FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

721 19^th STREET, SUITE 443

DENVER, CO 80202-2500

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

December 12, 2011

ORDER DENYING RESPONDENT’S MOTION TO

REOPEN THE RECORD

            These cases are before me on petitions for assessment of civil penalty filed by the Secretary of Labor, acting through the Mine Safety and Health Administration (“MSHA”), against Hidden Splendor Resources, Inc. (“Hidden Splendor”) pursuant to sections 105 and 110 of the Federal Mine Safety and Health Act of 1977, 30 U.S.C. §§ 815 and 820 (the “Mine Act”). At a hearing held March 22-25, 2011, the parties presented testimony and exhibits on 11 orders of withdrawal issued under section 104(d)(2) of the Mine Act and 12 citations issued under section 104(a). Post-hearing briefs were filed on June 2, 2011. Because of the large number of cases pending before me, I have not yet issued a decision on the merits in these cases.

            On December 2, 2011, counsel for Hidden Splendor filed an informal motion to reopen these proceedings to present financial information that it considers to be relevant to the “effect on the ability to continue in business” criterion set forth in section 110(i) of the Mine Act. 30 U.S.C. § 820(i). The Secretary opposed the motion.

            The parties presented their arguments on this issue during a conference call held on December 9, 2011. Counsel for Hidden Splendor argues that her motion to reopen should be granted based on the three factors set forth in the Commission’s decision in Kerr-McGee Coal Corp. 15 FMSHRC 352, 357 (March 1993) (citing 6A Moore’s Federal Practice ¶ 59.04[13] (2d ed. 1992)). In that decision, the Commission held that in determining whether to grant a motion to reopen, “it is appropriate to consider the time when the motion was made, the character of the additional evidence, and the effect of granting the motion.” Id.

            Hidden Splendor states that, in a recent filing with the Securities and Exchange Commission (“SEC”), it was revealed that its financial position has deteriorated since the date of the hearing. It wishes to file this SEC report with this court for me to consider when addressing the effect on the ability to continue in business criterion. It contends that the motion was timely made, after the hearing but before the issuance of the decision. It also argues that the character of the additional evidence is strictly of a financial nature. This evidence will not address any of the substantive issues presented at the hearing but will only concern the appropriateness of any civil penalties assessed by this court. Hidden Splendor relies, in part, on the Commission’s decision in Georges Colliers, Inc., 23 FMSHRC 822 (Aug. 2001). In that decision, the Commission held that a Commission judge abused his discretion when he declined to consider evidence of the mine operator’s financial condition. The Commission held that a judge must consider all of the penalty criteria set forth in section 110(i) of the Mine Act. Finally, Hidden Splendor argues that the effect of granting its request to reopen will not adversely affect the disposition of this proceeding or the safety of miners working at the Horizon Mine. All of the citations and orders were timely abated by Hidden Splendor. It recognizes that granting the motion could possibly delay the issuance of the decision on the merits.

            The Secretary opposes the motion. She notes that the hearing was held nine months ago, briefs have been filed, and the citations and orders were issued in 2008. These cases were included in the backlog project and are to be decided as quickly as possible. Granting the motion would significantly delay this proceeding because counsel for the Secretary would need to engage a financial analyst within the Department of Labor to evaluate the financial information provided and then that analysis would need to be reviewed by counsel to determine its relevance on the ability to continue in business criterion. The Secretary also points to the fact that the parties entered into a stipulation at the hearing on the effect on the ability to continue in business criterion. Hidden Splendor stipulated as follows: “If paid in equal monthly installments over 12 months, the proposed penalties would not affect Hidden Splendor’s ability to continue in business.” (Stip. ¶ 7). In response, Hidden Splendor argued that its financial condition has changed since March 2011.

            For the reasons set forth below, Hidden Splendor’s motion to reopen the record is denied. Hidden Splendor is a fully-owned subsidiary of America West Resources, Inc. That company is headquartered in Salt Lake City, Utah, and it is publicly traded on the NASDAQ exchange as AWSR. It is the nature of the mineral extraction industry that profits earned or losses incurred by coal mining companies are often very volatile. A coal mining company can earn record profits one quarter and report a large loss in another quarter. Publicly traded companies are required to file quarterly reports with the SEC on Form 10-Q. This form and other related forms report financial results for the previous quarter and the year to date. Even if this form or another SEC form shows a net loss for the quarter or for the year, that fact does not establish that the penalties in these cases would affect Hidden Splendor’s ability to continue in business. Financial statements showing a net loss are not generally sufficient to establish that civil penalties assessed by the Commission will adversely affect an operator’s ability to continue in business. See generally Spurlock Mining Co., Inc., 16 FMSHRC 697, 700 (April 1994). It is entirely possible that the financial condition of America West Resources will improve in 2012. Thus, I find that the character of the proposed evidence would not advance the disposition of these cases.

            I also find that the motion to reopen was not timely filed and granting the motion would adversely affect the timely resolution of these cases. The motion was filed well after the close of the record. Considering the time required for the Secretary to analyze the financial report that Hidden Splendor seeks to submit and the time it will take this court to review the report and the Secretary’s response, reopening the record could delay the issuance of the decision. It should be noted that all of the other civil penalty criteria in section 110(i) are applied by Commission judges looking at facts as they existed at the time the citations were issued. Under Hidden Splendor’s logic, an operator would be able to reopen the record to provide more up-to-date information on its financial condition as the case works its way through litigation. Hidden Splendor already stipulated that the penalties proposed by the Secretary would not affect its ability to continue in business if it can pay the penalties over a 12-month period. It did not seek to introduce any information regarding its finances at the time of the hearing. The Secretary’s total proposed penalty in these cases was $455,902. The parties agreed to settle many citations and orders prior to the hearing for a total penalty of $82,644. I ordered that these penalties be paid pursuant to orders granting partial settlement. The Secretary’s total proposed penalty for the 23 citations and orders adjudicated at the hearing is $245,265.

            The Commission has held that a judge must make findings of fact on each of the statutory criteria to provide the operator with the required notice as to the basis of the penalty assessed and to provide the Commission and the courts with the necessary foundation on which to review whether the penalties assessed by the judge were appropriate. Kerr-McGee at 825, quoting Sellersburg Stone Co., 5 FMSHRC 287, 292-93 (March 1983), aff’d 736 F. 2d 1147 (7^th Cir. 1984). At the hearing, Hidden Splendor agreed that the Secretary’s proposed penalty would not affect its ability to continue in business. Nothing in the record or in the statements of counsel for Hidden Splendor when discussing its motion to reopen suggest that the payment of this penalty or a similar penalty over a 12-month period would seriously risk putting Hidden Splendor or America West Resources out of business. Reopening the record in these cases for the purpose of putting into the record a report filed with the SEC by America West Resources or other financial information would not advance my consideration of the statutory civil penalty criteria in section 110(i) of the Mine Act.

            For the reasons set forth above, Hidden Splendor’s motion to reopen the record in these cases is DENIED.

                                                                        /s/ Richard W. Manning

                                                                        Richard W. Manning

                                                                        Administrative Law Judge

Distribution:

Alicia A. W. Truman, Esq., Office of the Solicitor, U.S. Department of Labor, 1999 Broadway, Suite 800 , Denver, CO 80202

Willa Perlmutter, Esq., Crowell & Moring, 1001 Pennsylvania Ave., NW Washington, DC 20004-2595

RWM