1.  SAFETY FAILURE RESULTS IN 5 DEATHS, CRIMINAL PLEA, $15M FINE, $69M LIABILITY SETTLEMENT, AND $26M SAFETY INVESTMENT

An energy company recently pled no contest to six felony charges involving worker safety, paying $15 million to settle criminal and civil charges. (California v. KMGP Services Co., Cal. Super. Ct., Nos. 01-132885-5, N07-1598, 9/21/07).  This settlement involved a 2004 pipeline explosion in California that killed five workers.  The accident happened while a water main was being installed and a backhoe hit a high-pressure pipeline.  The plea agreement resulted in the company being put on probation for two years and required the company to audit the implementation of pipeline safety regulations.  In addition, the company is reported to have paid approximately $70 million to the families of the deceased and others injured in the accident. 

The magnitude of this settlement (and the amount of the payments) emphasizes the need to be proactive in risk reduction and to be prepared to react in the most risk-preventive manner when an accident happens.  Cal/OSHA fined the company $140,000 for the incident, issuing two citations (failure to communicate the proximity of its pipeline and not marking the location as an excavation project), and the company signed a consent agreement with the U.S. DOT Pipeline Safety Administration.  Reportedly, prosecutors then used the regulatory failures to support their case, and the company revised its prevention program and committed $26 million to improve pipeline safety. 

The case reinforces the critical role of integrated physical and legal risk reduction as stressed by Patton Boggs’ management training seminars and audits. For more information on PB training and audits, contact Henry Chajet (hchajet@pattonboggs.com) or Mark Savit (msavit@pattonboggs.com).

2.  UTAH MINE DISASTER LIKELY TO PROMPT CONGRESSIONAL LEGISLATION

The Crandall Canyon underground coal tragedy has left some members of Congress in no mood to permit MSHA to lighten up on enforcement or to put off additional regulations that could be directed at all of mining.

The Utah incident involved two separate tragedies.  On August 6, a seismic event that miners call a “bump” or “bounce” trapped six miners, who remain unaccounted for to this day.  Then, 10 days later, three rescue workers, including an MSHA official, died trying to reach them underground when another bump occurred.  Six others were injured.  Bumps are seismic events causing mine collapses due to pressure from the weight overhead.  There is a debate as to whether the bumps were naturally occurring or were caused by excessive removal of coal pillars that provided support for the mine during a process called “retreat mining.”  The press reported that the mine’s co-owners purchased the Utah operation a year earlier after the previous owner had ceased mining.  MSHA approved the mining plan for the new owner, raising questions about the Agency and the mine owner.  The Crandall Canyon mine was dug deep inside a mountain in central Utah.

At a hearing September 5 before a subcommittee of the Senate Appropriations Committee, Sen. Robert Byrd of West Virginia recounted how, after the Sago coal tragedy last year, Congress had given MSHA new authority under the MINER Act, funded more inspectors, and increased the budget for coal enforcement.  Thus, Byrd told MSHA chief Richard Stickler, a hearing witness, “it is infuriating to watch MSHA even after the tragedy at Sago to continue a tepid, disjointed, and minimalist approach to mine safety.”

Byrd called on Stickler to “crack some heads” at MSHA.  “Get rid of the political deadweight now, and empower your inspectors to go after recalcitrant operators who are daily putting the lives of our miners at risk.”

Byrd reminded Stickler that he has a hold on Stickler’s nomination as MSHA Assistant Secretary, one he put in place 15 months ago.  The Senator’s grip on the nomination has effectively prevented Senate action to confirm Stickler.  As a result, President Bush recess-appointed Stickler last October to fill the vacant post.  His appointment expires at the end of this year.  Byrd’s sway over the Agency also extends to its funding, since Byrd chairs the Senate Appropriations Committee.

Since the Sago accident in West Virginia in January 2006, Congress has enacted the MINER Act, and MSHA has pushed through two interim final rules governing seals and emergency evacuation, as well as an enhanced enforcement scheme that greatly increases the cost of citations and for the first time ever puts teeth into its pattern of violations enforcement weapon.  In addition, MSHA issued a new proposal to beef up mine rescue teams and equipment early this month.

Even before Crandall Canyon, lawmakers drafted legislation called the S-MINER Act that is designed to supplement the MINER Act.  The new measures were described as oriented toward prevention of mine accidents, whereas the MINER Act primarily addressed emergency response.  The S-MINER Act has been opposed almost universally by the mining industry.  In the House, the legislation originated in the Committee on Education and Labor, which reportedly is to mark up the measure October 10-11.

That committee has scheduled a hearing on Crandall Canyon and mine safety for October 3.  Additionally, no fewer than a half-dozen investigations are underway into Crandall Canyon and MSHA’s performance related to it.  Besides MSHA’s accident investigation, both chambers of Congress have initiated probes and the Department of Labor (DOL) has launched what it described as an “independent” investigation.  Moreover, the state of Utah has begun a limited investigation of its own, and several Republican lawmakers have called for an investigation by the DOL’s Inspector General.

The only real question is whether Congress will wait until after the probes are complete to pass more punitive legislation, or instead act preemptively.

Under changes proposed by MSHA, the number of rescue stations serving underground coal mines would expand by 30%, while the number of rescue teams would grow by 39%.  Changes the Agency proposes in rescue equipment will also affect underground metal/non-metal (M/NM) operations.

In response to a MINER Act mandate, MSHA issued a proposed rule September 6 to amend 30 CFR 49 that would require rescue stations to be situated within an hour’s ground travel time from the mines they serve.  The current requirement is two hours.  MSHA estimates the provision would result in the creation of 28 more rescue stations.  Ninety-two rescue stations now serve the nation’s 653 underground coal mines. 

In addition, rescue team training would be expanded to 64 hours annually from the current 40-hour requirement.  Such annual training also would require participation in two mine rescue contests a year, and include once-a-year training under apparatus in smoke, simulated smoke, or an equivalent environment.  Team members would also have to be knowledgeable about the operations and ventilation in the mines they cover.  An existing requirement to complete an initial 20-hour program of instruction, applicable to persons seeking to become rescue team members, would remain unchanged.

The proposal recognizes four types of mine rescue teams and spells out requirements for them.  Each would be required to participate semi-annually in rescue training at the small mines they cover.  However, at large mines, rescue training requirements differ.  For instance, mine-site and state-sponsored rescue teams would have to train annually at large mines; composite teams, semi-annually; and contract teams, quarterly.  The current eligibility requirement of a minimum of a year’s underground mine experience within the past five years remains unchanged; however, contract team members are to be made up of persons with a minimum of three years’ underground coal mine experience within the past 10-year period preceding their membership on the team.

One of the two teams serving large mine operators must be either a mine-site team or a composite team.  For purposes of the regulation, small mines are those employing fewer than 36 miners underground. 

So-called “small and remote” mines may seek an alternative mine rescue capability if approved by the District Manager.  Under the proposal, MSHA considers an underground coal mine as small and remote when the total underground employment of the operator’s mine and any surrounding mines within an hour’s ground travel time is under 36.  Due to their unique nature, underground anthracite mines would have to meet slightly different requirements.

The proposal would also amend Part 75.1501 to add provisions affecting the person now required to be available to take charge in an emergency during each shift miners are underground.  MSHA proposes that this individual have current knowledge of the mine’s emergency response and mine rescue notification plans.  New annual training requirements have been proposed as well.

As for equipment, both coal and M/NM mines would have to upgrade mine rescue equipment and increase the amount of it.

The Agency has scheduled four public hearings on its proposal: Oct. 23, Salt Lake City; Oct. 25, Lexington, KY; Oct. 30, Charleston, WV; and Nov. 1, Birmingham, AL.  The comment period closes Nov. 9.

Due to recent changes in MSHA’s civil penalty criteria, mine safety and health professionals need to pay close attention to their companies’ past citation history to avoid possibly huge compliance costs on subsequent inspections.

The advice came from Mark Savit of Patton Boggs during separate talks this summer at the annual conference of the International Society of Mine Safety Professionals and the National Stone, Sand & Gravel Association’s Environment, Safety & Health (ESH) Forum.  Willa Perlmutter, also with Patton Boggs, joined Savit on the podium during the ESH Forum in Chantilly, VA September 5.

Referencing changes that went into effect in April, Savit suggested that mine officials recalculate under the current higher penalty scheme all penalties they received last year under the old penalty arrangement.  A firm that paid $14,000 for 114 citations last year would pay $40,000 under the new system, but $300,000 if the same citations are issued a year from now, he said.

“Suddenly, paying attention to what you got in the past in relation to what you are going to get is very, very important,” he remarked, referring to penalty provisions that address an operator’s history of previous violations.  He also cautioned against getting repeat citations under the Sec. 104(d) unwarrantable failure provision.  “You need to see if you have exposure to that violation down the road because the third such citation will earn you a flagrant $220,000 penalty,” he said.

Under the revised scheme, violation history is based both on the total number of violations and the number of repeat violations of the same citable provision of a standard within the preceding 15-month period. 

Penalty assessments are calculated based on the number of points assigned.  Under the history criterion, an operator may be assessed up to 25 penalty points based on violations per inspection day (VPID).  VPID is determined by dividing the total number of inspection days at a mine into the total number of violations that have been paid, finally adjudicated, or are final orders of the Review Commission over the 15-month period.  Thus, a mine with 16 such violations in six inspection days is charged 2.6 VPID. Since more than 2.1 VPID yields the highest point total, the mine in this example would be assessed the maximum 25 points.

Supervisory and trainee time are not included as inspection days, nor are non-inspection activities.  No excess history points are assigned to mine operators assessed fewer than 10 such violations over the preceding 15 months.  VPID is not used in assessments of independent contractors.  Instead, they are assigned points, also up to 25 maximum, based on the total number of violations accrued at all mines they served during the preceding 15 months.  They get no points for fewer than six total violations during the period.