tr.II 

52:15-21) Each production shift, Tattoo’s trucks, about 12 to 15 of them, were repeatedly loaded 

with coal at the Hubble mine, driven down the haul road to Clintwood’s prep plant, where the 

loads were weighed and dumped. The trucks were then driven back up the haul road to the mine 

for their next load. (Tr.II 31:3-9; Tr.II 354:5-6) 

Clintwood had a financial relationship with the Hubble mine arising from its ownership, 

lease, and contractual relationships. Clintwood also retained the authority to inspect the Hubble 

mine, and to approve all subcontractors who performed any work under the contract. The same 

Hubble contractors hauled and dumped the coal from the Hubble mine at the Clintwood prep 

plant, deepening the relationship between the prep plant, the mine, and the contracting parties. 

Regarding production, although Clintwood accepted coal from multiple mines, all of the coal 

produced at the Hubble mine was hauled to the Clintwood prep plant.Based on the totality of the 

circumstances, I find that Clintwood was an “operator” and subject to MSHA’s jurisdiction 

because it had substantial involvement with the Hubble mine.7

Moreover, Clintwood stipulated that it operated the Clintwood prep plant, (Joint 

Prehearing Rep., Stipulation 1). The citation alleges that the violation occurred at the prep plant. 

Bishop lost control of his truck on Clintwood’s haul road, crossed over Clintwood’s main road, 

hit Clintwood’s berm, and nearly fell into Clintwood’s dump site. Therefore, by virtue of its 

stipulation, Clintwood was an operator for purposes of the violation, and Bishop lost control of 

his vehicle on Clintwood’s property. 

 

                                                             7

 Clintwood also argued that the area where the accident occurred was a private way 

appurtenant to the mine, and therefore, not within MSHA jurisdiction. (Resp. Br. at 4-5) Even if 

the haul road was a private way appurtenant to the mine and under the control of the mine, the 

truck in question was used in mining activities, and was under MSHA jurisdiction. See Sec'y of 

Labor v. Nat'l Cement Co. of Cal., Inc., et. al, 573 F.3d 788, 793-97 (D.C. Cir. 2009); See 

Youngquist Brothers Rock, Inc., 36 FMSHRC 2492, 2493-97 (Sept. 2014) (ALJ Gill); 30 U.S.C. 

§ 802(h)(1)(B),(C). 

38 FMSHRC Page 461
Citation No. 6660595 

Inspector Robert Bellamy8

 issued Citation No. 6660595 to Clintwood, alleging a 

violation of 30 C.F.R. § 77.1607(b). The Commission concluded that Clintwood violated the 

standard. The regulation states that “[m]obile equipment operators shall have full control of the 

equipment while it is in motion.” 30 C.F.R. § 77.1607(b). Section 77.1607(b) is a mandatory 

safety standard. The citation alleges: 

On 10/06/2010, the contract driver of a loaded coal haulage truck 

failed to maintain control of the truck. The truck ran away down 

the mine coal haulage road, crossed the main prep plant access 

road and entered the prep plant stockpile before stopping. 

Overloading of the truck contributed to the driver losing control. 

This event caused exposure to employees from other mines, 

vendors and prop plant employees using the main access road and

employees at the prep plant to a potentially fatal accident. The 

estimated weight of the loaded truck was 50,200 lbs. over the 

Gross Vehicle Weight Rating (GVWR) recommended by the 

manufacturer based on the average weight tickets for the previous 

eight loads for this truck on this date. Clintwood Elkhorn was 

aware that the trucks hauling to this prep plant are routinely 

overloaded and did nothing to stop this practice. This is an 

unwarrantable failure to comply with a mandatory safety standard. 

Ex. S-12 

The citation alleges that an injury occurred, the injury could reasonably be expected to be 

fatal, the violation was significant and substantial, one person was potentially affected, and the 

level of negligence was high. Id. 

Negligence and Unwarrantable Failure 

“Negligence” is not defined in the Mine Act. The Commission has, however, 

[R]ecognized that “[e]ach mandatory standard ... carries with it an 

accompanying duty of care to avoid violations of the standard, and 

an operator's failure to meet the appropriate duty can lead to a 

finding of negligence if a violation of the standard occurs.” A.H. 

Smith Stone Co., 5 FMSHRC 13, 15 (Jan. 1983). In determining 

whether an operator met its duty of care, we consider what actions 

would have been taken under the same circumstances by a 

reasonably prudent person familiar with the mining industry, the 

                                                             8

 At the time of the hearing, Bellamy had been working at MSHA for approximately 

twenty-four years and had conducted approximately 30 fatal accident investigations and 

numerous nonfatal accident investigations. (Tr.I 107:25 – 108:9) 

38 FMSHRC Page 462
relevant facts, and the protective purpose of the regulation. See 

generally U.S. Steel Corp., 6 FMSHRC 1908, 1910 (Aug. 1984). 

Jim Walter Res. Inc., 36 FMSHRC 1972, 1975 (Aug. 2014); Brody Mining, LLC, 37 FMSHRC 

1687, 1702. (Aug. 2015); Spartan Mining Co., 30 FMSHRC 699, 708 (Aug. 2008). “Thus in 

making a negligence determination, a Judge is not limited to an evaluation of allegedly 

‘mitigating’ circumstances. Instead, the Judge may consider the totality of the circumstances 

holistically.” Brody Mining, LLC, 37 FMSHRC at 1702. Although the Secretary's part 100 

regulations are not binding on the Commission, the Secretary's definitions of negligence in those 

provisions are illustrative. 

In Lopke Quarries, Inc., 23 FMSHRC 705, 711 (July 2001), the Commission reiterated 

the law applicable to determining whether a violation is the result of an unwarrantable failure: 

The unwarrantable failure terminology is taken from section 

104(d) of the Act, 30 U.S.C. § 814(d), and refers to more serious 

conduct by an operator in connection with a violation. In Emery 

Mining Corp., 9 FMSHRC 1997 (Dec. 1987), the Commission 

determined that unwarrantable failure is aggravated conduct 

constituting more than ordinary negligence. Id. at 2001. 

Unwarrantable failure is characterized by such conduct as 

“reckless disregard,” “intentional misconduct,” “indifference,” or a 

“serious lack of reasonable care.” Id. at 2003-04; Rochester & 

Pittsburgh Coal Co., 13 FMSHRC 189, 194 (Feb. 1991) (“R&P”); 

see also Buck Creek [Coal, Inc. v. FMSHRC, 52 F.3d 133, 136 (7th 

Cir. 1995)] (approving Commission's unwarrantable failure test). 

See Manalapan Mining Co., 35 FMSHRC 289, 293 (Feb. 2013). Whether conduct is 

“aggravated” in the context of an unwarrantable failure analysis is determined by looking at all 

the facts and circumstances of each case to see if any aggravating factors exist. Big Ridge, Inc., 

34 FMSHRC 119, 125 (Jan. 2012) (ALJ Zielinski). 

 The Secretary alleged high negligence and unwarrantable failure, and argued that 

Bishop’s truck was overloaded at the time of the accident, that the overload contributed to the 

accident, that Clintwood Elkhorn was aware that the trucks hauling to its prep plant were 

routinely overloaded, and it did nothing to stop this practice. (Sec’y Br. at 9-13; Ex. S-12) The 

Respondent argued that the Secretary did not prove that the vehicle was overloaded, did not 

prove that even if it were overloaded, the overload caused the accident, and that it was driver 

error that caused the accident because the truck ran out of fuel. (Resp. Br. at 7-14) It must be 

noted that the standard relates to Bishop losing control over his vehicle while it was in motion, 

not whether something caused or contributed to the accident. 

38 FMSHRC Page 463
The Secretary’s evidence and argument at the 2010 and 2014 hearings focused largely on 

establishing an evidentiary link between Gross Vehicle Weight Ratings (GVWR)9

 and the 

alleged consequences of overloading. The Secretary tried to convince the court that Bishop’s 

truck was overloaded based on load records that showed loads in excess of the GVWR, and that 

the resulting overload contributed to the accident.10 The Secretary argued that overloading puts 

more strain on the brakes and can cause brake fade. (Tr.II 190:10 -191:10) This argument 

appears to be one of first impression. Neither the Mine Act nor the regulations defines 

“overload” or describes how MSHA determines that a truck is overloaded. 

To prove high negligence, the Secretary attempted to show that Bishop’s truck was 

overloaded by reference to an objective measure of what the truck could presumably safely haul 

-- the GVWR for a Mack 800 haul truck. However, Bishop’s Mack 800 truck had been modified 

from the manufacturer’s specifications to haul larger loads. (Tr.II 57:20 -58:16) Thus, the 

manufacturer’s stated GVWR was practically useless to establish a proper load limit for Bishop’s 

truck. The Secretary attempted to prove that the weight he proffered as the maximum load 

GVWR was for Bishop’s modified truck. However, the Secretary’s witness was unable to do 

anything more than speculate about the actual GVWR for Bishop’s modified truck. His 

speculation was based on an inspection of seven or eight Mack 800 series trucks, but he never 

tested the actual haul limits or possible overload ratings of any of the trucks. (Tr.II 186-190; Tr.II 

202:22 – 203:4; Tr.II 207:9-17) As a result, the Secretary failed to prove what the GVWR was 

for Bishop’s truck, even assuming that the GVWR was relevant or a reliable means of 

determining overloading.11 Since there was no baseline for comparison, the Secretary could not 

use the weight tickets for Bishop’s truck from the previous eight loads before the accident to 

establish a pattern of overloading. 

Even assuming the Secretary proved that Bishop’s truck was overloaded, and further 

assuming that when a truck is overloaded it is harder to brake, I cannot find that the high 

negligence designation was appropriate. Bishop lost control of his truck because of driver error. 

William Griffith, the owner of Tattoo Trucking, testified that driver error caused the 

brakes to fail and the truck to run away. Bishop allowed the truck to run out of fuel, which 

prevented it from restarting when he attempted to shift gears after the engine died. (Tr.II 26:18-

25; Tr.II 60:21-24; Tr.II 66:17 – 67:2) This is consistent with Resp. Ex-5 and Griffith’s 

testimony that there was no fuel leaking from the truck as it lay on its side after running through 

the berm and overturning. Further, the fuel tank was empty when the truck was inspected after 

the accident. (Tr.II 61:1-9; Tr.II 62:15 – 63:23) 

                                                             9

 The GVWR is assigned by the truck’s manufacturer and is the maximum weight the 

manufacturer recommends that a truck can haul. (Tr.II 114:16-21; Tr.II 115:17-21) 

10 The inspector testified that it was not MSHA’s policy to issue a citation if a truck was 

overloaded past the GVWR, but MSHA considered loads in excess of the GVWR an aggravating 

factor for negligence and the unwarrantable failure analysis. (Tr.II 128:10-23; TR.II 129:6-10) 

11 I need not discuss the notice issues with MSHA using GVWR as a threshold standard 

for overloading, or using it for enhanced enforcement. 

38 FMSHRC Page 464
At the time of the accident, Bishop had been driving for Tattoo Trucking for 

approximately five months. This was his first job working for a trucking company. (Tr.I 183:4-9) 

He did not have a commercial driver’s license. (Tr.I 183:10-16) Based on Bishop’s and Griffith’s 

testimony, it was Bishop’s inexperience that caused him to lose control of the truck. Bishop’s 

truck ran out of fuel, causing the engine to make a loud noise, and when Bishop tried to shift, the 

engine stalled and died, which resulted in brake failure and loss of control. When an engine dies, 

as it did here, the steering and brakes do not work. (Tr.II 64:2-8) Normally, the jake brake, or 

engine brake, will still work even if the truck runs out of gas. However, the truck must still be in 

gear. (Tr.II 785:12-17) Here, since Bishop shifted the truck out of gear, the jake brake did not 

work either. 

 Bishop was driving on an empty tank. Instead of coasting down the hill, as an 

experienced driver would have done, he attempted to shift into another gear, which caused the 

engine to quit. A reasonably prudent person familiar with driving such haul trucks would not 

have allowed the truck to run out of gas, and would not have shifted out of gear. However, this is 

not where the analysis ends. 

It is well settled that under the Mine Act, an operator is strictly liable for violations of the 

Act and mandatory standards committed by its employees. Southern Ohio Coal Co., 4 FMSHRC 

1459, 1462 (Aug. 1982)(“SOCCO”) (citing Allied Products Co. v. Fed. Mine Safety & Health 

Review Comm'n, 666 F.2d 890 (5th Cir. 1982); American Materials Corp., 4 FMSHRC 415 

(March 1982); Kerr-McGee Corp., 3 FMSHRC 2496 (November 1981); El Paso Rock Quarries, 

Inc., 3 FMSHRC 35 (January 1981)). However, the imputation of a rank-and-file miner’s acts to 

an operator departs from strict liability under certain circumstances. The negligence of a rankand-file miner is not attributable to an operator for the purposes of negligence designations, 

unwarrantable failure determinations, and penalty amounts. Southern Ohio Coal Co., 4 

FMSHRC 1459, 1462 (Aug. 1982)(“SOCCO”); Whayne Supply Co., 19 FMSHRC 447, 451, 453 

(Mar. 1997); Fort Scott Fertilizer-Cullor, Inc., 17 FMSHRC 1112, 1116 (July 1995). If “a rankand-file employee has violated the Act, the operator's supervision, training and disciplining of its 

employees must be examined to determine if the operator has taken reasonable steps to prevent 

the rank-and-file miner's violative conduct.” SOCCO at 1462 (emphasis in original). The record 

indicates that at the time of the hearing, Clintwood did not supervise trucking operations at 

Hubble, did not issue directions to truck drivers at Hubble, and did not have authority to 

discipline truck drivers while they were at Hubble. (Tr.II 232:17 – 233:2) 

Additionally, Tattoo gave its employees annual training (Tr.II 48:14-21), and since 

Bishop had been employed with Tattoo for only five months at the time of the hearing, he was 

“recently” trained. Clintwood did offer Tattoo’s employees training, but Griffith could not recall 

if his drivers took advantage of the offer. (Tr. 49:3-9) 

 I cannot find Clintwood liable for Bishop’s negligence as a rank-and-file miner. 

Therefore, I find that there was no negligence attributable to Clintwood. Additionally, I cannot 

find an unwarrantable failure to comply by the operator because there was no aggravating 

conduct constituting more than ordinary negligence. 

38 FMSHRC Page 465
Gravity 

The gravity penalty criterion under section 110(i) of the Mine Act, 30 U.S.C. § 820(i), “is 

often viewed in terms of the seriousness of the violation.” Consolidation Coal Co., 18 FMSHRC 

1541, 1549 (Sept. 1996) (citing Sellersburg Stone Co., 5 FMSHRC 287, 294-95 (March 1983), 

aff'd, 736 F.2d 1147 (7th Cir. 1984) and Youghiogheny & Ohio Coal Co., 9 FMSHRC 673, 681 

(Apr. 1987)). The seriousness of a violation can be examined by looking at the importance of the 

standard which was violated and the operator’s conduct with respect to that standard, in the 

context of the Mine Act’s purpose of limiting violations and protecting the safety and health of 

miners. See Harlan Cumberland Coal Co., 12 FMSHRC 134, 140 (Jan. 1990) (ALJ Fauver). The 

gravity analysis focuses on factors such as the likelihood of an injury, the severity of an injury, 

and the number of miners potentially injured. The Commission has recognized that the likelihood 

of injury is to be made assuming continued normal mining operations without abatement of the 

violation. U.S. Steel Mining Co., 7 FMSHRC at 1130. 

Inspector Bellamy designated this violation as injury “occurred;” the referenced injury 

could reasonably be expected to be a fatality; it was significant and substantial; and one person 

was potentially affected. (Tr.II 101:1-5) Clintwood argued that there was no “injury,” therefore, 

an injury did not “occur.” (Resp. Br. at 15) The Secretary argued that Bishop was injured 

because he received an abrasion and bruising. (Sec’y Reply Br. at 12) 

The Commission stated in Freeman that the term “injury” is not defined in the Mine Act 

or regulations, but the ordinary meaning of the word is “an act that damages harms, or hurts” or 

“hurt, damage, or loss sustained.” Freeman United Coal Mining Company, 6 FMSHRC 1577, 

1578-9 (July 1984)(quoting Webster's Third New International Dictionary (Unabridged) 1164, 

(1978)). This plain meaning of “injury” has been used by the Commission and its ALJs in 

numerous decisions. Here, Bishop suffered a “hurt” or “damage” because he sustained an 

abrasion and bruising. Therefore, an “injury” occurred. 

Bellamy designated the injury as reasonably expected to result in a fatality because this 

type of accident -- a runaway truck -- could have resulted, and had resulted, in fatalities in the 

past. (Tr.II 101:7-14) The fatality designation not only pertained to the driver of a runaway truck, 

but could also affect a pedestrian miner struck by a runaway truck. Id. 

I find that an injury occurred; it could reasonably be expected to be a fatality; and, one 

person was potentially affected. 

Significant and Substantial 

The citation was designated by the Secretary as significant and substantial (“S&S”). A 

violation is properly designated S&S “if, based upon the particular facts surrounding that 

violation, there exists a reasonable likelihood that the hazard contributed to will result in an 

injury or illness of a reasonably serious nature.” Cement Div., Nat’l Gypsum Co., 3 FMSHRC 

822, 825 (Apr. 1981). The question of whether a particular violation is S&S must be based on the 

particular facts surrounding the violation. Texasgulf, Inc., 10 FMSHRC 498 (Apr. 1988); 

Youghiogheny & Ohio Coal Co., 9 FMSHRC 2007 (Dec. 1987). S&S enhanced enforcement is 

38 FMSHRC Page 466
applicable only to violations of mandatory health and safety standards. Cyprus Emerald Res. 

Corp. v. FMSHRC, 195 F.3d 42, 45 (D.C. Cir. 1999). The Secretary bears the burden of proving 

all elements of a citation by a preponderance of the evidence. In re: Contests of Respirable Dust 

Sample Alteration Citations: Keystone Mining Corp., 17 FMSHRC 1819, 1838 (Nov. 1995), 

aff’d 151 F.3d 1096 (D.C. Cir. 1998); Jim Walter Resources, Inc., 30 FMSHRC 872, 878 (Aug. 

2008) (ALJ Zielinski) (“The Secretary’s burden is to prove the violations and related allegations, 

e.g., gravity and negligence, by a preponderance of the evidence.”) 

In Mathies Coal Co., the Commission established the standard for determining whether a 

violation was S&S: 

In order to establish that a violation of a mandatory safety standard 

is significant and substantial under National Gypsum, the Secretary 

of Labor must prove: (1) the underlying violation of a mandatory 

safety standard; (2) a discrete safety hazard – that is, a measure of 

danger to safety – contributed to by the violation; (3) a reasonable 

likelihood that the hazard contributed to will result in an injury; 

and (4) a reasonable likelihood that the injury in question will be of 

a reasonably serious nature. 

6 FMSHRC 1, 3-4 (Jan. 1984). 

The third element of the Mathies test presents the most difficulty when determining 

whether a violation is S&S. In U.S. Steel Mining Co., Inc., 7 FMSHRC 1125, 1129 (Aug. 1985), 

the Commission provided additional guidance: [T]he third element of the Mathies formula 

“requires that the Secretary establish a reasonable likelihood that the hazard contributed to will 

result in an event in which there is an injury.” (citing U.S. Steel Mining Co., Inc., 6 FMSHRC 

1834, 1836 (Aug. 1984)). The Secretary, however, “need not prove a reasonable likelihood that 

the violation itself will cause injury.” Cumberland Coal Res., 33 FMSHRC 2357, 2365 (Oct. 

2011) (citing Musser Engineering, Inc. and PBS Coals, Inc., 32 FMSHRC 1257, 1281 (Oct. 

2010)). Further, the Commission has found that “the absence of an injury-producing event when 

a cited practice has occurred does not preclude a determination of S&S.” Id. (citing Elk Run Coal 

Co., 27 FMSHRC 899, 906 (Dec. 2005)); and Blue Bayou Sand & Gravel, Inc., 18 FMSHRC 

853, 857 (June 1996)). This evaluation is also made in consideration of the length of time that 

the violative condition existed prior to the citation and the time it would have existed if normal 

mining operations had continued. Elk Run Coal Co., 27 FMSHRC at 905; U.S. Steel Mining Co., 

Inc., 6 FMSHRC 1573, 1574 (July 1984).12 

                                                             12 The 4th and the 7th Circuits have changed the Commission’s precedent under Mathies

by placing the emphasis and bulk of the analysis on the second element of the test. See Peabody 

Midwest Mining, LLC v. FMSHRC, 762 F.3d 611 (7th Cir. 2014); See Knox Creek Coal Corp. v. 

Sec’y of Labor, 811 F.3d 148 (4th Cir. 2016). This Respondent, however, is not located in either 

of those Circuits, and thus, my analysis is under the traditional Mathies test. 

38 FMSHRC Page 467
The first and fourth prongs of the Mathies test have been met. There was a measure of 

danger to safety – a discrete safety hazard – which arose from Bishop losing control of his truck 

as it was coming down the steep haul road. This hazard could have resulted in serious injuries to 

a miner. The remaining question is whether there was a reasonable likelihood that the hazard 

would result in an injury. 

A runaway 40- to 60-ton truck carrying a full load down a steep haul road is extremely 

dangerous to the driver of the truck and to other miners on foot or to other mining equipment in 

the area. Before hitting the berm and landing on its side, Bishop’s truck crossed over 

Clintwood’s main access road. There was a reasonable likelihood that Bishop’s truck could have 

struck a person or a piece of equipment on the haul road, could have struck a miner or a piece of 

equipment while crossing the prep plant’s main road, could have crashed and fallen into the prep 

plant’s dump site, or Bishop himself could have been thrown from the cab of the truck – all of 

which could reasonably result in a fatality. (Tr.II 108:13 – 109:2; Tr.II 154:18 – 155:11; Tr.II 

155:19 – 156:4) I find that the Secretary proved by a preponderance of the evidence that 

significant and substantial designation was warranted here. 

Penalty 

Under Section 110(i) of the Mine Act, the Commission is to consider the following when 

assessing a civil penalty: (1) the operator’s history of previous violations; (2) the appropriateness 

of such penalty to the size of the business of the operator charged; (3) whether the operator was 

negligent; (4) the effect on the operator's ability to continue in business; (5) the gravity of the 

violation; and (6) the demonstrated good faith in abatement of the violative condition. 30 U.S.C 

§ 820(i). Thus, the Commission alone is responsible for assessing final penalties. See Sellersburg 

Stone Co. v. FMSHRC, 736 F.2d at 1151-52 (“[N]either the ALJ nor the Commission is bound 

by the Secretary's proposed penalties ... we find no basis upon which to conclude that [MSHA's 

Part 100 penalty regulations] also govern the Commission.”); See American Coal Co., 35 

FMSHRC 1774, 1819 (July 2013)(ALJ Zielinski). 

The Commission has repeatedly held that substantial deviations from the Secretary's 

proposed assessments must be adequately explained using the Section 110(i) criteria. E.g., 

Sellersburg Stone Co., 5 FMSHRC at 293; Hubb Corp., 22 FMSHRC 606, 612 (May 

2000); Cantera Green, 22 FMSHRC 616, 620-21 (May 2000) (citations omitted). A judge need 

not make exhaustive findings but must provide an adequate explanation of how the findings 

contributed to his or her penalty assessments. Cantera Green, 22 FMSHRC at 622. 

 In this case, Clintwood’s history of violations is not an aggravating factor, however 

Clintwood is a moderate sized operator, controlled by a large entity. (Tr.II 93:17 -94:3) I found 

no negligence. Clintwood stipulated that the proposed penalty would not affect its ability to 

remain in business. (Joint Prehearing Rep., Stipulation 7) The gravity of the violation was very 

serious, because the runaway truck could have resulted in a fatality. At the initial hearing, there 

was a conflict whether Clintwood demonstrated good faith in abating the violation because the 

parties could not agree to an accident plan, but I consider Clintwood’s abatement response 

appropriate. Considering all of these factors, I find that a penalty of $1,140.00 is appropriate. 

38 FMSHRC Page 468
WHEREFORE, it is ORDERED that Clintwood pay a penalty of $1,140.00 within 

thirty (30) days of the filing of this decision. 

 It is further ORDERED that Citation No. 6660595 be MODIFIED from a 104(d)(1) 

citation to a 104(a) citation. 

/s/ L. Zane Gill 

 L. Zane Gill 

 Administrative Law Judge 

Distribution: 

Matthew S. Shepherd, Esq., U.S. Dept. of Labor, Office of the Solicitor, 618 Church Street, 

Suite, 230, Nashville, TN 37219-2456 

Melanie Kilpatrick, Esq., Rajkovich, Williams, Kilpatrick & True, PLLC, 3151 Beaumont 

Centre Circle, Suite 375, Lexington, KY 40513 

38 FMSHRC Page 469
FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

OFFICE OF ADMINISTRATIVE LAW JUDGES 

7 PARKWAY CENTER, SUITE 290 

875 GREENTREE ROAD 

PITTSBURGH, PA 15220 

TELEPHONE: 412-920-7240 / FAX: 412-928-8689 

March 24, 2016 

DECISION AND ORDER

Appearances: Anthony M. Fassano, Esq., U.S. Department of Labor, Philadelphia, PA, 

for Petitioner 

Patrick W. Dennison, Esq., Jackson Kelly, PLLC, Pittsburgh, PA, for 

Respondent 

Before: Judge Lewis 

These cases are before the Court upon two petitions for assessment of civil penalties 

under Section 105(d) of the Federal Mine Safety and Health Act of 1977, 30 U.S.C. § 801 et seq. 

(2012). PENN 2015-42 contains one section 104(d)(2) order, and PENN 2015-41 contains 15 

section 104(a) citations, two of which remain at issue.1

A hearing in this matter occurred on Tuesday, July 14, 2015, in Pittsburgh, Pennsylvania. 

The Court heard testimony from three witnesses: Jason Tungate, MSHA Inspector; Chris 

Demidovich, maintenance supervisor; and Shane Jobes, outside shop and maintenance foreman. 

Two witnesses, Christopher O’Neil, assistant manager of maintenance for Pennsylvania 

operations, and Brian Henry, a hoistman, were allowed to provide testimony at subsequent 

depositions. 

During the hearing, the parties entered the following joint stipulations into evidence: 

1. At all relevant times, Respondent is/was an “operator” as defined in § 3(d) of

the Federal Mine Safety and Health Act of 1977, as amended (hereinafter

referred to as “the Mine Act”), 30 U.S.C. § 803(d), of the Enlow Fork Mine.

1

 The parties settled 13 of the 15 citations contained in PENN 2015-41. That settlement is 

approved by the Court in this Decision and Order, and the terms of the settlement are contained 

in Appendix A. 

SECRETARY OF LABOR 

 MINE SAFETY AND HEALTH 

 ADMINISTRATION (MSHA), 

 Petitioner, 

v. 

CONSOL PENNSYLVANIA 

 COAL COMPANY LLC, 

 Respondent. 

CIVIL PENALTY PROCEEDINGS 

Docket No. PENN 2015-41 

A.C. No. 36-07416-365834

Docket No. PENN 2015-42 

A.C. No. 36-07416-365834

Mine: Enlow Fork Mine 

38 FMSHRC Page 470
2. The Enlow Fork Mine, at which the Citations and Order in contest were 

issued, is an underground coal mine subject to the jurisdiction of the Mine 

Act. 

3. This proceeding is subject to the jurisdiction of the Federal Mine Safety and 

Health Review Commission and its designated Administrative Law Judges 

pursuant to Sections 105 and 113 of the Mine Act. 

4. The individual whose name appears in Block 22 of the Citations and Order in 

contest was acting in an official capacity and as an authorized representative 

of the Secretary of Labor when the Citations and Order were issued. 

5. The Citations and Order at issue, as well as any modifications thereto, were 

properly served by a duly authorized representative of the Secretary of Labor, 

the Mine Safety and Health Administration, upon an agent of Respondent on 

the date and place stated therein. 

6. Payment of the total proposed penalty of the citations and order at issue in this 

matter will not affect Respondent’s ability to continue in business. 

7. Consol demonstrated good faith in the abatement of the alleged violations. 

8. The parties stipulate to the authenticity of the exhibits referenced in the parties 

Prehearing Statements (with all amendments thereto) but not to the relevancy 

or the truth of the matters asserted therein. The Secretary has not stipulated to 

the authenticity of Mr. Shane Jobes’s notes, which were provided to Counsel 

for Consol and Solicitor Anthony Fassano on July 13, 2015. 

9. With respect to Citation No. 7018138 Respondent admits that a violation of 

30 C.F.R. § 50.10(d) occurred, and that the Citation was properly designated 

as "Unlikely" and Non-S&S. 

10. With respect to Citation No. 7018138, the Citation was properly designated as 

"Lost Workdays or Restricted Duty." 

11. With respect to Citation No. 7018138, the Citation was properly designated as 

“1 Persons Affected.” 

12. With respect to Citation No. 7018139, if a violation of 30 C.F.R. § 77.1401 

occurred, the Citation was properly designated as “Unlikely” and Non-S&S. 

13. With respect to Citation No. 7018139, if a violation of 30 C.F.R. § 77.1401 

occurred, the Citation was properly designated as “Lost Workdays or 

Restricted Duty.” 

14. With respect to Citation No. 7018139, if a violation of 30 C.F.R. § 77.1401 

occurred, the Citation was properly designated as “1 Persons Affected.” 

15. With respect to Order No. 7018140, Respondent admits that a violation of 30 

C.F.R. § 77.1400-4 occurred. 

38 FMSHRC Page 471
16. With respect to Order No. 7018140, the Order was properly designated as “1

Persons Affected.”

JX-1 at 1-3.2

Given the stipulations of the parties, the remaining issues before the Court are: (1) 

whether Citation No. 7018138 was properly designated as high negligence; (2) whether, as set 

forth in Citation No. 7018139, there was a violation of 30 C.F.R. § 77.1401, and, if so, whether it 

was properly designated as low negligence; (3) whether Order No. 7018140 was properly 

designated as reasonably likely, significant and substantial, high negligence, and an 

unwarrantable failure; and (4) the appropriate penalty for each violation. 

I. Summary of the Testimony

Enlow Fork Mine (“the Mine”) is an underground coal mine operated by Consol 

Pennsylvania Coal Company LLC (“Consol”) and is located in western Pennsylvania. The Mine 

is considered a large coal mine by the Mine Safety and Health Administration (“MSHA”). See

Sec’y of Labor’s Petition for Assessment of Civil Penalty, Ex. A, No. PENN 2015-41; 30 C.F.R. 

§ 100.3, Table I. The mine has two slope hoists, the Enlow slope hoist and the Oak Springs slope

hoist. Tr. 97-98. The areas are located approximately six miles apart, which takes 10-15 minutes

to drive. Tr. 82, 163. This proceeding concerns the Oak Springs slope hoist.

A slope is a diagonal entrance to a mine created by blasting into the ground until the 

operator of a mine reaches the coal seam. Tr. 150. The slope at Oak Springs is 2,700 feet long, 

and has a grade of 16 degrees. Tr. 157. Coal is transported out of Enlow Fork Mine up the Oak 

Springs slope via a belt, and the coal is then transported over land back to the Enlow area. Tr. 

150. 

A slope hoist consists of several parts, including the personnel or “brakeman” car, the 

rope, the spool, the motor, the gearbox, the driver, and the operator station. It is used to bring 

personnel and supplies into and out of the mine. Tr. 97, 99. The Mine has three hoists: the Enlow 

slope hoist, a vertical hoist, and the Oak Springs slope hoist. Tr. 98. The Enlow slope hoist is 

similar to the Oak Springs slope hoist, and the vertical hoist is effectively an elevator for the 

transport of personnel only. Id.

The Oak Springs slope hoist is the most technologically advanced of the three hoists. Tr. 

98. The hoist is equipped with a Programmable Logic Controller (PLC) and a Hoist Safety

Supervisor (HSS). RX-K at 6-7. Both systems monitor the operation and condition of the hoist as

well as monitor each other. Tr. 65-67. If the systems detect a problem with the hoist (a “fault”), it

will show up on a screen in a control room, and the HSS and PLC have the ability to stop the car

slowly (controlled stop fault) or abruptly (emergency stop fault). Tr. 117-18, 120-21. The screen

also shows the speed, torque, and position of the car for each fault. Tr. 122.

The Oak Springs slope hoist took approximately two years to construct. Tr. 27-28. It was 

built by a contractor, Frontier-Kemper Lake Shore (“Frontier-Kemper”). Tr. 102. Before a slope 

2

 Joint exhibits will be cited as “JX,” the Secretary’s exhibits will be cited as “GX,” and 

Respondent’s exhibits will be cited as “RX.” 

38 FMSHRC Page 472
hoist can be put into operation, it must be commissioned. Tr. 100. In this instance, the 

commissioning ceremony (or “witness test”) was held on April 1, 2014, at which FrontierKemper performed a series of tests for Consol, the Pennsylvania Bureau of Deep Mine Safety, 

and MSHA. Tr. 60-62. If the tests are successful, the state of Pennsylvania approves the hoist for 

use, and the hoist gets a certification number. O’Neil Dep. 11.3

 There is no equivalent 

requirement for MSHA to certify or approve the hoist prior to operation. Id. 

Consol’s maintenance supervisor, Chris Demidovich, was present at the ceremony.4

 Tr. 

98-99. He stated that they tested the max load for the hoist, 107 tons, by assembling 100 tons to 

add to the weight of the brakeman car. Tr. 103. Once the hoist was loaded, they sent it down the 

slope shaft and hit the brakes to make sure the brakes would hold the weight. Id. They also 

demonstrated overtravel and overspeed safety features. Id. Demidovich testified that at the end of 

the ceremony on April 1, 2014, “[e]verybody seemed to be satisfied that [Consol] was okay to 

put this hoist in operation.” Tr. 104. 

According to Christopher O’Neil, Consol’s Assistant Manager of Maintenance for the 

Pennsylvania Operations, Frontier-Kemper had additional items to complete after the ceremony.5

O’Neil Dep. 12; RX-E. Some of the items were from Consol, and some were from the State. Id.

Consequently, O’Neil stated, the commissioning was not finished until the items were completed 

and he signed the “Commission Certification.” Id. He signed the Commission Certification, 

 3

 The transcript from Christopher O’Neil’s deposition will be cited as “O’Neil Dep.” The 

transcript from Brian Henry’s deposition will be cited as “Henry Dep.” 

4

 At the time of the hearing, Chris Demidovich had worked for Consol at Enlow Fork 

Mine for thirteen and a half years. Tr. 94. During that time period, he had been a mechanic, 

maintenance foreman, maintenance supervisor, and senior electrical supervisor. Tr. 94-95. Prior 

to working at Enlow Fork, he performed maintenance at Dana Mining for four years. Tr. 95. He 

holds a Pennsylvania bituminous mining certification as a miner and is a Pennsylvania certified 

electrician. Tr. 95. In March and April of 2014, Demidovich was a maintenance supervisor. Tr. 

96. His responsibilities included overseeing other mechanics, performing preventative 

maintenance, and ensuring generally that machines were in safe operating condition and 

permissible. Tr. 96. 

5

 O’Neil had worked for Consol Energy since graduating from college in 1995. O’Neil 

Dep. 4. He worked as an industrial engineer, shift maintenance foreman, electrical engineer, 

longwall maintenance coordinator, master mechanic, general maintenance mechanic, and 

assistant manager of maintenance. O’Neil Dep. 4. When he was deposed, he was currently 

working as the assistant manager of maintenance of the Consol Pennsylvania operations. O’Neil 

Dep. 4, 5. He has a B.S. in electrical engineering technology and a Master’s in Business 

Adminstration. O’Neil Dep. 5. He also has a federal electrician certification and an MSHA 

instructor certification for Part 48. O’Neil Dep. 5. As assistant manager of maintenance, his 

duties and responsibilities included involvement with underground, surface, and plant 

equipment, including the purchase of equipment and assuring written specifications are met. 

O’Neil Dep. 6. With reference to hoist installation, O’Neil acts as a liaison between Consol and 

the State of Pennsylvania, including facilitating the approval process. O’Neil Dep. 6. 

38 FMSHRC Page 473
which states that “[t]he owner herby [sic] accepts the above listed hoist system as complete, and 

assumes operational and maintenance responsibilities of the system,” on April 7, 2014. RX-C. 

Additionally, as of the commissioning ceremony, Frontier-Kemper had not trained Consol’s 

hoist operators. O’Neil Dep. 13. They were trained on April 3, 2014. Tr. 106; RX-F at 17. The 

Commissioning Report also states that “[t]he commissioning consisted of successful completion 

of the included checklists, required periodic tests, and training of 16 Consol hoistmen.” RX-F at 

3. 

Chris Demidovich, hoistman Brian Henry, and 15 others attended the training on April 3, 

2014.6

 Tr. 105-06; Henry Dep. 12; RX-F at 17. During the training, the Frontier-Kemper 

representative instructed the miners on the operation of the hoist, all of the fault screens and 

panels in the hoist building, the brake systems, and how to check the safety features. Tr. 106-07; 

Henry Dep. 12. There were no discussions about daily examinations at that time. Henry Dep. 12. 

Demidovich, however, had one of his mechanics record that a weekly examination had been 

performed, since Frontier-Kemper covered all of the safety devices on the brakeman car and the 

mechanic was trained. Tr. 109. On April 3rd and April 4th, Consol recorded weekly electrical 

examinations of the slope car, the slope pump, and the slope rope.7 RX-D at 1. 

After the training, Brian Henry was sent from the Enlow slope to the Oak Springs slope 

to watch the belts that ran up the slope with the hoist. Henry Dep. 13. During this time, Henry 

operated the Oak Springs slope hoist to hoist a fire boss so that he could examine self-contained 

self-rescuer stations along the slope. Id. He was never directed to hoist the fire boss, but the fire 

boss asked if the hoist was operational, and to Henry’s knowledge, it was, so he pulled up the 

fire boss. Id. Henry could not recall who told him that the hoist was operational. Id. at 14. Shane 

Jobes and Inspector Jason Tungate also testified that another fireboss was pulled out of the mine 

by another hoist operator.8 Tr. 48; Tr. 160. 

6

 Brian J. Henry also gave testimony by deposition subsequent to the hearing. Henry had 

been employed as a hoistman at Enlow Fork Mine since 2013 and had worked for Consol for 10 

years. Henry Dep. 7-8. His past jobs included mine operator, mine side bolter, loader operator, 

and motorman. Henry Dep. 7. He was a certified hoistman and had been paid on an hourly basis 

at the time of the written citation and order. Henry Dep. 7-8. 

7

 A slope pump is a pump midway down the shaft that must be examined to make sure it 

is in permissible condition. Tr. 110. 

8

 Shane Jobes was the outside shop and maintenance foreman at Enlow Fork Mine at the 

time of the hearing and in April of 2014. Tr. 149. He had worked at Enlow Fork Mine since 

September 2013, and before that was with engineering and maintenance groups with Consol 

since 1998. Tr. 147. He started working for Consol at the Bailey Prep plant in 1991, just after he 

graduated from West Virginia Institute of Technology, where he received a bachelor’s in 

engineering. Tr. 149. His duties included repairing broken parts in the maintenance shop and 

sending away broken parts to get repaired. Tr. 149. 

(continued...) 

38 FMSHRC Page 474
Between April 3, 2014, and April 10, 2014, three issues occurred on the Oak Springs 

slope hoist. The first, an overspeed glitch, occurred between April 3rd and April 8th. Tr. 123. 

When the hoist was operated at 600 feet per minute, the HSS showed a fault because the 

brakeman car’s overspeed control and the hoist drum’s overspeed control were not 

communicating. Id. To fix the issue, Consol turned one of the controls “maybe five feet a minute 

lower than the HSS [to] kind of give it a little bit of a buffer so those two could try to keep in 

sync with each other. Id. At 600 feet per minute, they could run the hoist for a little while 

without having a fault, then they could hit the “fault reset and acknowledge button” to run it 

again, but when they slowed down the hoist to 300 feet per minute, “it worked flawlessly.” Tr. 

123-24.

The second issue, a kink in the hoist’s rope, occurred on April 7th. Tr. 138. Brian Henry, 

the hoistman, dropped dollies, or flat cars used to haul equipment, into the mine using the Oak 

Springs slope hoist. Henry Dep. 15. When the dollies reached the bottom of the hoist, Henry 

surmised at the hearing, the motormen hooking up to the dollies “must have pushed the car up 

the hill too far and it kinked the rope.” Henry Dep. 16. At that same time, Demidovich was with 

Chris O’Neil and Tom Muser, maintenance managers, at Oak Springs, looking at the conveyor 

belt system, and O’Neil and Muser wanted to stop by the hoist house to look at the hoist remote 

building. Tr. 125. When they exited the hoist house, the brakeman car had returned to the top of 

the rope, and they noticed the kink in the rope. Tr. 125; Henry Dep. 16. Demidovich called 

Ketchem Construction to reterminate the rope. Tr. 138. They were at the Enlow slope portal that 

day, however, so Ketchem could not perform the work until April 8th. Id. The hoist was taken 

out of service until Ketchem “reterminated” the rope on April 8th by removing the 25 feet that 

contained the kink and reconnecting the rope to the brakeman car. O’Neil Dep. 19; Tr. 126. 

The third issue occurred on April 8th when the three overtravel devices failed to stop the 

brakeman car from crashing into the shiv wheel at the top of the hoist. After Ketchem 

reterminated the rope, they asked Tom Nelms, a hoist operator, to do a full test run of the hoist 

before they left the area. Tr. 126. When he did so, he failed to drop the brakeman car far enough 

into the mine to resync the system with the reset switch. Id. Because he did not resync the 

system, the HSS and PLC systems, which set a limit for how far up or down the slope hoist the 

brakeman car can go, did not register that the rope was now 25 feet shorter than it was prior to 

the retermination. Id. Consequently, when the car reached the top of the hoist, the systems did 

not register that it had done so. Regardless, a third overtravel device, a “mechanical limit 

switch,” should have stopped the car short of running into the shiv wheel. This switch failed, too. 

Tr. 52. 

8

 (...continued) 

MSHA Inspector Jason Tungate appeared and testified on behalf of the Secretary. 

Tungate’s duties as an inspector included the inspection of hoists and elevators at mines and 

approving shaft and slope plans. Tr. 21. He had worked for 5 years with MSHA as an electrical 

specialist and an additional 4 years as a general inspector. Tr. 21-22. Prior to working for 

MSHA, Tungate had worked as an underground electrician, mine supply contractor, and general 

laborer. Tr. 24. He possessed an Associate’s degree in electrical engineering. Tr. 25. Tungate 

was familiar with Enlow Fork, having both inspected and worked at the mine. Id. 

38 FMSHRC Page 475
The mechanical limit switch consisted of a spring-loaded, foot-long rod that, when struck 

by the car, should have caused the car’s brakes to engage. Tr. 127. However, the inch-wide plate 

on the car “barely caught the end of the rod, so when it shoved the rod down . . . and it went past 

the rod, the rod popped itself back up in a neutral position.” Id. 

On Thursday, April 10, 2014, Inspector Tungate conducted an inspection at the Oak 

Springs portal. Tr. 28. His supervisor had told him that an inspector at the mine on April 9, 2014, 

was made aware of issues with the hoist, so Tungate’s supervisor sent Tungate to look at the 

hoist. Tr. 84. The cited conduct and conditions were discovered by Tungate during the April 10th 

inspection. 

Inspector Tungate issued Citation No. 7018138 for a violation of 30 C.F.R. § 50.10(d), 

which requires that a mine operator contact MSHA within 15 minutes if a hoist sustains damage 

that endangers an individual or interferes with use of the hoist for more than 30 minutes. See

GX-5. He marked the cited condition as unlikely to result in a lost workdays or restricted duty 

injury or illness, not significant and substantial, but resulting from high negligence, with one 

person affected. Id. At the hearing, Tungate stated that he designated the citation as high 

negligence because the mine knew, because they have other hoisting systems at the mine, that “if 

there’s something that causes the hoist to be down for longer than 30 minutes they have to report 

it.” Tr. 57. 

Inspector Tungate issued Citation No. 7018139 for a failure to have automatic stop 

controls in violation of 30 C.F.R. § 77.1401. See GX-3. He designated this violation as unlikely 

to result in a lost workdays or restricted duty injury or illness, not significant and substantial, and 

the result of low negligence, with one person affected. Id. Tungate designated the negligence as 

low because the violation occurred during a test run and the failure to reset the sensors, which 

caused two of the automatic stop controls to fail, was inadvertent. Tr. 54. 

Finally, Tungate issued Order No. 7018140 due to Consol’s failure to record daily 

examinations between April 1, 2014, and April 9, 2014. 30 C.F.R. §75.1400-4 requires that daily 

examinations be recorded after each examination is completed and be retained for one year. See

GX-1. He designated the violation as reasonably likely to result in a lost workdays or restricted 

duty injury or illness, significant and substantial, the result of high negligence, affecting one 

person, and an unwarrantable failure to comply with a mandatory safety standard. Id. Tungate 

stated at the hearing that a high negligence finding was warranted, mainly, because the mine took 

ownership of the hoist on April 1st, and no exams were recorded in the next nine days, even 

though the hoist was operated by qualified operators and company officials were around the hoist 

throughout the time period. Tr. 40. When Tungate arrived at the hoist house, additionally, he saw 

the empty examination book sitting within five feet of the hoist operator on a table or electrical 

box, with no other books around. Tr. 44. 

II. Findings of Fact and Conclusions of Law 

The findings of fact are based on the record as a whole and my careful observation of the 

witnesses during their testimony. In resolving any conflicts in the testimony, I have taken into 

consideration the interests of the witnesses, or lack thereof, and consistencies, or inconsistencies, 

in each witness’s testimony and between the testimonies of the witnesses. In evaluating the 

38 FMSHRC Page 476
testimony of each witness, I have also relied on his demeanor. Any failure to provide detail as to 

each witness’s testimony is not to be deemed a failure on my part to have fully considered it. The 

fact that some evidence is not discussed does not indicate that it was not considered. See Craig v. 

Apfel, 212 F.3d 433, 436 (8th Cir. 2000) (administrative law judge is not required to discuss all 

evidence and failure to cite specific evidence does not mean it was not considered). 

A. Citation No. 7018138 Is Properly Designated as High Negligence 

Citation No. 7018138 was issued due to a violation of 30 C.F.R. § 50.10(d), which 

requires the operator to “immediately contact MSHA at once without delay and within 15 

minutes . . . once the operator knowns or should know that an accident has occurred involving 

. . . [a]ny other accident.” The regulations define accident broadly, but it includes “[d]amage to 

hoisting equipment in a shaft or slope which endangers an individual or which interferes with use 

of the equipment for more than thirty minutes.” 30 C.F.R. § 50.2(h)(11). 

 Inspector Tungate issued the citation because Consol failed to report the kink in the rope 

and the damage caused when the car was pulled into the shiv wheel following retermination of 

the rope by Ketchem. GX-5. 

i. Negligence Determination 

Consol has stipulated to the fact of violation for Citation No. 7018138. JX-1, ¶ 9. Consol 

has also stipulated that the violation was properly characterized as unlikely, non-S&S, that the 

reasonably likely injury was lost workdays or restricted duty, and that one person would likely be 

affected. JX-1, ¶¶ 9-11. The only remaining issues with respect to this violation are whether the 

inspector properly characterized it as being due to high negligence, and the appropriate penalty 

to be assessed. 

 The Secretary defines high negligence as requiring that “management knew or should 

have known of a violation, and there are no mitigating factors.” 30 C.F.R. § 100.3(d), Table X. 

Respondent urges use of this definition as well. Resp’t Br. 29. Judges, however, are not bound by 

the Secretary’s definitions of negligence. Wade Sand & Gravel, 37 FMSHRC 1874, 1878 n.5 

(Sept. 2015). The Commission has a broader definition of high negligence, which requires that 

such a finding result from “an aggravated lack of care that is more than ordinary negligence.” E. 

Assoc. Coal Corp., 13 FMSHRC 178, 187 (Feb. 1991). Under this definition, “a Commission 

Judge may find ‘high negligence’ in spite of mitigating circumstances or may find ‘moderate’ 

negligence without identifying mitigating circumstances.” Brody Mining, LLC, 37 FMSHRC 

1687, 1703 (Aug. 2015). 

 

 The Court agrees that the citation was properly characterized as high negligence. Consol 

is a seasoned operator, and has another hoist and elevator at Enlow Fork Mine. Not only does it 

know of the responsibility to report accidents, members of mine management had personal 

knowledge of the damage that occurred and the time that it took to abate the kinked rope. 

Without reporting accidents, MSHA cannot investigate causes and cannot work to prevent 

additional accidents. 

38 FMSHRC Page 477
 Respondent argues that the hoist was not being used for production purposes, that 

Ketchem was directing the hoistman when the car was pulled into the shiv, that the hoist was not 

a designated escapeway, and that, although the hoistman had pulled firebosses in the car, he was 

never directed to do so. Resp’t Br. 30-31. However, Respondent identifies no basis in the 

caselaw or regulations that would exempt it from the reporting requirement of § 50.10(d) for any 

of these reasons, and the Court does not recognize these as mitigating circumstances. 

 Respondent also asserts that MSHA’s designation of Citation No. 7018139 as “low 

negligence” is inconsistent with a finding of high negligence for this citation. Resp’t Br. 32. This 

assertion is unpersuasive because the negligent conduct that resulted in each violation is 

completely different. For this citation, a finding of high negligence is warranted because (1) mine 

management knew of the damage to the rope and the subsequent damage to the shiv wheel, and 

(2) mine management knew of the requirement in § 50.10(d) by virtue of the fact that the mine 

has another operating hoist. The negligence that resulted in Citation No. 7018139 was based on 

the short length of time the condition existed and the fact that the hoistman should have known 

that the hoist would need to be resynced following the retermination of the rope. The negligence 

that caused the automatic stop controls to fail is irrelevant and unrelated to the mine’s negligence 

in failing to report the resulting accident to MSHA. 

ii. Penalty Determination 

When assessing civil penalties, the Commission considers the factors contained in section 

110(i) of the Mine Act. These six factors are: 

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. 

30 U.S.C. § 820(i). The parties stipulated that the penalties as assessed by the Secretary would 

not affect Respondent’s ability to continue in business, and Respondent demonstrated good faith 

in abating the violations. JX-1, ¶¶ 6-7. 

 The Court finds that Respondent had no history of violations of this type, the operator 

was highly negligent, and the gravity, with injury unlikely to occur, was somewhat low. Based 

on these factors, the Court finds that the Secretary’s proposed penalty is appropriate. 

Accordingly, a civil penalty of $362.00 is assessed against Respondent for Citation No. 7018138. 

B. The Conduct in Citation No. 7018139 Violates 30 C.F.R. § 77.1401, and the 

Citation Is Properly Designated as Low Negligence 

i. The Fact of Violation 

 The Secretary has carried his burden of proof, establishing that Respondent violated 30 

C.F.R. § 77.1401 by a preponderance of the evidence. The standard requires that “[h]oists and 

38 FMSHRC Page 478
elevators shall be equipped with overspeed, overwind, and automatic stop controls and with 

brakes capable of stopping the elevator when fully loaded.” 30 C.F.R. § 77.1401. 

 The undisputed record discloses that the Oak Springs slope hoist was equipped with three 

stop controls: the PLC system, the HSS system, and the mechanical switch. Tr. 127. All three, 

however, failed to stop the car, and the car crashed into the shiv wheel. Tr. 52. 

 The Secretary interprets § 77.1401 as requiring that “the hoist be equipped with 

automatic stop controls capable of stopping the hoist.” Sec’y Br. 20. Consequently, those that fail 

to stop the hoist do not satisfy the plain meaning of the regulation. Id. It is unclear, however, 

whether the adjective phrase “capable of stopping the elevator when fully loaded” modifies only 

the noun “brakes,” or both “brakes” and the series “overspeed, overwind, and automatic stop 

controls.” Because the regulation is ambiguous, the Secretary’s reasoned interpretation is entitled 

to deference unless “plainly erroneous or inconsistent with the regulation.” Auer v. Robbins, 519 

U.S. 452 (1997) (quoting Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 359 

(1989)). 

 Regardless of whether the Secretary’s interpretation of the standard is correct, automatic 

stop controls by their very nature must be able to stop the car in order to comply with the 

regulation, and the Court finds Respondent’s arguments to the contrary unpersuasive. 

Respondent argues that the hoist was “equipped” with automatic stop controls, and it therefore 

met the standard, even though they were not functioning due to operator error. Resp’t Br. 27.9

This is a distinction without a difference, because the operator’s actions caused the stop controls 

to no longer function, and controls that do not automatically stop a brakeman car from running 

into the shiv wheel at the top of the hoist do not meet the definition of “automatic stop controls” 

for the purposes of § 77.1401. If non-functioning stop controls met the standard, the standard 

would be rendered useless since they would not achieve the purpose for which they are 

intended—actually stopping the car. 

To the extent that operator error played a role in the brakeman car’s failure to stop, such a 

factor may be taken into consideration in determining the degree of negligence but not as to 

whether a violation of § 77.1401 had taken place. Additionally, the mechanical switch would not 

have been capable of stopping the car even in the absence of error. Regardless of whether the 

 9

 Respondent’s “plain language” argument is reminiscent of that rejected by the 

Commission in Watkins Engineers & Constructors, 24 FMSHRC 669 (July 2002). The operator 

in that case argued that 30 C.F.R. § 56.15005, which requires that “[s]afety belts and lines shall 

be worn when persons work where there is danger of falling,” does not require that “such belts 

and lines be used or ‘tied off.’” 24 FMSHRC at 681. The Commission disagreed with this 

reading, and instead cited to its statement in a similar case that “[a]lthough a literal reading of the 

standard might suggest that compliance is achieved whenever a miner wears any kind of line in 

any manner, such an interpretation is inconsistent with the [safety enhancing] purposes of the 

Part 57 regulations and this standard in particular.” Id. at 682 (quoting Kerr-McGee Corp., 3 

FMSHRC 2496, 2497 (Nov. 1981)) (alterations in original). Similarly, stop controls that are nonfunctioning and unable to serve the purpose for which they are “equipped” do not meet the 

requirements of 30 C.F.R. § 77.1401. 

38 FMSHRC Page 479
hoist operator, who had only been trained a few days earlier, see RX-H, had failed to resync the 

system, none of the automatic stop devices, including the mechanical switch, actually stopped 

the car when they should have. 

ii. Negligence Determination 

 Given the stipulations of the parties, the gravity of the violation of § 77.1401 was 

properly designated as “unlikely,” the injury that could reasonably be expected was “lost 

workdays or restricted duty,” and the violation itself was non-S&S with “1 person affected.” See 

JX-1, ¶¶ 12-14. This Court found nothing in the record to contraindicate said designations, 

leaving only the question of whether the negligence was properly characterized as “low.” 

 30 C.F.R. § 100.3, Table X, provides that a finding of low negligence is warranted when 

“the operator knew or should have known of the violative condition or practice, but there are 

considerable mitigating circumstances.”10

 Respondent was aware that Ketchem had reterminated the rope, so Respondent clearly 

knew or should have known of the violative condition. However, as noted by Inspector Tungate, 

the condition had existed for only a few hours. Tr. 54; GX-4. Given that Respondent had acted 

on constructive knowledge that the hoist car would need to be resynced following retermination 

so that the systems could accurately measure the rope’s length and the stopping distance, 

Respondent has not advanced any persuasive argument for a finding of no negligence. See 30 

C.F.R. § 100.3, Table X (“The operator exercised diligence and could not have known of the 

violative condition or practice.”). Accordingly, the Court finds that Citation No. 7018139 was 

appropriately designated as arising from low negligence. 

iii. Penalty Determination 

 The Court finds that Respondent had no history of this type of violation, Respondent is a 

large operator, Respondent showed low negligence in committing the violation, and the gravity 

was otherwise low. Considering those factors and the factors stipulated to by the parties, the 

Court finds that the originally assessed penalty, $100.00, is appropriate for Citation No. 

7018139. 

C. Order No. 7018140 Is Properly Designated as Reasonably Likely, Significant 

and Substantial, High Negligence, and Resulting from an Unwarrantable 

Failure 

Order No. 7018140 was issued to Respondent for failing to record the hoist examination 

for nine days, from April 1, 2014, to April 9, 2014. GX 1. It is undisputed that during his April 

10, 2014, inspection, MSHA Inspector Tungate found that the examination book for the Oak 

Springs slope hoist was blank. Respondent was unable to produce any records of daily exams for 

 10 The Commission has stated that ALJs are not bound by the Secretary’s negligence 

definitions in Part 100, see, e.g., Wade Sand & Gravel, 37 FMSHRC at 1878 n.5, but the Court 

finds the Secretary’s definitions of low and no negligence to be appropriate in this case. 

38 FMSHRC Page 480
the time period of April 1 through April 9, 2014. Given such, the parties stipulated that 30 C.F.R. 

§ 75.1400-4 was violated and that this violation affected one person. 

 

30 C.F.R. § 75.1400-4, in reference to daily examination of hoists, provides: 

At the completion of each daily examination required by § 75.1400, the person 

making the examination shall certify, by signature and date, that the examination 

has been made. If any unsafe condition is found during the examinations required 

by § 75.1400-3, the person conducting the examination shall make a record of the 

condition and the date. Certifications and records shall be retained for one year. 

i. Significant and Substantial and Likelihood 

 Well-settled Commission precedent sets forth the standard used to determine if a 

violation is Significant and Substantial (S&S). A violation is S&S “if, based upon the particular 

facts surrounding the violation there exists a reasonable likelihood that the hazard contributed to 

will result in an injury or illness of a reasonably serious nature.” Cement Div., Nat’l Gypsum Co., 

3 FMSHRC 822, 825 (April 1981). The Commission later clarified this standard: 

In order to establish that a violation of a mandatory safety standard is significant 

and substantial under National Gypsum, the Secretary of Labor must prove: (1) 

the underlying violation of a mandatory safety standard; (2) a discrete safety 

hazard – that is, a measure of danger to safety – contributed to by the violation; 

(3) a reasonable likelihood that the hazard contributed to will result in an injury; 

and (4) a reasonable likelihood that the injury in question will be of a reasonably 

serious nature. 

Mathies Coal Co., 6 FMSHRC 1, 3-4 (Jan. 1984). This determination “must be made at the time 

the citation is issued ‘without any assumptions as to abatement’ and in the context of ‘continued 

normal mining operations.’” Paramont Coal Co., 37 FMSHRC 981, 985 (May 2015) (quoting 

U.S. Steel Mining Co., 6 FMSHRC 1573, 1574 (July 1984)). 

Since Respondent stipulated to the fact of the violation, and 30 C.F.R. § 75.1400-4 is a 

mandatory safety standard, the first element of Mathies has been proven by the Secretary. The 

second prong of Mathies is also clearly satisfied. The failure to record daily examinations clearly 

contributes to a discrete safety hazard: hoist operators, miners, or MSHA inspectors may be 

unaware of unsafe conditions with the hoist that would pose a hazard for transporting men or 

materials. See Tr. 37-38. 

 The third element of the Mathies test—a reasonable likelihood that the hazard contributed 

to will result in an injury—is also supported by the record and applicable case law. The 

Commission discussed the third element of the Mathies test in Musser Engineering, Inc., 32 

FMSHRC 1257, 1280-81 (Oct. 2010) (affirming an S&S violation for using an inaccurate mine 

map). The Commission held that the “test under the third element is whether there is a 

reasonable likelihood that the hazard contributed to by the violation . . . will cause injury.” Id. at 

38 FMSHRC Page 481
1281. Importantly, the “Secretary need not prove a reasonable likelihood that the violation itself 

will cause injury.” Id. 

 The lack of notice of a possible unsafe condition on the hoist due to the lack of a daily 

examination record clearly creates a reasonable likelihood that the hazard contributed to will 

result in an injury. Viewed through the perspective of continued mining operations, the Court 

assumes that Respondent would continue to fail to record daily examinations. Fire bosses at 

Enlow Fork Mine would continue to be exposed as they utilized the slope hoist while conducting 

their preshift examinations. See Tr. 39. These preshift examinations take place three times per 

day, once per shift. Miners traveling in a hoist that had unrecorded unsafe conditions could be 

thrown about if the hoist moved suddenly or had a violent impact due to a collision or an 

emergency stop. Tr. 39-40. 

 The Secretary has also established the fourth and final element of Mathies: “A reasonable 

likelihood that the injury in question will be of a reasonably serious nature.” Mathies, 6 

FMSHRC at 3-4. Being thrown about in a hoist that is malfunctioning, causing it to overspeed or 

overtravel, or causing sudden movements or violent impacts, creates a reasonable likelihood that 

injuries will be of a reasonably serious nature. 

 Respondent argues an injury was not reasonably likely to occur due to the recording 

violation because of the redundant safety features and “the significant attention paid to and work 

conducted on the hoist during the relevant time.” Resp’t Br. 14. However, “the Commission and 

courts have soundly rejected the argument that additional safety measures should preclude a 

finding of S&S.” Small Mine Development, 37 FMSHRC 1892, 1901 (Sept. 2015); see also Buck 

Creek Coal, 52 F.3d 133, 136 (7th Cir. 1995) (finding that additional safety measures did not 

preclude a finding that a fire contributed to by coal dust accumulations would be reasonably 

likely to result in serious injury). This point is especially important because the safety features 

that Respondent relies on, which include the PLC, HSS, mechanical switch system, and fault 

screen, all in some way failed within the first nine days during which the hoist was active. The 

PLC and HSS failed when the hoist operator did not recalibrate the hoist following the kink in 

the rope. The mechanical switch failed of its own accord—it would have never stopped the car 

from crashing into the shiv wheel, regardless of operator error. Finally, the fault screen cannot 

notify the operator of every issue with the hoist, as demonstrated when it did not identify the 

kink in the rope as a problem. Henry Dep. 23. 

Respondent’s argument that there was “no hazardous miscommunication,” Resp’t Br. 18, 

is only true in the most technical sense. Brian Henry stated that one of the ways that he would be 

aware of problems with the hoist on prior trips would be through talking to the hoistman from 

the prior shift. Henry Dep. 20-21. While operating the Oak Springs slope hoist, he did not 

remember talking to anybody. Id. at 21. In fact, even though he was operating the hoist to pull

out firebosses and send dollies into the mine, no one told him whether he was allowed to operate 

the hoist or not. Id. Rather than stating that there was “no hazardous miscommunication,” it 

appears that there was simply “no communication,” even though Respondent asserts that 

“significant attention was paid to the hoist by both Frontier Kemper and Consol.” Resp’t Br. 15. 

38 FMSHRC Page 482
Accordingly, the Court finds that the failure to record examinations was significant and 

substantial and appropriately designated as reasonably likely. The violation contributed to the 

hazard that miners would use the hoist with unrecorded and uncommunicated defects and 

hazards, which would be reasonably likely to cause a jarring stop, either from the automatic stop 

controls or by running into the shiv wheel. This stop would throw them about the car, resulting in 

reasonably serious lost workday or restricted duty injuries. The known failures of the safety 

devices and the admitted lack of communication, additionally, served to make an injury 

reasonably likely to occur.

ii. Respondent’s Failure to Record Examinations Constituted an 

Unwarrantable Failure 

The Commission has determined that an “unwarrantable failure is aggravated conduct 

constituting more than ordinary negligence.” Manalapan Mining Co., 35 FMSHRC 289, 293 

(Feb. 2013). Such a failure may be characterized by the following types of conduct: reckless 

disregard, intentional misconduct, indifference, or a serious lack of reasonable care. Emery 

Mining Corp., 9 FMSHRC 1997, 2003-04 (Dec. 1987). 

Whether conduct is “aggravated” in the context of unwarrantable failure is 

determined by looking at all the facts and circumstances of each case to see if any 

aggravating factors exist, including (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. 

Manalapan Mining Co., 35 FMSHRC at 293. The Court must consider all relevant factors, the 

facts and circumstances of the case, and whether mitigating circumstances exist. IO Coal Co., 

Inc., 31 FMSHRC 1346, 1351 (Dec. 2009). 

1. The Extent of the Violative Condition and the Length of Time 

that the Violative Condition Existed 

Because this is a daily recordkeeping violation, the extent of the violative condition and 

the length of the time the condition existed are, in this case, one and the same. Accordingly, the 

Court will consider these two factors together. 

In order to determine the length of time that the condition existed, the Court must 

determine when the Oak Springs slope hoist was commissioned. The Secretary contends that 

Respondent failed to record exams for nine days, from April 1, 2014, to April 9, 2014. 

Respondent, however, asserts that it was not required to perform daily examinations until 

Monday, April 7, 2014, when Chris O’Neil signed the Commission certification document, RX38 FMSHRC Page 483
C, which was signed, scanned, and emailed to Jeremy Cundiff, Frontier-Kemper Operations 

Manager. Resp’t Br. 21.11

The Court finds that, by the preponderance of the evidence, the Oak Springs slope hoist 

was commissioned on April 1, 2014. The cover page of the Commissioning Report from 

Frontier-Kemper states that the hoist was commissioned on April 1, 2014. RX-F at 1. The “Final 

Commissioning Checklist” states “Date Completed: 4/1/2014.” RX-F at 8. Chris Demidovich 

was present at the commissioning ceremony on April 1, 2014, and confirmed that “[e]verybody 

seemed to be satisfied that we [were] okay to put this hoist in operation.” Tr. 104. Brian Henry, 

the hoist operator, similarly stated that he understood the hoist to be operational. Henry Dep. 21. 

Respondent also recorded weekly electrical examinations of the Oak Spring slope hoist that 

occurred on April 3, 2014, and April 4, 2014. RX-D at 1. Demidovich confirmed that the 

electrical exams were performed and recorded. Tr. 109. 

Respondent states that Frontier-Kemper continued to perform tests at the Oak Springs 

slope hoists and even serviced the hoist’s brake coil on April 5, 2014. Resp’t Br. 16-17; RX-E. 

These facts are stated to provide evidence for the assertion that the commissioning had not yet 

occurred. While Exhibit E does show that Frontier-Kemper performed work on April 1st through 

April 4th, it also states, on the first line, “April 1, 2014 – Commission Testing and Operational 

Turn-over.” RX-E. Exhibit E, instead of supporting Respondent’s argument that operation of the 

hoist had not yet been passed to Consol, provides strong evidence that the commissioning was 

completed on April 1st. 

Additionally, Respondent argues that Frontier-Kemper had not trained the hoistmen until 

April 3, 2014, so Respondent could not have performed the examinations until then because 

hoistmen are the ones who perform examinations. Resp’t Br. 16. The Court is unconvinced by 

this argument. Respondent would usually have hoistmen perform daily examinations on the 

midnight shift at the Enlow slope hoist. Tr. 142. Respondent had no midnight shift hoistmen at 

the Oak Springs slope hoist, but that does not excuse the responsibility to perform daily 

 11 At O’Neil’s deposition, Respondent moved to admit into evidence two different copies 

of the Commission certification document, designated Exhibits C and C-1. Exhibit C, containing 

O’Neil’s signature, was offered without objection. That exhibit is hereby admitted. The Secretary 

objected to the admission of Exhibit C-1, which contained the signatures of both O’Neil and 

Cundiff, on the basis that the Secretary had not been provided with the exhibit until July 23rd, 

nine days after the hearing in this case and just one day before the deposition. O’Neil Dep. 15-

16. The document differs from the one provided in discovery and the one identified in 

Respondent’s prehearing report. O’Neil Dep. 16. Respondent asserted that the document had 

been provided to him late, and he offered to provide the email sending him the document. O’Neil 

Dep. 16. The Court’s Notice of Hearing, issued February 24, 2015, stated that “a list of exhibits 

expected to be introduced” must be provided to the other party and to the Court on or before June 

12, 2015. Failure to do so, it warned, may result in that exhibit’s exclusion at the hearing. 

Respondent has offered no good reason why the exhibit was not identified in the prehearing 

statement since it was available over a year prior to the date prehearing statements were due. 

Accordingly, the Secretary’s objection is sustained, and Respondent’s Exhibit C-1 is not 

admitted into evidence. 

38 FMSHRC Page 484
examinations. Similarly, Respondent’s failure to either (a) train the hoistmen to perform daily 

exams or (b) direct other miners to perform the daily examinations until hoistmen were trained 

does not obviate the requirement to perform and record daily examinations. 

For the preceding reasons, the Court finds that the Oak Springs slope hoist was 

commissioned on April 1, 2014. To find otherwise would be to ignore the plain statements of the 

commissioning report, Consol’s own witness, Chris Demidovich, the fact that electrical exams 

were conducted on April 3, 2014, and the fact that the Oak Springs slope was being operated by 

Consol hoistmen. The violation was therefore extensive and existed for nine days, a substantial 

period of time. 

2. Whether the Violation Posed a High Degree of Danger 

The Court finds that the violation posed a high degree of danger. As the Court stated in 

its S&S analysis, the Oak Springs slope hoist had several problems during this short time period, 

a period in which it was being used to transport miners. Respondent argues that there was no 

hazardous miscommunication, which the Court has already addressed; that none of the 

conditions were S&S; and that hoist operators would not have even relied on the daily 

examination for the operation of the hoist. Resp’t Br. 23. Insofar as Respondent’s argument 

relies on hoist operators’ use of the fault screen or communication with other hoist operators, the 

Court notes that Brian Henry stated that he did not remember checking the fault screen before 

operating the hoist, that he would not normally check the fault screen, and that there was no 

communication with other hoist operators. Henry Dep. 20-21. Hoist operators’ failure to use 

tools, such as the daily examination book, to ensure that the hoist is being operated safely does 

not mitigate a finding that this violation posed a high degree of danger. Failing to record daily 

exams leads to exams being missed, contributing to the hazard that the hoist will be operated in 

an unsafe condition, and miners will be thrown about in the hoist car when it stops suddenly, 

either due to the automatic stop controls or when it overtravels into the top or bottom of the 

hoist. Given the problems that had already occurred with the hoist and that it was in use by 

miners, the violation posed a high degree of danger. 

3. Whether the Violation was Obvious 

The failure to record exams was obvious, and Respondent should have noticed that exams 

were not being recorded. First, the physical examination book was lying in the open, within 

reach of the hoist operator, and it was the same book used for the other hoists, both at Enlow 

Fork and at other Consol mines. Tr. 44-45. Members of mine management were present at the 

hoist on most of the nine days on which exams were not recorded. Tr. 158-59. While Respondent 

argues that the condition was not obvious because of the confusion surrounding the newlycommissioned hoist, Tr. 22, this confusion does not make the empty examination book any less 

obvious. Respondent’s lack of “specific knowledge” does not preclude a finding that the 

violation was obvious. 

38 FMSHRC Page 485
4. The Operator’s Knowledge of the Existence of the Violation 

The inspector testified that Respondent did not know that examinations were not being 

performed, nor did it know that Frontier-Kemper had stopped performing examinations. Tr. 78-

79. The Secretary argues not that Respondent knew of the violation, but that it should have 

known. Sec’y Br. 20. Accordingly, the Court finds that Respondent did not know of the 

violation. 

5. The Operator’s Efforts in Abating the Violative Condition 

Respondent, having no knowledge of the violation, could not have attempted to abate the 

violation, and the Court finds that it made no effort to abate the violation. 

6. Whether the Operator Had Been Placed on Notice that 

Greater Efforts Were Necessary for Compliance 

Respondent, as a seasoned operator and as the operator of other slope hoists, was on 

notice that 30 C.F.R. § 75.1400-4 requires daily examinations to be recorded. Respondent states 

that the Secretary “adduced no evidence of past similar violations, of conversations regarding 

daily examinations or notice of any type that would serve to put Consol on notice of the need for 

greater compliance.” Resp’t Br. 23-24. In fact, Respondent asserts that “[t]he Secretary presented 

no evidence that Consol ever had any issue with respect to daily hoist examinations.” Id. at 24. 

While this may not hold true in all circumstances, under the facts of this case, Respondent’s 

compliance with the standard at other slope hoists itself demonstrates that Respondent knew that 

failing to record daily examinations would result in noncompliance with the standard. The 

operator had been placed on notice that greater efforts (than no effort at all) were necessary to 

comply with the standard. 

In sum, although Respondent did not know that exams were not being recorded, the 

violative condition was “extensive,” and exams were not recorded for nine days. The violation 

posed a high degree of danger, the failure to record the exams was obvious, the operator made no 

efforts to abate the violation, and the operator had been placed on notice that greater efforts were 

necessary for compliance. 

Accordingly, consideration of the seven factors strongly supports a finding that 

Respondent’s failure to record examinations was an unwarrantable failure to comply with a 

mandatory standard. None of Respondent’s arguments highlighting the miscommunication, lack 

of actual knowledge, and confusion surrounding the commissioning of the hoist are sufficient to 

mitigate this finding. While Respondent’s conduct was not “willful,” that is not a requirement for 

an unwarrantable failure finding. Here, Respondent’s actions constituted reckless disregard, 

indifference, or a serious lack of reasonable care. Miners were transported in the hoist car, 

multiple problems occurred with the hoist, and mine management was in the area almost every 

day. It should have been clear that daily examinations were not being recorded. 

38 FMSHRC Page 486
iii. Respondent Demonstrated a High Degree of Negligence in Violating 

§ 75.1400-4 

As stated in the Court’s analysis of Citation No. 7018138, high negligence may be found, 

in spite of mitigating circumstances, where an operator evinces an aggravated lack of care that 

constitutes more than ordinary negligence. The Court finds that the violation of § 75.1400-4 was 

due to high negligence. Respondent was aware that there is a daily examination requirement for 

slope hoists, mine management was, by Respondent’s admission, in the area almost daily, and 

the empty examination book was in plain sight. 

 Section 75.1400-4 plainly provides that daily examinations be made, certified, signed, 

and dated. In the instant case, Respondent failed to record all nine of the daily exams that were 

required between the time of the hoist’s commissioning and the inspection. Tr. 46. Multiple 

members of mine management were in and around the area. Any of the members of mine 

management should have noticed that the book in the hoist house was blank. Tr. 37. Inspector 

Tungate testified that the blank record book was lying in the open, and that it was the same book 

used by Consol to record daily examinations at its other hoists, including the other hoist at Enlow 

Fork Mine. Tr. 44-45. 

 While Respondent’s Post-Hearing Brief asserts that the high negligence designation is 

inappropriate, that statement constitutes the entirety of its argument on that point. See Resp’t Br. 

19-24. The entirety of the argument beneath the applicable heading applies to the unwarrantable 

failure designation, but, applied to the consideration of whether Respondent showed an 

aggravated lack of care, Respondent’s arguments are similarly unavailing. The Court has found 

that the commissioning was completed on April 1, 2014, and Respondent’s statements about the 

general confusion regarding responsibilities does not diminish the fact that mine management 

had multiple opportunities to notice and rectify the failure to record exams, yet failed to do so. 

Accordingly, the violation noted in Order No. 7018140 is accurately described as being 

precipitated by high negligence. 

iv. Penalty Determination 

The parties have stipulated that Respondent abated the violation in good faith and that 

payment of the fine would not impair its ability to continue in business. JX-1. Respondent is 

large in size, and does not have a history of this type of violation. The gravity and negligence of 

the violation were both high. Accordingly, the originally proposed penalty for this violation is 

appropriate. Respondent is assessed a penalty of $4,000.00 for Order No. 7018140. 

III. Conclusion 

The Secretary has proven, by the preponderance of the evidence, each of the issues to be 

addressed at the hearing. For Citation No. 7018138, Respondent is assessed a penalty of $362.00; 

for Citation No. 7018139, Respondent is assessed a penalty of $100.00; and for Order No. 

7018140, Respondent is assessed a penalty of $4,000.00. 

38 FMSHRC Page 487
IV. Partial Settlement

The Secretary has also filed a Motion for Decision and Order Approving Partial 

Settlement, which addresses the 13 settled citations contained in Docket No. PENN 2015-41.12

The terms of the settlement and the rationale for the settlement of each citation are contained in 

the table in Appendix A. The Court has considered the representations and documentation 

submitted in this case, finds that the modifications are reasonable as set forth in the motion to 

approve settlement, and concludes that the proposed settlement is appropriate under the criteria 

set forth in Section 110(i) of the Act. 

WHEREFORE, the motion for approval of the partial settlement is GRANTED. 

ORDER 

 It is hereby ORDERED that Citation Nos. 7018138 and 7018139 and Order No. 

7018140 are AFFIRMED. 

 It is further ORDERED that Citation Nos. 7027932, 7027716, 7027717, 7027878, 

7027718, 7030040, 7030041, 7030042, 7028461, 7028463, and 7030049 are AFFIRMED as 

modified in the Secretary’s motion to approve partial settlement, and that Citation Nos. 7028205 

and 7028207 are VACATED. 

 Respondent is ORDERED to pay a total penalty of $10,500.00 for Docket Nos. PENN 

2015-41 and PENN 2015-42 within 30 days of the date of this decision.13

/s/ John Kent Lewis 

 John Kent Lewis 

 Administrative Law Judge 

 12 Pursuant to 29 C.F.R. § 2700.1(b) and Fed. R. Civ. P. 12(f), the Court strikes 

paragraphs three and four from the Secretary’s Motion as immaterial and impertinent to the 

issues legitimately before the Commission. The paragraphs incorrectly cite and interpret the case 

law and misrepresent the statute, regulations, and Congressional intent regarding settlements 

under the Mine Act. Instead, I have evaluated the proposed settlement in accordance with 

sections 110(i) and 110(k) of the Act. 

13 Payment should be sent to: MINE SAFETY AND HEALTH ADMINISTRATION, 

U.S. DEPARTMENT OF LABOR, PAYMENT OFFICE, P. O. BOX 790390, ST. LOUIS, MO 

63179-0390. 

38 FMSHRC Page 488
Distribution: 

Anthony M. Fassano, Esq., Office of the Regional Solicitor, U.S. Department of Labor, The 

Curtis Center, Suite 630E, 170 S. Independence Mall West, Philadelphia, PA 19106 

Patrick W. Dennison, Esq., Jackson Kelly PLLC, Three Gateway Center, 401 Liberty Avenue, 

Suite 1500, Pittsburgh, PA 15222 

 

38 FMSHRC Page 489
APPENDIX A 

Settled and Vacated Citations in Docket No. PENN 2015-41 

Citation/ 

Order No. 

Type/Standard/ 

Gravity 

Proposed 

Penalty 

Settlement 

Amount 

Settlement and 

Rationale 

7027932 104(a), § 75.503 

(failure to maintain 

electrical 

equipment in a 

permissible 

manner), S&S, 

Reasonably Likely, 

Lost Workdays or 

Restricted Duty, 3 

Persons Affected, 

Moderate 

Negligence. 

$687.00 $500.00 Negligence modified to 

Low. 

Reduction in penalty.

Respondent presented 

evidence tending to show 

that the condition had 

developed after the most 

recent weekly exam, 

which occurred seven 

days earlier. 

Accordingly, the 

Secretary agreed to 

modify the citation and 

reduce the penalty 

because the negligence 

may have been less than 

initially assessed. 

7027716 104(a), § 

75.380(d)(4)(iv) 

(failure to maintain 

a walkway with 

sufficient width to 

allow disabled 

persons to quickly 

exit the mine in an 

emergency), S&S, 

Reasonably Likely, 

Fatal, 1 Person 

Affected, Moderate 

Negligence. 

$540.00 $375.00 Gravity modified to Lost 

Workdays or Restricted 

Duty. 

Reduction in penalty.

Respondent presented 

evidence tending to show 

that the obstruction in the 

walkway would slow, but 

not prevent, a miner’s 

escape in the event of an 

emergency. Accordingly, 

the Secretary agreed to 

modify the citation and 

reduce the penalty 

because the expected 

injury may have been 

less severe than initially 

assessed. 

7027717 104(a), § 75.403 

(failure to maintain 

the proper 

percentage of 

incombustible 

$873.00 $300.00 Likelihood modified to 

Unlikely/Non-S&S. 

Persons Affected 

modified to 1.

Reduction in penalty.

38 FMSHRC Page 490
Citation/ 

Order No. 

Type/Standard/ 

Gravity 

Proposed 

Penalty 

Settlement 

Amount 

Settlement and 

Rationale 

content), S&S, 

Reasonably Likely, 

Permanently 

Disabling, 2 

Persons Affected, 

Moderate 

Negligence. 

Respondent presented 

evidence tending to show 

that the area in question 

did not contain methane 

or ignition sources. 

Accordingly, the 

Secretary agreed to 

modify the citation and 

reduce the penalty 

because the likelihood of 

an injury and the number 

of persons affected may 

have been less than 

initially assessed. 

7027878 104(a), § 75.503 

(failure to maintain 

electrical 

equipment in a 

permissible 

manner), S&S, 

Reasonably Likely, 

Lost Workdays or 

Restricted Duty, 5 

Persons Affected, 

Low Negligence. 

$425.00 $300.00 Persons Affected 

modified to 1.

Reduction in penalty. 

Respondent presented 

evidence tending to show 

that the miner operator 

would likely be the only 

miner affected in the 

event of an ignition. 

Accordingly, the 

Secretary agreed to 

modify the citation and 

reduce the penalty 

because the number of 

persons affected may 

have been less than 

initially assessed. 

7027718 104(a), § 75.403 

(failure to maintain 

the proper 

percentage of 

incombustible 

content), S&S, 

Reasonably Likely, 

Permanently 

Disabling, 2 

Persons Affected, 

Moderate 

Negligence. 

$873.00 $300.00 Likelihood modified to 

Unlikely/Non-S&S. 

Persons Affected 

modified to 1. 

Negligence modified to 

Low.

Reduction in penalty. 

Respondent presented 

evidence tending to show 

that the area in question 

did not contain methane 

or ignition sources. In 

addition, Respondent 

38 FMSHRC Page 491
Citation/ 

Order No. 

Type/Standard/ 

Gravity 

Proposed 

Penalty 

Settlement 

Amount 

Settlement and 

Rationale 

presented evidence 

tending to show that the 

condition would not have 

been obvious during the 

time of the most recent 

exam. Accordingly, the 

Secretary agreed to 

modify the citation and 

reduce the penalty 

because the likelihood of 

an injury, negligence, 

and the number of 

persons affected may 

have been less than 

initially assessed. 

7030040 104(a), § 75.605 

(failure to clamp a 

trailing cable to the 

machine), S&S, 

Reasonably Likely, 

Fatal, 1 Person 

Affected, Moderate 

Negligence. 

$1,795.00 $400.00 Likelihood modified to 

Unlikely/Non-S&S. 

Negligence modified to 

Low.

Reduction in penalty. 

Respondent presented 

evidence tending to show 

that there was no damage 

to the cable in question, 

and that the condition did 

not exist at the time of 

the most recent exam. 

Accordingly, the 

Secretary agreed to 

modify the citation and 

reduce the penalty 

because the likelihood of 

an injury and negligence 

may have been less than 

initially assessed. 

7030041 104(a), § 75.403 

(failure to maintain 

the proper 

percentage of 

incombustible 

content), S&S, 

Reasonably Likely, 

Permanently 

Disabling, 4 

$3,996.00 $2,313.00 Likelihood modified to 

Unlikely/Non-S&S. 

Persons Affected 

modified to 1. 

Negligence modified to 

Moderate.

Reduction in penalty. 

Respondent presented 

evidence tending to show 

38 FMSHRC Page 492
Citation/ 

Order No. 

Type/Standard/ 

Gravity 

Proposed 

Penalty 

Settlement 

Amount 

Settlement and 

Rationale 

Persons Affected, 

Moderate 

Negligence. 

that the area in question 

did not contain methane 

or ignition sources. In 

addition, Respondent 

presented evidence 

tending to show that the 

condition would not have 

been obvious during the 

time of the most recent 

exam. Accordingly, the 

Secretary agreed to 

modify the citation and 

reduce the penalty 

because the likelihood of 

an injury, negligence, 

and the number of 

persons affected may 

have been less than 

initially assessed.

7030042 104(a), § 

75.360(b)(3) 

(failure to conduct 

an adequate 

preshift exam on 

the working 

sections), S&S, 

Reasonably Likely, 

Permanently 

Disabling, 4 

Persons Affected, 

Moderate 

Negligence. 

$1,203.00 $750.00 Likelihood modified to 

Unlikely/Non-S&S. 

Persons Affected 

modified to 1. 

Reduction in penalty. 

This citation was related 

to Citation No. 7030041, 

which was a 75.403 

violation. As explained 

above, Respondent 

presented evidence 

tending to show that the 

area in question did not 

contain methane or 

ignition sources, and that 

the condition would not 

have been obvious during 

the time of the most 

recent exam. Based on 

those arguments, the 

Secretary agreed to 

modify the citation and 

reduce the penalty 

because the likelihood of 

an injury and the number 

38 FMSHRC Page 493
Citation/ 

Order No. 

Type/Standard/ 

Gravity 

Proposed 

Penalty 

Settlement 

Amount 

Settlement and 

Rationale 

of persons affected may 

have been less than 

initially assessed.

7028205 104(a), § 75.1403 

(failure to follow a 

safeguard), NonS&S, Unlikely, 

Lost Workdays or 

Restricted Duty, 1 

Person Affected, 

Moderate 

Negligence. 

$108.00 $0.00 The Secretary has 

determined that this 

violation should be 

vacated in an exercise of 

his prosecutorial 

discretion recognized by 

the Commission in RBK 

Construction, Inc., 15 

FMSHRC 2099 (Oct. 

1993). 

7028461 104(a), § 

75.321(a)(2) 

(failure to maintain 

the proper level of 

oxygen), NonS&S, Unlikely, 

Lost Workdays or 

Restricted Duty, 1 

Person Affected, 

Low Negligence. 

$100.00 $100.00 Negligence modified to 

None. 

Respondent presented 

evidence tending to show 

that the results of its most 

recent oxygen reading 

were compliant. 

Accordingly, the 

Secretary agreed to 

modify the citation 

because the negligence 

may have been less than 

initially assessed. 

7028207 104(a), § 

75.360(b)(1) 

(failure to perform 

an adequate exam 

on beltlines), NonS&S, Unlikely, 

Lost Workdays or 

Restricted Duty, 1 

Person Affected, 

Moderate 

Negligence. 

$108.00 $0.00 The Secretary has 

determined that this 

violation should be 

vacated in an exercise of 

his prosecutorial 

discretion recognized by 

the Commission in RBK 

Construction, Inc., 15 

FMSHRC 2099 (Oct. 

1993). 

7028463 104(a), § 

75.1725(a) (failure 

to maintain 

equipment in safe 

operating 

condition), S&S, 

Reasonably Likely, 

$540.00 $300.00 Likelihood modified to 

Unlikely/Non-S&S. 

Reduction in penalty. 

Respondent presented 

evidence tending to show 

that the machine in 

question was using 

38 FMSHRC Page 494
Citation/ 

Order No. 

Type/Standard/ 

Gravity 

Proposed 

Penalty 

Settlement 

Amount 

Settlement and 

Rationale 

Lost Workdays or 

Restricted Duty, 1 

Person Affected, 

Moderate 

Negligence. 

double-braided hoses, 

decreasing the likelihood 

that the condition would 

cause the hose to burst. 

Accordingly, the 

Secretary agreed to 

modify the citation and 

reduce the penalty 

because the likelihood of 

an injury may have been 

less than initially 

assessed. 

7030049 104(a), § 75.517 

(failure to fully 

protect a power 

cable), S&S, 

Reasonably Likely, 

Lost Workdays or 

Restricted Duty, 1 

Person Affected, 

Moderate 

Negligence. 

$540.00 $400.00 Negligence modified to 

Low. 

Reduction in penalty. 

Respondent presented 

evidence tending to show 

that the condition did not 

exist at the time of the 

most recent monthly 

exam. Accordingly, the 

Secretary agreed to 

modify the citation and 

reduce the penalty 

because the negligence 

may have been less than 

initially assessed. 

38 FMSHRC Page 495
FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION 

OFFICE OF ADMINISTRATIVE LAW JUDGES 

7 PARKWAY CENTER, SUITE 290 

875 GREENTREE ROAD 

PITTSBURGH, PA 15220 

TELEPHONE: 412-920-7240 / FAX: 412-928-8689 

March 31, 2016 

DECISION AND ORDER 

Appearances: Kenneth Polka & Jessica R. Brown, Esq., U.S. Department of Labor, 

Office of the Solicitor, Philadelphia, PA, for the Secretary 

Patrick W. Dennison, Esq., Jackson Kelly, Pittsburgh, PA, for the 

Respondent 

Before: Judge Lewis 

STATEMENT OF THE CASE 

This civil penalty proceeding is pursuant to the Federal Mine Safety and Health Act of 

1977, 30 U.S.C. § 801 et seq. (2000) (the “Mine Act” or “Act”). This matter concerns two 

citations (Nos. 7041173 and 7041179) issued against Respondent Amfire Mining Co., LLC. A 

hearing was held in Pittsburgh, Pennsylvania on December 4, 2014, at which the parties 

presented testimony and documentary evidence. After the hearing, the parties submitted Post 

Hearing Briefs, which have been fully considered. 

SECRETARY OF LABOR 

 MINE SAFETY AND HEALTH 

 ADMINISTRATION (MSHA), 

 Petitioner, 

v. 

AMFIRE MINING CO., LLC, 

 Respondent. 

CIVIL PENALTY PROCEEDING 

Docket No. PENN 2013-374 

A.C. No. 36-09033-330197

Mine: Gillhouser Run Mine 

38 FMSHRC Page 496
JOINT STIPULATIONS1

 The parties have stipulated to the following: 

1. The parties agree that jurisdiction for this matter exists because Amfire Mining 

Company, LLC, (“Respondent” or “Operator”) was an operator of a mine, as defined 

in Section 3(d) of the Act, 30 U.S.C. §802(d), and the products of the subject mine 

entered the stream of commerce within the meaning and scope of Section 4 of the 

Act, 30 U.S.C. §803. 

2. Amfire Mining Company, LLC, operates the Gillhouser Run Mine where the citations 

in contest (hereafter “the citations”) were issued. 

3. Gillhouser Run Mine (the “Mine”) is an underground coal mine in Indiana County, 

Pennsylvania. 

4. The Mine produced 255,712 tons of coal in 2013. 

5. The Mine produces coal using the continuous miner method. 

6. Amfire is an “operator” as defined in §3(d) of the Federal Mine Safety and Health 

Act of 1977, as amended (hereinafter “the Act”), 30 U.S.C. §803(d), at the coal mine 

at which the citation at issue in this proceeding were issued. 

7. Operations of Amfire at the coal mine where the citations were issued in the 

proceeding are subject to the jurisdiction of the Act. 

8. This proceeding is subject to the jurisdiction of the Federal Mine Safety and Health 

Review Commission and its designated Administrative Law Judges pursuant to 

Sections 105 and 113 of the Act. 

9. The individual whose signature appears in Block 22 of the citations at issue in this 

proceeding was acting in his official capacity and as an authorized representative of 

the Secretary of Labor when the citations were issued. 

10. True copies of the citations at issue in this proceeding were served on Amfire as 

required by the Act. 

11. The R-17 Assessed Violation History Report is an authentic copy reflecting the 

Mine’s history of violations and may be admitted as a business record of the Mine 

Safety and Health Administration. 

12. The proposed civil penalty will not affect Amfire’s ability to remain in business. 

13. Citation No. 7041173 was issued on January 23, 2013, and citation 7041179 was 

issued on February 5, 2013, by MSHA Inspector Joseph A. Wagner. 

 1

 The following stipulations are contained in Joint Exhibit No. 1. Joint exhibits will 

hereinafter be designated JX followed by a number; the Secretary’s exhibits will be designated as 

GX followed by a number; and Respondent’s exhibits will be designated as RX followed by a 

letter. Pages of the official hearing transcript are designated “Tr.” followed by the appropriate 

page reference(s). 

38 FMSHRC Page 497
14. Inspector Wagner was accompanied by company representative, Troy Lewarchik, on 

January 23, 2013. 

15. Inspector Wagner was accompanied by company representative, Rich Kinter, on 

February 5, 2013. 

16. Citation No. 7041173 was issued with respect to the Ocenco EBA 6.5 Self Contained 

Self Rescuers. 

17. Citation No. 7041179 was issued with respect to the roof control plan previously 

approved by MSHA on October 13, 2011. 

FINDINGS OF FACT AND CONCLUSIONS OF LAW 

The findings of fact are based on the record as a whole and my careful observation of the 

witnesses during their testimony. In resolving any conflicts in the testimony, I have taken into 

consideration the interests of the witnesses, or lack thereof, and consistencies, or inconsistencies, 

in each witness’s testimony and between the testimonies of the witnesses. In evaluating the 

testimony of each witness, I have also relied on his demeanor. Any failure to provide detail as to 

each witness’s testimony is not to be deemed a failure on my part to have fully considered it. The 

fact that some evidence is not discussed does not indicate that it was not considered. See Craig v. 

Apfel, 212 F.3d 433, 436 (8th Cir. 2000)(administrative law judge is not required to discuss all 

evidence and failure to cite specific evidence does not mean it was not considered). 

Citation No. 7041173 (SCSRs) 

On January 23, 2013, MSHA Inspector Joseph Wagner inspected the Gillhouser Run 

Mine as part of a quarterly inspection.2 Tr. 25-26. During the inspection, Wagner traveled along 

the 9 South alternate escapeway, which is a belt air course, and served as the primary travelway 

for everybody going inby and outby of the mine using a rubber trial mantrip. Tr. 26, 27. 

Wagner issued Citation No. 7041173 to mine superintendent Norman Gardner3 after he 

found three Ocenco 6.5 self-rescuers (SCSRs) that had lost pressure on the Damascus 

 2

 At the time of hearing, Joseph Wagner had worked as an underground coal mine 

inspector for MSHA for approximately three and a half years. Tr. 24. He had 10 years of mining 

experience, working in a variety of jobs underground, including outby supply guy and outby 

foreman. Tr. 24-25. Wagner had Pennsylvania mine foreman and mine examiner papers, as well 

as certifications in machine runners and gas detection. Tr. 25. Wagner had previously worked for 

Amfire. Tr. 50. 

3

 At the time of hearing, Norman Gardner had been the superintendent and mine foreman 

at the Gillhouser Run Mine for several years. Tr. 153. Prior to starting at the Gillhouser Run 

Mine in 2006, he worked for DLR Mining. Tr. 153. Prior to that, he worked for over 19 years at 

Greenwich Colliers. Tr. 153. He had 42 years of total mining experience. Tr. 153. He has all 

available state certifications, except electrician, has several certifications from the federal 

government, and is trained as an EMT. Tr. 153-154. 

38 FMSHRC Page 498
mantrip.4

 Tr. 27-28; GX-1. The mantrip was a MAC-8, which carried eight persons. Tr. 68. 

Therefore, according to the regulations contained in 30 C.F.R. §75.1714-4(b) it was required that 

there be eight SCSRs on the mantrip. Tr. 68. The mantrip had a total of 12 SCSRs, with three 

that were non-compliant. Tr. 68-69. 

The manufacturer’s recommended pressure range for the Ocenco 6.5 SCSR was between 

2,500-3,000 pounds per square inch (PSI). Tr. 33.5

 According to the Ocenco 6.5 instruction 

manual, the gauge pressure readings should at no time be below 2,150 PSI. Tr. 32; GX-14. 

Therefore, three of the SCSRs met the manufacturer’s removal criteria. Tr. 32. In order to 

terminate the citation, the Respondent removed the three noncompliant SCSRs. Tr. 69. 

At hearing, Wagner referred to photographs he took of the non-compliant SCSRs and 

testified that the pressure gauge of SCSR number 10120485 was at 1,500 PSI; the pressure gauge 

of number 10120408 was at 1,400 PSI; and the pressure gauge of number 10120557 was at 1,000 

PSI. Tr. 33-34; GX-8. Two of the three noncompliant SCSRs were on the outside box of the 

mantrip, and one was on the box inside. Tr. 41.Wagner testified that because of the limited room 

between the mantrip box and the mine roof, the noncompliant SCSRs would be more accessible 

and may have been utilized first in case of an emergency. Tr. 42-43. Any type of emergency, 

including an explosion, fire, or inundation, could require use of the SCSRs. Tr. 43. Wagner 

testified that this posed a problem because if there was smoke, the miners would be using the 

SCSRs on the mantrip to make it to the surface. Tr. 34. 

MSHA rates the Ocenco 6.5 SCSRs as lasting one hour, so that a miner can make it to 

fresh air. Tr. 34. However, according to Ocenco advertisements, the 6.5 unit provides over 90 

minutes of oxygen in demand mode—such as in an escape situation—and up to 8 hours in 

conservation mode. Tr. 115. 

The mine had other SCSRs available in addition to those on the mantrip. Tr. 34-35. Based 

on the coal seam height of 42-48 inches, MSHA has permitted the caches of SCSRs at Gillhouser 

Mine to be 3,300 feet apart. Tr. 26, 73, 121. It was presumed that miners could travel this 

distance in approximately half an hour. Tr. 73. The next cache of SCSRs is approximately 3,000 

feet away. The Emergency Response Plan (ERP), required that there had to be a cache of 26 

SCSRs every 3,300 feet.6

 Tr. 157-158. Twenty six SCSRs were required per cache because it 

 4

 At Gillhouser Mine, two types of SCSRs are used: the belt-worn Ocenco M-20 and the 

Ocenco 6.5 in the cache. Tr. 114. The M-20 is lighter and more maneuverable than the 6.5, and 

miners can keep it on them at all times while running the equipment. Tr. 114-115. 

5

 When the SCSR is within the manufacturer’s recommended pressure range, it is 

sometimes referred to being “in the green.” Tr. 33. 

6

 The ERP provides instructions and other relevant materials in case of an evacuation. Tr. 

156-157. 

38 FMSHRC Page 499
was determined that 26 would be the most men that would be underground at any given time, 

including if the men were “hot seating.”7

 Tr. 158. 

In case of emergency, miners were trained to meet in specific places underground, which 

were determined by the escapeway plan. Tr. 70. Gillhouser Mine safety representative, Richard 

Kinter testified that he conducts annual electrical and rescuer training every 90 days.8

 Tr. 70-71, 

127. During this training, Kinter teaches miners how to use the belt-worn rescuers, including 

performing a manual inspection to make sure everything is in order before donning the SCSR. 

Tr. 128-129. Kinter believed that his men were well-trained enough so that the non-compliant 

SCSRs would not have been an issue. Tr. 130-132. 

 

Kinter described the procedures miners were trained to follow in case of emergency. At 

the first sign of an event, a miner would first use the 10-minute SCSR on his belt in order to get 

to a one-hour SCSR. Tr. 35, 36, 69. The miner would have to travel a distance of approximately 

100-300 feet by either crawling or duck-walking. Tr. 37, 39, 51-52. Assuming that miners can 

travel approximately 150 feet per minute, it would take the miners approximately 10 minutes to 

travel the distance from the escapeway caches. Tr. 76. During an emergency situation, smoke 

may lead to little or no visibility.9

 Tr. 40. Furthermore, a miner cannot talk while donning an 

SCSR. Tr. 45-46. 

Wagner determined that three persons would be affected because that was how many 

units were noncompliant. Tr. 47. There was no way to determine how long the violation existed. 

Tr. 47. Amfire had a policy of preoperational checks on the SCSRs, fire extinguishers, and 

brakes, and Wagner believed that they should have seen the units during that check. Tr. 48. 

 7

 “Hot seating” is the industry term used for when section coal crews switch out at the 

face. Tr. 158. 

8

 Richard Kinter testified at hearing for Respondent. At the time of hearing, Kinter had 

worked for Amfire for seven years as a safety representative. Tr. 110. He has worked at 

Gillhouser Mine, Ednola Mine, Barrett Mine, and Dora Mine. Tr. 111. Prior to that he worked 

for two years at R&P in a variety of positions including general laborer and miner operator. Tr. 

111. Prior to R&P, Kinter worked for 21.5 years with Bethlehem as a general laborer, mine 

examiner, shuttle car operator, miner operator, temporary face washer, and assistant chief mine 

operator. Tr. 111-112. Kinter has a Pennsylvania State mine electrician certificate, a 

Pennsylvania State diesel instructor certificate, a Pennsylvania mine examiner certificate, and he 

is a certified EMT and MSHA approved instructor and mine rescue instructor. Tr. 112. In 

January and February of 2013, Kinter was employed as the safety representative for Gillhouser 

Mine. Tr. 112-113. In this capacity, Kinter was responsible for training miners in self-rescue, 

accompanying inspectors to accident violation investigation, and filling out tracking sheets on all 

violations. Tr. 113. 

9

 During a training event that Wagner witnessed, miners told him that they could not see 

the SCSR gauges because the smoke was too thick. Tr. 40-41. 

38 FMSHRC Page 500
Kinter testified that he performed an examination on the SCSRs on December 12, 2012. 

Tr. 117; RX-11. He described the process by which he normally examines the SCSRs. Kinter 

would pull the rescuer out of the case and inspect the expiration date, whether the seal had 

popped, whether there was any swelling, whether the bands were in place, whether the gauges 

were in the correct position, whether there were any cracks or obstructions, and whether there 

was any bulging in the middle. Tr. 118-119. If an SCSR needed attention, Kinter would remove 

it and replace it. Kinter testified that during the December 12, 2012 examination he did not find 

any SCSRs on the MAC-8 that needed to be removed from the mine. Tr. 118. 

Kinter testified that the SCSRs with a reading of 1,000 PSI, 1,300 PSI, and 1,500 PSI 

would have provided “plenty enough oxygen” for a miner to get to the next cache. Tr. 125-126. 

Kinter further testified that contrary to MSHA’s estimates that the M-20 SCSR only provides 10 

minutes of oxygen, he has been able to get 30 minutes of oxygen from one, and 20 minutes with 

a guy running around an outside parking lot. Tr. 126. He estimated that the 6.5 Ocenco at 1,000 

PSI would have provided approximately 30 minutes of oxygen. Tr. 126. 

Kinter performed an investigation following the issuance of Citation No. 7041173. Tr. 

113. He testified that he has tested the SCSRs at issue and at 2,000 pounds of pressure, they 

lasted 45 minutes to one hour. Tr. 116. However, his testing was not performed in a smoke-filled 

environment or in one where miners were crawling out of the mine. Tr. 138-139. Kinter 

conceded that when a person is under stress he will often breathe heavier, and that under such 

conditions it may not last as long as his tests indicated. Tr. 139. 

ANALYSIS 

1. Contentions of the Parties 

The Secretary argues that the Respondent violated 30 C.F.R. §75.1714-3(a) by not 

properly maintaining three of the SCSRs on the mantrip. It encourages this Court to employ the 

definition of “maintain” that the Commission has used in interpreting other regulations, i.e. “to 

keep in state of repair, efficiency, or validity: preserve from failure or decline.” See Secretary of 

Labor, Mine Safety And Health Administration v. Nally & Hamilton Enterprises, Inc., 33 

FMSHRC 1759, 1763 (Aug. 2011); Secretary of Labor, Mine Safety And Health Administration 

v. Sedgman & David Gill, Employed by Sedgman, 28 FMSHRC 322 (June 2006). The Secretary 

argues that the three SCSRs violate §75.171-3(a)’s maintenance requirement. Furthermore, the 

Secretary argues that the violation was S&S because in the case of an emergency, the use of an 

SCSR without sufficient oxygen would lead to serious injury. The Secretary further argues that 

the violation was a result of moderate negligence because the Respondent was negligent in 

allowing three SCSRs to become noncompliant, but their negligence was somewhat mitigated by 

the fact that none of them were found to have been unsafe at the time of the last inspection. 

Respondent argues that it did not violate the regulation by having three SCSRs that were 

not in the green. Specifically, it argues that the regulation is a performance-based standard that 

covers only the reasonableness of the operator’s efforts to maintain, test, repair, or keep records. 

The Respondent argues that a mere existence of SCSRs that were not in the green, without a 

showing of a defect in the procedures, does not constitute a violation. The Respondent further 

argues that if the violation did exist, it was not properly designated as S&S because even in the 

38 FMSHRC Page 501
context of an emergency, it was unlikely miners would use the SCSRs not in the green or that 

those SCSRS would have run out of oxygen. The Respondent further argues that the inspector’s 

designation of moderate negligence was excessive and that no negligence was proven by the 

Secretary. 

2. The Secretary Has Carried His Burden Of Proof By A Preponderance Of The

Evidence That Respondent Violated 30 C.F.R. §75.1714-3(a)

On January 23, 2013, Inspector Wagner issued Citation No. 7041173 for a violation of 30 

C.F.R. §75.1714-3(a). Section 8 of that Citation, Condition or Practice, reads as follows:

Three of the twelve Ocenco EBA 6.5 Self Contained Self Rescuers provided on the 

company #4 Mac 8 mantrip, located at survey station 3559 along the 9 South Alternate 

Escapeway, were not being maintained in a safe operable condition. The gauge on 

Ocenco SCSR serial number 10120557 was reading approximately 1000 PSI, the gauge 

on serial number 10120485 was reading approximately 1500 PSI, and the gauge on serial 

number 10120408 was reading approximately 1300 PSI. The "green" operating range on 

the Ocenco EBA 6.5 is between 2500 PSI and 3000 PSI. 

Standard 75.1714-3(a) was cited 1 time in two years at mine 3609033 (1 to the operator, 

0 to a contractor). 

GX-1. The Citation was terminated that same day by removing the three SCSRs at issue from the 

mine. Id. 

In the instant case, the operator was required to have eight functioning SCSRs on the 

cited mantrip—one for each miner. Tr. 68. The issue is that in addition to the eight functioning 

SCSRs, they had three that were not “in the green.” Tr. 32-34. The manufacturer’s recommended 

pressure range was between 2,500-3,000 PSI, and the three SCSRs were at 1,000 PSI, 1,300 PSI, 

and 1,500 PSI. Tr. 32; GX-14. Such readings indicate that the SCSRs did not contain enough 

breathable air to function for the hour required by MSHA regulations. Tr. 126. Therefore, they 

were below the manufacturer’s minimum of 2,150 PSI, and met the manufacturer’s removal 

criteria. Tr. 32. 

The Respondent argued that although the pressure gauges of the SCSRs indicated a lack 

of pressure, the SCSRs would likely have provided enough oxygen for miners who utilized them. 

At hearing, Kinter testified that he examined the SCSRs on December 12, 2012, and they 

appeared to be in good working condition. Tr. 117-119. Furthermore, he stated that the three 

SCSRs would have provided “plenty enough oxygen” for a miner to get to the next cache of 

SCSRs. Tr. 125-126. He based this assertion on tests he conducted in the parking lot where the 

belt-worn M-20 SCSR provided a miner with 20-30 minutes of oxygen, and not the 10 minutes 

that MSHA estimates. Tr. 126. He testified that the 6.5 Ocenco SCSR, even at 1,000 PSI, would 

have provided a miner with an additional 30 minutes of oxygen. Tr. 126. 

Giving all due regard to Kinter’s parking lot experiments, I find that the three SCSRs 

were not being maintained in a safe condition. The purpose of the pressure gauges is to ensure 

38 FMSHRC Page 502
that there is sufficient oxygen and pressure in the SCSR to provide the miner air during an 

emergency. Such gauges and other safety signals serve an important role in notifying users 

whether the equipment is likely to work. The pressure gauges were well below the 

manufacturer’s suggested range, and met the manufacturer’s removal criteria. Tr. 32; GX-14. As 

such, I find that they were not in working order. I do not find Kinter’s testimony persuasive 

concerning how much the non-compliant SCSRs may have provided because the conditions of a 

parking lot are quite unlike the conditions of a mine. The mine at issue had a height of 42-48 

inches, meaning that the miners would have had to crawl or walk stooped over. If the miners had 

to utilize the SCSRs in the mine during an emergency, it is likely that there would have been 

smoke and other conditions that would have made mobility, visibility, and communications 

difficult. The parking lot, presumably, did not have these same conditions. 

The Respondent argues that even if the SCSRs are found to be noncompliant, this does 

not prove that the regulation was violated. The cited standard, titled “Self-rescue devices; 

inspection, testing, maintenance, repair, and recordkeeping,” provides that “[e]ach operator shall 

provide for proper inspection, testing, maintenance, and repair of self-rescue devices by a person 

trained to perform such functions.” 30 C.F.R. 75.1714-3(a). The Respondent contends that it 

fulfilled its duty to maintain the SCSRs as required by the regulations. 

“Where the language of a regulatory provision is clear, the terms of that provision must 

be enforced as they are written unless the regulator clearly intended the words to have a different 

meaning or unless such a meaning would lead to absurd results.” Jim Walter Res., Inc., 28 

FMSHRC 983, 987 (Dec. 2006) (quoting Dyer v. Unites States, 832 F.2d 1062, 1066 (9th Cir. 

1987) (citation omitted)). Only when the meaning of a regulation is ambiguous does the 

Secretary’s interpretation warrant deference from the court. Udall v. Tallman, 380 U.S. 1, 16-17 

(1965). 

In this instance, the meaning of the regulation is clear. Although not interpreted in the 

context of 75.1714-3(a), “the Commission has consistently construed ‘maintain’ in relation to 

other standards to require a continuing functioning condition.” Secretary of Labor, Mine Safety 

and Health Administration v. Nally & Hamilton Enterprises, Inc., 33 FMSHRC 1759, 1763 

(Aug. 2011). Accordingly, the Commission has defined “maintain” as “to keep in state of repair, 

efficiency or validity: preserve from failure or decline.” Sedgman, 28 FMSHRC 322, 329 (June 

2006); Jim Walter Res., 28 FMSHRC 983, 987-88 (Dec. 2006); Lopke Quarries, 23 FMSHRC 

705, 707-08 (July 2001); Jim Walter Res., 19 FMSHRC 1761, 1765 (Nov. 1997); Freeman 

United Coal Mining Co. v. FMSHRC, 108 F.3d 358, 362 (D.C. Cir. 1997). 

In applying this ordinary meaning of “maintain,” the Commission has repeatedly held 

that standards including such a provision require that the item to be maintained be operating 

properly. In Alan Lee Good, the Commission affirmed the judge’s finding that an inoperative 

parking brake violated the requirement in 30 C.F.R. §56.14101(a)(3) that braking systems “be 

maintained in functional condition.” 23 FMSHRC 995, 996 (Sept. 2001). Similarly, in Nally & 

Hamilton Enterprises, the Commission reversed the judge’s ruling and held that where the 

operator had a truck back-up alarm that was not working it violated the requirement of 30 C.F.R. 

38 FMSHRC Page 503
§77.410(c) that “warning devices shall be maintained in functional condition.” 33 FMSHRC at 

1763-1765. The Commission further explained: 

Inclusion of the term “maintain” makes clear that warning devices shall be capable of 

performing on an uninterrupted basis and at all times. Congruent with our holding 

in Lopke Quarries, to “maintain” imposes a continuing responsibility on operators to 

ensure that safety alarms do not fall into a state of disrepair. 

Id. at 1763 (emphasis in original). 

The Commission has held that where the regulation requires the operator to maintain 

equipment, knowledge of a defect is not an essential element of violation. Quoting Peabody 

Coal, the Commission in Nally & Hamilton held that “what the operator knew or should have 

known is relevant, if at all, in determining the appropriate penalty, not in determining whether a 

violation of the regulation occurred.” 33 FMSHRC at 1764 (quoting Peabody Coal, 1 FMSHRC 

1494, 1495 (Oct. 1979). The Commission further pointed out that imputing such a knowledge 

requirement would create “perverse incentives” for the operator to overlook problems during 

examinations. Id. The same is true in the instant case. The maintenance requirements of 30 

C.F.R. §75.1714-3(a) mean that the SCSRs must be in proper working order. The three SCSRs 

that were found with low pressure were not in such working order and therefore constituted a 

violation of the standard. 

It is no defense to argue that because the operator had the required number of compliant 

SCSRs, the three non-compliant SCSRs did not constitute a violation. Such an argument 

presumes that no harm occurs from having non-compliant or inoperative safety equipment in the 

mine. It completely ignores the reliance that miners might place on defective equipment, 

assuming that it was in working condition. Miners should not be required to roll the dice in an 

emergency situation and hope that a tank intended to provide air actually provides such lifesaving air. If during an emergency, a miner accidentally grabbed an SCSR with insufficient 

pressure or air, it does him no good to know that there was a better working SCSR behind it. 

This argument also permits no principled line drawing. If three of twelve SCSRs may be 

noncompliant, so long as the required eight are compliant, then it would seem to be allowable to 

have eight of sixteen noncompliant. Or twenty of twenty eight noncompliant. Or one hundred of 

one hundred and eight noncompliant. It is easy to draw this argument to absurd lengths because 

the argument is based upon an absurd premise. Miners must be able to rely on all of the safety 

and emergency equipment available to them. Any other holding would place the entire Mine Act 

in jeopardy. 

3. The Violation Was Reasonably Likely to Result in a Fatal Injury and Was 

Significant And Substantial In Nature 

Inspector Wagner marked the gravity of the cited danger in Citation No. 7041173 as 

being Reasonably Likely to result in Fatal injuries to three persons, as well as S&S. These 

determinations are supported by a preponderance of the evidence. 

38 FMSHRC Page 504
Well-settled Commission precedent sets forth the standard used to determine if a 

violation is S&S. A violation is S&S “if, based upon the particular facts surrounding the 

violation there exists a reasonable likelihood that the hazard contributed to will result in an injury 

or illness of a reasonably serious nature.” Cement Div., National Gypsum Co., 3 FMSHRC 822, 

825 (April 1981). The Commission later clarified this standard, explaining: 

In order to establish that a violation of a mandatory safety standard is significant and 

substantial under National Gypsum, the Secretary of Labor must prove: (1) the 

underlying violation of a mandatory safety standard; (2) a discrete safety hazard – that is, 

a measure of danger to safety – contributed to by the violation; (3) a reasonable 

likelihood that the hazard contributed to will result in an injury; and (4) a reasonable 

likelihood that the injury in question will be of a reasonably serious nature. 

Mathies Coal Co., 6 FMSHRC 1, 3-4 (Jan. 1984). 

The Commission has held that determining whether emergency lifeline standards are 

S&S “necessarily involve[s] consideration of an emergency situation.” MSHA v. Cumberland 

Coal Res. LP, 33 FMSHRC 2357, 2364 (Oct. 5, 2011), affirmed 717 F.3d 1020 (D.C. Cir. 2013). 

It explained that such standards “are different from other mine safety standards. They are 

intended to apply meaningfully only when an emergency actually occurs.” Id. at 2367. The 

Commission has similarly held that when considering the S&S nature of an escapeway violation, 

the judge must presume the existence of an emergency. MSHA v. Spartan Mining Co., Inc., 2013 

WL 6792689 (Dec. 11, 2013). In the instant case a similar emergency standard is at issue, and 

therefore the analysis requires the presumption of an emergency situation of the type that the 

standard is intended to address. 

Regarding the first element of S&S - the underlying violation of a mandatory safety 

standard - it has already been established that Respondent violated 30 C.F.R. § 75.1714-3(a). 

Similarly, the second element of Mathies, a discrete safety hazard contributed to by the violation 

– was met. Using an SCSR during an emergency situation that does not have sufficient air or 

pressure under the manufacturer’s guidelines could contribute to the discrete safety hazard of not 

having sufficient air during an emergency. In the instant case, if an emergency arose with eight 

miners in the mantrip, these miners would face a 25%-60% chance of grabbing a non-compliant 

SCSR.10

The third element of the Mathies test – a reasonable likelihood that the hazard contributed 

to will result in an injury – was also met. The Commission clarified the third element of the 

Mathies test in Musser Engineering, Inc., and PBS Coal Inc., 32 FMSHRC 1257, 1280-81 (Oct. 

2010) (“PBS”). The Commission held that the “test under the third element is whether there is a 

reasonable likelihood that the hazard contributed to by the violation...will cause injury.” Id. at 

1281. Importantly, it stated that the “Secretary need not prove a reasonable likelihood that the 

violation itself will cause injury.” Id. The Commission also emphasized the well-established 

 10 This back-of-the-envelope calculation assumes that the first miner would have a 3/12 

chance of grabbing a non-compliant SCSR. Then, assuming a best-case scenario where the first 

seven miners grabbed working SCSRs, the final miner would have a 3/5 chance of grabbing a 

non-compliant SCSR. 

38 FMSHRC Page 505
precedent that “the absence of an injury-producing event when a cited practice has occurred does 

not preclude a determination of S&S.” Id. (citing Elk Run Coal Co., 27 FMSHRC 899, 906 (Dec. 

2005); Blue Bayou Sand & Gravel, Inc., 18 FMSHRC 853, 857 (June 1996). The likelihood of 

the hazard being realized must be considered assuming normal continued mining operations 

without abatement of the violation. Consolidation Coal Co., 8 FMSHRC 890, 899 (Jun. 1986). If 

a miner utilized and relied upon a noncompliant SCSR during an emergency, that miner could 

suffer smoke inhalation or death. Under Mathies, the fourth and final element that the Secretary 

must establish is that there was a “reasonable likelihood that the injury in question will be of a 

reasonably serious nature.” Mathies Coal Co., 6 FMSHRC at 3-4; U.S. Steel, 6 FMSHRC 1573, 

1574 (July 1984). Smoke inhalation and death are injuries that are reasonably serious in nature. 

4. The Violation Was the Result of Moderate Negligence 

The Secretary defines Moderate negligence as when the “operator knew or should have 

known of the violative condition or practice, but there are mitigating circumstances.” 30 C.F.R. § 

100.3(d), Table X. The Commission has made it clear that judges, however, are not bound by the 

Secretary’s “formulaic approach” to negligence, and instead should look to whether the operator 

has failed to meet the high standard of care established under the Act. Sec’y of Labor, MSHA v. 

Brody Mining, LLC, 37 FMSHRC 1687, 1701 (Aug. 2015); Wade Sand & Gravel, 37 FMSHRC 

1874, 1878 n.5 (Sept. 2015). “In determining whether an operator met its duty of care, we 

consider what actions would have been taken under the same circumstances by a reasonably 

prudent person familiar with the mining industry, the relevant facts, and the protective purpose of 

the regulation.” Brody, 37 FMSHRC at 1702. The judge is to apply a “totality of the 

circumstances” analysis that need not focus on mitigating circumstances. Id. at 1702-1703. 

In the instant case, the operator had a duty to maintain the SCSRs in the mantrip. As has 

been explained supra, the operator fell short of this duty in allowing three of the 12 SCSRs—a 

full quarter of those available—to become non-compliant. The Respondent had an internal policy 

that required preoperational checks of all mantrips, including SCSRs and fire extinguishers. Tr. 

48. Though there is no evidence that the operator or its agents knew of the deficient SCSRs, it is 

inconceivable that with all proper checks a full quarter of the SCSRs on the mantrip would be 

deficient. Therefore, I find that the violation is the result of Moderate negligence. 

Citation No. 7041179 (roof control plan) 

On February 5, 2013, while conducting the quarterly inspection of the Gillhouser Run 

Mine, Inspector Wagner issued a citation for a roof control violation. Wagner was traveling the 

10 South belt drive with Kinter.11 Tr. 52-53, 134-135. At 10 South, there was 24-47 inches of 

roof that had been cut for a total roof height of six to eight feet. Tr. 53-55. The width was 20 feet, 

with 13 feet of rib that wasn’t bolted. Tr. 55. There was approximately 36 inches of clearance 

between the rib and the structure. Tr. 55. 

 11 A belt drive is taller than a normal belt structure and requires that rock is cut either 

from the roof or the bottom. Tr. 53. The transcript incorrectly has the date of inspection as 

February 15, 2013, but this appears to be a typographical error. 

38 FMSHRC Page 506
Wagner issued Citation No. 7041179 because there were no bolts or posts in an area 

where more than two feet of rock was cut.12 Tr. 56-57. According to the approved roof control 

plan, posts were supposed to be set on five foot centers, or rib bolts and cribs were supposed to 

be utilized. Tr. 58, 93; GX-10. Wagner testified that there was no support installed in the cited 

area. Tr. 58. When more than two feet of rock is cut, it puts more pressure on the coal pillar, and 

additional supports are necessary. Tr. 56-57. 

According to Wagner’s notes, the ribs on the clearance side of the belt showed signs of 

failure and there were large pieces of rock that were either pulled down or had fallen down. Tr. 

61-62; GX-4. Wagner cited the area on the tight side of the belt, where miners only travel when 

they have to clean the belt. Tr. 86. Wagner believed that at minimum the cited area had been 

mined for approximately a month before the citation was issued, meaning that the condition 

existed for at least a month. Tr. 64, 67. 

According to the roof control plan approved on April 17, 2014, unbolted ribs are 

permitted for up to one week. Tr. 99; RX-13. The one week delay in putting in the bolts would 

have been before the belt drive was installed. Tr. 101. Therefore, mine management would have 

been present during parts of the belt drive installation. Tr. 101. Even if there was a one-week 

delay when the rib was unbolted, there were at least three weeks when it remained unbolted. Tr. 

102. The area that was cited as not adequately supported was near a turn where bolts sometimes 

get pulled out during mining. Tr. 91. Wagner did not ask anyone whether the area had been 

bolted because there were no signs of it having ever been bolted. Tr. 91. 

Wagner determined that the citation was S&S because roof and rib problems are the 

leading cause of injuries in mines.13 Tr. 64-65. In this instance, the miners had to walk an area 

that was three feet wide between the belt structure and the rib. Tr. 65. A falling object could 

cause fatal injuries, or cause someone to fall onto the belt. Tr. 65. Wagner testified that such 

injuries would be fatal. Tr. 65. Wagner testified that the condition was very obvious because it 

was painted with dots, and examiners and management would have been well aware of the 

condition. Tr. 66. 

 12 Under Section 8, “Condition or Practice,” the Citation reads: 

The operator failed to comply with the current approved roof control plan (No. 

40239-B8) page 27 which states the Procedures for Rib Control at Boom Hole Locations 

where 24” or more roof has been removed. There was an area, located at the 10 South 

belt drive boom hole along the tight side of the 1 South Belt, that measured 

approximately 13’ in length where the roof removed measured from 24” to 47” that had 

no additional support provided. 

Standard 75.220(a)(1) was cited 2 times in two years at mine 3609033 (to the 

operator, 0 to a contractor). 

13 This standard is on the Rules to Live By list, meaning that the condition has led to a 

high level of injuries. Tr. 67. 

38 FMSHRC Page 507
Kinter testified that he saw red spots on the rib where there were no rib bolts, meaning 

that they were either not installed or were removed. Tr. 135. It appeared to Kinter that the bolts 

had been pulled out.14 Tr. 135. Kinter described the condition of the rib as “okay,” with no 

movement, sloughage or cracks. Tr. 135. He disagreed with Wagner’s assessment that the roof 

had been cut as much as 47 inches, and said it was likely 27 inches. Tr. 135-137. Kinter further 

did not agree that the violation was reasonably likely to cause fatal injuries to one person because 

the rib condition in the area did not show any visual defects. Tr. 137. Furthermore the roof was 

slate and there was no breakage on the roof. Tr. 137-138. 

ANALYSIS 

1. Contentions of the Parties 

The Secretary argues that Respondent violated 30 C.F.R. §75.220(a)(1) by not complying 

with the mine roof control plan and installing additional rib supports in a 13 by 20 foot area in 

the 10 South Belt Drive Area. The Secretary argues that the violation was S&S because a rib fall 

caused by unsupported ribs was reasonably likely to lead to a serious injury. The Secretary 

further argues that the violation was the result of high negligence, rather than moderate (as 

originally assessed), because the Respondent had marked the areas that needed additional roof 

support, and these markings were visible for at least a month without any action. As a result of 

the change in negligence, the Secretary requests that the civil penalty be increased from 

$1,412.00, as originally assessed, to $5,159.00.15

Respondent concedes the fact of violation, but argues that it was not S&S, and that the 

gravity, negligence, and assessed penalty should be reduced. The Respondent argues that there 

was no credible evidence presented that demonstrated a reasonable likelihood of serious injury, 

or that the cited condition adversely affected the immediate roof or ribs, or that there was any 

exposure to the condition. For these reasons, the Respondent argues that the Fatal and S&S 

designations were improper. Further, the Respondent argues that there was no evidence that 

anyone in management was aware of the condition, or that the condition existed for the length of 

time presumed by the inspector. For these reasons, the Respondent argues that the level of 

negligence should be lowered from Moderate, rather than raised, as the Secretary proposed. 

 14 If a roof bolt was pulled out, evidence of it would have been visible to an examiner and 

should have been recorded in the pre-shift examination. Tr. 147. 

15 The original assessed penalty was $1,569.00, however the Secretary reduced it by 10% 

to $1,412.00 

38 FMSHRC Page 508
2. The Violation Was Reasonably Likely to Result in a Fatal Injury and Was 

Significant And Substantial In Nature 

Regarding the first element of S&S—the underlying violation of a mandatory safety 

standard—the Respondent has conceded that it violated §75.220(a)(1).16 Similarly, the second 

element of Mathies, a discrete safety hazard contributed to by the violation, was met. The 

unsupported rib area was thirteen feet long and the width of the entry was 20 feet. Tr. 55. There 

were signs of rib failure, such as large pieces of rock that had come down onto the mine floor 

across from the unsupported rib. Tr. 62. This condition significantly contributed to the safety 

hazard of a rib fall. 

The third and fourth elements of the Mathies test—a reasonable likelihood that the hazard 

contributed to will result in a serious injury—was also met. A rib fall is reasonably likely to lead 

to an injury as serious as death. Tr. 65. MSHA has identified rib falls as one of the categories of 

accidents most frequently cited by MSHA following a fatal accident. Rules to Live By.17 A 

falling rock from a rib or roof has been repeatedly held to meet the third and fourth elements of 

the Mathies test. See Sec’y of Labor, MSHA v. Maryan Mining LLC, 37 FMSHRC 1715 (ALJ) 

(Aug. 2015); Sec’y of Labor, MSHA v. Consolidation Coal Co., 36 FMSHRC 615, 634 (ALJ) 

(Feb. 2014). I therefore find that the violation met the Mathies test and was properly designated 

as S&S. 

Furthermore, the citation was properly designated as “Fatal.” Inspector Wagner credibly 

testified that when more than two feet of rock is cut, it places additional pressure on the coal 

pillar, requiring extra supports. Tr. 56-57. Though the unsupported rib was on the tight side of 

the belt, miners would travel in this area when cleaning the belt. Tr. 86. Such a miner could 

easily have a large rock fall on him, leading to fatal injuries. Therefore, I find that the Secretary 

carried his burden by a preponderance of the evidence that the citation should be marked as 

“Fatal.” 

3. The Violation Was the Result of Moderate Negligence 

The Secretary argues that the negligence of the citation should be “High,” rather than 

“Moderate” (as originally assessed) because there were no mitigating circumstances present. 

However, the Commission has made clear that judges are not bound by the Secretary’s 

 16 Section 75.220(a)(1) “Roof Control Plan” states: 

Each mine operator shall develop and follow a roof control plan, approved by the 

District Manager, that is suitable to the prevailing geological conditions, and the mining 

system to be used at the mine. Additional measures shall be taken to protect persons if 

unusual hazards are encountered. 

30 C.F.R. § 75.220(a)(1). 

17 The Rules to Live By are available at available at 

http://arlweb.msha.gov/focuson/RulestoLiveBy/RulestoLiveByI.asp. 

38 FMSHRC Page 509
definitions of negligence, and rather than focusing purely on mitigating circumstances, the judge 

should consider the totality of the circumstances. Brody, 37 FMSHRC at 1701-1702. 

In the instant case, Inspector Wagner believed that the condition existed for at least one 

month, whereas the roof control plan only allowed unbolted ribs for one week. Tr. 64, 67, 99. 

However, Kinter testified credibly that it appeared to him that the bolts had been pulled out. Tr. 

135. Whether the bolts were never installed or pulled out is irrelevant to whether the violation 

existed, but highly relevant to the negligence determination. Though Wagner’s assessment is 

reasonable, because of the presence of red spots where bolts should have been, there is also a 

possibility that the bolts had been pulled out. Therefore, I find that the negligence should remain 

at “Moderate” and not be raised as the Secretary requests. 

PENALTIES 

The principles governing the authority of the Commission’s administrative law judges to 

assess civil penalties de novo for violations of the Mine Act are well established. Section 110(i) 

of the Mine Act delegates to the Commission and its judges the authority to assess all civil 

penalties provided in the Act. 30 U.S.C. 820(i). The Act delegates the duty of proposing 

penalties to the Secretary. 30 U.S.C. §§ 815(a), 820(a). Thus, when an operator notifies the 

Secretary that it intends to challenge a penalty, the Secretary petitions the Commission to assess 

the penalty. 29 C.F.R. §2700.28. The Act requires that in assessing civil monetary penalties, the 

Commission and its judges shall consider the six statutory penalty criteria: 

[1] the operator’s history of previous violations, [2] the appropriateness of such 

penalty to the size of the business of the operator charged, [3] whether the 

operator was negligent, [4] the effect on the operator’s ability to continue in 

business, [5] the gravity of the violation, and [6] the demonstrated good faith of 

the person charged in attempting to achieve rapid compliance after notification of 

a violation 

30 U.S.C. § 820(i) 

 The Secretary seeks civil penalties in the amounts of $1,795.00 for Citation No. 7041173 

and $5,159.00 for Citation No. 7041179.18 Given all of the evidence and my findings above, I 

find that the penalty for Citation No. 7041173 is appropriate, but the penalty for Citation No. 

7041179 should remain at the originally assessed amount of $1,412.00. 

 In assessing a $3,207.00 total penalty, I have given full consideration to the Section 

110(i) criteria. Specifically, I note that Respondent had been cited once in the previous two years 

for violations of §75.1714-3(a) and two times for §75.220(a). Respondent is a large operator and 

the Gillhouser Run Mine is a large mine and therefore the penalty is appropriate to the size of the 

business. The parties stipulated that this penalty amount would not affect Respondent’s ability to 

stay in business. Both citations were properly assessed as S&S and Moderate negligence. 

 18 The Secretary originally assessed a penalty of $1,412.00 for Citation No. 7041179, but 

sought an increase in its Post-Hearing Brief. 

38 FMSHRC Page 510
Further, the dangers cited with respect to each violation were highly likely to result in fatal 

injuries of miners. 

ORDER

It is ORDERED that Citation No. 7041173 is AFFIRMED as written, and Citation No. 

7041179 is AFFIRMED, with Moderate negligence. It is further ORDERED that Amfire 

Mining Co. LLC, PAY the Secretary of Labor the sum of $3,207.00 within 30 days of the date of 

this Decision.19 Upon receipt of payment, this case is hereby DISMISSED. 

/s/ John Kent Lewis 

John Kent Lewis 

 Administrative Law Judge 

Distribution: 

Jessica R. Brown, Esq., Office of the Solicitor, Suite 630E, The Curtis Center, 170 S. 

Independence Mall West, Philadelphia, PA 19106-3306 

Kenneth J. Polka, CLR, 631 Excel Dr., Suite 100, Mt. Pleasant, PA 15666 

Patrick W. Dennison, Esq., Jackson Kelly, PLLC, Three Gateway Center, Suite 1500, 401 

Liberty Ave., Pittsburgh, PA 15222-1000

 19 Payment should be sent to: MINE SAFETY AND HEALTH ADMINISTRATION, 

U.S. DEPARTMENT OF LABOR, PAYMENT OFFICE, P. O. BOX 790390, ST. LOUIS, MO 

63179-0390 

38 FMSHRC Page 511

ADMINISTRATIVE LAW JUDGE ORDERS
38 FMSHRC Page 512
FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

OFFICE OF ADMINISTRATIVE LAW JUDGES 

1331 PENNSYLVANIA AVE., N.W., SUITE 520N 

WASHINGTON, DC 20004-1710 

TELEPHONE: 202-434-9933 / FAX: 202-434-9949 

March 4, 2016 

ORDER ON COMPLAINANT’S MOTION TO AMEND 

Before: Judge Moran 

Complainant Matthew Varady has filed a motion to amend the complaint in this matter, 

brought under section 105(c)(3) of the Federal Mine Safety and Health Act of 1977, 30 U.S.C. § 

801 et seq. (2012) (“Mine Act” or “Act”), to add Jerritt Canyon Gold, LLC, (“JCG”) as an 

alleged successor. JCG then filed its Special Limited Appearance on Behalf of Jerritt Canyon 

Gold, LLC to Contest Jurisdiction in Response to Complainant’s Motion to Amend 

(“Response”).1 For the reasons that follow, the Court grants Complainant’s Motion to Amend, 

allowing the addition of JCG as an alleged successor in interest to Veris Gold USA, Inc. (“Veris 

Gold”). 

JCG’s Special Limited Appearance challenges whether this Court has “jurisdiction over 

and can attach liability for alleged claims of discrimination by Veris Gold USA, Inc. (‘Veris 

Gold’) to [JCG], a newly formed entity that purchased certain assets of the former Veris Gold 

under a bankruptcy court order and approved sale.” JCG Resp. 1. Though it filed its Response, 

JCG simultaneously asserts that it had not received service of the Motion to Amend but that, de 

facto, it received the filing from counsel for Whitebox Advisors, LLC. Given JCG’s Response, in 

view of its claim of defective service, though overcome because it acknowledges receiving 

Varady’s motion, JCG, through its Counsel, Attorney Kaster and Attorney Jarvis, is hereby 

ORDERED to provide the correct service address for JCG to the Court and Mr. Varady. 

The Response begins with serious inaccuracy by characterizing the Mine Act 

discrimination action brought by Varady as “alleged claims of discrimination by Veris Gold 

USA, Inc.” Id. (emphasis added). This Court, after a hearing held in Elko, Nevada, from June 8-

10, 2015, at which Veris Gold had legal counsel, found in a decision issued on September 2, 

2015, that Veris Gold engaged in acts of discrimination against Complainant Varady. See Varady

1

 Mr. Varady filed a response to the JCG filing, which was also considered by the Court. 

MATTHEW A. VARADY, 

 Complainant, 

v. 

VERIS GOLD USA, INC., 

and 

JERRITT CANYON GOLD, LLC, 

 Respondents, 

DISCRIMINATION PROCEEDING 

Docket No. WEST 2014-307-DM 

WE-MD 14-03 

Mine: Jerritt Canyon Mill 

Mine ID: 26-01621 

38 FMSHRC Page 513
v. Veris Gold USA, Inc., 37 FMSHRC 2037 (Sept. 2015) (ALJ). Therefore, far from mere

allegations, this Court made findings of fact and conclusions of law regarding that discrimination

claim.

The Response then queries whether JCG, “a newly formed entity that purchased certain 

assets of the former Veris Gold under a bankruptcy court order and approved sale” can be liable 

for Veris Gold’s acts of discrimination. JCG Resp. 1. The Response does acknowledge that the 

issue is whether JCG can be added to the complaint as an “alleged successor in interest to Veris 

Gold.” Id.2

It is JCG’s position that the final orders of the bankruptcy court are not subject to 

collateral attack, as that court “declared the sale of Veris Gold assets to JCG ‘free and clear’ of 

claims and encumbrances pursuant to Federal Bankruptcy Code, 11 U.S.C. § 363(f).” JCG Resp. 

2. Again characterizing Varady’s Complaint as an allegation of Veris Gold’s discrimination, JCG

asserts that “efforts to impose a penalty on JCG [based on Varady’s discrimination complaint]

tramples on powerful and persuasive precedent as well as policies that derive from fundamental

‘equitable distribution to creditors’ policy underlying bankruptcy law.” Id. at 2. On that basis, the

Response contends that this Court has no jurisdiction over JCG and therefore it should deny the

Complainant’s Motion to Amend. Id.

In the “Background” section, the Response asserts “JCG is a newly formed limited 

liability company funded by new investors [which is] not affiliated in any way with the former 

operations of Veris Gold.”3 Id. (emphasis added). 

The Response acknowledges that Mr. Varady brought his own “private” discrimination 

action under section 105(c)(3) of the Mine Act.4 The Response then notes that “[o]n June 4, 

2

 The Response references that similar issues are presented in Lowe v. Veris Gold, Docket 

No. WEST 2014-614-DM, another matter in which this Court determined, after a hearing, that 

Veris Gold discriminated against Daniel Lowe in violation of section 105(c)(3) of the Mine Act. 

JCG Resp. 1. 

3

 These claims, that JCG is funded by “new investors” who are “not affiliated in any 

way” with Veris Gold, have been challenged, and the resolution of such issues would be part of 

the Court’s determinations regarding whether JCG is a successor. 

4

 Though it acknowledges that Varady brought his own discrimination action under 

section 105(c)(3) of the Mine Act, the Response cannot help but insert irrelevancies into its 

argument by noting that MSHA declined to file a discrimination action on Varady’s behalf and 

that MSHA’s decision was “based upon its investigation, staffing, resources and priorities.” JCG 

Resp. 3 & n.2. Such references are not merely historical, but, as with the Response’s 

characterization of the action as “alleged claims of discrimination,” are obvious attempts to 

indirectly diminish the merits of Varady’s 105(c)(3) action as if it was a stepchild claim. 

Congress did not impute under the Mine Act that such private claims were of inferior standing. 

Since JCG has raised the vehicle employed for Varady’s claim, it is fair to note that his action 

was one of a bevy of discrimination complaints filed against Veris Gold, some brought by the 

(continued...) 

38 FMSHRC Page 514
2015, the U.S. Bankruptcy Court entered an order approving the sale of Veris Gold’s assets, 

including the Jerritt Canyon mine and mill, free and clear of all liens, claims and interests 

pursuant to Section 363 of the Bankruptcy Code, (11 U.S.C. § 363). Docket No. 318.” Id. at 3. 

JCG takes particular note that 

the Sale Order specifically provided that the Assets would be sold free and clear 

of: ‘rights or claims on any successor or transferee liability and any enforcement 

action or enforcement history ...and... all contractual rights and claims and labor, 

employment and pension claims, in each case, whether known or unknown, 

choate or inchoate, filed or unfiled, scheduled or unscheduled, noticed or 

unnoticed, recorded or unrecorded, perfected or unperfected, allowed or 

disallowed, contingent or non-contingent, liquidated or unliquidated, matured or 

un-matured, material or non-material, disputed or undisputed, whether arising 

prior to or subsequent to the commencement of these Chapter 15 Cases...’ 

JCG Resp. 3-4 (quoting Sale Order at 6-7, In re Veris Gold Corp., No. 14-51015-gwz (Bankr. D. 

Nev. June 4, 2015), ECF No. 318). 

The Response then notes that Varady received notice of the bankruptcy action on June 

19, 2015, that Varady filed a motion to stay the bankruptcy court’s Sale Order, and that the 

bankruptcy court denied the motion stating that there was no legal or factual for the relief Varady 

sought. Id. at 4. The denial of the motion occurred on the same day Varady filed his motion 

seeking a stay.5 

The Response asserts that this Court “lacks jurisdiction to amend the complaint and 

adjudicate the Section 105(c)(3) complaint against JCG.” JCG Resp. 5. Apart from the unusual 

and temerarious assertion that this Court, as part of the Federal Mine Safety and Health Review 

Commission (“the Commission”), in a lawful section 105(c)(3) action under the Mine Act, lacks 

jurisdiction to allow Varady to amend his complaint and to adjudicate such amended complaint 

against JCG, the Response makes the fundamental error of conflating bankruptcy court 

decisional authority with that of the Commission. The Commission has the authority to 

adjudicate section 105(c) complaints of all stripes and such authority includes determinations of 

4

 (...continued) 

Secretary of Labor and others, as with Varady, on their own. See Sec’y of Labor on behalf of 

Garcia v. Veris Gold USA, Inc., 36 FMSHRC 1883 (July 2014) (ALJ); Lowe v. Veris Gold USA, 

Inc., 37 FMSHRC 2337 (Oct. 2015) (ALJ). 

5

 The Response notes that Varady, a non-attorney, pro se complainant, did not attempt to 

appeal the bankruptcy court’s denial of his motion and “thus failed to exhaust his remedies.” 

JCG Resp. 4. This is somewhat disingenuous if meant to suggest that a different outcome was at 

all possible. 

38 FMSHRC Page 515
motions to amend such complaints.6

 As Commissioner Cohen has noted in another section 

105(c)(3) complaint against Veris Gold, “the Complainant may file a motion to amend the 

complaint to add as parties the entities which now have a successor interest in the mine formerly 

owned by Veris Gold.” Lowe v. Veris Gold USA, Inc., No. WEST 2014-614-DM, 2016 WL 

197500, at *2 n.4 (FMSHRC Jan. 12, 2016) (citing Tolbert v. Chaney Creek Coal Corp., 12 

FMSHRC 615 (Apr. 1990)). Commissioner Cohen continued: 

Moreover, the Federal Rules of Civil Procedure may present several potential 

avenues of relief for the Complainant. See 29 C.F.R. § 2700.1(b) (“the 

Commission and its Judges shall be guided so far as practicable by the Federal 

Rules of Civil Procedure”). For instance, under Rule 21, a Judge may sua sponte

grant a post-hearing joinder of a new party. Fed. R. Civ. P. 21 (“the court may at 

any time, on just terms, add or drop a party”). In addition, Federal Rule of Civil 

Procedure 15 permits a party, with the court’s leave, to amend a complaint more 

than 21 days after the pleading is served “when justice so requires.” Fed. R. Civ. 

P. 15(a)(2).” 

Id. 

I. Jerritt Canyon Gold’s Arguments

In support of its claim that this Court does not have jurisdiction to adjudicate a Mine Act 

section 105(c)(3) discrimination complaint, the Response advances four contentions: 

I. The automatic stay provisions of the Bankruptcy Code preclude ancillary 

proceedings by private individuals and any such proceedings are void. . . . II. The 

Bankruptcy Court’s adjudication and sale of Veris Gold assets were ‘free and 

clear’ of liens, claims and interests as provided for under Section 363(f) of the 

 6 See, e.g., McDonald v. TMK Enterprises, 37 FMSHRC 2239 (Oct. 2015); Black Beauty 

Coal Co., 34 FMSHRC 1733 (Aug. 2012); Wyo. Fuel Co., 14 FMSHRC 1282 (Aug. 1992). The 

Procedural Rules provide that the Commission's judges shall be guided by the Federal Rules of 

Civil Procedure “[o]n any procedural question not regulated by Act, these Procedural Rules, or 

the Administrative Procedure Act.” 29 C.F.R. § 2700.1(b). Rule 15(a) of the Federal Rules of 

Civil Procedure provides that leave to amend a complaint shall be “freely given when justice so 

requires.” Fed. R. Civ. P. 15(a); see also Foman v. Davis, 371 U.S. 178, 182 (1962). The 

Commission has taken a liberal view when it comes to amending complaints, “especially when 

. . . they do not prejudice a party in preparing its defenses.” Brannon v. Panther Mining, LLC, 31 

FMSHRC 1277, 1279 (Sept. 2009) (ALJ); see also Cyprus Empire Corp., 12 FMSHRC 911, 916 

(May 1990); El Paso Rock Quarries, Inc., 3 FMSHRC 35, 38 (Jan. 1981); Bob Bak Constr., No. 

CENT 2005-139-M et al., 2006 WL 2927263, at *6 (FMSHRC Sept. 11, 2006) (ALJ). Provided 

adequate notice is given and there is no prejudice to the opposing party, administrative pleadings 

are to be liberally construed and easily amended. CDK Contracting Co., 23 FMSHRC 783, 784 

(July 2001) (ALJ). The grant or denial of a motion for leave to amend is within the sound 

discretion of the court and will be reversed only for an abuse of discretion. Jim Walter Res., No. 

SE 2010-351, 2013 WL 3865345, at *4 (FMSHRC June 12, 2013) (ALJ) (citing Zenith Radio 

Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 330 (1971)). 

38 FMSHRC Page 516
Bankruptcy Code. The Bankruptcy Courts’ [sic] Adjudication resulted in the 

buyer of assets of Veris Gold taking title to those assets free from all claims 

against Veris Gold, including the claims in this private proceeding. . . . III. 

Complainant is barred under principles of res judicata and collateral estoppel from 

bringing a claim against Veris Gold and JCG where Complainant made an 

appearance, sought relief from, and made objections to actions in the Bankruptcy 

Court’s denial of the relief sought by Complainant and the ordering of the sale 

free and clear to JCG. . . . IV. Any action of the ALJ would violate important 

policies and the fundamental framework of the Bankruptcy Code which requires 

equitable treatment of all creditors.” 

JCG Resp. 5, 7, 9, 11 (footnote omitted). 

A. The Contention that the Automatic Stay Provisions of the Bankruptcy Code 

Preclude Ancillary Proceedings by Private Individuals and Any Such 

Proceedings Are Void 

 Noting that Veris Gold sought bankruptcy protection under Chapter 15 of the Bankruptcy 

Code, JCG asserts that the petition filing brought about an “automatic stay” the same day and 

triggered 11 U.S.C. § 362(a)(1). The Response states that the stay served as an injunction to 

the commencement or continuation, including the issuance or employment of 

process, of a judicial, administrative, or other action or proceeding against the 

debtor that was or could have been commenced before the commencement of the 

case under this title, or to recover a claim against the debtor that arose before the 

commencement of the case under this title. 

JCG Resp. 5 (quoting 11 U.S.C. § 362(a)(1)). 

 The Response acknowledges that, despite the broad language employed, “cases 

commenced or continued by a ‘governmental unit’ may be exempt from the automatic stay” 

provision, per 11 U.S.C. § 362 (b)(4). However, the Response effectively asserts that any action 

other than one brought by a governmental unit is void ab initio. Id. (citing In re Dunbar, 245 

F.3d 1058, 1063 (9th Cir. 2001)). It then contends that, since the pro se, non-attorney 

Complainant failed to seek relief from the automatic stay, any actions taken by other judicial or 

administrative authorities are void as infringing upon the bankruptcy court’s jurisdiction. Id. at 5-

6. The concern is that if the bankruptcy court’s injunction could be modified, it would strip the 

court of “its ability to distribute the debtor’s assets equitably, or to allow the debtor to reorganize 

[its] financial affairs.” Id. at 6 (quoting In re Gruntz, 202 F.3d 1074, 1083-84 (9th Cir. 2000)).7

Thus, the Response maintains that this Court has no jurisdiction because the bankruptcy court’s 

 7

 In In re Gruntz, the Ninth Circuit, in the context of determining whether a bankruptcy 

court’s automatic stay enjoined a state criminal proceeding for failing to pay child support, held 

that because that proceeding fell within one of the exceptions to an automatic stay, it did not so 

operate, but that, generally, federal courts are not bound by state court modifications of the 

automatic stay. 

38 FMSHRC Page 517
stay enjoined “proceedings brought by creditors of a debtor outside of the bankruptcy case.” Id. 

(emphasis added). The response to this contention is addressed infra. 

B. The Contention that the Bankruptcy Court’s Adjudication and Sale of Veris 

Gold Assets Were “Free and Clear” of Liens, Claims, and Interests as Provided 

for Under § 363(f) of the Bankruptcy Code, Resulting in JCG, as the Buyer of 

the Assets of Veris Gold, Taking Title to Those Assets Free from All Claims 

Against Veris Gold, Including the Discrimination Action Brought by Varady 

Under the Mine Safety and Health Act 

 Noting that § 363(f)8

 provides that the trustee may sell property free and clear of any 

interest in such property other than the estate only upon meeting certain conditions, JCG 

observes that the term “interest” has been broadly interpreted by courts and, citing In re Trans 

World Airlines, Inc., 322 F.3d 283, 289-90 (3rd Cir. 2003) (“TWA”), that being free and clear of 

such “interest” insulates a successor from claims of discrimination against the predecessor. Id. at

7. JCG also points to In re Leckie Smokeless Coal Co., 99 F.3d 573, 585 (4th Cir. 1996), for the 

proposition that the bankruptcy court may extinguish Coal Act successor liability pursuant to 11 

U.S.C. § 363(f)(5) and therefore that Court did not need to determine if the purchaser was a 

successor in interest. JCG contends that, per TWA, “interest in property” applies to obligations 

that are connected to, or arise from, property being sold, and are not limited to in rem interests. 

Id. at 8 (citing TWA, 322 F.3d at 289-90). JCG adds that as the bankruptcy court’s Sale Order 

provided that the purchaser will not be liable for claims based on any successor or transferee 

liability and any enforcement action or enforcement history or employment and pension claims, 

such order applies to Varady’s claim. Id. JCG also maintains that Varady moved to stay the Sale 

Order, and that his motion was denied and he made no appeal from that order. Id. 

 It is true that, while not in the Ninth Circuit, the applicable circuit for this case, the Third 

Circuit did hold in TWA that the various airline workers’ employment discrimination claims, as 

well as claims by flight attendants under a travel voucher program that the debtor-airline had 

established in settlement of sex discrimination actions, both qualified as “interests in property” 

under the bankruptcy statute provision that provided for sale of assets of estates free and clear of 

interests in property. However, this Court believes the case is distinguishable. 

 8

 11 U.S.C. § 363(f) provides: 

The trustee may sell property under subsection (b) or (c) of this section 

free and clear of any interest in such property of an entity other than the estate, 

only if— 

(1) applicable nonbankruptcy law permits sale of such property free 

and clear of such interest; 

(2) such entity consents; 

(3) such interest is a lien and the price at which such property is to be 

sold is greater than the aggregate value of all liens on such property; 

(4) such interest is in bona fide dispute; or 

(5) such entity could be compelled, in a legal or equitable proceeding, 

to accept a money satisfaction of such interest. 

38 FMSHRC Page 518
First, it would appear that American Airlines was an arms-length successor to TWA. In 

addition, the court of appeals concluded that in the § 363(f) sale permitting the sale of property 

“free and clear” of an “interest in such property,” the claims against TWA were connected to or 

arose from the assets sold, a determination which this Court has yet to make. An additional and 

important distinction, the bankruptcy court determined there was no basis for successor liability 

only after conducting an evidentiary hearing. TWA, 322 F.3d at 286. 

Apart from the procedural protection of an evidentiary hearing, as noted, part of that 

determination was the bankruptcy court’s determination that the claims against TWA were 

interests in property under § 363(f). In construing the term “interest in such property,” the 

appeals court acknowledged that Congress did not define that phrase and that some courts have 

limited its application to in rem interests in property.1

 The appeals court also referenced the 

Fourth Circuit’s decision in Leckie in which that court concluded “that the employer-sponsored 

benefit plans had interests in the property of the debtors which had been transferred under 

section 363(f) in the sense that there was a relationship between their right to demand premium 

payments from the debtors and the use to which the debtors had put their assets.” TWA, 322 F.3d 

at 289 (citing Leckie, 99 F.3d at 582). The Third Circuit obviously struggled with its conclusion, 

so much so that it felt the need to offer a supporting rationale had it concluded that the claims 

were not interests in property. It noted that one of the discrimination claims went to trial and 

damages were awarded, while in the other suit no determination of liability had been made at the 

time of the bankruptcy filing. It then looked to the reasoning in other cases that such claimants 

should not be allowed “to seek a recovery from the successor entity while creditors which were 

accorded higher priority by the Bankruptcy Code obtained their recovery from the limited assets 

of the bankruptcy estate [as that] would ‘subvert the specific priorities which define 

Congressional policy for bankruptcy distribution to creditors.’ TWA, 322 F.3d at 292 (quoting In 

re New England Fish Co., 19 B.R. 323, 329 (Bankr. W.D. Wash. 1982)). 

 However, the Third Circuit also took special note of the importance of discrimination 

claims, stating it recognized “that the claims of the EEOC and the Knox-Schillinger class of 

plaintiffs are based on congressional enactments addressing employment discrimination and are, 

therefore, not to be extinguished absent a compelling justification.” Id. (emphasis added). 

Despite that admission, that court continued to adhere to its view that allowing “the claimants to 

assert successor liability claims against American while limiting other creditors’ recourse to the 

proceeds of the asset sale would be inconsistent with the Bankruptcy Code’s priority scheme.” 

Id. 

It is clear, at least to this Court, that the Third Circuit’s holding was impacted by the 

particular facts and that it was not a broad-based pronouncement. Among those facts was the 

anticipated disastrous outcome if the claimants’ interests were recognized, as it noted: 

The Bankruptcy Court found that, in the absence of a sale of TWA’s assets to 

American, “the EEOC will be relegated to holding an unsecured claim in what 

will very likely be a piece-meal liquidation of TWA. In that context, such claims 

are likely to have little if any value.” In re Trans World Airlines, Inc., et al., No. 

01-00056, slip op. at 23, 2001 WL 1820326 (Bankr. D. Del. Mar.27, 2001). The 

same is true for claims asserted pursuant to the Travel Voucher Program, as they 

would be reduced to a dollar amount and would receive the same treatment as the 

38 FMSHRC Page 519
unsecured claims of the EEOC. Given the strong likelihood of a liquidation absent 

the asset sale to American, a fact which appellants do not dispute, we agree with 

the Bankruptcy Court that a sale of the assets of TWA at the expense of 

preserving successor liability claims was necessary in order to preserve some 

20,000 jobs, including those of Knox-Schillinger and the EEOC claimants still 

employed by TWA, and to provide funding for employee-related liabilities, 

including retirement benefits. 

TWA, 322 F.3d at 293. 

C. The Contention that Complainant Is Barred Under Principles of Res Judicata

and Collateral Estoppel from Bringing a Claim Against Veris Gold and JCG 

Where Complainant Made an Appearance, Sought Relief from, and Made 

Objections to Actions in the Bankruptcy Court and Thereafter Failed to Seek 

Relief from or Appeal the Bankruptcy Court’s Denial of the Relief Sought by 

Complainant and the Court’s Ordering of the Sale Free and Clear to JCG 

 JCG argues that since the § 363 sale order is an in rem proceeding, res judicata applies to 

that sales transfer of property rights and that those property rights are good against the world. 

JCG Resp. 9. Since the property in the bankruptcy court’s Sale Order was sold free and clear of 

any interests in that property, Complainant cannot make any claims against that property. Id.

JCG adds that collateral estoppel also applies on the basis that Complainant “had notice and 

participated in the Bankruptcy Court action, the matter was actually litigated, and Complainant 

had the incentive to litigate and prevail.” JCG Resp. 9-10. Repeating its earlier remarks about 

this, JCG asserts that Varady had his chance, as he sought to stay the bankruptcy sales order. 

When the bankruptcy court ruled against his motion, Varady failed to appeal that ruling and now 

must live with the consequences of that failure. Id. at 10. 

 This contention is an echo of JCG’s other arguments and is addressed within this Order. 

D. The Contention that Any Action by the ALJ Would Violate Important Policies 

and the Fundamental Framework of the Bankruptcy Code which Requires 

Equitable Treatment of all Creditors. 

 Unabashedly, JCG invokes its concern for the “equitable treatment of creditors” and the 

Bankruptcy Code’s purpose of ensuring “that all substantially similar claims of creditors are 

treated equitably[, with c]laims [being] classified and paid according to priority as set forth in 11 

U.S.C. § 507.” JCG Resp. 11. That sounds high-minded, but if the Court correctly interprets 

JCG’s next remark that Veris Gold shifted from a “going concern” restructuring to a liquidation 

and only secured claims would be paid, in plain English this means that no matter what Varady 

did in terms of appeals from the bankruptcy court rulings, he could never prevail. Thus, happily 

for Veris, and by extension for JCG, under the bankruptcy proceeding, both were able to walk 

away from all unsecured pre-filing claims. Mr. Varady, JCG asserts, should not be entitled to any 

“preferential” treatment. Rather, he should be entitled to the same equitable treatment dispensed 

to all the other unsecured creditors. As an example of this “equitable treatment,” JCG points to 

the settlement agreement Veris had with Jennifer Morreale, another person alleging 

38 FMSHRC Page 520
discrimination by Veris, under which, by the Veris bankruptcy action she was paid nothing with 

her claim being discharged. JCG seeks the same fair and equitable treatment for Varady. 

II. Discussion

The Court takes a step back to take note of the basics of the bankruptcy process: 

A fundamental goal of the federal bankruptcy laws enacted by Congress is to give 

debtors a financial ‘fresh start’ from burdensome debts. The Supreme Court made 

this point about the purpose of the bankruptcy law in a 1934 decision: ‘[I]t gives 

to the honest but unfortunate debtor...a new opportunity in life and a clear field 

for future effort, unhampered by the pressure and discouragement of preexisting 

debt.’ Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934). This goal is 

accomplished through the bankruptcy discharge, which releases debtors from 

personal liability from specific debts and prohibits creditors from ever taking any 

action against the debtor to collect those debts. 

Administrative Office of the U.S. Courts, Process – Bankruptcy Basics, 

http://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/process-bankruptcybasics (last visited March 3, 2016) (emphasis added).The same source advises that 

[n]ot all debts are discharged. The debts discharged vary under each chapter of the 

Bankruptcy Code. Section 523(a) of the Code specifically excepts various 

categories of debts from the discharge granted to individual debtors. Therefore, 

the debtor must still repay those debts after bankruptcy. Congress has determined 

that these types of debts are not dischargeable for public policy reasons (based 

either on the nature of the debt or the fact that the debts were incurred due to 

improper behavior of the debtor, such as the debtor's drunken driving). 

Id. (emphasis added). 

Accordingly, it is noted that bankruptcy law is aimed at debts owed creditors, not at relief 

for wrongdoers, such as those that engage in discrimination in violation of the Mine Act. 

Depending on the outcome of the determination of JCG’s possible status as a successor and what 

it knew about the Varady proceeding and the legal representation for Veris Gold in that 

proceeding, holding JCG responsible may be an appropriate outcome. 

Moreover, as noted above, per the Commission’s related opinion in Lowe v. Veris Gold 

USA, Inc.,

9

 No. WEST 2014-614-DM, 2016 WL 197500, at *2 n.4 (FMSHRC Jan. 12, 2016), 

one Commissioner expressed that it was not so clear that the bankruptcy proceeding filed by 

 9

 While this Order pertains to Varady’s action, this Court upheld Lowe’s discrimination 

complaint in a decision issued on October 15, 2015. See Lowe v. Veris Gold USA, Inc., 37 

FMSHRC 2337 (Oct. 15, 2015) (ALJ). JCG has filed essentially the same response, advancing 

the same arguments for the Lowe matter, as it has presently filed here in Varady’s discrimination 

complaint. A separate order will be issued for the Lowe matter.

38 FMSHRC Page 521
Veris Gold is effective against Lowe.10 As such, that Commissioner’s expression would apply 

with equal force in the Varady discrimination complaint. That Commissioner further expressed 

that 

[i]t appears that in filing its bankruptcy petition, Veris Gold may not have given 

Lowe proper notice of the filing. Indeed, Lowe – together with other former 

employees of Veris Gold who have discrimination complaints before the 

Commission under section 105(c) of the Mine Act – filed a motion in the U.S. 

Bankruptcy Court for the District of Nevada in Case No. 14-51015 gwz in which 

they made this allegation. 

Lowe, 2016 WL 197500, at *2 n.4.

The same Commissioner also stated: 

Even if the bankruptcy filing was effective against Lowe, this fact does not 

necessarily foreclose the Commission from providing relief against the successors 

in interest of Veris Gold. In International Technical Products Corp., 249 NLRB 

1301 (Jun. 1980), the NLRB held that a company which purchased all of the 

assets of a predecessor company ‘free and clear of all liens, claims and 

encumbrances’ pursuant to an order of a bankruptcy court could be held 

responsible for the predecessor’s backpay liability under federal labor law. In 

2010, the Board reaffirmed the International Technical Products Corp. holding in 

Leiferman Enterprises, LLC, 355 NLRB 364 (Aug. 2010), incorporating by 

reference 354 NLRB 872 (Oct. 2009), aff’d sub nom. NLRB v. Leiferman 

 10 The same Commissioner also expressed: 

The Mine Act provides a Judge broad remedial powers to address 

instances of discrimination as may be appropriate. 30 U.S.C. § 815(c)(3) 

(providing that if a Judge sustains charges of discrimination he may grant “such 

relief as [he] deems appropriate, including, but not limited to, an order requiring 

the rehiring or reinstatement of the miner of his former position with back pay and 

interest or such remedy as may be appropriate”). Accordingly, [that 

Commissioner noted] that the Commission has been granted more discretion in 

fashioning an appropriate remedy by the Mine Act than [this Court] initially 

recognized [when it] concluded that reinstatement of a miner to a successor in 

interest is not possible under the Mine Act. . . . However, the remedy of 

reinstatement may be imposed on an operator’s successor in interest. Sec’y of 

Labor on behalf of Corbin v. Sugartree Corp., 9 FMSHRC 394 (Mar. 1987), aff’d 

sub nom., Terco v. Fed. Coal Mine Safety & Health Review Comm’n, 839 F.2d 

236 (6th Cir. 1987), cert. denied, 488 U.S. 818 (1988); Simpson v. Kenta Energy, 

11 FMSHRC 770, 778 (May 1989). 

Lowe, 2016 WL 197500, at *2 n.4.

38 FMSHRC Page 522
Enterprises, LLC, 649 F.3d 873 (8th Cir. 2011), cert. denied, 132 S. Ct. 1741 

(2012). 

Id. 

As the Commissioner noted, the National Labor Relations Board, in International 

Technical Products, held that a successor was liable for backpay, despite the successor’s 

assertion that the assets were purchased “free and clear of all liens” pursuant to an order and 

judgment of the United States District Court. The NLRB stated that the sole issue presented was 

whether “a judicial sale, free and clear of all liens, pursuant to the authority of a bankruptcy 

court, extinguishes any backpay liability imposed upon a successor-employer for the unfair labor 

practices committed by its predecessor-employer.” International Technical Products, 249 NLRB 

at 1302. The successor asserted that as it purchased the predecessor’s assets free and clear of all 

liens, claims, and encumbrances, this would include the Board’s claim for backpay. Citing its 

decision in Perma Vinyl Corp., 164 NLRB 968 (1967), and the Supreme Court’s decision in 

Golden State Bottling Company, Inc. v. N.L.R.B., 414 U.S. 168 (1973), the Board noted its 

holding in Perma Vinyl

that ‘one who acquires and operates a business of an employer found guilty of 

unfair labor practices in basically unchanged form under circumstances which 

charge him with notice of unfair labor practice charges against his predecessor 

should be held responsible for remedying his predecessor’s unlawful conduct.’ In 

Golden State Bottling Company, Inc., the Supreme Court sustained the Board’s 

Perma Vinyl doctrine and held that a successor-employer which acquires a 

business with knowledge of an outstanding Board order requiring its predecessor 

to reinstate with backpay an unlawfully discharged employee may properly be 

required to assume the reinstatement obligation and to share jointly and severally 

with the predecessor the backpay liability. 

International Technical Products, 249 NLRB at 1303 (footnote omitted). 

The Board did not accept the contention that the successor’s liability was extinguished by 

the bankruptcy court’s order allowing the successor to purchase the assets “free and clear of all 

liens, claims, and encumbrances. Rather, it noted that 

while a bankruptcy court may have the authority to assign a certain priority to the 

Board’s claim for backpay, the authority to modify or set aside the order upon 

which the claim is based rests exclusively with the Board and the appropriate 

reviewing Federal courts, and not the bankruptcy courts. Indeed, the significance 

of a Board order has long been recognized by the Supreme Court. Thus, in 

N.L.R.B. v. J. H. Rutter Rex Manufacturing Co, Inc., 396 U.S. 258, 263 (1969), 

the Supreme Court, citing N.L.R.B. v. Seven-Up Bottling Co., 344 U.S. 344 

(1953), stated that ‘as with the Board’s other remedies, the power to order back 

pay is for the Board to wield, not for the courts.’ Moreover, the Court emphasized 

that ‘when the Board, in the exercise of its informed discretion, makes an order of 

restoration by way of back pay, the order should stand unless it can be shown that 

38 FMSHRC Page 523
the order is a patent attempt to achieve ends other than those which can fairly be 

said to effectuate the policies of the Act.’ 

Id.

The Board concluded that 

the bankruptcy court’s order allowing [the successor] to purchase [the] assets free 

of all liens, claims, and encumbrances cannot affect the Board’s Order . . . 

requir[ing] . . . the ultimate successor [to] make the discriminate[e] whole for the 

remaining portion of the backpay due and owing them. To find otherwise 

would . . . be tantamount to a relinquishment by the Board of its statutory 

obligation to remedy unfair labor practices and also its authority . . . to proceed 

against a successor employer in furtherance of that obligation. Indeed, such a 

finding would, of necessity, imply that, by merely ordering the judicial sale of a 

bankrupt employer’s assets to a nonbankrupt successor employer ‘free and clear 

of all liens, claims, and encumbrances,’ a bankruptcy court can effectively nullify 

a Board order requiring that the nonbankrupt successor employer remedy the 

unfair labor practices committed by its predecessor. 

Id. 

Speaking to the purpose of the Board’s order, it added: 

To insure that the adverse effects of a wrongdoer’s unlawful conduct are 

eliminated and that the public right is vindicated, it is essential that there be full 

compliance with the Board’s order requiring that the employer comply with the 

order’s remedial provisions. . . . Thus it cannot be classified or treated simply as a 

“lien, claim, or encumberance” within the common usage of those terms and, 

consequently, any liability arising therefrom cannot be extinguished or modified 

. . . through the purchase of a bankrupt’s assets “free and clear of all liens, claims 

and encumbrances” at a judicial sale. 

Id. 

In Chicago Truck Drivers, Helpers, and Warehouse Union (Independent) Pension Fund 

v. Tasemkin, Inc., 59 F.3d 48, 49 (7th Cir. 1995), a multi-employer pension fund brought an 

action against a Chapter 7 debtor’s successor in interest. Although the district court held there 

could not be successor liability, the appeals court held that the pension fund’s unsuccessful 

participation in the predecessor employer’s bankruptcy did not preclude it from a successor 

liability claim. The facts in Tasemkin may yet echo those in this matter. Tasemkin “went bellyup” allegedly owing some $300,000 in delinquent pension funds. Id. While the Pension Fund 

attempted to recover those funds in the Chapter 7 bankruptcy, Tasemkin Furniture (“Old 

Tasemkin”) made a debt compromise agreement with its secured lender and turned over its 

interest to a new company, Tasemkin, Inc., (“New Tasemkin”) which then foreclosed on the 

collateral, leaving nothing for anyone else, including the Pension Fund. Id. Thereafter, the 

Pension Fund sued Tasemkin, Inc., on a successor liability theory. Id. The Seventh Circuit 

38 FMSHRC Page 524
provided clarity about successorship vis-à-vis bankruptcy and the general rule that a purchaser of 

assets does not acquire the seller’s liabilities: 

Most states have adopted exceptions to the general no-liability rule that allow 

creditors to pursue the successor if the “sale” is merely a merger or some other 

type of corporate reorganization that leaves real ownership unchanged. . . . 

Successor liability under federal common law is broader still: in order to protect 

federal rights or effectuate federal policies, this theory allows lawsuits against 

even a genuinely distinct purchaser of a business if (1) the successor had notice of 

the claim before the acquisition; and (2) there was “substantial continuity in the 

operation of the business before and after the sale.” E.E.O.C. v. G-K-G, Inc., 39 

F.3d 740, 748 (7th Cir.1994). Successor liability is an equitable doctrine, not an 

inflexible command, and “in light of the difficulty of the successorship question, 

the myriad factual circumstances and legal contexts in which it can arise, and the 

absence of congressional guidance as to its resolution, emphasis on the facts of 

each case as it arises is especially appropriate.” Howard Johnson Co., Inc. v. 

Detroit Local Joint Exec. Bd., 417 U.S. 249, 256, 94 S.Ct. 2236, 2240, 41 L.Ed.2d 

46 (1974); see also Steinbach v. Hubbard, 51 F.3d 843, 846 (9th Cir.1995). 

Tasemkin, 59 F.3d at 49. 

 Noting that the district court had found that allowing the Pension Fund to proceed against 

New Tasemkin on a successor liability theory would frustrate the primacy of the Bankruptcy 

Code, and on that basis dismissed its claim, the Seventh Circuit acknowledged there were cases 

adopting that approach but it rejected the notion that it is an ironclad or simplistically applied 

rule. Id. at 50. The Seventh Circuit took note of the reasoning in support of protecting successors, 

that it is desirable, perhaps even necessary, to shield purchasers of failing 

businesses from liability incurred by the predecessors . . . as a means of 

encouraging market growth and the fluidity of corporate capital. Fear of successor 

liability, this argument runs, would “chill” sales in bankruptcy and as a result 

harm employees of the failed concern who might have retained jobs with the 

successor business . . . [and that] companies may have trouble selling their assets 

for a decent price because “successors will be unwilling to assume a business 

involved in substantial time-consuming and expensive litigation when the assets 

themselves lack substantial value” 

Id. (quoting Musikiwamba v. ESSI, Inc., 760 F.2d 740, 751 (7th Cir.1985)). 

 Again, the Seventh Circuit’s point, that a blanket rule is insufficiently analytical, is well 

taken, as it noted that 

there is no reason to accord the purchasers of formally bankrupt entities some 

special measure of insulation from liability that is unavailable to ailing but not yet 

defunct entities[, and that] it is neither certain nor clear that the chilling effect 

need give [that Court] pause [as] purchasers can demand a lower price to account 

for pending liabilities of which they are aware, and [furthermore] under federal 

38 FMSHRC Page 525
successorship principles [purchasers] will not be held responsible for liabilities of 

which they had no notice. 

Id. at 50-51. 

The Seventh Circuit then quickly dispatched the second argument — that allowing 

application of “the successorship doctrine [would] frustrate[] the orderly scheme of the 

Bankruptcy Code by allowing some unsecured creditors to leapfrog over others.” Id. at 51. The 

circuit court observed that “once a bankruptcy proceeding is completed and its books closed, the 

bankrupt has ceased to exist and the priorities by which its creditors have been ordered lose their 

force.” Id. Although the circuit court acknowledged that imposing successorship liability “would 

be a second opportunity for a creditor to recover on liabilities after coming away from the 

bankruptcy proceeding empty-handed,” it noted that “a second chance is precisely the point of 

successor liability, and it is not clear why an intervening bankruptcy proceeding, in particular, 

should have a per se preclusive effect on the creditor’s chances.” Id. The circuit court clearly 

thought a successorship theory should be permitted where the opposite approach, one which had 

the effect of “frustrating unsecured creditors while resurrecting virtually the identical enterprise,” 

should not. Id.11

11 A number of law review commentators have criticized the view that the power of a 

bankruptcy court under § 363(f) is without boundaries. George W. Kuney, Misinterpreting 

Bankruptcy Code Section 363(f) and Undermining the Chapter 11 Process, 76 Am. Bankr. L.J. 

(2002). The author notes that § 363(f) of the bankruptcy code authorizes sales free of “any 

interests,” whereas § 1141(c) authorizes post-sale vesting of property free and clear of all 

“claims and interests,” pointing out that the distinction is important because the latter is a plan 

process whereas the former is a quick-sale process, which affords little opportunity to object. 

Despite the narrower statutory language, in applying § 363(f), bankruptcy courts have been 

affording the debtor or trustee the same power to sell claims and interests. As applied to 

successors, the author points out that although it has been asserted that “[s]tate and federal 

decisions holding a bankruptcy purchaser liable as a successor of the debtor are directly at odds 

with Congressional intent to allow a debtor to sell its assets free and clear of all claims and 

interests therein,” this view is problematic. Id. at 258. This is because “[s]uccessor liability arises 

out of the actions of the purchaser, not the property itself.” Id. at 261. Thus, where 

a de facto merger is found, or mere continuation of an enterprise justifies 

imposing successor liability, it is the purchaser’s postsale conduct (in continuing 

the business in substantially the same form and manner) that gives rise to liability. 

The same is true for successor liability founded upon fraudulent transfer and 

continued manufacture of a product line. All these successor liability doctrines are 

grounded upon acts or implications from acts of the purchaser, not the property. 

Id. Thus, successor liability is in personam in nature, not in rem. 

Other commenters have similarly opined that successor liability claims should be viewed 

as outside of “interests in property” under § 363(f) of the Bankruptcy Act. Rachel P. Corcoran, 

(continued...) 

38 FMSHRC Page 526
11 (...continued) 

Why Successor Liability Claims are not ‘Interests in Property’ under Section 363(f), 18 Am. 

Bankr. Inst. L. Rev. 697 (2010). As noted, that section permits the sale of property of the estate 

outside the ordinary course of business “free and clear of any interest in such property.” The 

article examines what constitutes an “interest in property” in the context of § 363(f)’s “free and 

clear” sale provision, noting that its construction is important for successor liability claimants 

suing those who have purchased under it. While acknowledging that the great majority of courts 

have interpreted the provision to include successor claims, the author contends that state law 

should guide “the analysis of whether a particular claim or right constitutes ‘property’ or an 

‘interest in property’ in the bankruptcy context, unless some identifiable federal interest requires 

otherwise,” and that Supreme Court precedent supports her view. Id. at 699. The author also 

observes that if a successor liability claim is an interest in property, then such claimant is entitled 

to adequate protection per § 363(e). This author also notes that § 363(f) only refers to “interests 

in property,” and does not include the term “claims.” Id. at 705. “Successor liability claims do 

not fall within any one of the section 507 priorities, and therefore, are general unsecured claims 

entitled to a pro rata share of whatever remains after secured and priority claims are paid.” Id. at 

707. The author also cites to Golden State Bottling Co. v. NLRB, 414 U.S. 168 (1973), stating

that the Supreme Court

held ‘that a bona fide purchaser, acquiring, with knowledge that the wrong 

remains unremedied, the employing enterprise which was the locus of the unfair 

labor practice, may be considered in privity with its predecessor for purposes of 

Rule 65(d)[,]’ that is, with respect to injunctions and restraining orders resulting 

from unfair labor practices. The Court reasoned, ‘[a]voidance of labor strife, 

prevention of a deterrent effect on the exercise of rights guaranteed employees . . . 

and protection for the victimized employee-- all important policies subserved by 

the National Labor Relations Act, are achieved at a relatively minimal cost to the 

bona fide successor.’ . . . [T]he imposition of successor liability in Golden State 

was not due to the transfer of property alone, but rather, federal policy concerns 

and the successor’s knowledge at the time of purchase. 

Id. at 727 (quoting Golden State Bottling, 414 U.S. at 180, 185) (footnotes omitted). 

Another commentator reached a similar analytical outcome. See Patrick M. Birney, 

Section 363 Sale Orders: May Sales be made Free and Clear of Successor Liability Claims?, 22 

J. Bankr. L. & Prac. 4 Art. 4 (2013). The author asserts that § 363 cannot provide insulation from

successor liability claims, and that such claims against a § 363 purchaser under a successor

liability theory should be evaluated under state successor liability law. Speaking to the language

employed in § 363, that such sales are made “free and clear of any interest in such property,” the

author acknowledges that in In re Leckie Smokeless Coal Co., 99 F.3d 573 (4th Cir. 1996), the

court suggests that the “any interest” language “refer[s] to obligations that are connected to, or

arise from, the property being sold,” and, in a similar vein, that In re Trans World Airlines, Inc.,

322 F.3d 283 (3d Cir. 2003), also points to the proposition that “any interest” should include

interests “that could potentially travel with the property being sold.” Birney, supra, at 3.

(continued...) 

38 FMSHRC Page 527
 JCG has acknowledged that if MSHA itself brought the discrimination claim under 

section 105(c)(2) such a claim would be in a different category, but in this Court’s estimation 

there is nothing about a section 105(c)(3) claim which mandates that it should have inferior 

status. Congress included the provision as a failsafe protection mechanism for those miners 

alleging discrimination where, as in this case, the agency, though acting in good faith, simply 

gets it wrong. 

The Mine Act is a distinct creation of Congress. It operates independently of the 

Bankruptcy Act in, among other matters, making determinations of discrimination, appropriate 

parties to be included in its proceedings, and findings on the issue of successorship. There is 

nothing in the Mine Act that relegates it to a status as an appendage of bankruptcy law and 

therefore there is nothing which prohibits this Court, should the facts so warrant, from making 

the legal determination of whether JCG is a successor entity under the Mine Act. Should the 

Court find that JCG is a successor to Veris Gold, it also has the authority to award damages 

against that entity. However, should Varady prevail, the issue of whether JCG will ultimately be 

held financially liable as a successor for the damages flowing from Mr. Varady’s discrimination 

claim is unpredictable and a distinct matter from this Court’s ability to make the determination of 

11 (...continued) 

However, as with the other commentators cited in this footnote, the author notes that, although 

courts have read the word “claims” into § 363(f), it is absent. In contrast, the word does appear in 

§ 1141(c) proceedings, an inclusion which makes sense because that section provides claimants

with procedural rights that do not exist in § 363 sale. Because “successor liability claimants are

general unsecured creditors, who have no specific interest in the property that is being sold . . .

there is no nexus between a successor liability claimant and specific debtor property outside of

bankruptcy.” Id. at 4. These are in personam, not in rem, actions, which is significant because a

judgment against a successor does not constitute an interest in the debtor’s property. Id. If in

personam claims are included within a § 363 sale order, that would constitute “a nondebtor

release of the asset purchaser from the successor liability claim” but such releases are very

limited under the Bankruptcy Code. Id. at 5. In that regard the author notes that In re

Lowenschuss, 67 F.3d 1394, 1401 (9th Cir. 1995), held that, except for asbestos matters,

nondebtor releases are prohibited. Birney, supra, at 6. Thus, the author contends that as “thirdparty releases are permitted (if at all) only in limited circumstances and only in the context of a

confirmed plan of reorganization, the Bankruptcy Code, and in particular section 363, simply

cannot authorize the insulation of an asset purchaser from successor liability claims.” Id.

Advocating that state law should not be supplanted in the context of bankruptcy, unless Congress

expressly so declares such a preemption, the author points out that the “Supreme Court has noted

that, absent a “clear and manifest” purpose to the contrary, “the Bankruptcy Code will be

construed to adopt, rather than to displace . . . state law.” To that point, § 363 does not contain an

express congressional mandate empowering bankruptcy courts to sell debtor assets free and clear

of in personam claims, including successor liability claims. Instead, the courts have inserted that

broad interpretation. Id. at 6-7. Perhaps most importantly, the author observes that successor

liability claims are born from the conduct of the asset purchaser, and not the asset. Id.

This Court fully appreciates that law journal assessments are not, in any fashion, 

precedent. However, the persuasiveness of such arguments is noted. 

38 FMSHRC Page 528
whether JCG is properly designated as a successor and to make findings as to the established, 

and appropriate, damages. 

Other observations need to be made. It is unclear whether, in the high speed route under § 

363(f) of the Bankruptcy Act, Mr. Varady received fair treatment. Though beyond this Court’s 

purview, it would seem that he did not, in part because the § 363 procedure avoids the due 

process hearing found in § 1141(c) proceedings. The Court is under the impression that the 

bankruptcy court relies heavily upon those moving that procedure along, in particular, the 

monitor, to ensure that they are treating those who may have claims appropriately, especially 

where a pro se, non-attorney is seeking fair treatment. This Court is also persuaded that, in line 

with the law review commentators cited above, at least in the type of claim brought by Mr. 

Varady, the tendency of many courts to read interests and claims into 363 actions may work 

injustice. 

In this connection it is noted that while the bankruptcy action was proceeding, Veris was 

still actively defending the section 105(c)(3) claims brought by Mr. Varady. JCG at least had 

knowledge of this. It was not until the evidence at that hearing clearly demonstrated Veris’ 

discriminatory behavior against Varady that, at the conclusion of the hearing, Veris then acted to 

back out. That option, not taken earlier, was available. 

Accordingly, Varady’s complaint is amended to add JCG as a respondent.12 The next step 

in the proceeding will be to determine the appropriateness of designating JCG as a successor. 

The final stage will then be for the Court to determine the appropriate damages to be awarded, a 

determination made apart from whether such damages as may be awarded will be enforceable in 

another federal, or possibly a state, forum. 

Within two weeks from the date of this Order, JCG is directed to advise the Court 

whether it intends to participate in the successorship and damages proceedings and 

determinations. 

So ordered. 

/s/ William B. Moran 

William B. Moran 

Administrative Law Judge 

12 A separate order will be forthcoming regarding the issue of whether the Whitebox 

Entities may appropriately be added as a respondent in this proceeding for the purpose of 

determining successor liability. 

38 FMSHRC Page 529
Distribution: 

 

Mark Kaster, Dorsey & Whitney, LLP, 1500 South 6th Street, Minneapolis, MN 55402 

Annette Jarvis, Dorsey & Whitney, LLP, 136 South Main Street, Suite 1000, Salt Lake City, UT 

84101 

Matthew Varady, 701 S. 5th Street, #6, Elko, NV 89801 

Cathy L. Reece, Fennemore Craig, P.C., 2394 East Camelback Rd., Suite 600, Phoenix, AZ 

85016 

38 FMSHRC Page 530
FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

OFFICE OF ADMINISTRATIVE LAW JUDGES 

721 19TH ST. SUITE 443 

DENVER, CO 80202-2500 

TELEPHONE: 303-844-5266 / FAX: 303-844-5268 

March 4, 2016 

STAY ORDER 

Before: Judge Simonton 

This discrimination case is before me under section 105(c) of the Federal Mine Safety 

and Health Act of 1977, 30 U.S.C. § 815(c). The listed Respondent, Veris Gold USA, filed for 

Chapter 15 Bankruptcy on June 9, 2014, several weeks before the Secretary first filed for 

temporary reinstatement on behalf of Ms. Garcia in this matter.1

 On June 4, 2015, Jerritt Canyon 

Gold (JCG) purchased the Jerritt Canyon Mill Mine and other Veris Gold assets pursuant to a 

section 363(f) asset sale approved by the U.S. Bankruptcy Court. As a condition of that sale, 

JCG obtained a liability waiver that stated the asset sale was “free and clear of all liens, claims, 

and interests.” Sale Order, Docket No. 14-51015 (Bankr. D. Nev.). 

During that same time period, the court twice postponed the scheduled hearing in this 

matter with assurances that additional time would aid settlement negotiations. On June 11, 2015, 

the Respondent’s bankruptcy counsel sent the Complainant a letter stating that Veris Gold USA 

would be liquidated through an asset sale and that no proceeds would be available to satisfy 

employee claims. On June 16, 2015, Respondent’s previous counsel filed a Notice of 

Withdrawal stating that Veris Gold USA had instructed counsel to withdraw from this matter 

pending the Respondent’s corporate dissolution. 

Veris Gold then repeatedly failed to participate in mandatory prehearing proceedings, and 

the court entered a default order in favor of the Complainant on September 21, 2015. At the 

court’s request, the Secretary submitted a civil monetary penalty and personal damages on behalf 

of Ms. Garcia on October 9, 2015. 

Shortly thereafter, two different actions were filed with the Commission that, in effect, 

sought to add JCG as a liable successor in interest for separate 105(c) violations originally filed 

against Veris Gold. Morreale v Veris, WEST 2014-793, October 9, 2015 Motion to Reopen;

1

 Ms. Garcia’s last potential cause of action occurred on or about February 27, 2014. As 

such, Ms. Garcia’s claim is a pre-bankruptcy claim and collection of any monetary award is 

presumptively governed by federal bankruptcy law. 

SECRETARY OF LABOR, MSHA, on 

behalf of CHERYL GARCIA, 

Complainant, 

v. 

VERIS GOLD USA, INC., 

Respondent. 

DISCRIMINATION PROCEEDING 

Docket No. WEST 2014-905-DM 

WE MD 14-16 

Jerritt Canyon Mill Mine 

Mine ID 26-01621 

38 FMSHRC Page 531
Lowe v. Veris, 37 FMSHRC 2337 (October 2015)(ALJ Moran). The Commission remanded 

Lowe to the ALJ for further consideration on January 12, 2016 and has not yet addressed the 

Complainant’s Motion to Reopen in Morreale. 

 On February 4, 2016, this court ordered the Secretary, Veris Gold, and JCG to address 

the following issues for this docket. 

1.) Is JCG liable as a successor in interest for the discrimination claims contained in this 

docket. 

2.) If the Secretary does not move to add JCG as a successor in interest, may the court 

add JCG sua sponte pursuant to Rule 21 of the Federal Rules of Civil Procedure? 

 The Secretary and JCG timely filed responses with the court on February 29, 2016. Veris 

Gold did not file a response. On February 16, 2016, JCG also filed a response with the 

Commission to the Complainant’s Motion to Expedite and Amend in Morreale v Veris, WEST 

2014-793. 

 Both the Secretary and JCG argue that this court should not add JCG as a liable successor 

in interest. Both entities state, with extra-Commission support, that a section 363(f) asset sale 

liability waiver is a complete bar to recovery for claims based upon the preceding owner’s 

liabilities, including employment discrimination claims. In re Trans World Airlines, Inc., 322 

F.3d 283, 289-290 (3rd. Cir. 2003); In re New England Fish Co., 19 BR 323, 326-27 (Bankr. 

W.D. Wash. 1982). However, neither party offered any binding guidance on the relationship 

between the Commission’s traditional successorship test and federal bankruptcy law. 2 3

 JCG’s February 16, 2016 Commission filing in Morreale v. Veris WEST 2014-793 is 

substantially similar to the filing made with this court on February 29, 2016. Therefore, it 

appears that the Commission is currently considering the same asset sale liability waiver and 

                                                             2

 JCG does note that the Bankruptcy Court may extinguish “Coal Act” successor liability 

pursuant to 11 U.S.C. § 363(f)(5). JCG Br., 7 (citing Leckie Smokeless Coal Co., 99 F.3d 573, 

585 (4th Cir. 1996)). Upon review the “Coal Act” referenced is the Coal Industry Retiree Health 

Benefit Act of 1992 that created a combined pension Fund and Plan for UMWA miners and 

retirees. Leckie, 99 F.3d 576-77. Accordingly, while the Leckie decision may be illustrative of 

the proper operation of section 363(f) asset sales in general, it is not pertinent to successorship 

liability under the subject Federal Mine Safety & Health Act of 1977. 

 

3

 Additionally, neither party addressed the explicit statutory requirement that 363(f) sales 

may proceed, “only if – (1) applicable nonbankruptcy law permits sale of such property free and 

clear of such interest.” 11 U.S.C. 363(f)(1). To be clear, this court cannot and will not review the 

Bankruptcy Court’s approval of the asset sale itself. However, this court is not prepared to 

conclude that a section 363(f) liability waiver completely supersedes the Commission’s 

longstanding successorship test without further Commission direction. See Munsey v. Smitty 

Baker Coal Co., 2 FMSHRC 3463 (Dec. 1980), aff’d in relevant part sub nom. Munsey v. 

FMSHRC, 701 F.2d 976 (D.C. Cir. 1983). 

38 FMSHRC Page 532
successorship issues presented in this case. The Commission’s decision in Morreale will likely 

provide clarity for the adjudication of this docket. Thus, a temporary stay is warranted in this 

matter to ensure administrative efficiency and consistency.4

 

ORDER 

Accordingly, Docket No. WEST 2014-905 is STAYED pending Commission action in 

Morreale v Veris, WEST 2014-793. 

/s/ David P. Simonton 

David P. Simonton 

Administrative Law Judge 

Distribution: (U.S. First Class Mail) 

Brad Mantel, U.S. Department of Labor, Office of the Solicitor, Division of Mine Safety and 

Health, 201 12th Street South, Suite 401, Arlington, VA 22202 

Cheryl Garcia, 450 Castle Crest Dr., Spring Creek, NV 89815 

Annette Jarvis, Dorsey & Whitney LLP, Counsel for Jerritt Canyon Gold, 136 South Main 

Street, Suite 1000, Salt Lake City, UT 84101 

Shaun Heinrichs, Veris Gold, 688 West Hastings Street, Suite 900, Vancouver, BC V6B 1P1, 

Canada 

Tevia Jeffries, Dentons Canada LLP, Counsel for Bankruptcy Monitor, 250 Howe Street, 20th

Floor, Vancouver, BC V6C 3R8, Canada 

Honorable Gregg W. Zive, U.S. Bankruptcy Court, District of Nevada, C. Clifton Young Federal 

Bldg., 300 Booth St., Reno, NV 89509 

Michael McCord, General Counsel, Office of the General Counsel, Federal Mine Safety & 

Health Review Commission, 1331 Pennsylvania Avenue NW, Suite 520N, Washington, DC 

20004 

4

 As noted by the Secretary, Veris Gold USA has been officially dissolved and does not 

retain any assets against which Ms. Garcia could potentially recover. Therefore, placing this 

matter in stay will not prejudice or harm the Complainant. 

38 FMSHRC Page 533
FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

OFFICE OF ADMINISTRATIVE LAW JUDGES 

7 PARKWAY CENTER, SUITE 290 

875 GREENTREE ROAD 

PITTSBURGH, PA 15220 

TELEPHONE: 412-920-7240 / FAX: 412-928-8689 

March 7, 2016 

ORDER GRANTING TEMPORARY REINSTATEMENT 

OF JEFFREY S. BREWER

Before: Judge Andrews 

Pursuant to Section 105(c)(2) of the Federal Mine Safety and Health Act of 1977 (“Act”), 

30 U.S.C. §801, et. seq., and 29 C.F.R. §2700.45, the Secretary of Labor (“Secretary”) on 

February 19, 2016, filed an Application for Temporary Reinstatement of miner Jeffrey S. Brewer 

(“Complainant”) to his former position with Murray Energy (“Respondent”) at the Blacksville 

No. 2 Mine pending final hearing and disposition of the case. 

According to Commission Rule 45, a request for hearing must be filed within 10 days 

following receipt of the Secretary’s application for temporary reinstatement. 29 C.F.R. 

§2700.45(c). By email, the Respondent’s counsel notified the court that they received the

Secretary’s Application on February 22, 2016. The Respondent has not filed a timely Request

for Hearing. Since, for the following reasons, the complaint appears to have merit the temporary

reinstatement of Jeffrey S. Brewer should be granted.

Law and Regulations 

Section 105(c) of the Mine Act prohibits discrimination against miners for exercising any 

protected right under the Mine Act. The purpose of the protection is to encourage miners “to 

play an active part in the enforcement of the [Mine Act]” recognizing that, “if miners are to be 

encouraged to be active in matters of safety and health, they must be protected against any 

possible discrimination which they might suffer as a result of their participation.” S. Rep. No. 

181, 95th Cong., 1 Sess. 35 (1977), reprinted in Senate Subcommittee on Labor, Committee on 

Human Resources, 95th Cong., 2nd Sess., Legislative History of the Federal Mine Safety and 

Health Act of 1977, at 623 (1978). 

SECRETARY OF LABOR 

 MINE SAFETY AND HEALTH 

 ADMINISTRATION (MSHA), 

 on behalf of JEFFREY S. BREWER, 

 Complainant, 

v. 

MONONGALIA COUNTY CO., 

CONSOLIDATION COAL CO., 

MURRAY AMERICAN ENERGY INC., 

and MURRAY ENERGY CORP., 

 Respondents 

TEMPORARY REINSTATEMENT 

PROCEEDING 

Docket No. WEVA 2016-238-D 

MSHA Case No.: MORG-CD 2016-14 

Mine: Blacksville No. 2 

Mine ID: 46-01968 

38 FMSHRC Page 534
The Commission’s regulations control the temporary reinstatement procedures. Once an 

application for temporary reinstatement is served on the person against whom relief is sought, 

that person shall notify the Chief Administrative Law Judge or his designee within 10 calendar 

days whether a hearing on the application is requested. 29 C.F.R. §2700.45(c). If no hearing is 

requested, the Judge assigned to the matter shall review immediately the Secretary’s application 

and, if based on the contents thereof, the Judge determines that the miner’s complaint was not 

frivolously brought, s[he] shall issue immediately a written order of temporary reinstatement. Id. 

In the instant case, the Respondent has not timely filed a request for hearing. 

In adopting section 105(c), Congress indicated that a complaint is not frivolously brought 

if it Aappears to have merit.@ S. Rep. No. 181, 95th Cong., 1st Sess. 36-37 (1977), reprinted in

Senate Subcommittee on Labor, Committee on Human Resources, 95th Cong. 2nd Sess., 

Legislative History of the Federal Mine Safety and Health Act of 1977, at 624-25 (1978). In 

addition to Congress= Aappears to have merit@ standard, the Commission and the courts have 

also equated Anot frivolously brought” to Areasonable cause to believe” and Anot insubstantial.”

Sec'y of Labor on behalf of Price v. Jim Walter Res., Inc., 9 FMSHRC 1305, 1306 (Aug. 1987), 

aff'd, 920 F.2d 738, 747 & n.9 (11th Cir. 1990). The plain language of the Act states that “if the 

Secretary finds that such complain was not frivolously brought, the Commission, on an 

expedited basis upon application of the Secretary, shall order the immediate reinstatement of the 

miner pending final order on the complaint.” 30 U.S.C. §815(c)(2). The judge must determine 

whether the complaint of the miner “is supported by substantial evidence and is consistent with 

applicable law.”1 Sec=y of Labor on behalf of Peters v. Thunder Basin Coal Co., 15 FMSHRC 

2425, 2426 (Dec. 1993). 

Evidence 

The Discrimination Complaint was filed with the Secretary’s Application for Temporary 

Reinstatement. (see Application for Temporary Reinstatement, Exhibit B). In the Summary of 

Discriminatory Action, Complainant stated, in pertinent part: 

I am a miner who, on October 19, 2015, was suspended pending discharge due to 

the accusation, by management, that I abused the filing of 103g and reported too 

many safety concerns. 

The Declaration of Special Investigator Jeffrey C. Maxwell was also filed with the 

Complainant’s Application for Temporary Reinstatement (see Exhibit A), and asserts the 

following: 

1. Mr. Brewer was employed and classified as a Shuttle Car Operator, and also performed

work as a Roof Bolter and General Inside Laborer, among various other jobs, at Murray's

Blacksville No. 2 Mine.

1 ASubstantial evidence@ means Asuch relevant evidence as a reliable mind might accept 

as adequate to support [the judge=s] conclusion.@ Rochester & Pittsburgh Coal Co., 11 

FMSHRC 2159, 2163 (Nov. 1989) (quoting Consolidated Edison Co. V. NLRB, 305 U.S. 197, 

229 (1938)). 

38 FMSHRC Page 535
2. Between August 2015 and October 2015, Mr. Brewer filed 103(g) safety complaints with

MSHA concerning safety issues at Blacksville No. 2 Mine.

3. Assistant Shift Foreman Chad Martin made statements showing that Mr. Martin believed

that Mr. Brewer filed too many 103(g) safety complaints with MSHA.

4. There is evidence showing that Shift Foreman Gary Brookover made statements

displaying general animus toward miners who filed 103(g) safety complaints with

MSHA.

5. On August 31, 2015, Mr. Brewer filed 105(c) complaint MORG-CD-2015-31, which he

subsequently withdrew because Murray did not terminate his employment at that time.

6. On September 1, 2015, Murray issued a letter stating that Mr. Brewer would be

suspended with intent to discharge. However, Murray amended this action, and Mr.

Brewer was not discharged, but was suspended from August 27, 2015 through September

2, 2015.

7. On October 17, 2015, Mr. Brewer was suspended with intent to discharge for allegedly

violating Employee Rules of Conduct Nos. 4 and 9, which provide that

In order to minimize the occasions for discipline or discharge, each 

employee should avoid conduct which violates reasonable standards of an 

employer-employee relationship including: 

 ... 

4. Insubordination (refusal or failure to perform work assigned or to

comply with supervisory direction) or use of profane, obscene, abusive, or 

threatening language or conduct toward subordinates, fellow employees, or 

officials of the company. 

9. Absence from work or leaving the workplace without permission from

supervisor, except in circumstances, which prevent the giving of such notice. 

8. On October 19, 2015, Murray terminated Mr. Brewer's employment.

9. On October 20, 2015, the United Mine Workers of America ("UMWA") Local, which

represents miners at Murray's Blacksville No. 2 Mine, filed a grievance to contest

Murray's termination of Mr. Brewer's employment.

10. On December 3, 2015, Mr. Brewer filed 105(c) complaint MORG-CD-2016-12, which he

subsequently withdrew on December 7, 2015.

11. Representatives from the UMWA advised Mr. Brewer to delay filing his 105(c)

complaint with MSHA until after an arbitration decision was issued on Mr. Brewer's

grievance regarding his termination.

12. On December 30, 2015, a final Arbitration Opinion and Award was issued, validating and

finalizing Murray's termination of Mr. Brewer's employment.

13. Mr. Brewer denies the allegations that he violated Employee Rules of Conduct Nos. 4

and 9. In addition, Mr. Brewer alleges that Employee Rules of Conduct Nos. 4 and 9 are

not consistently enforced at the Blacksville No. 2 Mine.

38 FMSHRC Page 536
14. On January 14, 2016. Mr. Brewer filed the 105(c) complaint which constitutes the basis

of the present 105(c) Temporary Reinstatement Application.

Based upon the information available as the result of the special investigation conducted

in these matters, I have concluded that evidence exists that Mr. Brewer was discharged from his 

employment with Murray because he made 103(g) safety complaints to MSHA. Thus, it is my 

determination that the discrimination complaint filed by Mr. Brewer was not frivolously brought. 

Declaration of Jeffrey C. Maxwell, pp. 1-3. 

Findings and Conclusion 

I find that the evidence developed by the Special Investigator is not insubstantial and 

presents a reasonable cause to believe the instant Discrimination Complaint was not frivolously 

brought. Miner Jeffrey S. Brewer is entitled to Temporary Reinstatement under the provisions of 

Section 105(c) of the Act. 

ORDER 

It is hereby ORDERED that Jeffrey S. Brewer be immediately TEMPORARILY 

REINSTATED to his former job at the Blacksville No. 2 mine at his former rate of pay, 

overtime, and all benefits he was receiving at the time of his termination. 

This Order SHALL remain in effect until such time as there is a final determination in 

this matter by hearing and decision, approval of settlement, or other order of this court or the 

Commission. 

I retain jurisdiction over this temporary reinstatement proceeding. 29 C.F.R. § 

2700.45(e)(4). The Secretary SHALL provide a report on the status of the underlying 

discrimination complaint as soon as possible. Counsel for the Secretary SHALL also 

immediately notify my office of any settlement or of any determination that Murray Energy did 

not violate Section 105(c) of the Act. 

/s/ Kenneth R. Andrews 

Kenneth R. Andrews 

Administrative Law Judge 

38 FMSHRC Page 537
Distribution (Via E-mail and First Class Mail): 

Andrea Gosfield, Esq., U.S. Dept. of Labor, Office of the Regional Solicitor, The Curtis Center, 

Suite 630E, 170 S. Independence Mall West, Philadelphia, PA 19106-3306, 

Gosfield.andrea@dol.gov 

Jeffrey S. Brewer, 3409 Lazzelle Union Road, Morgantown, WV 26501 

Thomas A. Smock, Esq., Ogletree Deakin Nash Smoak & Stewart, P.C. One PPG Place, Suite 

1900, Pittsburgh, PA 15222, Thomas.Smock@ogletreedeakins.com 

38 FMSHRC Page 538
FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

OFFICE OF ADMINISTRATIVE LAW JUDGES 

7 PARKWAY CENTER, SUITE 290 

875 GREENTREE ROAD 

PITTSBURGH, PA 15220 

TELEPHONE: 412-920-7240 / FAX: 412-928-8689

AUSTIN POWDER COMPANY, 

 Contestant, 

v. 

SECRETARY OF LABOR 

 MINE SAFETY AND HEALTH 

 ADMINISTRATION (MSHA), 

 Respondent, 

SECRETARY OF LABOR 

 MINE SAFETY AND HEALTH 

 ADMINISTRATION (MSHA), 

 Petitioner, 

v. 

AUSTIN POWDER COMPANY, 

 Respondent. 

CONTEST PROCEEDINGS 

Docket No. PENN 2012-116-R 

Citation No. 7040091; 01/20/2012 

Mine: River Hill Coal Co., Inc. 

Mine ID 36-00884 E24 

Docket No. KENT 2011-213-R 

Citation No. 8257007; 10/22/2010 

Mine: S-1 Hunts Branch 

Mine ID 15-18280 E24 

Docket No. KENT 2011-214-R 

Order No. 8257009; 10/22/2010 

Mine: S-1 Hunts Branch 

Mine ID 15-18280 E24 

Docket No. KENT 2011-403-R 

Citation No. 8257016; 12/29/2010 

Mine: S-4 Netley Branch 

Mine ID 15-17799 E24 

CIVIL PENALTY PROCEEDINGS 

Docket No. PENN 2012-172 

A.C. No. 36-00884-281523 E24

Mine: River Hill Coal Co., Inc. 

Docket No. PENN 2012-77 

A.C. No. 36-09312-273298 E24

Mine: Allegheny Strips 

March 9, 2016

38 FMSHRC Page 539
Docket No. CENT 2013-213 

A.C. No. 23-02262-309819 E24

Mine: Hume #1 

Docket No. KENT 2011-1011 

A.C. No. 15-17799-252893 E24

Mine: S-4 Netley Branch 

Docket No. KENT 2012-684 

A.C. No. 15-18280-281484 E24

Mine: S-1 Hunts Branch 

Docket No. KENT 2012-1030 

A.C. No. 15-17834-287578 E24

Mine: F-9 Prater Branch 

Docket No. KENT 2013-274 

A.C. No. 15-19451-307263 E24

Mine: S-9 Findlay Branch 

Docket No. KENT 2013-1078 

A.C. No. 15-19199-325351 E24

Mine: S-4 Calloway North 

Docket No. SE 2012-128 

A.C. No. 01-03375-273206 E24

Mine: Johnson Mine 

Docket No. VA 2012-542 

A.C. No. 44-07133-293119 E24

38 FMSHRC Page 540
ORDER AFFIRMING “UNITARY OPERATOR” STATUS OF 

AUSTIN POWDER COMPANY

Appearances: Stephen Turow, Esq., Office of the Solicitor, U.S. Department of Labor, 

Arlington, Virginia, on behalf of the Secretary of Labor 

Christopher D. Pence, Esq., Hardy Pence, PLLC, Charleston, West

Virginia, on behalf of Austin Powder Company 

Before: Judge Andrews 

This proceeding is pursuant to the Federal Mine Safety and Health Act of 1977, 30 

U.S.C. § 801 et seq. (2000) (the “Mine Act” or “Act”). Austin Powder Company (“APC”) is 

subject to the jurisdiction of The Federal Mine Safety and Health Commission (“FMSHRC”) and 

the undersigned Administrative Law Judge (“ALJ”) has the authority to hear this case and issue a 

decision.1 

 1

 For clarity throughout this decision, the following abbreviations and terms will be used: 

 

Austin Powder Company, the Ohio Corporation, parent and owner of the 

subsidiaries will be “APC”; 

The Austin Powder Divisional Subsidiary Corporations will be “subsidiary LLC” 

or “LLC”; 

The entire Austin Powder organization, APC and LLCs, will be the “APC 

organization”; and 

The Berwind companies will be the “BNRC group”. 

Mine: No. 26 Strip 

Docket No. VA 2014-197 

A.C. No. 44-07098-343919 E24 

Mine: S-5 Jones Fork 

Docket No. WEVA 2014-157 

A.C. No. 46-00015-334165 E24 

DBA: Greer Lime Company 

38 FMSHRC Page 541
Procedural History 

The above-captioned dockets were consolidated to provide for the efficient resolution of 

a threshold issue common to all of the citations for alleged violations of safety standards by 

Austin Powder divisional subsidiary LLCs. Each of the twenty citations and two orders listed 

Austin Powder Company as the operator based on a determination by the Secretary of Labor 

(“Secretary”) that the APC organization constituted a “unitary operator” for the purposes of the 

Mine Act. Austin Powder Company is the parent company and the owner of the divisional 

subsidiary LLCs. Respondent has objected to being charged on that basis since the subsidiary 

LLC - and only that entity – should be held liable for any violations committed by that subsidiary 

LLC. The secretary has responded that more than one entity in a company may be held liable 

based on the “unitary operator” theory first announced by the Commission in Berwind Natural 

Resources, Corp., et al., 21 FMSHRC 1284 (Dec. 1999). 

Early in the procedural history of this case, ALJ William Steele approved a partial 

settlement of the 104(a) citation in docket PENN 2012-172, leaving the issue of assignment of 

liability to be later adjudicated. Upon Judge Steele’s retirement, the docket was reassigned to 

another ALJ. The parties moved for Summary Decision, but the ALJ determined there were 

material facts in dispute and that the unitary operator issue must first be decided. The Secretary 

then moved for consolidation of all similar APC dockets, so the preliminary issue of the 

Secretary’s determination that the APC organization is a unitary operator could be resolved in 

one proceeding. 

After reassignment of this docket to the undersigned, Austin Powder dockets with the 

unitary operator issue were ordered to be consolidated. Of the twelve consolidated dockets, 

PENN 2012-172 with Contest PENN 2012-116-R were designated the lead dockets.2

 In 

December 2014 the parties were ordered to file briefs limited to the unitary operator issue and 

the test to be applied for any determination of unitary operator status. The briefs were submitted 

and the matter was set for hearing. Conferences were also held with the parties on May 5, 13, 

and 21, 2015, in preparation for the hearing. The hearing was held on May 27, 2015, in 

Pittsburgh, Pennsylvania at which time the parties had the opportunity to present arguments and 

evidence in support of their respective positions. No witnesses were called; the evidence in this 

proceeding consists of numerous documents filed prior to the hearing and the exhibits admitted 

at hearing, all contained in the official file of the lead docket.3 Oral argument replaced the need 

for post hearing briefs.4

 

2

 PENN 2012-172 contains copies of all of the complete pleadings and documents filed in 

this proceeding. 

3

 Before the hearing, the official file had become expanded to well over one thousand 

pages, mostly repetitive filings of the parties when seeking summary decision. In an effort to 

contain the record and limit duplicative submissions and exhibits, the documents already of 

record were marked for identification and reference as follows:

The 28 exhibits attached to Respondent’s Motion for Summary Decision will be 

“RSD” with the exhibit number; 

(continued...) 

38 FMSHRC Page 542
At the outset, the Secretary objected to the admission of expert reports obtained by 

Respondent pertaining to APC and two of the subsidiary LLCs that concluded APC and the 

LLCs should not be treated as a unitary operator. Counsel for Respondent explained the reports 

were offered for the limited purpose of understanding the corporate structure and corporate 

formalities, and not for the facts found or conclusions drawn by the author. The reports were 

admitted on the basis that there could be information helpful in the determination of the 

preliminary issue. However, much of the information was also contained in other documents, and 

I did not find the reports to be particularly relevant in reaching this decision. 

The Secretary also objected to a letter dated September 26, 2008. Again, for the limited 

purpose of any helpful background information in the letter, it was admitted into evidence. 

However, the information was not needed for a determination in this matter. 

Joint Stipulations 

The parties submitted Joint Stipulations: 

1. The May 6, 2015, Notice of Hearing, Pre-Hearing Order addresses the

"narrowly limited" scope of the May 27 hearing, stating that the hearing will

be restricted to consideration of two discrete issues. The first issue is

"Whether Austin Powder Company meets the definition of 'Operator' under

Section 3(d) of the Mine Act." For purposes of the consolidated proceeding, the

Secretary does not assert that Austin Powder Company (APC), an Ohio

corporation and the parent company of various Austin Powder subsidiaries

established pursuant to Delaware state law, alone had sufficient contact with

mines at which the violations were issued to be an "operator" under Section

3(d) of the Mine Act.

3

 (...continued) 

The 4 additional documents submitted with the Respondent’s renewed motion 

will be RRMD-3, RRMD-21, RRMD-27 and RRMD-28; 

The 50 documents submitted with the Secretary’s Motion for Summary Decision 

will be “SSD” with the document number. The 8 CDs will be “SSCD” with a 

letter, A through H; and 

The 2 documents submitted with the Secretary’s renewed motion will be SRMD-1 

and SRMD-2. 

4

 At the hearing, additional exhibits were admitted into evidence. The Secretary’s exhibits 

were marked GX-1 through 6, and two diagrams, demonstrative only, were marked GXDE-1 and 

GXDE-2. Respondent’s exhibit (with ten attachments) was marked RX-A. Joint Stipulations 

have also been submitted and marked JX-1. All of the above documents are contained in six 

numbered file folders that comprise the official file for the lead docket. Each document and/or 

the pages cited in the Findings and Conclusions below have been compiled and placed in each of 

the consolidated dockets. In addition, all of the documents relevant to the preliminary issue are 

also available in electronic form in each of the consolidated dockets in the Commission’s e-CMS 

system. 

38 FMSHRC Page 543
2. For purposes of this hearing, APC does not contest that an APC subsidiary 

(Austin Powder Appalachia, LLC; Austin Powder MidSouth, LLC; Austin 

Powder Northeast, LLC; or Austin Powder Central States, LLC) was 

performing services at a mine, and thus met the definition of an "operator," 

under Section 3(d) of the Mine Act, at the time each of the violations in the 

consolidated proceeding was issued.

3. Beginning on or about December 21, 2004, Austin Powder Company made the 

business decision for reasons unrelated to the contractor identification issue to

restructure the company and spin-off APC's corporate divisions performing 

services at mines into separate, legal entities, operating as wholly-owned 

subsidiaries and organized as limited liability companies pursuant to Delaware 

state law. The decision was formally adopted through an Action by Unanimous 

Written Contract of the Board of Directors, dated December 15, 2006. The 

Action is entered into evidence as SSD-9 and RRMD-21. This action was 

accomplished, in part, through the execution of Limited Liability Company 

Agreements for the respective subsidiaries and through the execution of formal 

certification documentation by Delaware state representatives. Each APC

subsidiary executed substantially the same Limited Liability Company 

Agreement and substantially the same Delaware state certification 

documentation was provided for each APC subsidiary. The documents specific 

to Austin Powder Northeast LLC are entered into evidence as SSD17, SSD18, 

and RSD-17.

4. Austin Powder Company and each Austin Powder Company subsidiary are parties 

to a series of formal, written contracts that specifically establish the duties and 

responsibilities of each party, including a Capital Contribution Agreement; 

Employee Leasing Agreement; Assignment and Assumption of Contracts and Leases; 

Services Agreement; Transportation, Vehicle and Operational Support Services 

Agreement; and Supply Agreement (collectively , "Contracts"). These Contracts were 

executed by and between the parties on or about January 1, 2007. The content of 

each of the Contracts between Austin Powder Company and each Austin Powder 

Company subsidiary is materially the same. The agreements specific to Austin 

Powder Northeast LLC are entered into evidence as SSD-10, SSD-11, SSD-12, 

SSD-13, SSD-14, SSD-16, and RSD-18, RSD-19, RSD-20, RSD-21, RSD-22, and 

RSD-23. 

JX-1. 

The Issue 

 The issue presented is whether APC and its subsidiary LLCs constitute a “unitary 

operator” under the Commission decision in Berwind. 

38 FMSHRC Page 544
Contentions 

 The APC organization performs blasting services for mines, and it contends that the 

purpose of the APC corporate restructuring was not to achieve lower penalties but to obtain ATF 

licenses for each of the LLCs.5 As a result of the restructuring, each LLC has separate officers, 

managers, and physical office locations; each LLC Management team has full authority and 

responsibility over the leased APC employees and activities of the LLC and can make decisions 

on their own without permission from APC. Each LLC can hire, fire and set the pay of an 

employee. Each LLC shares only one officer, the Secretary and Treasurer, with APC. Further, 

each LLC operates in a distinct region of the United States, files its own state income tax return, 

and conducts its own training, corrects safety issues, and enforces health and safety policies to 

protect miners. Respondent also contends that while there is some interrelationship of operations 

and some common management, APC is vertically integrated with each LLC, the corporations 

are formed under state law, the conduct of business is governed by formal, written “arms-length” 

contracts setting the obligations of each entity, and the LLCs have operational independence. 

Respondent further argues that viewing APC as one big company is overly simplistic and 

ignores corporate law and the facts of the case since the LLCs are separate and distinct legal 

business entities each with its own existence and identity. Also, APC is too far removed from the 

blasting activities to be considered a single entity with its LLCs. Further, each LLC can develop 

its own procedures based on regional geologic differences. Respondent also argues that MSHA 

has incorrectly cited APC for conditions that existed at a mine when APC does not have 

substantial involvement with the mine, does not exercise pervasive control over the LLC at the 

mine, and the Secretary’s “unitary operator” theory is not supported under the law. The ultimate 

responsibility for implementing and enforcing safety policies and compliance with health and 

safety laws rests with the LLCs. 

 The Secretary contends that prior to December 2004, APC worked as a single company 

with ten regional divisions performing contract services at mines; APC manufactured blasting 

materials that were transferred to these regional divisions where the products were sold and used. 

From 2004 through 2007, APC reorganized and incorporated each of the wholly owned regional 

subsidiaries, but for the purposes of the Mine Act the company continued to operate as a single 

entity, making, transferring, storing, selling and using the blasting materials and supplies. 

Further, APC continues to relate to its subsidiaries in materially the same way as before the 

reorganization and there is significant evidence of stunning interrelationship and interdependence 

of operations, centralized control over health and safety, and a number of facts showing common 

management. The training programs are developed and distributed by APC and are required to 

be presented to and followed by its employees at the LLCs. 

The Secretary also contends APC holds itself out as one company, and the wholly owned 

subsidiary LLCs could not and do not stand and function on their own. The formal agreements 

are in essence binding statements that dictate the way LLCs will operate. Further, there is no 

need to examine what work a particular subsidiary is performing at one of the 360 mines 

serviced by the company. The Secretary argues the facts overwhelmingly weigh in favor of the 

entities of the APC organization constituting a “unitary operator” under the four factor test, and 

 5

 ATF refers to the Bureau of Alcohol, Tobacco, and Firearms. 

38 FMSHRC Page 545
consistent with the Mine Act MSHA has the authority to charge-issue a citation to-either APC or 

its subsidiary LLC. 

Definitions 

 For the purposes of the Mine Act: 

 “operator” means any owner, lessee, or other person who operates, controls, or supervises 

a coal or other mine or any independent contractor performing services or construction at such 

mine.... 

 “person” means any individual, partnership, association, corporation, firm, subsidiary of 

a corporation, or other organization. 

30 U.S.C. § 802(d),(f). 

The Berwind proceedings 

 The parties are essentially in agreement that the Commission’s decision in Berwind 

controls, and under that precedent they should succeed in their respective positions. 

 The Berwind controversy arose as a result of over two hundred citations and orders issued 

by MSHA following an explosion at the Elmo No. 5 Mine in November 1993 that resulted in one 

fatality. Berwind Natural Resources, Corp., 17 FMSHRC 684 (Apr. 1995) (ALJ). There were 

five companies engaged in mining coal; Berwind Natural resources, Corp., (“BNRC”) a holding 

company, and its wholly owned subsidiaries: Kentucky Berwind Land Company (“Kentucky 

Berwind”) owner of coal reserves, Kyber Coal Company (“Kyber”) lessee of the Elmo No. 5 

coal reserves, and Jesse Branch Coal Company (“Jesse Branch”) a contractor providing mapping 

and surveying services at the mine for Kyber. Id at 684, 686-689. AA&W Coals, Inc., 

(“AA&W”) operated the mine under a contract with Kyber. Id at 684. The citations and orders 

were issued to AA&W as operator; however, the Secretary also issued these citations and orders 

to each of the four BNRC entities in order to establish joint and several liability. Id at 684, 686. 

 Following a hearing the ALJ rejected the Secretary’s “Unitary Entity” theory offered to 

establish that multifaceted corporate entities are of necessity statutory operators. Berwind 

Natural Resources, Corp., 18 FMSHRC 202, 233 (Feb. 1996) (ALJ). The Judge found that 

BNRC, Kentucky Berwind and Jesse Branch were not operators of the mine. Kyber, however, 

was found to have the authority to participate in decision making with AA&W and did retain 

such control and supervision of AA&W as to make Kyber an “operator” within the meaning of 

the Mine Act. Id at 233-243. 

 On review, a majority of the Commission affirmed that, of the four BNRC entities, only 

Kyber was an “operator” of the Elmo No. 5 Mine. This holding was based on Kyber’s 

“substantial involvement” in engineering, financial, production, personnel and health and safety 

matters. Secretary v. Berwind Natural Resources, Corp., et al., 21 FMSHRC 1284, 1325 (Dec. 

1999). The judge’s rejection of the Secretary’s “Unitary Entity” theory was vacated and a new 

test was established by modifying the four-part “Single Employer” doctrine developed under the 

38 FMSHRC Page 546
National Labor Relations Act (“NLRA”), 29 U.S.C. § 141 et seq., and Title VII of The Civil 

Rights Act of 1964 (“Title VII”), 42 U.S.C. § 2000e et seq. to address the primary concern with 

the protection of health and safety of miners. Id at 1308-1317. The majority modified the single 

employer doctrine and announced the four-factor “Unitary Operator” test. This theory was 

considered to be a gap-filling measure designed to flesh out the definition of “operator” under 

the Mine Act. Upon application of the test, only Kyber and Jesse Branch were found to be a 

“unitary operator” functioning essentially as a single entity. Id at 1321, 1322. The combined 

Kyber/Jesse Branch entity therefore qualified as an “operator” under the Mine Act. Id at 1324, 

1325.6

 

Berwind has been cited in one Commission decision, Secretary of Labor (MSHA) v. 

National Cement Co. of California, Inc., and Tejon Ranchcorp, 30 FMSHRC 668 (Aug. 2008). 

In this decision a majority of the Commission found that an entity must have “substantial 

involvement” with mine related activities, as defined in Berwind, to be considered a mine 

“operator”. Id at 682. In a dissenting opinion, Commissioner Jordan questioned the Berwind

holding in light of the D.C. Circuit decision in Sec’y of Labor v. Twentymile Coal Co., 456 F. 3d 

151 (D.C. Cir 2006). Id at 689, footnote 13.7 

Commission Judges have also cited Berwind in the application of the four-factor test and 

in discussing the statutory definition of “operator” status. Sec’y of Labor OBO Reuben Shemwell 

v. Armstrong Coal Co., 34 FMSHRC 894, 897 (Apr. 2012)(ALJ), 34 FMSHRC 1464, 1475 (Jun. 

2012)(ALJ); Fred Estrada v. Freeport McMoran Tyrone, Inc., and/or Runyan Construction, 35 

FMSHRC 3244, 3246 (Sept. 2013)(ALJ); Sec’y of Labor (MSHA) v. Black Energy, Inc., 35 

FMSHRC 2913, 2916 (Aug. 2013)(ALJ). Also, two commonly owned entities sharing the same 

address and equipment were considered a unitary operator in order to amend Petitions to include 

both as Respondents. Sec’y of Labor (MSHA) v. Quality Materials and CDG Materials, Inc., 36 

FMSHRC 2334-2336 (Aug. 2014). Recently, Berwind was discussed in the context of 

operational involvement at a mine and MSHA jurisdiction. Sec’y of Labor (MSHA) v. 

Hammerlund construction, Inc., 37 FMSHRC 2611, 2620-22 (Nov. 2015). 

Although both questioned and cited by the Commission, Berwind has not been modified 

or overruled. 

 In order to better understand whether and to what extent Berwind relates to the instant 

case, some pertinent information regarding each company, the APC organization and the BNRC 

group, is set forth below. It is not intended that these brief summaries be detailed or 

comprehensive. 

 6

 While this combined entity could properly be charged as liable along with AA&W, any 

citations were found to be invalid on fair notice grounds. 

7

 Commissioner Jordan wrote “In light of the D.C. Circuit’s decision in Sec’y of Labor v. 

Twentymile Coal Co., 456 F. 3d 151 (D.C. Cir. 2006), one could question the vitality of the 

Berwind holding cited by my colleagues.” 

38 FMSHRC Page 547
The BNRC group 

 The BNRC group was engaged in the business of production mining of coal at a single 

location, the Elmo No. 5 Mine. The holding company BNRC owned Kentucky Berwind, Kyber 

and Jesse Branch. The function of BNRC was to oversee the operations of its three subsidiaries 

by reviewing and approving their budgets and allocating funds to meet those budgets. BNRC 

shared common officers with its subsidiaries, and as sole shareholder had the authority to both 

approve and replace officers and management officials. Economic performance, coal production 

and quality were monitored through financial statements and reports received from the 

subsidiaries. BNRC did not have any direct relationship with contractor AA&W and did not 

exert control over operations at the mine. Berwind, at 1285. 

 Kentucky Berwind was the owner of coal reserves that were leased to Kyber, Jesse 

Branch and others. Kentucky Berwind did not fund the mining operations and did not support the 

mining with any supplies, machinery, equipment or tools. Id at 1286. Kentucky Berwind 

employees examined the mine workings periodically to ensure proper coal recovery and confirm 

royalties. Kentucky Berwind had no input into mining projections, or roof control or ventilation 

plans. Id at 1287, 1288. 

 Kyber contracted out preparation of the leased area and actual mining of coal at the Elmo 

No. 5 Mine. Kyber retained final approval of all aspects of mining projections, and Kyber 

employees visited the mine to insure that the coal reserves were being fully and properly mined. 

Id at 1287, 1288. 

 Jesse Branch was paid by Kyber for surveying services, including drafting mine maps 

and setting spads. Jesse Branch employees were generally at the mine weekly to perform the 

contract work. Id at 1286, 1287. Jesse Branch was a sister company with Kyber, and Jesse 

Branch’s engineering services played a key role in determining the areas to be mined and the 

direction of mining. Id at 1299, 1300. A high degree of interrelationship existed between these 

sister companies; they shared officers, board members, employees, offices, equipment and 

machinery. Id at 1319-1321. Together, Kyber and Jesse Branch exercised control over the 

operation of the Elmo No. 5 Mine. Id at 1322. 

The APC organization 

 APC is an Ohio corporation wholly owned by Austin Powder Holding Company. A large 

explosives company, APC provides contract blasting, drilling and related services to mining 

companies throughout the United States. APC’s contract services are provided by twelve wholly 

owned divisional subsidiary LLCs to more than three hundred mine sites. The LLCs purchase 

from APC the nitrates, explosives, fuel oil and blasting accessories as well as other needed goods 

and products. The subsidiary LLCs store, sell and use the APC commercial explosive products. 

There is no evidence that Austin Powder either owns coal or other mineral reserves or owns or 

operates any mine. Prior to 2004 the LLCs were divisions under the corporate umbrella of APC. 

During the period from 2004 through 2007 the relationship between APC and its LLCs was 

defined by a series of contractual agreements executed pursuant to reorganization. The 

relationship is also illustrated by materials published by APC, restructuring documents, various 

38 FMSHRC Page 548
communications, website information, and deposition testimony of record. The relationship is 

discussed at length below. 

 The APC organization today and the BNRC group of 1999 are very different business 

enterprises. The BNRC group was focused on mining coal at one location, the Elmo #5 mine. 

APC provides contract blasting services and supplies to industries including mining nation-wide, 

but does not own or operate any mines. Comparisons are difficult to draw and for this reason the 

wisdom of the Berwind four-factor test becomes obvious. Companies can and do differ greatly 

considering their organizational structure, conduct of their business, and the products and 

services offered. The four-factor test can be applied to companies that consist of two or more 

entities, and the relevant examination is the relationship between the entities. The unitary 

operator theory allowed the Secretary to issue each citation to the mine operator and to each of 

the BNRC entities; however, in the instant case the theory was used to cite APC for alleged 

violations of safety standards by the LLCs performing the contract services at mines. The 

Secretary stipulated that for this proceeding only APC is not an “operator” as defined by the 

Mine Act, and Respondent stipulated that the LLCs were contractors at mine sites and met the 

definition of “operator”. 

Findings and Conclusions 

 Congress intended for the definition of “operator” to be as broad as possible. S. Rep. No. 

91-411 at 44 (1969), 1 Coal Act Legis. Hist. at 170. However, in 1999 the definition had not 

been extended to multiple entities within a company engaged in mining or performing work at a 

mine. It was in this context that the Commission borrowed from and modified the “single 

employer” doctrine to craft the four-factor “unitary operator” test as a gap-filling measure to 

allow for joint and several liability of more than one entity of a company as an “operator”. The 

Berwind majority began by upholding as reasonable under Chevron II analysis the Secretary’s 

interpretation of the Mine Act permitting two or more related entities to be designated a single 

operator. The unitary operator test established these factors: 

 

(1) Interrelation of operations, 

(2) Common management, 

(3) Centralized control over mine health and safety, and 

(4) Common ownership. 

The majority further explained: 

 

To demonstrate unitary operator status, not every factor need be present, and no 

particular factor is controlling. Instead, we will weigh the totality of the 

circumstances to determine whether one corporate entity exercised such pervasive 

control over the other that the two entities should be treated as one. (Citations 

omitted). 

Berwind, at 1317. 

38 FMSHRC Page 549
 The APC organization is currently treated as a unitary operator, providing the Secretary 

with the discretion to issue citations to the parent, APC, for alleged violations by its subsidiary 

LLC working at a mine. Therefore, the test must be applied to the APC organization to determine 

whether the exercise of the Secretary’s prosecutorial discretion was proper. The initial task is to 

analyze the APC organization in each of the test factors. For each factor, the question of 

substantial involvement must be addressed. Whereas in Berwind the question was whether the 

entities of the group had ceased functioning as separate operations, in the instant case the 

question is whether APC and its subsidiary LLCs have become separate entities. 

 As indicated above, beginning in 2004 APC reorganized its regional subsidiaries as 

corporations under Delaware state law each as a limited liability company (LLC). The principle 

place of business for each was the APC corporate address in Cleveland, Ohio. Each LLC was 

granted an ATF license, and each license also listed the corporate address in Cleveland, Ohio. 

SSD-29, pp. 54, 55, 240. APC’s interest in the LLCs was 100% of “profits, losses, cash 

distributions, capital accounts and other economic rights”. Cash and any property not required by 

the LLC would flow to APC. A Board of Managers with decision making authority was created 

to manage and control each LLC. The individuals designated were David M. Gleason, Michael 

A. Gleason and David P. True. This Board of Managers elected the officers of the LLC. RSD-17. 

In December 2006 all of the Members of the APC Board of Directors, David M. Gleason, 

Michael A. Gleason and David P. True, having already caused the formation of the LLCs, 

unanimously consented to enter into certain contractual agreements with each LLC. RRMD-21. 

Two of the agreements provided for the contribution of certain assets to the LLCs in exchange 

for the 100% ownership interest, and the assumption of certain liabilities by the LLC including 

listed contracts and leases. RSD-18, 20. The remaining agreements provided for employee, 

services, transportation and supply arrangements between the entities. RSD-19, 21, 22, 23. The 

parties stipulated that the content of each of the contracts between APC and each subsidiary LLC 

was materially the same. JX-1, No.4. Therefore, there is no need to refer to the many duplicative 

documents in the official file. Respondent argues that the contractual agreements establish an 

“arms-length” relationship between the entities. However, those same agreements spell out how 

the business will be conducted and they also set the parameters for the operation of the LLCs. 

Interrelation of operations 

Many services are furnished by APC to its LLCs: accounting, human resources, 

invoicing/collection, record keeping, general office services, insurance coverage, and IT for 

record keeping and financial reporting purposes. RSD-21. These services are centralized at APC 

with some shared responsibilities performed by the LLCs. The services are characterized by APC 

as administrative and support necessary to allow the LLC to run its business. Id. The agreement 

covering services does relieve each LLC of needing additional personnel to handle these 

essential business functions or of contracting for such services locally. While these provisions do 

support the subsidiary LLC it is also clear that the LLCs are largely dependent on APC for the 

services. Further, the services are not only provided by APC, but controlled by APC. 

 An important support service is in the area of human resources. The Employee Leasing 

Agreement provides that APC will lease employees to the LLCs. RSD-19. All employees, 

38 FMSHRC Page 550
whether working at APC headquarters or at a subsidiary LLC in the field, are on the direct 

payroll of APC. Id. It is APC that performs the usual payroll functions of directly paying the 

leased employee, withholding taxes, and producing wage and tax statements. Id. Health and life 

insurance plans are provided by APC. Respondent contends the LLCs can hire, fire and set the 

pay of an employee. However, it is APC that has the authority to remove or replace any leased 

employee. RSD-19. LLC officials can recommend employment actions, but it is APC that 

conducts screening and approves the actions. SSD-29, pp. 94, 96, 99, 100. Employees are 

required to review the APC Employee Handbook during training, and they are issued a copy. 

SSD-41, p. 7. It is clear that all employees are governed by the personnel policies and guidelines 

published by APC. While the LLC may participate in personnel matters, it is APC that controls

the policies governing human resources. 

 Invoicing and collection are accounting services provided by APC. RSD-21. It is APC 

that maintains the cost accounting allowing the LLCs to “pay” for services and supplies. SSD-29, 

pp. 126, 127. A single federal tax return is filed for the APC organization, and APC provides the 

information and documentation for each LLC to file state tax returns. RSD-17, No.9.7, SSD-29, 

pp. 45-47. This does not show that the LLCs are independent of APC, but the practical reality of 

regional locations. Further, the mine operators send payments to a national company bank 

account. SSD-29, p. 127. While the LLCs must participate with billing, record keeping and 

financial reports regarding its activities in connection with performing contracts, it is clear that 

the handling of revenues is controlled by APC. In addition, insurance policies are negotiated and 

maintained by APC, with the LLCs named as parties. Employee health and life, workers 

compensation, liability, vehicle and other needed insurance coverage are all held by APC. RSD22; SSD-29, p. 86. Credit cards are provided to the LLCs, and APC is ultimately responsible for 

the charges. SSD-29, pp. 150-152. It is the IT service maintained by APC that relieves the LLC 

of obtaining and maintaining its own technology for communications, record keeping and 

financial reporting. SSD-29, pp. 187, 222, 223, 233, 234. The websites8

 are also maintained by 

APC, not each of the LLCs. SSD-29, p. 187. The LLCs are dependent on APC for accounting, 

financial, insurance and technology functions. 

 Vehicles, some specialized, are needed for the LLCs to carry out the blasting work. APC 

provides the vehicles, carrier services and vehicle support services necessary for the LLCs to do 

the contract work. APC is also responsible for registration and maintenance of the vehicles, 

insurance coverage, and related accounting and tax services. The LLCs have the responsibility to 

comply with all applicable laws and obtaining any needed permits. RSD-22. APC also supplies 

the LLCs with the products needed for their work. This includes nitrates, explosives, fuel oil and 

blasting accessories. Under the Supply Agreement the LLC is to purchase all of its needs for 

products from APC. RSD-23. Respondent contends that the LLCs can also purchase supplies 

from other vendors; however, about 95 percent of the material used by the LLCs is manufactured 

and supplied by APC. SSD-29, p. 135. Of course, when using the vehicles and supplies, they are 

under the control of LLC personnel, who are employees of APC. This does not serve to 

functionally separate the entities; rather, the LLCs are dependent on APC for vehicles, 

equipment, supplies and related services. 

 8

 The websites are www.austinpowder.com and www.austinpowder.net. 

38 FMSHRC Page 551
 The APC organization is not held out to the world as being comprised of separate and 

distinct corporations that function independently. The websites do not distinguish between APC 

and the subsidiary LLCs, referring to “Austin Powder”, “Austin Powder Company” or the 

“Austin team”. SSD-42, pp. 1, 7. The content of the websites shows that promotion, marketing, 

and technical support are all handled by APC. SSD-42, 43. Potential customers are directed to 

contact APC world headquarters. SSD-43. Further, the APC corporate organizational structure 

shows numerous divisions within APC, all connected and none designated as separate or 

independent.9 RSD-4. 

 Respondent argues that the LLCs can make decisions without permission from APC, 

apparently denominating this as “operational independence”. The LLCs were given control over 

the personnel, equipment and supplies provided by APC. In the day-to-day conduct of business, 

in this instance at many mine sites across the country, decisions “on the ground” would need to 

be made locally. APC headquarters officials do not need to be and no doubt could not be at the 

many mine sites. Of necessity, the LLCs are tasked with the responsibility of safely and fully 

executing the contract work awarded to APC. Not adequately explained, however, is just how 

this day-to-day conduct of business is different from the time prior to the reorganization when 

the LLCs were divisions that performed the same work and were considered an integral part of 

APC. The responsibility placed on the LLCs to perform the work at mines does not vitiate the 

functional integration of the entities. I find for this factor of the test there is substantial 

involvement of APC in its LLCs. 

Common management 

I have found, above, that the relevant inquiry under the Berwind four-factor test is the 

relationship between APC and the LLCs, and not an examination of what work the LLC 

performs at a particular mine site. BNRC and Kentucky Berwind did not have a comprehensive 

relationship with AA&W, the mining company contracted by Kyber. Only Kyber and sister 

company Jesse Branch exercised substantial control over operations at the mine. In contrast, the 

wholly owned LLCs are the entities that perform the blasting work for owner APC and there is a 

direct relationship between these entities that includes comprehensive management control. 

 

There is common management between APC and the subsidiary LLCs, and ownership 

control over the LLC managers and supervisors. David M. Gleason, Michael A. Gleason, and 

David P. True were all of the members of the APC Board of Directors during the time of the 

reorganization. These same Directors were also designated as a Board of Managers over each of 

the LLCs. RRMD-21, p. 3; RSD-17, p. 4. The Board of Managers had the authority “to manage, 

control and make all decisions affecting the business and assets” of the LLC. The Board of 

Managers also had the authority to both elect officers of the LLC and remove any LLC officer at 

any time with or without cause. Id. Therefore, the top-ranking Directors of the APC organization 

were designated to control all aspects of LLC operations which would include but not be limited 

to the areas of personnel, accounting and finances. 

With respect to accounting and finances the person elected as Secretary and Treasurer of 

each LLC, Randal Wicks, was also the Secretary and Treasurer of the APC organization. SSD-

 9

 Not all divisions are wholly owned. 

38 FMSHRC Page 552
29, pp. 50, 53, 54. As such, he would supervise accounting at both headquarters and the LLCs. 

SSD-29, pp. 144, 145. While the LLCs produced reports in each of the areas referenced in the 

paragraph above, these would be required by APC for corporate bookkeeping and management 

purposes and Mr. Wicks was responsible for making sure the reporting was accurate and up to 

date. SSD-29, p. 146. Also, he would oversee the LLC payables. SSD-29, p. 145. In Berwind, the 

financial involvement of BNRC with the mining activity was considered too far removed, but 

here the financial control over the LLCs operating as contractors is direct and interrelated with 

APC. In addition, although Respondent argues the Secretary and Treasurer is the only shared 

officer, the APC Board of Directors are also officers and they are not only shared with each LLC 

as a Board of Managers but have the authority to control all aspects of LLC operations. In this 

factor of the test I find substantial involvement of APC in its LLCs. 

Centralized control over mine health and safety 

 With respect to health and safety, it is acknowledged that blasting is a dangerous activity, 

and it is also acknowledged that APC places great emphasis on safety training and safe 

operations in conducting this work. Respondent contends it is the responsibility of each LLC to 

conduct training and enforce compliance with APC policies and applicable laws. While this is 

correct, the Secretary is also correct that APC exercises control over the training presented to 

APC employees and mandates that the LLCs enforce compliance. 

 The APC training materials are extensive, and the required orientation and training for 

new hires covers many topics and takes a full week to complete. The APC leader’s training guide 

directs how the program will be conducted, and sets forth that the program was developed to 

help standardize training and provide a systematic method that ensures all compliance training 

requirements are met. SSD-41, pp. 3, 5, 6. DVDs are provided and form the structure of the 

training, with additional activities performed locally. Id. A participant training guide and the 

APC Employee Handbook are issued to each employee. Id, pp. 6, 7. Multiple topics are 

presented covering requirements for ATF, OSHA, DOT-HAZMAT and MSHA regulatory 

compliance. Id, pp. 9, 11-17. The topics include miner’s rights, new miner training, hazard 

recognition, electrical hazards, shot safety, MSHA regulations, fall protection, lock out/tag out, 

hearing conservation, first aid and more. Id. The leader’s guide stresses that all of the training 

activities are required, and upon completion a certification statement must be signed and sent 

with completion documents to Human Resources. Id, pp. 3, 5, 6. 

 There are other important materials furnished by APC impacting health and safety. For 

example, APC provides software that records all blasts conducted by LLCs and maintains the 

data on a system server. SSD-29, pp. 60, 61, 63. On the server is the post-blast report required by 

state and federal authorities, Id, p. 63. APC provides pre-blast software to the LLCs for analysis 

and presentation to customers. Id, pp. 64, 65. Two or three technicians at each LLC have been 

trained to use this sophisticated pre-blast software. Id, pp. 66, 67. The software has mine 

planning parameters that can virtually mine on a computer, giving depths, pounds per shot, 

number of benches, etc. Id, pp. 67, 68. APC has also created and published Blaster Safety Tips 

and a Blaster’s Guide. APC conducts in-depth, 50-hour blaster training for Austin Certified 

Blasters. SSD-42, pp. 8-10, 14, 15. These materials can be accessed on the APC websites or 

obtained by contacting an APC representative. Id. 

38 FMSHRC Page 553
 APC employees who drive the vehicles provided to the LLCs are another safety concern. 

APC commercial vehicles cannot be operated until the Driver Candidate Program is completed 

and written approval is granted by Cleveland Safety and Compliance. Again, there is a leader’s 

guide, DVDs are provided to augment training, and the driver candidate is issued a Driver 

Handbook which is a fundamental reference document that includes APC processes and practices 

required of the driver. SSD-38, pp. 3-6. 

 Research and development is necessary to produce and publish the training documents 

and software crucial to the safe conduct of blasting services at mines. On this record it appears 

that APC performs these functions, not its LLCs. In safely satisfying the contracts for blasting at 

mine sites, there must of necessity be close cooperation between the entities. The LLCs are 

dependent on APC to provide them with the materials, guidance and requirements for training 

APC employees and for enforcement of compliance with safety regulations. Although some 

responsibilities are divided between the geographically separated entities, this actually 

underscores the need for a high degree of interrelationship to achieve both safety and contract 

fulfillment goals. While it is understandable that regional geologic differences would be 

addressed by development of special procedures, this does not change the essential 

interdependence of the entities. When viewed from the perspective of how the APC organization 

performs contract blasting, it is clear that APC maintains centralized control over health and 

safety at its LLCs. 

Common ownership 

 This test is met since each subsidiary LLC is wholly owned by APC. RSD-17. In 

Berwind, the majority did not elaborate on this criterion. Berwind, at 1321. There is no need to 

do so here, other than to point out that complete ownership by a company, however organized, of 

a subsidiary entity, however organized, establishes a controlling relationship flowing from the 

owner company to the owned entity. In the opinion of the undersigned, it is simply beyond 

question that a wholly owned entity must operate in a manner that is acceptable to the owner. 

The owner has a direct and immediate interest in the activities of the subsidiary to ensure and 

protect the success of the business enterprise. I find this to be substantial involvement. 

 Despite the restructuring that formed the wholly owned subsidiaries as corporations, the 

reality is that APC and its LLCs have never ceased functioning as an interrelated, interdependent, 

functionally integrated single business enterprise. Despite Respondent’s argument of 

“operational independence”, local decision making required to fulfill the contractual obligations 

at a mine site neither functionally separates the LLC from APC nor disturbs the close 

cooperation between the entities. APC must have field operations to perform the revenue 

generating work and the LLCs must have APC support, oversight, guidance, and control to 

efficiently, competently, safely and lawfully satisfy the obligations APC enters into with its 

client mine operators. Respondent also argues that viewing APC as a large single entity is 

simplistic and ignores corporate law. The majority in Berwind observed that corporate forms 

must not be ignored, but the form adopted by entities should not be exalted over the substance of 

interrelated and integrated operations. Berwind, at 1313. 

38 FMSHRC Page 554
After Berwind, there is no need to resort to the principles of corporate law to consider 

“alter ego” theory or the “identity rule” to “pierce the veil” of legally separate entities. We also 

do not need to determine whether there was an “intent to evade” the statutory obligations of the 

Mine Act. It does not matter that APC has chosen to create subsidiary corporations and define 

the relationship between entities with contracts rather than other forms of written or oral 

agreements. Companies are free to organize in any lawful manner, but if its activities bring it 

under the jurisdiction of the Mine Act the form of the company will be secondary to the 

substance of intra-organization relationships. The unitary operator test fully addresses the 

question of whether the separate corporate existence of two or more entities may be disregarded 

when their operations are so interrelated they function as a single entity. Berwind, at 1313-1316. 

 I have found substantial involvement of APC in its subsidiary LLCs under all of the 

Berwind “unitary operator” test factors. The remaining question is whether APC exercises 

pervasive control over the LLCs. Respondent contends that APC does not exercise pervasive 

control over the LLC at the mine. The Secretary contends that APC and the LLCs operate as a 

single entity and that the LLCs could not function on their own. For this determination the 

totality of the circumstances present in the instant case are weighed to ascertain whether APC 

and its LLCs should be treated as one entity. Berwind, at 1317. Here, the participation and 

involvement of APC in the personnel, financial, equipment, supplies and health and safety 

activities of the LLCs impacts virtually every important aspect of the conduct of the contract 

blasting business and is therefore extensive. This is sufficient to support a finding that APC’s 

control over its LLCs is pervasive. 

I have determined that the legal reorganization forming the APC subsidiaries as distinct 

corporations did not functionally separate APC from extensive involvement in its LLCs. I find 

the Secretary by a preponderance of the evidence has established that the reorganized APC and 

its wholly owned subsidiary LLCs have not become separate entities, but together meet the fourfactor test of Berwind and constitute a “unitary operator”. Therefore, I conclude that the 

Secretary may issue citations to either or both as “operators” as defined by the Mine Act. 30 

U.S.C. § 802. 

ORDER 

 The Secretary has correctly determined that Austin Powder Company and each of 

its wholly owned divisional subsidiary corporations constitute a “Unitary Operator”; 

therefore, both entities qualify as “Operators” for the purposes of the Mine Act. 

38 FMSHRC Page 555
This order is preliminary, interlocutory in nature, with issues remaining to be adjudicated. 

These issues include those raised by Respondent regarding the authority of the Secretary to 

assign contractor numbers as well as any validity, gravity, negligence and penalty determinations 

to be adjudicated for each unsettled citation in the dockets. 

/s/ Kenneth R. Andrews 

 Kenneth R. Andrews 

 Administrative Law Judge 

Distribution: 

Stephen Turow, Esq., Office of the Regional Solicitor, U.S. Department of Labor, 201 12th Street 

South, Suite 401, Arlington, VA 22202 

Christopher D. Pence, Esq., Hardy Pence, PLLC, 500 Lee Street East, Suite 701, P.O. Box 2548, 

Charleston, WV 25329 

38 FMSHRC Page 556
FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

OFFICE OF ADMINISTRATIVE LAW JUDGES 

7 PARKWAY CENTER, SUITE 290 

875 GREENTREE ROAD 

PITTSBURGH, PA 15220 

TELEPHONE: 412-920-7240 / FAX: 412-928-8689 

March 11, 2016 

ORDER DENYING RESPONDENT’S MOTION FOR SUMMARY DECISION 

ORDER GRANTING SECRETARY’S MOTION FOR SUMMARY DECISION 

ORDER TO PAY 

Before: Judge Harner 

On September 22, 2015, Rosebud Mining Company (“Contestant” or “RMC”) filed with 

the undersigned a Motion for Summary Decision in contest case PENN 2015-268-R. This docket 

includes one citation (No. 7032005) for a violation of 30 C.F.R. §75.370(d), which prohibits the 

implementation of a ventilation plan before it is approved by the District Manager.1

 

1

 The full text of the Regulation is as follows: “No proposed ventilation plan shall be 

implemented before it is approved by the district manager. Any intentional change to the 

ventilation system that alters the main air current or any split of the main air current in a manner 

that could materially affect the safety and health of the miners, or any change to the information 

required in § 75.371 shall be submitted to and approved by the district manager before 

implementation.” 30 C.F.R. § 75.370. 

ROSEBUD MINING CO., 

 Contestant, 

v. 

SECRETARY OF LABOR 

 MINE SAFETY AND HEALTH 

 ADMINISTRATION (MSHA), 

 Respondent. 

SECRETARY OF LABOR 

 MINE SAFETY AND HEALTH 

 ADMINISTRATION (MSHA), 

 Petitioner, 

v. 

ROSEBUD MINING CO., 

 Respondent. 

CONTEST PROCEEDING 

Docket No. PENN 2015-268-R 

Citation No. 7032005; 07/06/2015 

Mine: Brush Valley 

Mine ID: 36-09437 

CIVIL PENALTY PROCEEDING 

Docket No. PENN 2015-318 

A.C. No. 36-09437-388936

Mine: Brush Valley 

38 FMSHRC Page 557
The citation is in the nature of a technical citation intended to bring the matter before a judge, 

and was assessed as No Likelihood, No Lost Workdays, Non-S&S, No Negligence, 0 Persons 

Affected, with a civil penalty of $100.00. The Secretary filed, on October 14, 2015, a motion 

requesting that summary decision be denied to the Contestant, and instead be ruled in favor of 

the Secretary. For the following reasons, I deny the Contestant’s Motion for Summary Decision 

and grant the Secretary’s Motion for Summary Decision. 

Undisputed Facts 

Both parties have stipulated that there are no material facts at issue in this case. The 

Contestant submitted a list of “Proposed Facts,” of which the Secretary agreed with all but a few. 

I find the several facts over which there are disagreements to constitute either conclusions, 

speculative, or restatements of regulatory requirements. The mutually agreed-upon proposed 

facts are as follows: 

1) Rosebud Mining Company's (RMC) Brush Valley Mine is subject to the jurisdiction 

of the Federal Mine Safety and Health Act of 1977 ("The Act"). 

2) The Administrative Law Judge has jurisdiction to hear the contest of the penalties and 

citations at issue here. 

3) Citation No. 7032005 was properly served by a duly authorized representative of the 

Department of Labor upon an agent of Rosebud on the date and place indicated 

therein. 

4) Rosebud Mining Company owns and operates the Brush Valley Mine.

5) The Brush Valley Mine accesses the Lower Kittanning coal seam via two slope 

entries. 

6) The Brush Valley Mine utilizes two continuous miner sections to extract coal using 

the room and pillar method. 

7) Approved seals are utilized to seal off (isolate) worked out areas from the active mine 

workings. 

8) Seal Plans are developed by the Operator and submitted to MSHA for approval. If 

approved, the seal plan is incorporated into the mine's ventilation plan. 

9) RMC prepared a plan dated March 6, 2015, to seal the Bl Butt at Brush Valley Mine 

(36-0943 7). 

10) A decision letter from District Manager Thomas E. Light dated April 9, 2015, stated 

that the proposed plan has been reviewed and cannot be approved because (1) "The 

review revealed that the Bl Butt is to be sealed with two sets of seals. " and (2) "The 

set of seals identified as "#1, #2 & #3" does not meet the requirements of 30 CFR 

75.337(h)." 

11) MSHA and RMC held a meeting on April 30, 2015, to discuss the seal plan. The 

issues with the seal plan were not resolved and RMC asked for a technical citation to 

be issued so the plan issues could be resolved. 

38 FMSHRC Page 558
12) Citation #7032005 issued on July 6, 2015, and states "The proposed plan did not 

include provisions for installing a water drainage system in each set of seals." 

13) Four seals must be constructed to isolate the Bl Butt from the remaining active 

workings of Brush Valley Mine (i.e., create a BI Butt sealed area). 

a. The BI Butt sealed area comprises a series of entries that are interconnected. 

b. There is no barrier within the B1 Butt sealed area that separates entries behind 

Seals# 1-3 from entries behind Seal #4. 

c. Construction of seals # 1-3 alone does not create a sealed area. 

d. Construction of seal #4 alone does not create a sealed area. 

14) Maps/drawings submitted with the BI Butt seal plan designate areas on the perimeter 

of the Bl Butt sealed area where mining is prohibited; these mining limits ensure that 

barriers of sufficient size will be established as mining proceeds adjacent to the sealed 

area. These minimum barrier sizes are adequate and consistent with those determined 

using customary engineering design procedures. 

a. Seals # 1-4 in conjunction with established barrier pillars effectively isolate the 

B1 Butt sealed area from the remaining active workings at Brush Valley Mine. 

15) Criteria pertaining to drainage systems in mine seals are addressed in 30 CFR 

§75.337(h) and in MSHA approved seal installation guidelines (developed under 

§75.335(b)(l)(i)), MSHA Approval Number: 102M-02.1 120 psi ORICA I MAIN 

LINE TEKSEAL: 

a. 30 CFR §75.337(h) Water drainage system. For each set of seals constructed 

after April 18, 2008, the seal at the lowest elevation shall have a corrosion 

resistant, non-metallic water drainage system. Seals shall not impound water or 

slurry. Water or slurry shall not accumulate within the sealed area to any depth 

that can adversely affect a seal.

b. 30 CFR §75.335(b)(l) An engineering design application shall - (i) Address gas 

sampling pipes, water drainage systems, methods to reduce air leakage, pressuretime curve, fire resistance characteristics, flame spread index, entry size, 

engineering design and analysis, elasticity of design, material properties, 

construction specifications, quality control, design references, and other 

information related to seal construction.

c. Page 9 of the Seal Installation Guidelines for the Orica Main Line Tekseal 

developed per 30 CFR §75.335(b)(l) states that "A water drainage system must be 

installed during seal construction in the lowest elevation seal(s) of the set. This 

seal is not designed to impound water, other than to a minimal, unavoidable 

depth. The actual size and number of pipes must be determined by a CPE 

(certifying professional engineer) based on the anticipated maximum flow rate at 

the seal location. " 

16) The proposed water trap is located at the #4 seal which is at the lowest elevation of all 

of the proposed Bl-Butt seals. 

17) All seals must be examined on a weekly basis. 

38 FMSHRC Page 559
18) All water traps must be examined (weekly) to make sure they are functioning 

properly. 

19) MSHA District 2 Manager, Mr. Light was supplied with all information relied on as 

exhibits. 

Contestant’s Motion for Summary Decision, 1-3; Secretary’s Motion for Summary Decision, 4-

5.2 In addition to the stipulated facts, the parties each submitted affidavits and documentation 

supporting their positions. 

Summary Decision Standard 

The Court may grant summary decision where the “entire record...shows: (1) That there 

is no genuine issue as to any material fact; and (2) That the moving party is entitled to summary 

decision as a matter of law.” 29 C.F.R. §2700.67(b); see also UMWA, Local 2368 v. Jim Walter 

Res., Inc., 24 FMSHRC 797, 799 (July 2002); Energy West Mining, 17 FMSHRC 1313, 1316 

(Aug. 1995) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986), which interpreted 

Fed.R.Civ.P. 56). The Commission has analogized its Rule 67 to Federal Rule of Civil Procedure 

56, which authorizes summary judgments upon a proper showing of a lack of a genuine, triable 

issue of material fact. Hanson Aggregates New York, Inc., 29 FMSHRC 4, 9 (Jan. 2007). A 

material fact is “a fact that is significant or essential to the issue or matter at hand.” Black's Law 

Dictionary (9th ed. 2009, fact). “There is a genuine issue of material fact if the nonmoving party 

has produced evidence such that a reasonable factfinder could return a verdict in its favor.” 

Greenberg v. Bellsouth Telecommunications, Inc., 498 F.3d 1258, 1263 (11th Cir. 2007)(citation 

omitted). The court must evaluate the evidence “‘in the light most favorable to ... the party 

opposing the motion.” Hanson Aggregates, 29 FMSHRC at 9. Any inferences drawn “from the 

underlying facts contained in [the] materials [supporting the motion] must be viewed in the light 

most favorable to the party opposing the motion.” Id. Though the moving party bears the initial 

burden of informing the court of the basis for its motion, it is not required to negate the 

nonmoving party’s claims. Celotex, 477 U.S. at 323. “When the moving party has carried its 

burden under Rule 56(c), its opponent must do more than simply show that there is some 

metaphysical doubt as to the material facts .... Where the record taken as a whole could not lead a 

rational trier of fact to find for the nonmoving party, there is no ‘genuine issue for trial.’” Scott v. 

Harris, 550 U.S. 372, 380 (2007) (citation omitted). 

Analysis 

At issue in this case is the definition of the phrase “set of seals” in 30 C.F.R. §75.337(h), 

and whether the District Manager abused his discretion when he denied Rosebud’s March 06, 

2015 seal plan. In the decision letter, the District Manager explained that §75.337(h) Seals #1-3 

and Seal #4 are separate “sets of seals” such that each requires a water trap. The Contestant 

argues that the phrase, “set of seals,” by definition implies more than one seal such that Seal #4 

cannot constitute a “set of seals” that requires a water trap. 

 2

 Joint Stipulations will hereinafter be cited as Stip., followed by the stipulation number. 

The Contestant’s Motion will be cited as CMSD, followed by page number, and the Secretary’s 

Motion will be cited as SMSD, followed by a page number. 

38 FMSHRC Page 560
Section 75.337(h) (Water Drainage System) of the Regulations states: 

For each set of seals constructed after April 18, 2008, the seal at the lowest elevation 

shall have a corrosion-resistant, non-metallic water drainage system. Seals shall not 

impound water or slurry. Water or slurry shall not accumulate within the sealed area to 

any depth that can adversely affect a seal. 

30 C.F.R. § 75.337(h). 

 The Contestant grounds its argument primarily in the Merriam Webster Dictionary 

definition of “set,” as “a number of things of the same kind that belong or are used together.” 

Using that definition, the Respondent argues that the Secretary’s interpretation of the regulation 

would lead to an absurd result. Furthermore, it offers that if the term “set” is ambiguous, the 

Secretary’s interpretation should not be granted deference because “it is not logically consistent 

with the language of the regulation and it serves no permissible regulatory function.” CMSD at 7. 

Accordingly, the Contestant moves this court to find that the District Manger abused his 

discretion in denying the seal plan. 

Alternately, the Secretary argues that though the term “set of seals” is not defined in the 

Act or Regulations, the plain language is clear when read in context. The Secretary rebuts the 

Contestant’s appeal to the dictionary by nothing that the mathematical and technical definition of 

“set” may contain a single unit.3

 Furthermore, single seals do occur in mines, and the 

Contestant’s reading of the Regulation would exempt them from the requirements of Section 

75.337(h). Beyond dictionary definitions, the Secretary argues that the District Manager fully 

considered the details of the plan and he followed MSHA’s reasonable interpretation of the 

Regulation in denying the plan. 

Because the issue presented concerns both the agency interpretation of the Regulation 

and the District Manager’s denial of the Plan, there are two standards of review that must be 

applied. First, in determining the proper interpretation of “set of seals” in the Regulations, the 

agency’s interpretation is given “controlling weight unless it is plainly erroneous or inconsistent 

with the regulation.” Bowles v. Seminole Rock & Sand Co., 325 U.S. 410, 414 (1945); See Also 

Energy West Mining Co. v. FMSHRC, 40 F.3d 457, 463 (D.C. Cir. 1994). This requires an 

analysis of whether the Regulation’s plain meaning is clear or ambiguous, and if ambiguous 

whether the agency’s interpretation is unreasonable. Following this analysis, it must next be 

determined whether the District Manager abused his discretion in denying the plan. Prairie State 

Generating Co. LLC v. Sec’y of Labor, MSHA, 2013 WL 3947974, aff’d, 792 F.3d 82 (D.C. Cir. 

2015). An abuse of discretion occurs where the District Manager’s actions are arbitrary or 

capricious. Mach Mining, LLC v. Sec’y of Labor, MSHA, 34 FMSHRC 1784 (Aug. 2012), aff’d

 3

 Indeed, according to the Oxford English Dictionary, which contains a more complete 

entry for “set” than Merriam Webster, the term may refer to a number of elements, a single 

element, or no elements. Though not particularly relevant for the instant inquiry, a “set” may 

have zero elements contained within it. "set, n.2." OED Online. Oxford University Press, 

December 2015. Web. 8 March 2016. See Also A. Shen & N.K. Vershchagin, Basic Set Theory, 

American Mathematical Society (2000), for a full definition, replete with logic formulas, of 

“sets.” 

38 FMSHRC Page 561
728 F.3d 643 (7th Cir. 2013), cert. den. No. 13-645, 2014 WL 1515720 (Apr. 21, 2014); 

Twentymile Coal Co. v. Sec’y of Labor, MSHA, 30 FMSHRC 736 (Aug. 29, 2008). This standard 

simply requires the agency to show that the District Manager made “a full appraisal of the 

relevant and available facts, and is reasonable in drawing conclusions.”4 Prairie State 

Generating, 2013 WL at n. 6. 

 Applying these standards of review, it is clear that the Contestant’s arguments fail for 

several reasons. First, I find Contestant’s appeal to Merriam Webster to be a damp squib. The 

Contestant provides one definition of one word in the regulations, and announces that it is 

“evident” that a set cannot include one element, and any alternate interpretation would “result in 

an absurd result.” 

However, the phrase “set of seals” has no such singular definition. When viewed in the 

context of the Regulations and the purpose of §76.337(h), it is clear that the Contestant’s reading 

is unnecessarily and artificially narrow. Such a reading runs counter to the general rule that 

statutes and regulations intended to protect individuals’ health and safety must be interpreted in a 

broad manner to effectuate their goals. See Rag Shoshone Coal Corp. v. Sec’y of Labor, MSHA, 

23 FMSHRC 407, 422 (Apr. 9, 2001) (ALJ) (citing cases for this proposition). Appealing to 

dictionaries—from Merriam Webster to the Oxford English Dictionary—simply shows that a 

“set” may contain a number of elements, a single element, or no elements. 

 Words are written in context, and they must be read in context. Mach Mining, LLC v. 

Sec’y of Labor, MSHA, 728 F.3d 643, 647 (7th Cir. 2013) (“The meaning—or ambiguity—of 

certain words or phrases may only become evident when placed in context. It is a ‘fundamental 

canon of statutory construction that the words of a statute must be read in their context and with 

a view to their place in the overall statutory scheme.’” quoting Davis v. Michigan Dep't of 

Treasury, 489 U.S. 803, 809 (1989)). Sections 75.334-75.337 clearly concern the sealing off of 

areas to isolate any problems that occur in those areas. Section 75.337(h) fits this general plan by 

preventing water and slurry accumulations. See Final Rule and Commentary, Sealing of 

Abandoned Areas, 73 FR 21182-01 (April 18, 2008). The Contestant’s argument that the 

required water drainage systems would only be necessary for multiple seals makes little sense in 

light of the regulation and its context. Water and slurry could accumulate at one seal just as they 

could accumulate at multiple seals. Therefore, the plain meaning of the Regulation clearly 

includes a single seal. Such a reading as urged by the Contestant would exempt single seals not 

only from §75.337(h), but also §75.364(c)(3) (concerning the testing of methane) and 

§75.336(a)(iii) (concerning the monitoring of atmosphere behind a seal). Declaration of Stephen 

G. Sawyer, Jr., Sec. Ex-3, ¶ 8. There is no conceivable reason why MSHA would have intended 

for water and methane to be contained in very specific ways for multiple seals, but not for 

singular seals. The clear intent of these regulations is to keep miners safe, and an exemption for 

 4

 The Commission has explained that “this is an appropriately deferential standard, as 

judges (as well as Commissioners) are not always best-equipped to decide technical issues 

regarding ventilation and roof control. They are instead charged with deciding whether the 

district manager has made a fair and informed suitability determination.” Prairie State 

Generating Co. LLC v. Sec’y of Labor, MSHA, 2013 WL 3947974, at n. 6, aff’d, 792 F.3d 82 

(D.C. Cir. 2015). 

38 FMSHRC Page 562
single seals would not serve this purpose. Therefore, I find that the phrase “set of seals” can 

mean one seal for purposes of the regulation. 

Based on the stipulated facts it appears that the District Manager, Thomas E. Light, had a 

reasonable factual and legal basis to conclude that the Contestant’s plan violated §75.337(h). The 

District Manager was supplied with all relevant information regarding the seals. Stip. 19. He 

considered the fact that Seals #1-3 are within 50 feet of each other. Declaration of Thomas E. 

Light, Sec. Ex.-1, ¶ 9. Seal #4 is located approximately 2,600 feet from Seals #1-3, and this 

distance is occupied by an uninterrupted barrier of coal that runs along the B Mains. Id. at ¶¶ 9-

10. Furthermore, Seal #4 is 123 feet lower than Seals #1-3. Att. F-1. The District Manager was 

concerned that a roof or rib fall could block water from reaching Seal #4, thereby allowing water 

to accumulate behind Seals #1-3. Id. at ¶ 11. 

Furthermore, the District Manager also consulted with staff who were assigned to review 

the proposed plan in light of the conditions at the mine. Id. at ¶ 14. Staff such as Supervisory 

Specialist Jeremy Williams and Civil Engineer Stephen Sawyer each reviewed the proposed 

plans and concluded that they did not comply with the regulations. Declaration of Jeremy S. 

Williams, Sec. Ex-2; Declaration of Stephen G. Sawyer, Jr., Sec. Ex-3. Specifically Williams 

was concerned not only with the possibility of a roof or rib fall, but also with the effect on 

methane readings under §75.364(c)(3) of not having separate water traps at Seals #1-3 and at #4. 

Declaration of Jeremy S. Williams, Sec. Ex-2, ¶¶ 13-19. Sawyer reiterated these concerns and 

emphasized that the proposed plan would have an adverse effect on barometric pressure and 

methane testing. Declaration of Stephen G. Sawyer, Jr., Sec. Ex-3. 

The District Manager communicated his concerns to the Contestant. Declaration of 

Thomas E. Light, Sec. Ex.-1, ¶ 12. He considered all the information submitted, as well as 

MSHA guidance regarding seals, and drew factual conclusions based on his knowledge and 

experience. Declaration of Thomas E. Light, Sec. Ex.-1, ¶¶ 25-26. In rejecting the proposed plan, 

he stated that the information had been reviewed, and “the review revealed that the B1 Butt is to 

be sealed with two sets of seals. The set of seals identified as ‘#1, #2 & 3’ does not meet the 

requirements of 30 C.F.R. 75.337(h).” Stip. 10; Resp. Ex-B. 

The stipulations and documents show that the District Manager fully considered the 

relevant and available facts and drew reasonable conclusions based on the regulations, MSHA 

guidelines, and his experience and knowledge. Therefore, I find that he did not abuse his 

discretion. 

38 FMSHRC Page 563
Having found that the District Manager did not abuse his discretion in rejecting the 

proposed plan on the basis that it did not comply with §75.337(h), I find that Contestant violated 

§75.370(d) by taking steps to implement the plan. Wherefore, the Secretary’s Motion for 

Summary Decision is GRANTED, the Contestant’s Motion for Summary Decision is DENIED, 

and Rosebud Mining Co., is hereby ORDERED to pay the Secretary of Labor the sum of 

$100.00 within 30 days of the date of this Order.5

/s/ Janet G. Harner 

 Janet G. Harner 

 Administrative Law Judge 

Distribution: 

Jordana L. Greenwald, Esq., U.S. Dept. of Labor, MSHA, 170 S. Independence Mall West, The 

Curtis Center, Suite 630E, Philadelphia, PA 19106 

Benjamin E. Stock, Esq., Rosebud Mining Co., 301 Market St., Kittanning, PA 16201 

 5

 Payment should be sent to: MINE SAFETY AND HEALTH ADMINISTRATION, 

U.S. DEPARTMENT OF LABOR, PAYMENT OFFICE, P. O. BOX 790390, ST. LOUIS, MO 

63179-0390 

38 FMSHRC Page 564
FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

OFFICE OF ADMINISTRATIVE LAW JUDGES 

1331 PENNSYLVANIA AVE., N.W., SUITE 520N 

WASHINGTON, DC 20004-1710 

TELEPHONE: 202-434-9933 / FAX: 202-434-9949 

March 14, 2016 

ORDER ON COMPLAINANT’S MOTION TO AMEND 

Before: Judge Moran 

Complainant Daniel Lowe has filed a motion to amend the complaint in this matter, 

brought under section 105(c)(3) of the Federal Mine Safety and Health Act of 1977, 30 U.S.C. § 

801 et seq. (2012) (“Mine Act” or “Act”), to add Jerritt Canyon Gold, LLC, (“JCG”) as an 

alleged successor. JCG then filed its Special Limited Appearance on Behalf of Jerritt Canyon 

Gold, LLC to Contest Jurisdiction in Response to ALJ’s Order Regarding Secretary’s Motion for 

Reconsideration and Complainant’s Motion to Amend (“Response”).1 For the reasons that 

follow, the Court grants Complainant’s Motion to Amend, allowing the addition of JCG as an 

alleged successor in interest to Veris Gold USA, Inc. (“Veris Gold”).2

JCG’s Special Limited Appearance challenges whether this Court has “jurisdiction over 

and can attach liability for alleged claims of discrimination by Veris Gold USA, Inc. (‘Veris 

Gold’) to [JCG], a newly formed entity that purchased certain assets of the former Veris Gold 

under a bankruptcy court order and approved sale.” JCG Resp. 1.

The Response begins with serious inaccuracy by characterizing the Mine Act 

discrimination action brought by Lowe as “alleged claims of discrimination by Veris Gold USA, 

Inc.” Id. (emphasis added). This Court, after a hearing held in Elko, Nevada, on June 18, 2015, 

1

 Mr. Lowe filed a response to the JCG filing, which was also considered by the Court. 

2

 This Order parallels the March 4, 2016, Order issued by this Court in Matthew Varady’s 

discrimination complaint against Veris, WEST 2014-307-DM. Lowe and Varady, both nonattorneys, with each presently proceeding pro se, have assisted one another in their respective 

filings. In this instance their motions to amend, seeking to add Jarrett Canyon Gold as a party 

were nearly identical submissions. Accordingly, except for minor adjustments, this Order tracks 

the substance of Varady Order. 

DANIEL B. LOWE, 

 Complainant, 

v. 

VERIS GOLD USA, INC., 

and 

JERRITT CANYON GOLD, LLC, 

 Respondents. 

DISCRIMINATION PROCEEDING 

Docket No. WEST 2014-614-DM 

WE-MD 14-04 

Mine: Jerritt Canyon Mill 

Mine ID: 26-01621 

38 FMSHRC Page 565
found in a decision issued on October 15, 2015, that Veris Gold engaged in acts of 

discrimination against Complainant Lowe. See Lowe v. Veris Gold USA, Inc., 37 FMSHRC 2337 

(Oct. 2015) (ALJ). Therefore, far from mere allegations, this Court made findings of fact and 

conclusions of law regarding that discrimination claim. 

The Response then queries whether JCG, “a newly formed entity that purchased certain 

assets of the former Veris Gold under a bankruptcy court order and approved sale” can be liable 

for Veris Gold’s acts of discrimination. JCG Resp. 1. The Response does acknowledge that the 

issue is whether JCG can be added to the complaint as an “alleged successor in interest to Veris 

Gold.” Id.

It is JCG’s position that the final orders of the bankruptcy court are not subject to 

collateral attack, as that court “declared the sale of Veris Gold assets to JCG ‘free and clear’ of 

claims and encumbrances pursuant to Federal Bankruptcy Code, 11 U.S.C. § 363(f).” JCG Resp. 

2. Again characterizing Lowe’s Complaint as an allegation of Veris Gold’s discrimination, JCG 

asserts that “efforts to impose a penalty on JCG [based on Lowe’s discrimination complaint] 

tramples on powerful and persuasive precedent as well as policies that derive from the 

fundamental ‘equitable distribution to creditors’ policy underlying bankruptcy law.” Id. at 2. On 

that basis, the Response contends that this Court has no jurisdiction over JCG and therefore it 

should deny the Complainant’s Motion to Amend. Id. 

In the “Background” section, the Response asserts “JCG is a newly formed limited 

liability company funded by new investors [which is] not affiliated in any way with the former 

operations of Veris Gold.” Id. (emphasis added). 

 The Response acknowledges that Mr. Lowe brought his own “private” discrimination 

action under section 105(c)(3) of the Mine Act.3

 The Response then notes that “[o]n June 4, 

2015, the U.S. Bankruptcy Court entered an order approving the sale of Veris Gol[d]’s assets, 

including the Jerritt Canyon mine and mill, free and clear of all liens, claims and interests 

 3

 Though it acknowledges that Lowe brought his own discrimination action under section 

105(c)(3) of the Mine Act, the Response cannot help but insert irrelevancies into its argument by 

noting that MSHA declined to file a discrimination action on Lowe’s behalf and that MSHA’s 

decision was “based upon its investigation, staffing, resources and priorities.” JCG Resp. 3 & 

n.2. Such references are not merely historical, but, as with the Response’s characterization of the 

action as “alleged claims of discrimination,” are obvious attempts to indirectly diminish the 

merits of Lowe’s 105(c)(3) action as if it were a stepchild claim. Congress did not impute under 

the Mine Act that such private claims were of inferior standing. Since JCG has raised the vehicle 

employed for Lowe’s claim, it is fair to note that his action was one of a bevy of discrimination 

complaints filed against Veris Gold, some brought by the Secretary of Labor and others, as with 

Lowe, on their own. See Sec’y of Labor on behalf of Garcia v. Veris Gold USA, Inc., 36 

FMSHRC 1883 (July 2014) (ALJ); Varady v. Veris Gold USA, Inc., 37 FMSHRC 2037 (Sept. 

2015) (ALJ). 

38 FMSHRC Page 566
pursuant to Section 363 of the Bankruptcy Code, (11 U.S.C. § 363). Docket No. 318.” Id. at 3. 

JCG takes particular note that 

the Sale Order specifically provided that the Assets would be sold free and clear 

of: ‘rights or claims on any successor or transferee liability and any enforcement 

action or enforcement history....and... all contractual rights and claims and labor, 

employment and pension claims, in each case, whether known or unknown, 

choate or inchoate, filed or unfiled, scheduled or unscheduled, noticed or 

unnoticed, recorded or unrecorded, perfected or unperfected, allowed or 

disallowed, contingent or non-contingent, liquidated or unliquidated, matured or 

un-matured, material or non-material, disputed or undisputed, whether arising 

prior to or subsequent to the commencement of these Chapter 15 Cases...’ 

JCG Resp. 3-4 (quoting Sale Order at 6-7, In re Veris Gold Corp., No. 14-51015-gwz (Bankr. D. 

Nev. June 4, 2015), ECF No. 318). 

The Response then notes that Lowe received notice of the bankruptcy action, that on June 

19, 2015, Lowe filed a motion to stay the bankruptcy court’s Sale Order, and that the bankruptcy 

court denied the motion stating that there was no legal or factual basis for the relief Lowe sought. 

Id. at 4. The denial of the motion occurred on the same day Lowe filed his motion seeking a 

stay.4 

The Response asserts that this Court “lacks jurisdiction to amend the complaint and 

adjudicate the Section 105(c)(3) complaint against JCG.” JCG Resp. 5. Apart from the unusual 

and temerarious assertion that this Court, as part of the Federal Mine Safety and Health Review 

Commission (“the Commission”), in a lawful section 105(c)(3) action under the Mine Act, lacks 

jurisdiction to allow Lowe to amend his complaint and to adjudicate such amended complaint 

against JCG, the Response makes the fundamental error of conflating bankruptcy court 

decisional authority with that of the Commission. The Commission has the authority to 

adjudicate section 105(c) complaints of all stripes, and such authority includes determinations of 

motions to amend such complaints.5 As Commissioner Cohen has noted in this case, “the 

4

 The Response notes that Lowe, a non-attorney, pro se complainant, did not attempt to 

appeal the bankruptcy court’s denial of his motion and “thus failed to exhaust his remedies.” 

JCG Resp. 4. This is somewhat disingenuous if meant to suggest that a different outcome was at 

all possible. 

5 See, e.g., McDonald v. TMK Enterprises, 37 FMSHRC 2239 (Oct. 2015); Black Beauty 

Coal Co., 34 FMSHRC 1733 (Aug. 2012); Wyo. Fuel Co., 14 FMSHRC 1282 (Aug. 1992). The 

Procedural Rules provide that the Commission's judges shall be guided by the Federal Rules of 

Civil Procedure “[o]n any procedural question not regulated by Act, these Procedural Rules, or 

the Administrative Procedure Act.” 29 C.F.R. § 2700.1(b). Rule 15(a) of the Federal Rules of 

Civil Procedure provides that leave to amend a complaint shall be “freely given when justice so 

requires.” Fed. R. Civ. P. 15(a); see also Foman v. Davis, 371 U.S. 178, 182 (1962). The 

Commission has taken a liberal view when it comes to amending complaints, “especially when 

. . . they do not prejudice a party in preparing its defenses.” Brannon v. Panther Mining, LLC, 31 

(continued...) 

38 FMSHRC Page 567
Complainant may file a motion to amend the complaint to add as parties the entities which now 

have a successor interest in the mine formerly owned by Veris Gold.” Lowe v. Veris Gold USA, 

Inc., No. WEST 2014-614-DM, 2016 WL 197500, at *2 n.4 (FMSHRC Jan. 12, 2016) (citing 

Tolbert v. Chaney Creek Coal Corp., 12 FMSHRC 615 (Apr. 1990)). Commissioner Cohen 

continued: 

Moreover, the Federal Rules of Civil Procedure may present several potential 

avenues of relief for the Complainant. See 29 C.F.R. § 2700.1(b) (“the 

Commission and its Judges shall be guided so far as practicable by the Federal 

Rules of Civil Procedure”). For instance, under Rule 21, a Judge may sua sponte

grant a post-hearing joinder of a new party. Fed. R. Civ. P. 21 (“the court may at 

any time, on just terms, add or drop a party”). In addition, Federal Rule of Civil 

Procedure 15 permits a party, with the court’s leave, to amend a complaint more 

than 21 days after the pleading is served “when justice so requires.” Fed. R. Civ. 

P. 15(a)(2).”

Id. 

I. Jerritt Canyon Gold’s Arguments

In support of its claim that this Court does not have jurisdiction to adjudicate a Mine Act

section 105(c)(3) discrimination complaint, the Response advances four contentions: 

I. The automatic stay provisions of the Bankruptcy Code preclude ancillary

proceedings by private individuals and any such proceedings are void. . . . II. The

Bankruptcy Court’s Adjudication and sale of Veris Gold assets were “free and

clear” of liens, claims and interests as provided for under Section 363(f) of the

Bankruptcy Code. The Bankruptcy Courts’ [sic] Adjudication resulted in the

buyer of assets of Veris Gold taking title to those assets free from all claims

against Veris Gold, including the claims in this private proceeding. . . . III.

Complainant is barred under principles of res judicata and collateral estoppel from

bringing a claim against Veris Gold and JCG where Complainant made an

appearance, sought relief from, and made objections to actions in the Bankruptcy

Court’s denial of the relief sought by Complainant and the ordering of the sale

free and clear to JCG. . . . IV. Any action of the ALJ would violate important

5

 (...continued) 

FMSHRC 1277, 1279 (Sept. 2009) (ALJ); see also Cyprus Empire Corp., 12 FMSHRC 911, 916 

(May 1990); El Paso Rock Quarries, Inc., 3 FMSHRC 35, 38 (Jan. 1981); Bob Bak Constr., No. 

CENT 2005-139-M et al., 2006 WL 2927263, at *6 (FMSHRC Sept. 11, 2006) (ALJ). Provided 

adequate notice is given and there is no prejudice to the opposing party, administrative pleadings 

are to be liberally construed and easily amended. CDK Contracting Co., 23 FMSHRC 783, 784 

(July 2001) (ALJ). The grant or denial of a motion for leave to amend is within the sound 

discretion of the court and will be reversed only for an abuse of discretion. Jim Walter Res., No. 

SE 2010-351, 2013 WL 3865345, at *4 (FMSHRC June 12, 2013) (ALJ) (citing Zenith Radio 

Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 330 (1971)). 

38 FMSHRC Page 568
policies and the fundamental framework of the Bankruptcy Code which requires 

equitable treatment of all creditors. 

JCG Resp. 5, 7, 9, 11 (footnote omitted). 

A. The Contention that the Automatic Stay Provisions of the Bankruptcy Code 

Preclude Ancillary Proceedings by Private Individuals and Any Such 

Proceedings Are Void 

 Noting that Veris Gold sought bankruptcy protection under Chapter 15 of the Bankruptcy 

Code, JCG asserts that the petition filing brought about an “automatic stay” the same day and 

triggered 11 U.S.C. § 362(a)(1). The Response states that the stay served as an injunction to 

the commencement or continuation, including the issuance or employment of 

process, of a judicial, administrative, or other action or proceeding against the 

debtor that was or could have been commenced before the commencement of the 

case under this title, or to recover a claim against the debtor that arose before the 

commencement of the case under this title. 

JCG Resp. 5 (quoting 11 U.S.C. § 362(a)(1)). 

 The Response acknowledges that, despite the broad language employed, “cases 

commenced or continued by a ‘governmental unit’ may be exempt from the automatic stay” 

provision, per 11 U.S.C. § 362 (b)(4). However, the Response effectively asserts that any action 

other than one brought by a governmental unit is void ab initio. Id. at 6 (citing In re Dunbar, 245 

F.3d 1058, 1063 (9th Cir. 2001)). It then contends that, since the pro se, non-attorney 

Complainant failed to seek relief from the automatic stay, any actions taken by other judicial or 

administrative authorities are void as infringing upon the bankruptcy court’s jurisdiction. Id.. The 

concern is that if the bankruptcy court’s injunction could be modified, it would strip the court of 

“its ability to distribute the debtor’s assets equitably, or to allow the debtor to reorganize [its] 

financial affairs.” Id. at 6 (quoting In re Gruntz, 202 F.3d 1074, 1083-84 (9th Cir. 2000)).6

 Thus, 

the Response maintains that this Court has no jurisdiction because the bankruptcy court’s stay 

enjoined “proceedings brought by creditors of a debtor outside of the bankruptcy case.” Id. at 7

(emphasis added). The response to this contention is addressed infra. 

 6

 In In re Gruntz, the Ninth Circuit, in the context of determining whether a bankruptcy 

court’s automatic stay enjoined a state criminal proceeding for failing to pay child support, held 

that because that proceeding fell within one of the exceptions to an automatic stay, it did not so 

operate, but that, generally, federal courts are not bound by state court modifications of the 

automatic stay. 

38 FMSHRC Page 569
B. The Contention that the Bankruptcy Court’s Adjudication and Sale of Veris 

Gold Assets Were “Free and Clear” of Liens, Claims, and Interests as Provided 

for Under § 363(f) of the Bankruptcy Code, Resulting in JCG, as the Buyer of 

the Assets of Veris Gold, Taking Title to Those Assets Free from All Claims 

Against Veris Gold, Including the Discrimination Action Brought by Lowe 

Under the Mine Safety and Health Act 

 Noting that § 363(f)7

 provides that the trustee may sell property free and clear of any 

interest in such property other than the estate only upon meeting certain conditions, JCG 

observes that the term “interest” has been broadly interpreted by courts and, citing In re Trans 

World Airlines, Inc., 322 F.3d 283, 289-90 (3rd Cir. 2003) (“TWA”), that being free and clear of 

such “interest” insulates a successor from claims of discrimination against the predecessor. JCG 

Resp. 7. JCG also points to In re Leckie Smokeless Coal Co., 99 F.3d 573, 585 (4th Cir. 1996), 

for the proposition that the bankruptcy court may extinguish Coal Act successor liability 

pursuant to 11 U.S.C. § 363(f)(5) and therefore that Court did not need to determine if the 

purchaser was a successor in interest. JCG Resp. 7. JCG contends that, per TWA, “interest in 

property” applies to obligations that are connected to, or arise from, property being sold, and are 

not limited to in rem interests. Id. at 8 (citing TWA, 322 F.3d at 289-90). JCG adds that as the 

bankruptcy court’s Sale Order provided that the purchaser will not be liable for claims based on 

any successor or transferee liability and any enforcement action or enforcement history or 

employment and pension claims, such order applies to Lowe’s claim. Id. JCG also maintains that 

Lowe moved to stay the Sale Order, and that his motion was denied and he made no appeal from 

that order. Id. at 9. 

 It is true that, while not in the Ninth Circuit, the applicable circuit for this case, the Third 

Circuit did hold in TWA that the various airline workers’ employment discrimination claims, as 

well as claims by flight attendants under a travel voucher program that the debtor-airline had 

established in settlement of sex discrimination actions, both qualified as “interests in property” 

under the bankruptcy statute provision that provided for sale of assets of estates free and clear of 

interests in property. However, this Court believes the case is distinguishable. 

 7

 11 U.S.C. § 363(f) provides: 

The trustee may sell property under subsection (b) or (c) of this section 

free and clear of any interest in such property of an entity other than the estate, 

only if— 

(1) applicable nonbankruptcy law permits sale of such property free 

and clear of such interest; 

(2) such entity consents; 

(3) such interest is a lien and the price at which such property is to be 

sold is greater than the aggregate value of all liens on such property; 

(4) such interest is in bona fide dispute; or 

(5) such entity could be compelled, in a legal or equitable proceeding, 

to accept a money satisfaction of such interest. 

38 FMSHRC Page 570
First, it would appear that American Airlines was an arms-length successor to TWA. In 

addition, the court of appeals concluded that in the § 363(f) sale permitting the sale of property 

“free and clear” of an “interest in such property,” the claims against TWA were connected to or 

arose from the assets sold, a determination which this Court has yet to make. An additional and 

important distinction, the bankruptcy court determined there was no basis for successor liability 

only after conducting an evidentiary hearing. TWA, 322 F.3d at 286. 

Apart from the procedural protection of an evidentiary hearing, as noted, part of that 

determination was the bankruptcy court’s determination that the claims against TWA were 

interests in property under § 363(f). In construing the term “interest in such property,” the 

appeals court acknowledged that Congress did not define that phrase and that some courts have 

limited its application to in rem interests in property.1 The appeals court also referenced the 

Fourth Circuit’s decision in Leckie in which that court concluded “that the employer-sponsored 

benefit plans had interests in the property of the debtors which had been transferred under 

section 363(f) in the sense that there was a relationship between their right to demand premium 

payments from the debtors and the use to which the debtors had put their assets.” TWA, 322 F.3d 

at 289 (citing Leckie, 99 F.3d at 582). The Third Circuit obviously struggled with its conclusion, 

so much so that it felt the need to offer a supporting rationale had it concluded that the claims 

were not interests in property. It noted that one of the discrimination claims went to trial and 

damages were awarded, while in the other suit no determination of liability had been made at the 

time of the bankruptcy filing. It then looked to the reasoning in other cases that such claimants 

should not be allowed “to seek a recovery from the successor entity while creditors which were 

accorded higher priority by the Bankruptcy Code obtained their recovery from the limited assets 

of the bankruptcy estate [as that] would ‘subvert the specific priorities which define 

Congressional policy for bankruptcy distribution to creditors.’” TWA, 322 F.3d at 292 (quoting 

In re New England Fish Co., 19 B.R. 323, 329 (Bankr. W.D. Wash. 1982)). 

 However, the Third Circuit also took special note of the importance of discrimination 

claims, stating it recognized “that the claims of the EEOC and the Knox-Schillinger class of 

plaintiffs are based on congressional enactments addressing employment discrimination and are, 

therefore, not to be extinguished absent a compelling justification.” Id. (emphasis added). 

Despite that admission, that court continued to adhere to its view that allowing “the claimants to 

assert successor liability claims against American while limiting other creditors’ recourse to the 

proceeds of the asset sale would be inconsistent with the Bankruptcy Code’s priority scheme.” 

Id. 

It is clear, at least to this Court, that the Third Circuit’s holding was impacted by the 

particular facts and that it was not a broad-based pronouncement. Among those facts was the 

anticipated disastrous outcome if the claimants’ interests were recognized, as it noted: 

The Bankruptcy Court found that, in the absence of a sale of TWA’s assets to 

American, “the EEOC will be relegated to holding an unsecured claim in what 

will very likely be a piece-meal liquidation of TWA. In that context, such claims 

are likely to have little if any value.” In re Trans World Airlines, Inc., et al., No. 

01-00056, slip op. at 23, 2001 WL 1820326 (Bankr. D. Del. Mar.27, 2001). The 

same is true for claims asserted pursuant to the Travel Voucher Program, as they 

would be reduced to a dollar amount and would receive the same treatment as the 

38 FMSHRC Page 571
unsecured claims of the EEOC. Given the strong likelihood of a liquidation absent 

the asset sale to American, a fact which appellants do not dispute, we agree with 

the Bankruptcy Court that a sale of the assets of TWA at the expense of 

preserving successor liability claims was necessary in order to preserve some 

20,000 jobs, including those of Knox-Schillinger and the EEOC claimants still 

employed by TWA, and to provide funding for employee-related liabilities, 

including retirement benefits. 

TWA, 322 F.3d at 293. 

C. The Contention that Complainant Is Barred Under Principles of Res Judicata

and Collateral Estoppel from Bringing a Claim Against Veris Gold and JCG 

Where Complainant Made an Appearance, Sought Relief from, and Made 

Objections to Actions in the Bankruptcy Court and Thereafter Failed to Seek 

Relief from or Appeal the Bankruptcy Court’s Denial of the Relief Sought by 

Complainant and the Court’s Ordering of the Sale Free and Clear to JCG 

 JCG argues that since the § 363 sale order is an in rem proceeding, res judicata applies to 

that sales transfer of property rights and that those property rights are good against the world. 

JCG Resp. 9. Since the property in the bankruptcy court’s Sale Order was sold free and clear of 

any interests in that property, Complainant cannot make any claims against that property. Id.

JCG adds that collateral estoppel also applies on the basis that Complainant “had notice and 

participated in the Bankruptcy Court action, the matter was actually litigated, and Complainant 

had the incentive to litigate and prevail.” JCG Resp. 10. Repeating its earlier remarks about this, 

JCG asserts that Lowe had his chance, as he sought to stay the bankruptcy sales order. When the 

bankruptcy court ruled against his motion, Lowe failed to appeal that ruling and now must live 

with the consequences of that failure. Id. at 10. 

 This contention is an echo of JCG’s other arguments and is addressed within this Order. 

D. The Contention that Any Action by the ALJ Would Violate Important Policies 

and the Fundamental Framework of the Bankruptcy Code which Requires 

Equitable Treatment of all Creditors. 

 Unabashedly, JCG invokes its concern for the “equitable treatment of creditors” and the 

Bankruptcy Code’s purpose of ensuring “that all substantially similar claims of creditors are 

treated equitably[, with c]laims [being] classified and paid according to priority as set forth in 11 

U.S.C. § 507.” JCG Resp. 11. That sounds high-minded, but if the Court correctly interprets 

JCG’s next remark that Veris Gold shifted from a “going concern” restructuring to a liquidation 

and only secured claims would be paid, in plain English this means that no matter what Lowe did 

in terms of appeals from the bankruptcy court rulings, he could never prevail. Thus, happily for 

Veris, and by extension for JCG, under the bankruptcy proceeding, both were able to walk away 

from all unsecured pre-filing claims. Mr. Lowe, JCG asserts, should not be entitled to any 

“preferential” treatment. Rather, he should be entitled to the same equitable treatment dispensed 

to all the other unsecured creditors. As an example of this “equitable treatment,” JCG points to 

the settlement agreement Veris had with Jennifer Morreale, another person alleging 

38 FMSHRC Page 572
discrimination by Veris, under which, by the Veris bankruptcy action she was paid nothing with 

her claim being discharged. JCG seeks the same fair and equitable treatment for Lowe. 

II. Discussion

The Court takes a step back to take note of the basics of the bankruptcy process: 

A fundamental goal of the federal bankruptcy laws enacted by Congress is to give 

debtors a financial ‘fresh start’ from burdensome debts. The Supreme Court made 

this point about the purpose of the bankruptcy law in a 1934 decision: ‘[I]t gives 

to the honest but unfortunate debtor...a new opportunity in life and a clear field 

for future effort, unhampered by the pressure and discouragement of preexisting 

debt.’ Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934). This goal is 

accomplished through the bankruptcy discharge, which releases debtors from 

personal liability from specific debts and prohibits creditors from ever taking any 

action against the debtor to collect those debts. 

Administrative Office of the U.S. Courts, Process – Bankruptcy Basics, 

http://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/process-bankruptcybasics (last visited March 3, 2016) (emphasis added).The same source advises that 

[n]ot all debts are discharged. The debts discharged vary under each chapter of the 

Bankruptcy Code. Section 523(a) of the Code specifically excepts various 

categories of debts from the discharge granted to individual debtors. Therefore, 

the debtor must still repay those debts after bankruptcy. Congress has determined 

that these types of debts are not dischargeable for public policy reasons (based 

either on the nature of the debt or the fact that the debts were incurred due to 

improper behavior of the debtor, such as the debtor's drunken driving). 

Id. (emphasis added). 

Accordingly, it is noted that bankruptcy law is aimed at debts owed creditors, not at relief 

for wrongdoers, such as those that engage in discrimination in violation of the Mine Act. 

Depending on the outcome of the determination of JCG’s possible status as a successor and what 

it knew about the Lowe proceeding, holding JCG responsible may be an appropriate outcome. 

Moreover, as noted above, per the Commission’s prior opinion in this case, one 

Commissioner expressed that it was not so clear that the bankruptcy proceeding filed by Veris 

38 FMSHRC Page 573
Gold is effective against Lowe.8 See Lowe v. Veris Gold USA, Inc., No. WEST 2014-614-DM, 

2016 WL 197500, at *2 n.4 (FMSHRC Jan. 12, 2016). That Commissioner further expressed that 

[i]t appears that in filing its bankruptcy petition, Veris Gold may not have given 

Lowe proper notice of the filing. Indeed, Lowe – together with other former 

employees of Veris Gold who have discrimination complaints before the 

Commission under section 105(c) of the Mine Act – filed a motion in the U.S. 

Bankruptcy Court for the District of Nevada in Case No. 14-51015 gwz in which 

they made this allegation. 

Lowe, 2016 WL 197500, at *2 n.4.

The same Commissioner also stated: 

Even if the bankruptcy filing was effective against Lowe, this fact does not 

necessarily foreclose the Commission from providing relief against the successors 

in interest of Veris Gold. In International Technical Products Corp., 249 NLRB 

1301 (Jun. 1980), the NLRB held that a company which purchased all of the 

assets of a predecessor company ‘free and clear of all liens, claims and 

encumbrances’ pursuant to an order of a bankruptcy court could be held 

responsible for the predecessor’s backpay liability under federal labor law. In 

2010, the Board reaffirmed the International Technical Products Corp. holding in 

Leiferman Enterprises, LLC, 355 NLRB 364 (Aug. 2010), incorporating by 

reference 354 NLRB 872 (Oct. 2009), aff’d sub nom. NLRB v. Leiferman 

 8

 The same Commissioner also expressed: 

The Mine Act provides a Judge broad remedial powers to address 

instances of discrimination as may be appropriate. 30 U.S.C. § 815(c)(3) 

(providing that if a Judge sustains charges of discrimination he may grant “such 

relief as [he] deems appropriate, including, but not limited to, an order requiring 

the rehiring or reinstatement of the miner of his former position with back pay and 

interest or such remedy as may be appropriate”). Accordingly, [that 

Commissioner noted] that the Commission has been granted more discretion in 

fashioning an appropriate remedy by the Mine Act than [this Court] initially 

recognized [when it] concluded that reinstatement of a miner to a successor in 

interest is not possible under the Mine Act. . . . However, the remedy of 

reinstatement may be imposed on an operator’s successor in interest. Sec’y of 

Labor on behalf of Corbin v. Sugartree Corp., 9 FMSHRC 394 (Mar. 1987), aff’d 

sub nom., Terco v. Fed. Coal Mine Safety & Health Review Comm’n, 839 F.2d 

236 (6th Cir. 1987), cert. denied, 488 U.S. 818 (1988); Simpson v. Kenta Energy, 

11 FMSHRC 770, 778 (May 1989). 

Lowe, 2016 WL 197500, at *2 n.4.

38 FMSHRC Page 574
Enterprises, LLC, 649 F.3d 873 (8th Cir. 2011), cert. denied, 132 S. Ct. 1741 

(2012). 

Id. 

As the Commissioner noted, the National Labor Relations Board, in International 

Technical Products, held that a successor was liable for backpay, despite the successor’s 

assertion that the assets were purchased “free and clear of all liens” pursuant to an order and 

judgment of the United States District Court. The NLRB stated that the sole issue presented was 

whether “a judicial sale, free and clear of all liens, pursuant to the authority of a bankruptcy 

court, extinguishes any backpay liability imposed upon a successor-employer for the unfair labor 

practices committed by its predecessor-employer.” International Technical Products, 249 NLRB 

at 1302. The successor asserted that as it purchased the predecessor’s assets free and clear of all 

liens, claims, and encumbrances, this would include the Board’s claim for backpay. Citing its 

decision in Perma Vinyl Corp., 164 NLRB 968 (1967), and the Supreme Court’s decision in 

Golden State Bottling Company, Inc. v. N.L.R.B., 414 U.S. 168 (1973), the Board noted its 

holding in Perma Vinyl

that ‘one who acquires and operates a business of an employer found guilty of 

unfair labor practices in basically unchanged form under circumstances which 

charge him with notice of unfair labor practice charges against his predecessor 

should be held responsible for remedying his predecessor’s unlawful conduct.’ In 

Golden State Bottling Company, Inc., the Supreme Court sustained the Board’s 

Perma Vinyl doctrine and held that a successor-employer which acquires a 

business with knowledge of an outstanding Board order requiring its predecessor 

to reinstate with backpay an unlawfully discharged employee may properly be 

required to assume the reinstatement obligation and to share jointly and severally 

with the predecessor the backpay liability. 

International Technical Products, 249 NLRB at 1303 (footnote omitted). 

The Board did not accept the contention that the successor’s liability was extinguished by 

the bankruptcy court’s order allowing the successor to purchase the assets “free and clear of all 

liens, claims, and encumbrances. Rather, it noted that 

while a bankruptcy court may have the authority to assign a certain priority to the 

Board’s claim for backpay, the authority to modify or set aside the order upon 

which the claim is based rests exclusively with the Board and the appropriate 

reviewing Federal courts, and not the bankruptcy courts. Indeed, the significance 

of a Board order has long been recognized by the Supreme Court. Thus, in 

N.L.R.B. v. J. H. Rutter Rex Manufacturing Co, Inc., 396 U.S. 258, 263 (1969), 

the Supreme Court, citing N.L.R.B. v. Seven-Up Bottling Co., 344 U.S. 344 

(1953), stated that ‘as with the Board’s other remedies, the power to order back 

pay is for the Board to wield, not for the courts.’ Moreover, the Court emphasized 

that ‘when the Board, in the exercise of its informed discretion, makes an order of 

restoration by way of back pay, the order should stand unless it can be shown that 

38 FMSHRC Page 575
the order is a patent attempt to achieve ends other than those which can fairly be 

said to effectuate the policies of the Act.’ 

Id.

The Board concluded that 

the bankruptcy court’s order allowing [the successor] to purchase [the] assets free 

of all liens, claims, and encumbrances cannot affect the Board’s Order . . . 

requir[ing] . . . the ultimate successor [to] make the discriminate[e] whole for the 

remaining portion of the backpay due and owing them. To find otherwise 

would . . . be tantamount to a relinquishment by the Board of its statutory 

obligation to remedy unfair labor practices and also its authority . . . to proceed 

against a successor employer in furtherance of that obligation. Indeed, such a 

finding would, of necessity, imply that, by merely ordering the judicial sale of a 

bankrupt employer’s assets to a nonbankrupt successor employer ‘free and clear 

of all liens, claims, and encumbrances,’ a bankruptcy court can effectively nullify 

a Board order requiring that the nonbankrupt successor employer remedy the 

unfair labor practices committed by its predecessor. 

Id. 

Speaking to the purpose of the Board’s order, it added: 

To insure that the adverse effects of a wrongdoer’s unlawful conduct are 

eliminated and that the public right is vindicated, it is essential that there be full 

compliance with the Board’s order requiring that the employer comply with the 

order’s remedial provisions. . . . Thus it cannot be classified or treated simply as a 

“lien, claim, or encumberance” within the common usage of those terms and, 

consequently, any liability arising therefrom cannot be extinguished or modified 

. . . through the purchase of a bankrupt’s assets “free and clear of all liens, claims 

and encumbrances” at a judicial sale. 

Id. 

In Chicago Truck Drivers, Helpers, and Warehouse Union (Independent) Pension Fund 

v. Tasemkin, Inc., 59 F.3d 48, 49 (7th Cir. 1995), a multi-employer pension fund brought an 

action against a Chapter 7 debtor’s successor in interest. Although the district court held there 

could not be successor liability, the appeals court held that the pension fund’s unsuccessful 

participation in the predecessor employer’s bankruptcy did not preclude it from a successor 

liability claim. The facts in Tasemkin may yet echo those in this matter. Tasemkin “went bellyup” allegedly owing some $300,000 in delinquent pension funds. Id. While the Pension Fund 

attempted to recover those funds in the Chapter 7 bankruptcy, Tasemkin Furniture (“Old 

Tasemkin”) made a debt compromise agreement with its secured lender and turned over its 

interest to a new company, Tasemkin, Inc., (“New Tasemkin”) which then foreclosed on the 

collateral, leaving nothing for anyone else, including the Pension Fund. Id. Thereafter, the 

Pension Fund sued Tasemkin, Inc., on a successor liability theory. Id. The Seventh Circuit 

38 FMSHRC Page 576
provided clarity about successorship vis-à-vis bankruptcy and the general rule that a purchaser of 

assets does not acquire the seller’s liabilities: 

Most states have adopted exceptions to the general no-liability rule that allow 

creditors to pursue the successor if the “sale” is merely a merger or some other 

type of corporate reorganization that leaves real ownership unchanged. . . . 

Successor liability under federal common law is broader still: in order to protect 

federal rights or effectuate federal policies, this theory allows lawsuits against 

even a genuinely distinct purchaser of a business if (1) the successor had notice of 

the claim before the acquisition; and (2) there was “substantial continuity in the 

operation of the business before and after the sale.” E.E.O.C. v. G-K-G, Inc., 39 

F.3d 740, 748 (7th Cir.1994). Successor liability is an equitable doctrine, not an 

inflexible command, and “in light of the difficulty of the successorship question, 

the myriad factual circumstances and legal contexts in which it can arise, and the 

absence of congressional guidance as to its resolution, emphasis on the facts of 

each case as it arises is especially appropriate.” Howard Johnson Co., Inc. v. 

Detroit Local Joint Exec. Bd., 417 U.S. 249, 256, 94 S.Ct. 2236, 2240, 41 L.Ed.2d 

46 (1974); see also Steinbach v. Hubbard, 51 F.3d 843, 846 (9th Cir.1995). 

Tasemkin, 59 F.3d at 49. 

 Noting that the district court had found that allowing the Pension Fund to proceed against 

New Tasemkin on a successor liability theory would frustrate the primacy of the Bankruptcy 

Code, and on that basis dismissed its claim, the Seventh Circuit acknowledged there were cases 

adopting that approach but it rejected the notion that it is an ironclad or simplistically applied 

rule. Id. at 50. The Seventh Circuit took note of the reasoning in support of protecting successors, 

that it is desirable, perhaps even necessary, to shield purchasers of failing 

businesses from liability incurred by the predecessors . . . as a means of 

encouraging market growth and the fluidity of corporate capital. Fear of successor 

liability, this argument runs, would “chill” sales in bankruptcy and as a result 

harm employees of the failed concern who might have retained jobs with the 

successor business . . . [and that] companies may have trouble selling their assets 

for a decent price because “successors will be unwilling to assume a business 

involved in substantial time-consuming and expensive litigation when the assets 

themselves lack substantial value” 

Id. (quoting Musikiwamba v. ESSI, Inc., 760 F.2d 740, 751 (7th Cir.1985)). 

 Again, the Seventh Circuit’s point, that a blanket rule is insufficiently analytical, is well 

taken, as it noted that 

there is no reason to accord the purchasers of formally bankrupt entities some 

special measure of insulation from liability that is unavailable to ailing but not yet 

defunct entities[, and that] it is neither certain nor clear that the chilling effect 

need give [that Court] pause [as] purchasers can demand a lower price to account 

for pending liabilities of which they are aware, and [furthermore] under federal 

38 FMSHRC Page 577
successorship principles [purchasers] will not be held responsible for liabilities of 

which they had no notice. 

Id. at 50-51. 

 The Seventh Circuit then quickly dispatched the second argument — that allowing 

application of “the successorship doctrine [would] frustrate[] the orderly scheme of the 

Bankruptcy Code by allowing some unsecured creditors to leapfrog over others.” Id. at 51. The 

circuit court observed that “once a bankruptcy proceeding is completed and its books closed, the 

bankrupt has ceased to exist and the priorities by which its creditors have been ordered lose their 

force.” Id. Although the circuit court acknowledged that imposing successorship liability “would 

be a second opportunity for a creditor to recover on liabilities after coming away from the 

bankruptcy proceeding empty-handed,” it noted that “a second chance is precisely the point of 

successor liability, and it is not clear why an intervening bankruptcy proceeding, in particular, 

should have a per se preclusive effect on the creditor’s chances.” Id. The circuit court clearly 

thought a successorship theory should be permitted where the opposite approach, one which had 

the effect of “frustrating unsecured creditors while resurrecting virtually the identical enterprise,” 

should not. Id.9

 9

 A number of law review commentators have criticized the view that the power of a 

bankruptcy court under § 363(f) is without boundaries. George W. Kuney, Misinterpreting 

Bankruptcy Code Section 363(f) and Undermining the Chapter 11 Process, 76 Am. Bankr. L.J. 

(2002). The author notes that § 363(f) of the bankruptcy code authorizes sales free of “any 

interests,” whereas § 1141(c) authorizes post-sale vesting of property free and clear of all 

“claims and interests,” pointing out that the distinction is important because the latter is a plan 

process whereas the former is a quick-sale process, which affords little opportunity to object. 

Despite the narrower statutory language, in applying § 363(f), bankruptcy courts have been 

affording the debtor or trustee the same power to sell claims and interests. As applied to 

successors, the author points out that although it has been asserted that “[s]tate and federal 

decisions holding a bankruptcy purchaser liable as a successor of the debtor are directly at odds 

with Congressional intent to allow a debtor to sell its assets free and clear of all claims and 

interests therein,” this view is problematic. Id. at 258. This is because “[s]uccessor liability arises 

out of the actions of the purchaser, not the property itself.” Id. at 261. Thus, where 

a de facto merger is found, or mere continuation of an enterprise justifies 

imposing successor liability, it is the purchaser’s postsale conduct (in continuing 

the business in substantially the same form and manner) that gives rise to liability. 

The same is true for successor liability founded upon fraudulent transfer and 

continued manufacture of a product line. All these successor liability doctrines are 

grounded upon acts or implications from acts of the purchaser, not the property. 

Id. Thus, successor liability is in personam in nature, not in rem. 

 

Other commenters have similarly opined that successor liability claims should be viewed 

as outside of “interests in property” under § 363(f) of the Bankruptcy Act. Rachel P. Corcoran, 

(continued...) 

38 FMSHRC Page 578
9

 (...continued) 

Why Successor Liability Claims are not ‘Interests in Property’ under Section 363(f), 18 Am. 

Bankr. Inst. L. Rev. 697 (2010). As noted, that section permits the sale of property of the estate 

outside the ordinary course of business “free and clear of any interest in such property.” The 

article examines what constitutes an “interest in property” in the context of § 363(f)’s “free and 

clear” sale provision, noting that its construction is important for successor liability claimants 

suing those who have purchased under it. While acknowledging that the great majority of courts 

have interpreted the provision to include successor claims, the author contends that state law 

should guide “the analysis of whether a particular claim or right constitutes ‘property’ or an 

‘interest in property’ in the bankruptcy context, unless some identifiable federal interest requires 

otherwise,” and that Supreme Court precedent supports her view. Id. at 699. The author also 

observes that if a successor liability claim is an interest in property, then such claimant is entitled 

to adequate protection per § 363(e). This author also notes that § 363(f) only refers to “interests 

in property,” and does not include the term “claims.” Id. at 705. “Successor liability claims do 

not fall within any one of the section 507 priorities, and therefore, are general unsecured claims 

entitled to a pro rata share of whatever remains after secured and priority claims are paid.” Id. at 

707. The author also cites to Golden State Bottling Co. v. NLRB, 414 U.S. 168 (1973), stating

that the Supreme Court

held ‘that a bona fide purchaser, acquiring, with knowledge that the wrong 

remains unremedied, the employing enterprise which was the locus of the unfair 

labor practice, may be considered in privity with its predecessor for purposes of 

Rule 65(d)[,]’ that is, with respect to injunctions and restraining orders resulting 

from unfair labor practices. The Court reasoned, ‘[a]voidance of labor strife, 

prevention of a deterrent effect on the exercise of rights guaranteed employees . . . 

and protection for the victimized employee-- all important policies subserved by 

the National Labor Relations Act, are achieved at a relatively minimal cost to the 

bona fide successor.’ . . . [T]he imposition of successor liability in Golden State 

was not due to the transfer of property alone, but rather, federal policy concerns 

and the successor’s knowledge at the time of purchase. 

Id. at 727 (quoting Golden State Bottling, 414 U.S. at 180, 185) (footnotes omitted). 

Another commentator reached a similar analytical outcome. See Patrick M. Birney, 

Section 363 Sale Orders: May Sales be made Free and Clear of Successor Liability Claims?, 22 

J. Bankr. L. & Prac. 4 Art. 4 (2013). The author asserts that § 363 cannot provide insulation from

successor liability claims, and that such claims against a § 363 purchaser under a successor

liability theory should be evaluated under state successor liability law. Speaking to the language

employed in § 363, that such sales are made “free and clear of any interest in such property,” the

author acknowledges that in In re Leckie Smokeless Coal Co., 99 F.3d 573 (4th Cir. 1996), the

court suggests that the “any interest” language “refer[s] to obligations that are connected to, or

arise from, the property being sold,” and, in a similar vein, that In re Trans World Airlines, Inc.,

322 F.3d 283 (3d Cir. 2003), also points to the proposition that “any interest” should include

interests “that could potentially travel with the property being sold.” Birney, supra, at 3.

(continued...) 

38 FMSHRC Page 579
 JCG has acknowledged that if MSHA itself brought the discrimination claim under 

section 105(c)(2) such a claim would be in a different category, but in this Court’s estimation 

there is nothing about a section 105(c)(3) claim which mandates that it should have inferior 

status. Congress included the provision as a failsafe protection mechanism for those miners 

alleging discrimination where, as in this case, the agency, though acting in good faith, simply 

gets it wrong. 

The Mine Act is a distinct creation of Congress. It operates independently of the 

Bankruptcy Act in, among other matters, making determinations of discrimination, appropriate 

parties to be included in its proceedings, and findings on the issue of successorship. There is 

nothing in the Mine Act that relegates it to a status as an appendage of bankruptcy law and 

therefore there is nothing which prohibits this Court, should the facts so warrant, from making 

the legal determination of whether JCG is a successor entity under the Mine Act. Should the 

Court find that JCG is a successor to Veris Gold, it also has the authority to award damages 

against that entity. However, should Lowe prevail, the issue of whether JCG will ultimately be 

held financially liable as a successor for the damages flowing from Mr. Lowe’s discrimination 

claim is unpredictable and a distinct matter from this Court’s ability to make the determination of 

9

 (...continued) 

However, as with the other commentators cited in this footnote, the author notes that, although 

courts have read the word “claims” into § 363(f), it is absent. In contrast, the word does appear in 

§ 1141(c) proceedings, an inclusion which makes sense because that section provides claimants

with procedural rights that do not exist in § 363 sale. Because “successor liability claimants are

general unsecured creditors, who have no specific interest in the property that is being sold . . .

there is no nexus between a successor liability claimant and specific debtor property outside of

bankruptcy.” Id. at 4. These are in personam, not in rem, actions, which is significant because a

judgment against a successor does not constitute an interest in the debtor’s property. Id. If in

personam claims are included within a § 363 sale order, that would constitute “a nondebtor

release of the asset purchaser from the successor liability claim” but such releases are very

limited under the Bankruptcy Code. Id. at 5. In that regard the author notes that In re

Lowenschuss, 67 F.3d 1394, 1401 (9th Cir. 1995), held that, except for asbestos matters,

nondebtor releases are prohibited. Birney, supra, at 6. Thus, the author contends that as “thirdparty releases are permitted (if at all) only in limited circumstances and only in the context of a

confirmed plan of reorganization, the Bankruptcy Code, and in particular section 363, simply

cannot authorize the insulation of an asset purchaser from successor liability claims.” Id.

Advocating that state law should not be supplanted in the context of bankruptcy, unless Congress

expressly so declares such a preemption, the author points out that the “Supreme Court has noted

that, absent a “clear and manifest” purpose to the contrary, “the Bankruptcy Code will be

construed to adopt, rather than to displace . . . state law.” To that point, § 363 does not contain an

express congressional mandate empowering bankruptcy courts to sell debtor assets free and clear

of in personam claims, including successor liability claims. Instead, the courts have inserted that

broad interpretation. Id. at 6-7. Perhaps most importantly, the author observes that successor

liability claims are born from the conduct of the asset purchaser, and not the asset. Id.

This Court fully appreciates that law journal assessments are not, in any fashion, 

precedent. However, the persuasiveness of such arguments is noted. 

38 FMSHRC Page 580
whether JCG is properly designated as a successor and to make findings as to the established, 

and appropriate, damages. 

 Other observations need to be made. It is unclear whether, in the high speed route under § 

363(f) of the Bankruptcy Act, Mr. Lowe received fair treatment. Though beyond this Court’s 

purview, it would seem that he did not, in part because the § 363 procedure avoids the due 

process hearing found in § 1141(c) proceedings. The Court is under the impression that the 

bankruptcy court relies heavily upon those moving that procedure along, in particular, the 

monitor, to ensure that they are treating those who may have claims appropriately, especially 

where a pro se, non-attorney is seeking fair treatment. This Court is also persuaded that, in line 

with the law review commentators cited above, at least in the type of claim brought by Mr. 

Lowe, the tendency of many courts to read interests and claims into 363 actions may work 

injustice. 

 In this connection it is noted that while the bankruptcy action was proceeding, Veris was 

still actively defending the section 105(c)(3) claims brought by Mr. Lowe. JCG at least had 

knowledge of this. It was not until the evidence at that hearing clearly demonstrated Veris’ 

discriminatory behavior against Lowe that, at the conclusion of the hearing, Veris then acted to 

back out. That option, not taken earlier, was available. 

 Accordingly, Lowe’s complaint is amended to add JCG as a respondent.10 The next step 

in the proceeding will be to determine the appropriateness of designating JCG as a successor. 

The final stage will then be for the Court to determine the appropriate damages to be awarded, a 

determination made apart from whether such damages as may be awarded will be enforceable in 

another federal, or possibly a state, forum. 

Within two weeks from the date of this Order, JCG is directed to advise the Court 

whether it intends to participate in the successorship and damages proceedings and 

determinations. 

So ordered. 

/s/ William B. Moran 

 William B. Moran 

 Administrative Law Judge 

 

 10 A separate order will be forthcoming regarding the issue of whether the Whitebox 

Entities may appropriately be added as a respondent in this proceeding for the purpose of 

determining successor liability. 

38 FMSHRC Page 581
Distribution: 

 

Mark Kaster, Dorsey & Whitney, LLP, 1500 South 6th Street, Minneapolis, MN 55402 

Annette Jarvis, Dorsey & Whitney, LLP, 136 South Main Street, Suite 1000, Salt Lake City, UT 

84101 

Daniel B. Lowe, P.O. Box 2608, Elko, NV 89801 

Cathy L. Reece, Fennemore Craig, P.C., 2394 East Camelback Rd., Suite 600, Phoenix, AZ 

85016 

Brad J. Mantel, Esq., Department of Labor, SOL – Regional Solicitor’s Office, 201 12th Street 

South – Suite 401, Arlington, VA 22202-5450 

38 FMSHRC Page 582
FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION 

OFFICE OF ADMINISTRATIVE LAW JUDGES 

1331 PENNSYLVANIA AVENUE, N.W., SUITE 520N 

WASHINGTON, D.C. 20004 

March 18, 2016 

SECRETARY OF LABOR, CIVIL PENALTY PROCEEDING 

MINE SAFETY AND HEALTH 

ADMINISTRATION (MSHA), Docket No. YORK 2013-212-M 

Petitioner, A.C. No. 30-00287-330292 (2KX)

v. 

NORTH AMERICAN QUARRY AND 

CONSTRUCTION SERVICES, LLC, 

Mine: Mt. Marion Pit and Mill 

Respondent. 

SECRETARY OF LABOR, CIVIL PENALTY PROCEEDING 

MINE SAFETY AND HEALTH 

ADMINISTRATION (MSHA), Docket No. YORK 2015-134-M 

Petitioner, A.C. No. 30-00287-387349A

v. 

MARTY HARRINGTON, formerly 

employed by NORTH AMERICAN 

Mine: Mt. Marion Pit and Mill 

QUARRY AND CONSTRUCTION 

SERVICES, LLC, 

Respondent. 

ORDER GRANTING THE SECRETARY’S MOTION TO COMPEL 

These cases are before me upon the petitions for the assessment of civil penalty filed by 

the Secretary of Labor (“Secretary”) pursuant to sections 105 and 110(c) of the Federal Mine 

Safety and Health Act of 1977 (“Mine Act”), 30 U.S.C. §§ 815, 820(c).1 I consolidated Docket 

Nos. YORK 2013-212-M and YORK 2015-134-M on December 8, 2015, and ordered the parties 

to comply with my Prehearing Order by no later than April 20, 2016. 

On February 25, 2016, the Secretary filed a motion to compel North American Quarry 

and Construction Services, LLC (“NAQCS”), to produce requested discovery and to appear at a 

1

 On January 2, 2014, Chief Administrative Law Judge Robert J. Lesnick assigned me 

Docket No. YORK 2013-212-M. On April 14, 2014, I stayed this docket, yet allowed discovery 

to proceed, pending completion of the Secretary’s related section 110(c) investigation. On 

September 25, 2015, the Secretary filed a petition in Docket No. YORK 2015-134-M, seeking 

penalties against Marty Harrington (“Harrington”) under section 110(c). Chief Judge Lesnick 

assigned me Docket No. YORK 2015-134-M on December 2, 2015, attaching a copy of my 

Prehearing Order directing the parties to settle the case or position it for hearing within 140 days. 

38 FMSHRC Page 583
Rule 30(b)(6) deposition focusing on the business relationship between NAQCS and its parent 

company, Austin Powder Company (“Austin Powder”). See Fed. R. Civ. P. 30(b)(6). NAQCS 

timely filed a response on March 7, 2016. On March 15, 2016, the Secretary filed a motion 

requesting permission to file a reply to NAQCS’s response, which I hereby DENY. 

 

I. Background and Issues 

 On August 19, 2015, the Secretary sent NAQCS a set of interrogatories and document 

requests. (Mot. at 6.) NAQCS objected to one interrogatory and eight document requests, which 

sought information about NAQCS’s relationship with Austin Powder. (Mot. at 6–9.) NAQCS’s 

objections stated that the information sought was irrelevant, overly broad, unduly burdensome, 

not reasonably calculated to lead to the discovery of admissible evidence, and protected by the 

attorney-client privilege and work-product doctrine. (Id.) NAQCS provided no additional 

explanation in its initial objections. (Id.) 

 On October 21, 2015, the Secretary again requested this information, asserting its 

relevance to the Secretary’s penalty assessment. (Mot. at Ex. K.) On November 10, 2015, 

NAQCS again refused to comply but indicated it would stipulate (1) to the operator’s size 

alleged in the Secretary’s Petition for the Assessment of Civil Penalty, and (2) that the 

Secretary’s proposed penalty would not adversely affect the operator’s ability to continue in 

business. (Mot. at Ex. L.) On January 13, 2016, the Secretary sent a final letter demanding the 

information and averring that NAQCS’s proposed stipulations did not resolve the penalty issue. 

(Mot. at Ex. M.) On February 16, 2016, the Secretary served NAQCS with notice of its Rule 

30(b)(6) deposition concerning these same topics. (Mot. at 2, Ex. A.) According to the Secretary, 

NAQCS will not comply with the notice. (Mot. at 2.) 

 In his motion, the Secretary argues he is entitled to conduct discovery on the relationship 

between Austin Powder and its subsidiary, NAQCS, to demonstrate that the two entities should 

be treated as a “unitary operator.” (Mot. at 9–10.) The Secretary relies on the Commission’s 

holding in Berwind Natural Resources Corporation, 21 FMSHRC 1284 (Dec. 1999), and claims 

Austin Powder may be held liable for both the violation and penalty in this matter under the 

unitary operator theory.2

 (Id. at 9–11.) The Secretary thus believes his discovery requests are 

necessary to determine the full extent of Austin Powder’s control over NAQCS. (Id. at 11–12.) 

 In response, NAQCS argues that the Secretary’s discovery requests are duplicative, are 

wasteful, and seek irrelevant information. (Resp. to Mot. at 2–5.) NAQCS asserts that the 

Secretary has already completed voluminous discovery on the unitary operator issue in separate 

proceedings before another Commission Judge involving Austin Powder and other subsidiaries 

 2

 In Berwind, the Commission held that a corporation and its subsidiary may be 

considered a single operator under the Mine Act for purposes of establishing joint and several 

liability and assessing civil penalties. See Berwind Natural Res. Corp., 21 FMSHRC at 1316. 

38 FMSHRC Page 584
(not NAQCS).3

 (Id. at 3.) NAQCS claims its relationship with Austin Powder has already been 

examined in those separate proceedings. (Id.) Furthermore, NAQCS argues that the requested 

information is irrelevant due to NAQCS’s proposed stipulations, as well as Austin Powder’s 

limited involvement in the events leading to the issuance of the citations here. (Id. at 4–5.) 

 Based on the parties’ arguments, the following issues are before me — (1) whether 

information regarding NAQCS business relationship with its parent company, Austin Powder, is 

within the scope of discovery; and (2) whether providing the requested documents and an answer 

to the interrogatory and allowing the Federal Rule 30(b)(6) deposition would be duplicative and 

impose an undue burden on NAQCS. 

II. Principles of Law 

A. Scope of Discovery 

 Under Commission Procedural Rule 56, parties may use depositions, written 

interrogatories, requests for admissions, and requests for documents or objects to “obtain 

discovery of any relevant, non-privileged matter that is admissible evidence or appears likely to 

lead to the discovery of admissible evidence.” 29 C.F.R. § 2700.56(a)–(b). A party served with a 

request for production must respond within 25 days of service and state the basis for any 

objections in its answer. 29 C.F.R. § 2700.58(c). 

 Commission Judges may look to the Federal Rules of Civil Procedure for guidance on 

any procedural question not governed by the Mine Act, the Commission’s Procedural Rules, or 

the Administrative Procedure Act. 29 C.F.R. § 2700.1(b). Under Federal Rule 26(b)(1), a party 

may discover “any non[-]privileged matter that is relevant to any party’s claim or defense and 

proportional to the needs of the case[.]” Fed. R. Civ. P. 26(b)(1). The scope of discovery under 

the Federal Rules is “construed broadly to encompass any matter that bears on, or that reasonably 

could lead to other matter that could bear on, any issue that is or may be in the case.” 

Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978). Parties may depose company 

officials under Federal Rule 30(b)(6). Fed. R. Civ. P. 30(b)(6). 

B. Limitations on Discovery: Undue Burden or Expense 

Under Commission Procedural Rule 56(c), a Commission Judge may “limit discovery to 

prevent undue delay or to protect a party or person from oppression or undue burden or expense” 

for “good cause shown.” 29 C.F.R. § 2700.56(c). This provision grants the Judge considerable 

discretion to regulate the course of discovery. See also 29 C.F.R. § 2700.55 (empowering 

 3

 On March 27, 2015, Administrative Law Judge Kenneth R. Andrews consolidated 

sixteen dockets to determine preliminarily whether Austin Powder and a number of its 

subsidiaries constitute a unitary operator. Austin Powder Co., FMSHRC Docket No. KENT 

2013-1078 (Mar. 27, 2015) (ALJ) (order). On March 9, 2016, Judge Andrews issued an order 

affirming the entities’ “unitary operator” status. Austin Powder Co., FMSHRC Docket No. 

PENN 2012-172 (Mar. 9, 2016) (ALJ) (order). However, NAQCS admits it was not a subsidiary 

involved in the consolidated proceedings before Judge Andrews. (Resp. to Mot. at 3.) 

38 FMSHRC Page 585
Commission Judges to regulate the course of hearings, order depositions, and dispose of 

procedural requests). 

Although the Commission has not defined “good cause” or “undue burden,” Commission 

Judges have relied on Commission Rule 56(c) to limit needless, speculative, overly broad, or 

duplicative discovery. See Marfork Coal Co., 28 FMSHRC 742, 743 (Aug. 2006) (ALJ) 

(postponing “needless discovery” where contest cases had been stayed pending the proposal of 

civil penalties); Eagle Energy, Inc., 21 FMSHRC 109, 113 (Jan. 1999) (ALJ) (denying motion to 

compel in camera review of documents where requesting party failed to make a “threshold 

showing identifying the nature of information to be discovered”); Newmont Gold Co., 18 

FMSHRC 1709, 1713–14 (Sept. 1996) (ALJ) (limiting deposition questions to prevent “broad, 

complicated, or lengthy hypothetical questions . . . that do not relate to the facts at issue”); Scott 

McGlothlin v. Dominion Coal Corp., 36 FMSHRC 3049, 3051 (Nov. 2014) (ALJ) (granting 

motion to quash subpoena because information sought had already been obtained through other 

documentation and would not necessarily lead to relevant evidence). 

A party objecting to a discovery request on the basis of undue burden or expense must 

demonstrate such a burden or expense. See Greyeagle Coal Co., 35 FMSHRC 3321, 3327–29 

(ALJ) (refusing to limit discovery because party failed to detail the burden or expense involved 

in responding to discovery request); Rail Link, Inc., 20 FMSHRC 181, 182–83 (Jan. 1998) (ALJ) 

(denying motion for protective order because party failed to show the requested deposition 

would cause undue burden); Newmont Gold Co., 18 FMSHRC 1304, 1306–08 (July 1996) (ALJ) 

(denying, in part, motion for protective order as depositions would not be overly burdensome). 

III. Analysis and Conclusions of Law 

A. Scope of Discovery – Relevancy 

 The Secretary seeks information to determine Austin Powder and NAQCS’s unitary 

operator status. (Mot. at 11.) NAQCS argues the unitary operator issue was the focus of 

discovery with regard to Austin Powder’s other subsidiaries, and the Secretary should not be 

permitted to delve into it again with NAQCS. (Resp. to Mot. at 2–4.) 

Here, the interrogatory, eight document requests, and notice of deposition ask NAQCS to 

produce information pertaining to its corporate relationship with Austin Powder: contractual 

agreements between the two entities; NAQCS’s placement within Austin Powder’s 

organizational structure; NAQCS’s leasing of employees; NAQCS’s worker and unemployment 

compensation policies; any goods, products, or services Austin Powder provides to NAQCS; and 

Austin Powder’s role in this litigation. (Mot. at 6–9, Ex. A.) Under Berwind, the Commission 

considers four factors to determine whether multiple entities will be treated as a unitary operator 

— (1) interrelation of operations; (2) common management; (3) centralized control over mine 

health and safety; and (4) common ownership. Berwind, 21 FMSHRC at 1317. The Secretary’s 

discovery requests relate to each of the four Berwind factors and would allow the Secretary to 

identify whether Austin Powder could be jointly liable with NAQCS for both the violation and 

payment of the civil penalty. Thus, the information the Secretary seeks is quite relevant to the 

unitary operator theory, especially given that no legal determination by a Commission Judge has 

38 FMSHRC Page 586
been made that NAQCS and Austin Powder are a unitary operator. Of course, a stipulation to the 

unitary operator issue and an unopposed motion adding Austin Powder as a party would obviate 

the need for any such discovery. 

NAQCS next argues its offered stipulations about the Secretary’s proposed penalty 

eliminate the relevance of NAQCS’s relationship with Austin Powder. (Resp. to Mot. at 4.) 

Commission Judges, however, are not bound by the Secretary’s proposed penalty assessment. 

See, e.g., Sellersburg Stone Co., 5 FMSHRC 287, 290–93 (Mar. 1983), aff’d, 737 F.2d 1147, 

1151–52 (7th Cir. 1984) (“[I]t is clear that under the [Mine] Act the Secretary of Labor’s and the 

Commission’s role regarding the assessment of penalties are separate and independent”). 

Consequently, information about the relationship between NAQCS and Austin Powder remains 

relevant to the Commission’s own determination of the civil penalty in this matter. NAQCS’s 

suggested stipulations, therefore, would not fully resolve the issue regarding the appropriate civil 

penalty. 

 Additionally, NAQCS argues that the information sought is not relevant to the actual 

violations at issue. (Resp. to Mot. at 4–5.) NAQCS claims the Secretary has no evidence that 

Austin Powder provided either the training or equipment that led to the violations. (Id.) Yet 

contrary to NAQCS’s claim, the Secretary has provided evidence that NAQCS’s employees 

drive vehicles carrying Austin Powder’s logo and are subject to the Austin Powder Company 

Employee Handbook, which contains the company’s safety policy. (Mot. at 10, Exs. J, C.) This 

evidence signals that a further inquiry into the extent of Austin Powder’s involvement in 

NAQCS’s operations is warranted.4

 The Secretary’s discovery requests would lead him to the 

very information NAQCS claims the Secretary does not have. NACQS’s circular reasoning why 

this information is not relevant therefore lacks merit. 

Accordingly, I determine that the information the Secretary seeks in his discovery 

requests is relevant or appears likely to lead to the discovery of admissible evidence under 

Commission Rule 56, and is thus within the scope of discovery in this matter. 

B. Undue Burden or Expense 

NAQCS argues that the Secretary’s discovery requests are duplicative and wasteful. 

(Resp. to Mot. at 2.) In support of this argument, NAQCS asserts that the Secretary has already 

completed voluminous discovery on the unitary operator issue in a separate Commission 

proceeding involving Austin Powder and a number of its other subsidiaries. (Id.) 

NACQS, however, was not a party in any of the dockets contained in the separate action. 

(Resp. to Mot. at 3.) Non-parties who are not privy to a legal action generally cannot be bound 

 4

 A Commission Judge’s decisions are not binding upon the Commission. 29 C.F.R. 

§ 2700.69(d). Nevertheless, Judge Andrew’s order affirming Austin Powder’s unitary operator 

status with a number of its other subsidiaries strongly suggests that Austin Powder’s control over 

its subsidiary NAQCS is a lot more pervasive than NAQCS seems to present. Austin Powder 

Co., FMSHRC Docket No. PENN 2012-172 (Mar. 9, 2016) (ALJ) (order). 

38 FMSHRC Page 587
by the adjudication of issues in that action. Richards v. Jefferson Cty., 517 U.S. 793, 798 (1996) 

(“A judgment or decree among parties to a lawsuit resolves issues as among them, but it does not 

conclude the rights of strangers to those proceedings.” (quoting Martin v. Wilks, 490 U.S. 755, 

762 (1989))). Furthermore, although another Commission Judge ruled on the unitary operator 

issue for other Austin Powder subsidiaries, decisions by a Commission Judge are not binding 

legal precedent. 29 C.F.R. § 2700.69(d). Thus, whether Austin Powder and NAQCS may be 

considered a unitary operator remains at issue in the matter before me. Accordingly, I determine 

that discovery by the Secretary on the issue would not be duplicative or wasteful. 

 Finally, NAQCS provided no information about the burden or expense of complying with 

the discovery. Based on the information before me, the discovery sought by the Secretary does 

not appear to be needless, speculative, overly broad, or duplicative. Rather, the discovery appears 

relevant and sufficiently tailored to the unitary operator issue. Lacking any additional details 

regarding the burden or expense of producing the requested information, I therefore determine 

that NAQCS has not demonstrated any undue burden or expense. Absent good cause, I conclude 

there is no basis to limit the Secretary’s pending discovery requests. 

IV. Order 

 Based on the above reasoning, the Secretary’s motion to compel is GRANTED. It is 

hereby ORDERED that NAQCS shall (1) identify and produce the documents in the Secretary’s 

eight document requests, unless otherwise privileged; (2) provide an answer to the Secretary’s 

interrogatory; and (3) designate a person or persons to appear at the Secretary’s properly noticed 

Rule 30(b)(6) deposition.5

 /s/ Alan G. Paez 

 Alan G. Paez 

 Administrative Law Judge 

 5

 Under the Commission’s rules a party that fails to comply with an order compelling 

discovery may be subject to an order, as is just and appropriate, in favor of the party seeking 

discovery, including deeming as established the matters sought to be discovered or dismissing 

the proceedings altogether. 29 C.F.R. § 2700.59. 

38 FMSHRC Page 588
Distribution (Via Electronic Mail & U.S. Mail): 

Patrick M. Dalin, Esq., U.S. Department of Labor, Office of the Solicitor, 201 Varick Street, 

Room 983, New York, NY 10014 

(dalin.patrick@dol.gov) 

David J. Hardy Esq., Hardy Pence PLLC, P.O. Box 2548, Charleston, WV 25329-2548 

(dhardy@hardypence.com) 

Robert B. Allen, Esq., Kay Casto & Chaney PLLC, P.O. Box 2031, Charleston, WV 25327 

(rallen@kaycasto.com) 

/ivn 

38 FMSHRC Page 589
FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

OFFICE OF ADMINISTRATIVE LAW JUDGES 

1331 PENNSYLVANIA AVE., N.W., SUITE 520N 

WASHINGTON, DC 20004-1710 

TELEPHONE: 202-434-9933 / FAX: 202-434-9949 

March 21, 2016 

ORDER ON COMPLAINANT’S MOTION TO AMEND TO ADD VARIOUS 

WHITEBOX ENTITIES AS PARTIES 

Before: Judge Moran 

Complainant Matthew Varady has filed a motion to amend his original complaint “so as 

to join ‘Whitebox Entities’ to include Whitebox Asset Management, Whitebox Advisors LLC, 

Wbox 2014-1 Ltd., Jerritt Canyon Gold, LLC,1 Sprott Mining Inc., and Eric Sprott as successors 

in interest to Veris Gold USA Inc.” Mot. to Deny Special Limited Appearances at 2; see also

Mot. to Amend and Mot. for Expedited Consideration at 1. 

Following that motion, on February 12, 2016, counsel on behalf of the Whitebox Entities 

(“Whitebox Counsel”) filed a Special Limited Appearance to contest this Court’s jurisdiction and 

to challenge whether the Court can attach liability against the parties Varady wishes to join for 

the acts of discrimination against Varady committed by Veris Gold USA, Inc. (“Veris Gold”). 

Thereafter, on February 25, 2016, Whitebox Counsel also filed a sur-reply. Varady then filed a 

response to the sur-reply. 

For the reasons which follow, the Court holds that it has jurisdiction to determine if other 

entities may be added as successors in interest, but that there is insufficient information in the 

record to make such a determination and that discovery may be had in furtherance of resolving 

those issues.

1

 Varady’s Motion to Amend asserts that Jerritt Canyon Gold, LLC, Whitebox Asset 

Management, Whitebox Advisors LLC, Wbox 2014-1 Ltd., Sprott Mining Inc. and Eric Sprott 

are the purchasers of Veris Gold Inc. and the successors in interest to Veris and that the three 

principals of Jerritt Canyon Gold LLC are Gregory Gibson, Jacob Mercer, and Erik Sprott, as its 

managers. Mot. to Amend 2. 

MATTHEW A. VARADY, 

 Complainant, 

v. 

VERIS GOLD USA, INC., 

and 

JERRITT CANYON GOLD, LLC, 

 Respondents, 

DISCRIMINATION PROCEEDING 

Docket No. WEST 2014-307-DM 

WE-MD 14-03 

Mine: Jerritt Canyon Mill 

Mine ID: 26-01621 

38 FMSHRC Page 590
Successorship Basics 

The Commission has recognized that, in certain cases, the imposition of liability on a 

successor is appropriate. Munsey v. Smitty Baker Coal Co., Inc., 2 FMSHRC 3463 (1980), aff’d 

in part, rev’d in part sub nom. Munsey v. FMSHRC, 701 F.2d 976 (D.C. Cir. 1983); Sec’y of 

Labor on behalf of Corbin v. Sugartree Corp., 9 FMSHRC 394 (Mar. 1987), aff’d sub nom.

Terco v. FMSHRC, 839 F.2d 236 (6th Cir. 1987). 

In Secretary of Labor on behalf of Keene v. S&M Coal Company, Inc., 10 FMSHRC 

1145 (Sept. 1988), the Commission noted that in 

the cases in which the Commission and the courts have found successorship 

liability there has been some type of transaction (a “transactional element”) with 

respect to the business between the predecessor and the entity against which 

liability is being asserted and/or there has been a continuation of activity at the 

predecessor’s site. In Munsey, supra, for example, the company that was held 

liable as a successor had acquired leases and mining equipment from the former 

employer, substantially replacing the predecessor’s operation. Similarly, in Terco, 

supra, successorship liability attached because there was substantial continuity of 

business interests at the same site. 

Id. at 1152. 

The Commission then observed that 

[a]ssumption of the predecessor’s position by the successor underlies the

successorship cases. For example, in Wiley & Sons v. Livingston, 376 U.S. 543

(1964), successorship was found where the predecessor company was merged into

the acquiring company, a process that also involved the wholesale transfer of the

predecessor’s employees to the successor. The Court observed that for an

employer to be considered a successor, there must be a substantial continuity in

the identity of the business enterprise before and after a change. Wiley, supra, 376

U.S. at 551. Another example of the acquisition element underlying these cases

can be found in Golden State Bottling Co. v. NLRB, 414 U.S. 168, (1973) which

involved a bona fide purchase of a company that had committed an unfair labor

practice. Issuance of a reinstatement and back-pay order was upheld against the

acquiring company, which occupied the site where the unfair practice had

occurred.

Id.

Clearly, the “transactional element,” at least as to Jerritt Canyon Gold, LLC, (“JCG”) has 

been conceded. This led to the Court’s determination adding that entity as a Respondent in its 

March 4, 2016, Order. See Order on Compl’t’s Mot. to Amend, Mar. 4, 2016. Whether other

entities may be shown to have such transactional elements, and therefore be added as successors, 

is a subject of this Order, though, as explained below, conclusions about the status of those 

entities are not presently possible. 

38 FMSHRC Page 591
Apart from determining if a company occupies the position of a successor is the separate 

issue of determining whether such a successor should be liable to remedy the unlawful 

discrimination of its predecessor. For that determination, the Commission has followed the 

courts and has approved consideration of nine specific factors: 

(1) whether the successor company had notice of the charge, (2) the ability of the 

predecessor to provide relief, (3) whether there has been a substantial continuity 

of business operations, (4) whether the new employer uses the same plant, (5) 

whether he uses the same or substantially the same work force, (6) whether he 

uses the same or substantially the same supervisory personnel, (7) whether the 

same jobs exist under substantially the same working conditions, (8) whether he 

uses the same machinery, equipment and methods of production and (9) whether 

he produces the same products. 

Keene, 10 FMSHRC at 1153 (quoting Munsey, 2 FMSHRC at 3465-66). 

The Commission has further noted that 

the key factor for determining successorship liability is whether there is a 

substantial continuity of business operations. This question is fact intensive and 

must be resolved on a case-by-case basis. Howard Johnson, Inc. v. Detroit Local 

Joint Executive Board, 417 U.S. 249, 256 (1974). In Sugartree, 9 FMSHRC at 

398, the Commission emphasized that factors (3) through (9) provide the 

framework for analyzing whether there is a continuity of business operations and 

work force between the successor and its predecessor. 

Id. (citing Munsey, 2 FMSHRC at 3467; Sugartree, 9 FMSHRC at 398). 

Similarly, in Secretary of Labor on behalf of Zambonino v. Colonial Mining Materials, 

LLC, 36 FMSHRC 1239 (May 2014) (ALJ), an administrative law judge determined a mine 

operator was a successor and liable for the complainant’s termination. That judge noted that in 

Golden State Bottling Co., Inc. v. NLRB, 414 U.S. 168 (1973), the Supreme Court determined 

that 

the successor company acquired the predecessor with notice of unfair labor 

practice litigation, and continued the business without substantial interruption or 

change in operations, employee or supervisory personnel, [and then] upheld the 

Board’s order requiring the successor to reinstate with back-pay an employee 

discharged by the predecessor company. Both companies were held jointly and 

severally liable for the back-pay award. 

Zambonino, 36 FMSHRC at 1259 (emphasis added). 

The judge took note that the Supreme Court also expressed that 

[t]o further the public interest involved in effectuating the policies of the Act and 

achieve the ‘objectives of national labor policy, reflected in established principles 

of federal law,’ we are persuaded that one who acquires and operates a business 

38 FMSHRC Page 592
of an employer found guilty of unfair labor practices in basically unchanged form 

under circumstances which charge him with notice of unfair labor practice 

charges against his predecessor should be held responsible for remedying his 

predecessor’s unlawful conduct. 

‘In imposing this responsibility upon a bona fide purchaser, we are not 

unmindful of the fact that he was not a party to the unfair labor practices and 

continues to operate the business without any connection with his predecessor. 

However, in balancing the equities involved there are other significant factors 

which must be taken into account. Thus, ‘It is the employing industry that is 

sought to be regulated and brought within the corrective and remedial provisions 

of the Act in the interest of industrial peace.’ When a new employer is substituted 

in the employing industry there has been no real change in the employing industry 

insofar as the victims of past unfair labor practices are concerned, or the need for 

remedying those unfair labor practices. Appropriate steps must still be taken if the 

effects of the unfair labor practices are to be erased and all employees reassured 

of their statutory rights. And it is the successor who has taken over control of the 

business who is generally in the best position to remedy such unfair labor 

practices most effectively. The imposition of this responsibility upon even the 

bona fide purchaser does not work an unfair hardship upon him. When he 

substituted himself in place of the perpetrator of the unfair labor practices, he 

became the beneficiary of the unremedied unfair labor practices. Also, his 

potential liability for remedying the unfair labor practices is a matter which can be 

reflected in the price he pays for the business, or he may secure an indemnity 

clause in the sales contract which will indemnify him for liability arising from the 

seller’s unfair labor practices.’ 

Id. at 1260 (quoting Golden State Bottling, 414 U.S. at 171 n.2 (quoting Perma Vinyl Corp., 164 

N.L.R.B. 968 (1967) (footnotes omitted), enforced sub nom., U.S. Pipe and Foundry Co. v. 

NLRB, 398 F.2d 544 (5th Cir. 1968))).

The Motion and Responses

 Varady’s Motion to Amend2 states that Veris Gold began its bankruptcy proceeding in 

June 2014, which was after Varady had filed his discrimination complaint in November 2013. 

Mot. to Amend 2. Varady asserts that 

Jerritt Canyon Gold LLC, Whitebox Advisors LLC, Sprott Mining Inc., and Eric 

Sprott had knowledge of the Complainant’s discrimination action before the 

Commission because Jerritt Canyon Gold LLC was represented by the same law 

 2

 Complainant Varady’s motion also requests expedited consideration. As this case is one 

of many dockets before the Court and as the Court has already issued many rulings regarding 

Varady’s Complaint, the request to expedite is DENIED. 

38 FMSHRC Page 593
firm as Veris Gold USA Inc., Goicoechea, Di Grazia, Coyle and Stanton, Ltd., 

and in particular both were represented by Attorney David M. Stanton. 

Id. at 3. Varady adds that “[a] business filing with the State of Nevada – Secretary of State’s 

Office filed on June 9, 2015 states that the age of the company, Jerritt Canyon Gold LLC., was 4 

months old,” and Varady therefore contends that “Jerritt Canyon Gold LLC., had been [in] 

operation since March of 2015 and that the Registered Agent was the law firm of Goicoechea, Di 

Grazia, Coyle and Stanton, Ltd.” Mot. to Amend 3. 

The motion asserts that 

[t]here has been a 100 % continuity of business operations between Veris Gold

USA Inc. and Jerritt Canyon Gold LLC, Whitebox Advisors LLC, Sprott Mining

Inc., and Eric Sprott. The same surface mill has operated without any hiatus by

Jerritt Canyon Gold LLC, Whitebox Advisors LLC, Sprott Mining Inc., and Eric

Sprott. Jerritt Canyon Gold LLC, Whitebox Advisors LLC, Sprott Mining Inc.,

and Eric Sprott are engaged in all of the exact same operations (gold ore

extraction, stock piling, primary crushing, secondary crushing, tertiary crushing,

ball milling, roasting, off gas handling, carbon in leaching, stripping of carbon,

tailings storage, and refining Dore gold) as Jerritt Canyon Gold LLC, Whitebox

Advisors LLC, Sprott Mining Inc., and Eric Sprott use the exact same equipment.

Id. 

As to this assertion, the Court would observe that Complainant is making allegations in 

support of his claim that the parties he wishes to add are successors. The Court notes that with 

its previous order, issued March 4, 2016, Jerritt Canyon Gold, as the acknowledged new owner 

of the Jerritt Canyon Mill, has been added as a party. However, as to the other entities and 

individuals Complainant seeks to add, Complainant apparently does not realize that his 

assertions about their involvement with Jerritt Canyon Gold, and previously with Veris Gold, are 

not evidence of such claims. Instead, evidence to support Varady’s claims about the relationship 

of those other entities and individuals with Veris Gold and JCG must be established. Discovery 

is the initial means to learn about the nature of the relationship of those other entities and 

individuals with Veris Gold and JCG. Discovery vehicles include official records, requests for 

admissions, interrogatories, stipulations, and depositions. 

Complainant also asserts that 

[t]he vast majority of Jerritt Canyon Gold LLC’s employees are all former Veris

Gold USA Inc.’s employees and are engaged in the same types of job

classifications as they were when they worked for Veris Gold USA Inc. The

transfer from one company to the other is likened to flipping a light switch at the

time of the sale date. At the stroke of midnight all to the Veris Gold USA Inc.’s

employees became Jerritt Canyon Gold LLC’s employees with a very minor

exception of less than a few employees. According to a local newspaper article

38 FMSHRC Page 594
the number of employees effected [sic] in the transfer of ownership was 

approximately 400 employees. 

Mot. to Amend 4. This assertion is also not evidence. 

The same deficiencies exist with regard to items 6 through 9 of Complainant’s Motion; 

they are assertions of the claims made in those items, not evidence thereof.3 See Id.

The Court has urged Complainant, following the determination that he was discriminated 

against by Veris Gold, to make efforts to find legal counsel in support of his efforts to establish 

that these various entities should be determined to be successors and to present a well-founded 

claim for his submission of damages. It again urges Complainant to make efforts to secure legal 

counsel. While retaining counsel would not assure a successful outcome, it can be stated with 

some confidence that continuing to proceed without such counsel, in these complex legal 

matters, presents a disadvantage. The Court will not, and cannot, act as if it were Complainant’s 

attorney in fact, as the Court cannot operate in such dual, and conflicting, roles. Discovery and 

how to conduct it effectively are Complainant’s burdens. 

Further, it is difficult for the Court to appreciate why such efforts to obtain legal counsel 

have apparently not been made, as Complainant has a judgment of discrimination in hand and 

attorney’s fees would be recoverable for the efforts to hold a successor liable, if such attorney is 

successful in that effort. Such attorney’s fees would not diminish the recovery of the 

respondent’s damages at all, as they are a separate line item for a respondent’s damages in 

discrimination claims. However, the Court is not suggesting that Complainant retain an attorney 

on a fee basis, as the cost would be prohibitive and the final outcome remains uncertain. 

Another arrangement would be on a contingency basis under which the attorney would be able to 

file for such attorney’s fees plus be entitled to a share of any damages. These are matters for 

Complainant and an attorney to work out, not the Court. The benefit for Complainant would be 

having the expertise and skill provided by legal counsel. 

The Court will now address the responses from “the Whitebox Entities,” as provided 

through the limited appearance of its counsel, the law firm of Fennemore Craig, P.C. 

The “Whitebox Entities,” which are defined in counsel’s response as Whitebox Asset 

Management, Whitebox Advisors LLC, WBox 2014-1 Ltd, and any other Whitebox entity or 

individual including Jacob Mercer and Jeff Sterling, assert that the Whitebox Entities did not 

purchase any of assets of Veris Gold, and do not operate the Jerritt Canyon Gold mine or mill. 

Special Limited Appearance on Behalf of the Whitebox Entities to Contest Jurisdiction in Resp. 

to Compl’t’s Mot. to Amend at 1 (“Whitebox Response”). 

The Response maintains that the Whitebox Entities had no involvement with Debtor 

Veris Gold entities4

 prior to filing of bankruptcy proceedings on June 9, 2014; were not creditors 

3

 The motion concludes with Complainant’s citation to case law, which he maintains 

support his claim that these entities should be deemed successors. Such legal conclusions cannot 

come about until the facts supporting such a claim have been adduced. 

38 FMSHRC Page 595
or equity holders of Veris Gold entities; and were not officers, directors, or control persons of 

Veris Gold entities. Id. at 2. Jerritt Canyon Gold, LLC, was the purchaser of Veris Gold’s 

assets. Id. However, the Response relates that “WBox 2014-1 Ltd.” loaned $12 million to Veris 

Gold for “their post-petition operations.” Whitebox Resp. 2. 

The Response then identifies Deutsche Bank as the “first position secured creditor” of the 

debtors, and informs that the bank declined to advance funds to keep the debtors in business, 

post-petition.5

 Id. The Response then asserts that post-petition financing was approved by 

bankruptcy courts around October 6, 2014, with WBox 2014-1 Ltd. loaning $12 million to the 

debtors, then increasing that loan to $15 million in May 2015, secured by a “first position 

priming lien” on all of debtors’ assets. Id. The recounting of events by the Response then 

informs that the sale process was approved in November 2014, but no buyer was found. Id. 

Following that, the Response advises that WBVG LLC, an affiliate of WBox 2014-1 Ltd, made 

an offer to purchase Veris Gold assets and after notice and hearing, that sale was approved. Id.

at 2-3. Thereafter, WBVG LLC changed its name to Jerritt Canyon Gold LLC. Id. at 3. 

The Response further asserts that Complainant had notice of Veris Gold’s bankruptcy, 

both actual and constructive. Id. The Response states written notice was given in the Sale 

Motion and hearing and also in the notice of entry of sale order in June 2015. Id. As to the 

written notice given in the Sale Motion and hearing, the Response, pointing to Paragraph G of 

the Sale Order, advises that the order found that “the Secretary of Labor, Inspector of Mines, 

EEOC, MSHA and OSHA and any known claimants that have asserted Claims against the 

Debtors were given actual notice of the Sale Motion and hearing.” Whitebox Resp. 3. It is not 

clear that Complainant was one of those known claimants given actual notice.6 

The Response then points to the Sale Order and its statement that 

[t]he transactions contemplated under the Agreement do not amount to a

consolidation, merger or de facto merger of the Purchaser and the Debtors and/or

the Debtors’ estates, there is not substantial continuity between the Purchaser and

4

 The bankruptcy proceedings concerned not only Veris Gold USA, Inc., but also Veris 

Gold Corp., Queenstake Resources, Ltd., and Ketza River Holdings, Ltd. (collectively, “Veris 

Gold entities”). See Whitebox Resp. Ex. A, at 1. 

5

 The Response also asserts that Deutsche Bank, with $80 million in secured claims, and 

Small Mine Development, with an asserted $40 million of secured claims, and various 

unidentified “environmental creditors,” asserting $20 million in penalties, all received no funds 

for the payment of their claims from the sale of the assets. Whitebox Resp. 3. This seems 

unimaginable, if the Response is suggesting that two significant creditors, with $120 million in 

secured claims, walked away from the bankruptcy proceeding with nothing. Whitebox Counsel 

is directed by the Court to address this issue. 

6

 It does appear to be admitted that the Complainant filed a Motion to stay the Sale on 

June 15, 2015, that the motion was denied and that Complainant did not appeal the Sale order. 

Whitebox Resp. 3-4. 

38 FMSHRC Page 596
the Debtors, there is no common identity between the debtors and the Purchaser, 

there is no continuity of enterprise between the Debtors and the Purchaser, the 

Purchaser is not a mere continuation of the Debtors or their estates, and the 

Purchaser does not constitute a successor to the Debtors or their estates. 

Whitebox Resp. 4 (quoting Sale Order at 9, In re Veris Gold Corp., No. 14-51015-gwz (Bankr. 

D. Nev. June 4, 2015), ECF No. 318 [hereinafter “Sale Order”]).

Thus, the Purchaser and Debtors happily agreed that none of the factors which would 

point toward a successorship were present. This Court would be surprised to learn that the 

bankruptcy courts engaged in any detailed review of those claims. Rather, they more likely 

accepted in good faith that those representations were made to them in good faith and grounded 

in fact, as opposed to being mere assertions. As mentioned in its Order of March 4, 2016, it is 

this Court’s understanding that bankruptcy courts of necessity rely upon the representations of 

the parties and the monitor. Depending upon what is learned about the relationships between 

Veris Gold, Jarrett Canyon Gold, the Whitebox Entities, and the various individuals who may 

have commonality among those enterprises, the bankruptcy courts may have been misled.7

 

 7

 In the Court’s estimation, some aspects of the bankruptcy proceeding involving at least 

the monitor, Veris Gold, and Jerritt Canyon Gold are disconcerting. The Court’s concerns, 

which are not yet conclusions or findings, stem in part from yet another discrimination action 

against Veris in which there was a settlement agreement between Veris and discrimination 

complainant Jennifer Morreale. A Commission Order involving that case informs there was a 

settlement agreement in February 2015 with Morreale within which agreement “Veris Gold 

represented that it had received approval from a bankruptcy monitor to make the [settlement] 

payment, as the operator had previously filed U.S. Chapter 15 bankruptcy proceedings 

concurrent with Canadian bankruptcy filings and was subject to the financial oversight of a 

bankruptcy monitor.” Sec’y of Labor on behalf of Morreale v. Veris Gold USA, Inc., 38 

FMSHRC ___, slip op. at 2, No. WEST 2014-793-DM (Mar. 8, 2016) (emphasis added). 

However, Morreale was never paid, the settlement agreement never lived up to, and in June 

2015, the presiding judge in that case learned “that the bankruptcy monitor overseeing the 

bankruptcy proceedings had withheld payment to both the Secretary [of Labor] and Ms. 

Morreale pending the resolution of an asset sale of the mine by the operator to a separate entity, 

Jerritt Canyon Gold, LLC.” Id. Given the above-mentioned dates, it can be stated with some 

confidence that the bankruptcy monitor must have been fully aware of Varady’s discrimination 

complaint, been aware of, and likely approved, Veris’ employing legal counsel to defend that 

complaint during the June 8 through 10, 2015, hearing held before this Court in Elko, Nevada. 

Similarly the monitor was likely fully aware of the separate discrimination complaint brought by 

Daniel Lowe in Docket No. WEST 2014-614-DM against Veris, which was also heard by this 

Court on June 18, 2015, and that the monitor approved the legal defense fees associated with that 

matter as well, until it became clear that Veris would not prevail in either matter. Thus, it seems 

reasonable to conclude that money was flowing freely for the legal defense of Veris in both the 

Varady and Lowe matters, but stopped once it became clear that Veris would be held 

accountable for its discrimination against those miners. The Court doubts that the bankruptcy 

courts were fully apprised of these doings. 

38 FMSHRC Page 597
Further, a case such as this lays bare the problems identified by the law review 

commentaries when 11 U.S.C. § 363(f) proceedings supplant those brought under § 1141(c), 

despite the former’s narrower language and the absence of the procedural protections which are 

available under the latter, all as cited in the Court’s previous Order on Complainant’s Motion to 

Amend, issued March 4, 2016. For example, if through discovery, it is shown that there are 

individuals who had financial or management interests in Veris, Jarrett Canyon Gold and/or the 

Whitebox Entities, such linkage could be troublesome and point to the appropriateness of 

holding others accountable as successors. 

As if the foregoing proclamations advanced by the Response were not enough, the 

Response then lards: 

Furthermore, Paragraph 38 of the Sale Order concludes that there is no 

“successor” liability as to the Purchaser. The sale was free and clear of any 

successor liability. [The Sale Order] expressly rules: . . . The Purchaser is not a 

‘successor’ to the Debtors or their estates by reason of any theory of law or 

equity, and the Purchaser shall not assume, nor be deemed to assume, or in any 

way be responsible for any liability or obligation of any of the Debtors and/or 

their estates including, but not limited to, any bulk sales law, successor liability, 

transferee liability, derivative liability, vicarious liability or any other liability or 

responsibility of any kind or character for any Liens, Claims, or Interests against 

the Debtors or against an insider of the Debtors, or similar liability except as 

otherwise expressly provided in the Agreement, whether known or unknown as of 

the Closing, now existing or hereafter arising, fixed or contingent, asserted or 

unasserted, or liquidated or unliquidated. 

Whitebox Resp. 4-5 (emphasis added) (footnote omitted) (quoting Sale Order at 21). 

Though the above language crafted by the purchaser and debtor would seem to have 

created an insurmountable barrier to successorship claims, that is, if one accepts the lawyering 

employed and disregards due process concerns and the issues concerning the propriety of using 

§ 363, instead of § 1141(c), additional barriers were nevertheless employed. Paragraphs N and Q 

of the Sale Order provide that the term “claims” captures successor or transferee liability and that 

the parties would not have entered into their agreement if the purchaser acquired the property 

with such claims. Id. at 5. 

Even with that, more efforts to protect against such claims were layered onto those 

already described, as the Response then points to Paragraph 39 of the Sale Order. That 

paragraph lists, in the fashion employed by the other provisions, just discussed, any other 

38 FMSHRC Page 598
conceivable soul8

 as being “forever barred, estopped and permanently enjoined from asserting, 

prosecuting or otherwise pursuing such Liens, Claims, or Interests . . . against the Purchaser or 

any affiliate, successor or assign thereof, or the Assets.” Id. at 5-6 (quoting Sale Order at 21). 

The Response concludes with the assertion that only the U.S. Bankruptcy Court can 

address the issues raised by the Complainant and that this Court has no jurisdiction over the 

Whitebox Entities. Yet, while asserting that this Court has no jurisdiction, Whitebox 

simultaneously requests attorneys’ fees and costs for having to file its response. Id. at 6. 

The request for attorneys’ fees is DENIED. 

Subsequent to its Response, the Whitebox Entities then filed a Special Limited 

Appearance on Behalf of Whitebox Entities for Sur Reply to Complainant’s Motion to Amend 

(“Whitebox Sur-reply”). For the most part, the Sur-reply reasserts its previous arguments or 

those made by Jarrett Canyon Gold in its responses. These include the claim that this Court has 

no jurisdiction over successorship vis-à-vis findings of Mine Act discrimination. Whitebox Surreply 1. Again, the Sur-reply from the Whitebox Entities points to the Order Approving the Sale. 

However, regarding that Order Approving Sale, through the process of discovery, as conducted 

by Complainant, not the Court, it is necessary to learn who drafted the Order approving the sale, 

the date that order was presented to the court(s), the circumstances of that presentation, including 

the party or parties who presented the Order to such bankruptcy court(s), the parties present at 

that presentation, the record, including any transcripts, of any inquiry between the bankruptcy 

court(s) and those presenting the Order for the courts’ approval, whether this occurred only by 

written submissions or through a hearing, if any hearing in fact occurred, and the date the Order 

was approved. 

8

 Displaying lawyering that frequently causes public revulsion, in stating that “to make 

sure the Purchaser [is] protected from further actions,” the Whitebox Entities Response points to 

this passage from Paragraph 39 of the Sale Order which provides: 

Except to the extent expressly included in the Assumed Liabilities or to 

enforce the Agreement or Permitted Encumbrances, pursuant to Bankruptcy Code 

Sections 105 and 363, all persons and entities, including but not limited to, the 

Debtors, the Monitor, all debt security holders, equity security holders, the 

Debtors’ employees or former employees, governmental, tax and regulatory 

authorities, lenders, parties to or beneficiaries under any benefit plan, trade and 

other creditors asserting or holding Liens, Claims, or Interests of any kind or 

nature whatsoever against, in or with respect to any of the Debtors or the Assets 

(whether legal or equitable, secured or unsecured, matured or unmatured, 

contingent or non-contingent, senior or subordinated), arising under or out of, in 

connection with, or in any way related to the Debtors’ business prior to the 

Closing Date or the transfer of the Assets to the Purchaser, shall be forever barred, 

estopped and permanently enjoined from asserting, prosecuting or otherwise 

pursuing such Liens, Claims, or Interests whether by payment, setoff, or 

otherwise, directly or indirectly, against the Purchaser or any affiliate, successor 

or assign thereof, or the Assets. 

Whitebox Resp. 5-6 (quoting Sale Order at 21-22). 

38 FMSHRC Page 599
 The Whitebox Entities repeat that they are not “an owner of a mine, miners, operators, or 

employers that fall within the definitions and jurisdiction of FMSHA.” Whitebox Sur-reply 2. 

Then, contradicting that assertion, they admit that “[a]t most, one of the Whitebox Entities, 

WBox 2014-1 Ltd., is a 20% holder of a membership interest [which the Sur-reply characterizes 

as analogous to 20% shareholder of a corporation] in the Delaware limited liability company that 

owns and operates the mine.”9 Whitebox Sur-reply 2. In this regard, the Sur-reply contends that 

the Whitebox Entities did not purchase, do not have title to and do not own any of 

the assets previously owned by Veris Gold, do not operate the mine or mill 

previously operated by Veris Gold and do not employ any employees previously 

employed by Veris Gold at the mine or mill [and that] . . . [t]here are no facts or 

law that could be used to find or conclude that any of the Whitebox Entities 

are the successor of Veris Gold. 

Id. at 3 (emphasis added). The Court agrees with the last quoted statement but adds the 

important qualifier, “at least for now.” This is because, until discovery occurs, a definitive 

statement about that claim cannot be made. 

 The Sur-reply then speaks to the role of Jacob Mercer, described as a manager of Jerritt 

Canyon Gold, LLC, and states that being a manager or a member of a limited liability company 

does not make such a person liable for the debts or obligations of such a company. Id. at 3-4. 

The balance of the Sur Reply repeats previous contentions and concludes with the assertion that 

Nevada common law is to be applied to determine successor liability and that such state law does 

not speak to the issue of whether a member or manager of a purchaser would be subject to such 

liability as a successor.10 Id. at 4-5. 

 Varady filed a short response to the Whitebox Sur-reply, asserting that the Mine Safety 

and Health Review Commission has the final jurisdictional authority in this matter, not the 

United States Bankruptcy Court. Varady’s response denies that he was ever served with any 

document regarding Veris Gold USA, Inc.’s bankruptcy but that, through information from other 

sources, he admits that he did file a motion to stay the sale, that the bankruptcy court denied that 

motion to stay, that he did not appeal that adverse ruling and that, in any event, the sale occurred 

before such appeal period ended. Complainant’s Motion To Deny Counsels’ Special Limited 

Appearance on behalf of the “Whitebox Entities” Sur Reply to Complainant's Motion to Amend 

(“Varady Response to Sur-reply”). 

 9

 The Sur Reply adds that it is not correct that “one of the Whitebox Entities purchased 

purchased a 20% interest in the assets and that Jerritt Canyon Gold LLC purchased an 80% 

interest.” Whitebox Sur-reply 3. Instead, it is stated that WBox 2014-1 Ltd. owns 20% of the 

membership interest in Jerritt Canyon Gold LLC, which it characterizes as akin to 20% of the 

stock of a corporation. Id. 

10 As with its Response, the Whitebox Entities’ Counsel seeks attorney’s fees and costs 

for filing its Sur-reply. Consistent with the Court’s ruling in the Whitebox Entities’ Counsel 

seeking such fees for its Response, this request is similarly DENIED. 

38 FMSHRC Page 600
Discussion 

In order to determine the appropriate parties potentially to be added as successor entities 

and to determine if liability as successors is warranted, it is necessary to pull back the covers, so 

to speak, in order to fully understand the relationship(s), if any, between Jarrett Canyon Gold, the 

“Whitebox Entities,” Veris Gold, and the owners of those entities, in order to determine if they 

share common identities. This is a purpose of discovery, which the complainant is entitled to 

utilize. 

Commission Procedural Rule 56(b) states that “[p]arties may obtain discovery of any 

relevant, non-privileged matter that is admissible evidence or appears likely to lead to the 

discovery of admissible evidence.” 29 C.F.R. § 2700.56(b) (“emphasis added”). That provision 

allows parties to use depositions, written interrogatories, requests for admissions, and requests 

for documents or objects to obtain such information. A party served with interrogatories and 

requests for production must answer within 25 days of service and must state the basis for any 

objections in its answer. 29 C.F.R. §§ 2700.58(a), (c). 

In addition, it has also been observed that: 

[f]or procedural questions not regulated by the [Mine] Act, [the Commission’s]

Procedural Rules, or the Administrative Procedure Act,” the Federal Rules of

Civil Procedure guide Commission Judges as “far as practicable.” 29 C.F.R. §

2700.1(b). Guidance, though, does not require strict adherence. See Rushton

Mining Co., 11 FMSHRC 759, 765 (May 1989) (observing “[Commission]

Procedural Rule 1(b) reserves to the Commission considerable discretion in

deciding whether and to what extent it is to be ‘guided’ by a particular Federal

Rule of Civil Procedure.”)

Like the Commission's rules, the Federal Rules of Civil Procedure establish a 

broad discovery regime. See Schlagenhauf v. Holder, 379 U.S. 104, 114-15 

(1964) (“We enter upon determination of this construction with the basic premise 

‘that the deposition-discovery rules are to be accorded a broad and liberal 

treatment’ to effectuate their purpose that ‘civil trials in federal courts no longer 

need to be carried on in the dark.”’) (quoting Hickman v. Taylor, 329 U.S. 495, 

501, 507 (1947)). Notwithstanding recent changes intended to involve courts’ fine 

tuning of overabundant discovery, Federal Rule 26(b)(1) continues to authorize 

parties to “obtain discovery regarding any nonprivileged matter that is relevant to 

any party’s claim or defense--including the existence, description, nature, 

custody, condition, and location of any documents or other tangible things and the 

identity and location or persons who know of any discoverable matter.” Fed. R. 

Civ. P. 26(b)(1). Like the Commission’s rules, the Federal Rules’ regime also 

specifies that “[r]elevant information need not be admissible at the trial if the 

discovery appears reasonably calculated to lead to discovery of admissible 

evidence.” 

Greyeagle Coal Co., 35 FMSHRC 3321, 3324 (Oct. 2013) (ALJ). 

38 FMSHRC Page 601
The Way Forward 

The information provided by both sides on the issue of determining which entities, 

(beyond Jarrett Canyon Gold, which was added as a party pursuant to the Court’s March 4, 2016, 

Order),11 may be considered as successors, has largely consisted of assertions. Complainant, it 

would seem, has two options. One is to pursue only Jarrett Canyon Gold to establish that entity 

as a successor to Veris Gold. The other would be to learn more about the various other entities 

Complainant believes should also be deemed as successors. Under both approaches, discovery 

needs to occur, beginning with the basics by Complainant seeking information from those 

entities, to include the identification all the owners of Veris Gold, its officers, the management 

individuals running that mine, and stockholders, and then seeking the same identifying 

information from each of the Whitebox Entities, including WBVG LLC, an affiliate of WBox 

2014-1 Ltd, which later changed its name to Jerritt Canyon Gold LLC. There needs to be a full 

understanding of the various entities, including the individuals which embody and comprise 

them, all with the purpose of ascertaining if there are threads of commonality between some or 

all of those entities as, for example, if names associated with Veris Gold reappear with Jarrett 

Canyon Gold and the Whitebox Entities. If such commonalities appear, this would tend to show 

that the sale of Veris was not an arms-length transaction. If present, given that Veris was trying 

to avoid being saddled with a pattern of violations designation by MSHA not long before opting 

for bankruptcy and was also facing multiple discrimination claims, see Varady v. Veris Gold 

USA, Inc., 37 FMSHRC 2037, 2050 (Sept. 2015) (ALJ), such relationships could be considered 

in evaluating successorship claims. 

Based upon the Court’s comments to the Response, supra, one would anticipate that 

Complainant would also want to discover a host of details such as the dates of bankruptcy court 

hearings, the participants in such hearings, the parties given notice of such hearings, and the 

transcripts of such proceedings before any bankruptcy court involved with this matter and the 

 11 Complainant Varady has provided business records from MSHA showing Jerritt 

Canyon Gold LLC as beginning operations at the Jerritt Canyon Mill on the day following the 

cessation of Veris Gold USA, Inc.’s operation at that Mill, with Veris Gold’s operation at that 

Mill ending on June 23, 2015, and Jerritt Canyon Gold LLC’s operation starting on June 24, 

2015. Current Mine Information, Mine Safety and Health Administration, 

http://arlweb.msha.gov/drs/drshome.htm#MID (input “2601621” in the MSHA Mine ID 

searchbox). The same MSHA records list “WBOX 2014-1 LTD; Eric Sprott” as the “Current 

Controller.” Id. Although Varady also listed other sources as associated with Whitebox entities, 

naming http://www.corporationwiki.com, which lists Jacob Mercer as the “Senior Portfolio 

Manager at Whitebox Advisors LLC, along with Greg Gibson and Eric Sprott, as managers for 

Jerritt Canyon Gold LLC,” and http://www.bloomberg.com, which lists other information about 

executives for Whitebox Advisors, LLC, these sources and others of that ilk (e.g., Bizapedia, 

http://www.foxrothschild.com) are insufficient to establish the information contained in them for 

purposes of this proceeding. 

38 FMSHRC Page 602
aforementioned relationships, if any, between Veris Gold, and the Whitebox entities, including 

Jarrett Canyon Gold LLC, formerly known as WBVG LLC.12

To that end, the Court ORDERS and DIRECTS Fennemore Craig, P.C., Whitebox 

Counsel, as the representative for the Whitebox Entities, including Whitebox Asset Management, 

Whitebox Advisors LLC, WBox 2014-1 Ltd, to provide the service address for those entities to 

the Court and Complainant within 10 days of the date of this Order to enable Complainant to 

pursue discovery of Jarrett Canyon Gold, the Whitebox Entities, and such individuals related to 

those entities. 

/s/ William B. Moran 

William B. Moran 

Administrative Law Judge 

12 Failure to respond to discovery requests may have consequences. The Commission’s 

rules require that discovery requests be responded to fully and in writing within 25 days of 

service unless the party initiating discovery agreed to a longer time. 29 C.F.R. § 2700.58. While 

that procedural rule does not itself deem unanswered requests as admitted, an order to compel 

discovery may follow and Federal Rule of Civil Procedure 36(a) provides additional guidance on 

this issue. See, e.g., Gray v. North Fork Coal Corp., No. KENT 2010-430-D, 2013 WL 4648492 

(FMSHRC Aug. 22, 2013); Sw. Quarry & Materials, 26 FMSHRC 116 (Feb. 2004) (ALJ); 

Hamilton v. Stone Mountain Trucking Co., 6 FMSHRC 2300 (Sept. 1984) (ALJ). 

38 FMSHRC Page 603
Distribution: 

Mark Kaster, Dorsey & Whitney, LLP, 1500 South 6th Street, Minneapolis, MN 55402 

Annette Jarvis, Dorsey & Whitney, LLP, 136 South Main Street, Suite 1000, Salt Lake City, UT 

84101 

Matthew Varady, 701 S. 5th Street, #6, Elko, NV 89801 

Cathy L. Reece, Fennemore Craig, P.C., 2394 East Camelback Rd., Suite 600, Phoenix, AZ 

85016 

38 FMSHRC Page 604