Mine Safety and Health Blog

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Archive for July, 2013

Hanson a “small” operator?

Posted by Ellen Smith on July 31, 2013

There are some decisions that make me scratch my head. The most recent is a July 16, 2013 decision by FMSHRC ALJ Michael Zielinski who used MSHA’s information in determining a penalty calculation.

I won’t get into all of the details of the case because they aren’t important. What is important is that the information submitted by the Solicitor’s Office in Denver, which came from MSHA’s assessment office, indicated that Hanson Aggregates is a “small operator,” for purposes of making a penalty calculation.

The quarry in this case is owned by Hanson, which, according to MSHA’s DRS, is owned by Heidelberg Cement. According to Bloomberg News, Heidelberg Cement just beat all expectations and posted a $973 million second quarter profit.

The company employs some 52,000 people at 2,500 locations in more than 40 countries, according to its website.

If calling this a “small operator,” makes any sense, then I need my head examined.

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Viper Coal Hit with Delinquent Penalty Complaint

Posted by Ellen Smith on July 23, 2013

The government has filed a lawsuit against Viper Coal LLC for $318,981 in outstand MSHA penalties.

However, as of March 2013, MSHA records show that Viper, controlled by Jody D. Puckett, owes $501,634 in outstanding penalties, and was number 21 on the Mine Safety and Health News list of 98 controllers owing $100,000 or more in MSHA penalties (20 MSHN 189; April 8, 2013).

According to the lawsuit filed in U.S. District Court in Pikeville, KY., the penalties arose between January 2008 and August 2011.

One of the mines that was operated by Viper/Puckett, the #11 Mine (MSHA ID #1518472) shows a long list of operators who never paid their penalties. When the mine was operated by “Foggy Mountain Coal,” and controlled by Connie Bryant the mine amassed $179,902 in delinquent penalties that MSHA now lists as “uncollectible.”

James Bevins, who briefly controlled a Viper mine in 2009, amassed a little over $12,000 in delinquent penalties.

Once again, MSHA records show a string of operators who come into a mine, are cited for for safety and health violations, some of which maim or kill miners, and then the operator/controller leaves the mess.

Why Treasury and MSHA are not going after Viper for all delinquent penalties, and why the government waited five years is a mystery.

The system is broken and must be fixed.

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Justice Served?

Posted by Ellen Smith on July 16, 2013

An interesting quirk in the tax code requires that MSHA civil penalties, which are deemed “final,” are to be reported to the IRS as income if the penalties are not paid. Failure to report, and failure to pay tax on the benefit of having penalties not paid, can result in an action by the IRS.

This is an important part of the tax code, and an important part of the enforcement scheme of the 1977 Mine Act. Equally important, however, is the fact that we cannot have laws and regulations in this country where some operators play by the rules, but their competitors don’t.

Case in point is the latest guilty plea involving Brandy Horvath and The New West Virginia Mining Co. (See story in this issue under “Criminal Proceedings”).

After looking at all court documents, and asking questions of the U.S. Attorney, it appears that the controller and supporting actors in the IRS case against The New West Virginia Mining Co., actually owe more in back taxes than the federal investigators found when they brought this case involving fake controllers of the mine, drug deals and tax evasion. What they missed is more than $1 million in unpaid penalties owed to MSHA.

While MSHA made attempts to enforce compliance at the mine through warning letters and eventually placing the mine on POV status, there in fact was no one actually enforcing MSHA’s penalty scheme as envisioned under the 1977 Mine Act. While two miners became permanently disabled, Brandy Horvath, or her boyfriend James Trent, were allowed to keep operating The New West Virginia Mining Co. while MSHA delinquent penalties continued to escalate.

It’s not that Horvath hasn’t been on the radar screen. In 2011, when Mine Safety and Health News did a one day “snapshot” of delinquent penalties, Horvath’s mine had delinquent penalties of $177,627, of which $172,000 had been forwarded to Treasury for collection.

At the time of the first permanently disabling accident in The New WV Mine, on July 17, 2010, the company had $158,234 in delinquent MSHA penalties. At the time of the second permanently disabling accident on March 2, 2011, the mine was up to $177,846 in delinquent MSHA penalties.

As of today’s date, Horvath and the New West Virginia Mine civil penalty delinquency tally has reached $1,369,224.
The person identified by the IRS as Horvath’s boyfriend, James Trent, is “permit blocked” by the state of West Virginia, and also owes MSHA $68,730.92 in delinquent penalties from when he was controller of Century Energy Corp., Coal America Inc., and Atlantic Leaseco LLC. Steven Rocky Justus, the mine’s superintendent, was also implicated in this tangled web by the IRS, and found guilty in this scheme of defrauding the government. He owes MSHA $1,331.81 in delinquent penalties from when he controlled Double A Mining in 2004.

While Horvath and her associates are, or may end up in jail for tax evasion, this is just one of many cases that fell through the proverbial crack at multiple levels.

We have outlined many instances of companies – large and small – who manage to run safe mines and pay their MSHA penalties on time (18 MSHN 169; “Delinquent Penalties Are A Chronic Problem For MSHA and Treasury”). It is simply not fair that some companies obey the law, run safely, and pay penalties when warranted, while others can run up hundreds of thousands of dollars – or millions as in this case – in delinquent penalties, with little to no consequences.

As always, a little history is helpful. This very issue is why changes were made in the 1969 Coal Mine Act, and then passed as the 1977 Mine Act.

In a May 16, 1977 report, the Senate stated that “Mine operators still find it cheaper to pay minimal civil penalties than to make the capital investments necessary to adequately abate unsafe or unhealthy conditions, and there is still no means by which the government can bring habitual and chronic violators of the law into compliance.” The difference today is that we are seeing some operators simply refusing to pay any penalties at all, or paying in a piece-meal fashion.

The Senate also noted in 1977 that enforcement sanctions under the current laws were “insufficient to deal with chronic violators,” and that “all too often the operator finds it cheaper to pay the penalties than to strive for a violation-free mine.”

There are now over 100 violators with delinquent penalties over $100,000 from when we reported March 2013 numbers (see: 20 MSHN 189), and in the case of Horvath – her company was well past $1 million in delinquent fines. It can certainly be argued that today, like in 1977 under MESA, the Labor Dept. and Treasury have been seriously deficient in enforcement and administrative responsibilities under this statute.

When looking at the flaws in the 1969 Act, the Senate report said “that to effectively induce compliance, the penalty must be paid by the operator in reasonably close time proximity to the occurrence of the underlying violation.” The Senate also noted that “District Courts are still reluctant to schedule trials on these issues, and the Department of Justice has been reluctant to pursue such cases in the courts, the matters generally languish at that stage, and the penalties go uncollected.”

The fact is, while it is good to see Horvath and the other bad actors in this case taken care of, it’s too late. The bottom line is that if anyone at MSHA, the Solicitor’s Office and the Justice Dept. had taken the MSHA penalty scheme seriously – the goal of which is to prevent accidents through rigorous enforcement – then at least two miners would still have all of their fingers, and Horvath would not have been in business – at least the mining business – for very long.

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Top Delinquent Debtor Agrees to Guilty Plea in Tax Case

Posted by Ellen Smith on July 10, 2013

Brandy Horvath, controller of The New West Virginia Mining Co., and on the Mine Safety and Health News’ MSHA delinquent debtors list, has apparently agreed to plead guilty to charges stemming from a tax fraud case (see 20 MSHN 189, “As Budget Crisis Hits, Government is Owed $69.8 Million in delinquent Penalties.)”

Horvath was listed as fifth on the list of delinquent mine controllers owing $1,369,244 in delinquent penalties related to The New West Virginia Mining Co. However, according to an April 2012 indictment, the real controller of the mine was Horvath’s boyfriend, James Trent, who owes the IRS at least $800,000 in personal, corporate and employment taxes.

No word from MSHA on whether the agency will change the controller information, or how the agency plans on getting the $1.3 million plus in delinquent fines.

Horvath’s (or Trent’s) Apache Mine paid only $100 in penalties since Aug. 28, 2008 when Horvath/Trent became controllers of the operation. The mine received a “Potential Pattern of Violations” notice April 12, 2011.

The case is before the U.S. District Court in Beckley, W.Va. (Case No. 5:11-cr-00247).

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Proximity detectors needed to save lives

Posted by Ellen Smith on July 5, 2013

Mine Safety and Health News Washington Correspondent Kathy Snyder took a long hard look at haulage fatalities in Mine Safety and Health News, Vol. 20, No. 12. The bottom line of her story is that many of the fatal accidents in underground mines would have been prevented if proximity detection devices were mandatory on haulage equipment.

On July 2,2013, Nathan Clarida, a 35 year old miner in the prime of his life died in a preventable haulage accident in the Peabody Coal’s Wildcat Hills Mine near Eldorado in Saline County, Ill., when he was hit by a ram car that was moving through a ventilation curtain. It wasn’t the first haulage accident at the mine — it was the third in less than 2 years, and with tragic consequences.

In the same mine, on Sept. 17, 2012, a miner was injured while walking up to mantrip to hook up tow rope. Not knowing a ram car was in reverse coming toward him, he was hit and pinned in between the ram car and mantrip.

On July 22, 2011, in the same mine, a miner was injured while building a stoppage utilizing 6″ solid blocks between the #5 & #6 entries. A coal haulage operator with a load drove through the curtain & struck the construction. The collision knocked the blocks onto the injured miner, causing him to suffer a severely lacerated right calf, a broken fibula & a broken patella.

In less than two years, proximity detection devices would have saved a life and prevented two lost time injuries in just one mine.

What is MSHA waiting for?

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