<DOC>
[DOCID: f:p9415.wais]
WAYNE R. STEEN, employed by AMBROSIA COAL COMPANY
August 20, 1997
PENN 94-15
FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION
OFFICE OF ADMINISTRATIVE LAW JUDGES
2 SKYLINE, 10th FLOOR
5203 LEESBURG PIKE
FALLS CHURCH, VIRGINIA 22041
August 20, 1997
SECRETARY OF LABOR, : CIVIL PENALTY PROCEEDING
MINE SAFETY AND HEALTH :
ADMINISTRATION (MSHA) : Docket No. PENN 94-15
Petitioner : A. C. No. 36-04109-03522 A
:
v. :
: Ambrosia Tipple Mine
WAYNE R. STEEN Employed by :
AMBROSIA COAL COMPANY, :
Respondent :
REMAND DECISION
BEFORE: Judge Barbour
In this civil penalty proceeding, the Secretary of Labor
(Secretary), on behalf of her Mine Safety and Health
Administration (MSHA), petitioned for the assessment of a civil
penalty against Wayne R. Steen, a foreman of Ambrosia Coal &
Construction Company (company). The petition was filed pursuant
to section 110(c) of the Federal Mine Safety and Health Act of
1977 (Mine Act or Act) (30 U.S.C. � 820(c)). The Secretary
alleged Steen knowingly violated 30 C.F.R. � 77.404(a) by
allowing a highlift to be operated with defective brakes.
(Section 77.404(a) in part requires mobile equipment to be
maintained in safe operating condition and equipment in unsafe
condition to be removed immediately from service.) Steen denied
the allegations, and the case was heard and decided by
Commission Administrative Law Judge William Fauver.
DECISIONS OF THE JUDGE AND THE COMMISSION
Judge Fauver held Steen was a corporate agent under
section 110(c) of the Act and Steen knowingly authorized a
violation of the standard. The judge found Steen knew for 5 or
6 days the highlift's brakes were defective, yet failed to repair
them or to remove the highlift from service (16 FMSHC 2293, 2300,
2302 (November 1994)). Although the Secretary proposed a civil
penalty of $3,500, the judge assessed Steen $4,000 for the
violation (16 FMSHRC at 2303-06).
Judge Fauver based the penalty upon his findings that Steen
exhibited high negligence in allowing the highlift to be operated
without effective brakes (16 FMSHRC at 2304), the violation was
reasonably likely to result in a serious injury
(16 FMSHRC at 2305), and after being cited for the violation,
there was instant action to comply with the standard (16 FMSHRC
at 2305). The judge also believed the amount assessed was
"sufficient to deter ... [Steen], and others similarly situated,
from committing a similar violation in the future" (16 FMSRHC
at 2305).
Steen appealed, and although the Commission upheld the
judge's findings regarding Steen's liability under section 110(c)
and Steen's knowing violation of the standard (Ambrosia Coal &
Construction Company (Ambrosia I) 18 FMSHRC 1552, 1563 (September
1996)), it concluded the judge improperly considered the
deterrent effect of penalty. (The Commission stated,
"[d]eterrence is not a separate component used to adjust a
penalty amount after the statutory criteria have been considered"
(18 FMSRHC at 1565).) The Commission also held the judge failed
to set forth adequate findings when applying the statutory
penalty criteria to Steen. The Commission remanded the matter for
reassessment of the penalty (18 FMSHRC at 1555-56).
On remand, the judge noted he had found the violation to be
a significant and substantial contribution to a mine safety
hazard due to high negligence. He also noted Steen's financial
situation justified amortizing the payment of a civil penalty and
Steen had no record of previous violations. Putting aside the
deterrent effect of the penalty with respect to Steen and others
similarly situated, he concluded the six statutory civil penalty
criteria warranted the assessment of a civil penalty of $3,500
payable in ten consecutive installments of $350 (18 FMSHRC 1874,
1875-76 (October 1996)).
Once again, Steen appealed. He argued the judge did not
make necessary factual findings as to his income or net worth and
that the penalty of $3,500 was excessive in light of his
financial situation. In Steen's view, a total penalty of $575
was appropriate.
The Commission affirmed Judge Fauver's consideration of four
of the six statutory civil penalty criteria (Ambrosia Coal &
Construction Company (Ambrosia II) 19 FMSHRC 819, 823-824 (May
1997)). However, it concluded the judge's consideration of the
criteria of "ability to continue in business" and "size" were
incomplete, and it remanded the matter for further application of
the criteria and reassessment (19 FMSHRC at 824-825).
POST REMAND PROCEEDINGS
On remand, the judge ordered the parties to confer to
determine if they could stipulate to a statement of Steen's
current income, net worth, and financial obligations, and to
include in the stipulation copies of Steen's latest federal
income tax return, his W-2 Form and a balance sheet. The judge
also requested a statement whether or not Steen had the financial
ability to pay a civil penalty of $3,500 in 10 monthly
installments of $350 and continue to meet other financial
obligations. If Steen could not, the judge requested the parties
to stipulate the civil penalty and the amount of the monthly
installments he could pay (Order On Remand (May 9, 1997) (as
modified May 30, 1997)).
In response, the parties submitted a statement of the income
of Steen and his wife (Stip., Exh. A), a statement of the monthly
expenses of the Steen family (Id., Exh. B) (excepting from the
agreement the claim of $400 in monthly medical and dental
expenses), a statement of the assets of Steen and his wife (Id.,
Exh. C), a copy of the 1996 joint U. S. Individual Income Tax
Return of Steen and his wife (Id., Exh. D), and a copy of the
1996 W-2 forms of Steen and his wife (Id., Exhs. E and F). Steen
submitted a separate statement of dental expenses (Statement
Concerning Dental Expenditures (June 19, 1997)).
Judge Fauver offered the parties an opportunity to request a
hearing on the remanded issues. If they did not want one, he
stated he would consider the information submitted as evidentiary
and decide the issues on the record (Order (June 25, 1997)). The
Judge also stated "Since . . . Steen's tax returns are jointly
filed, his income and financial obligations will be considered on
the basis of household and financial obligations" (Id., n.1).
The parties declined a hearing and submitted briefs. On
July 25, 1997, the matter was reassigned to me.
ASSESSMENT OF A CIVIL PENALTY
THE UNDERLYING PRINCIPLES
I have a narrow duty on remand - to assess a civil penalty
based upon Judge Fauver's prior findings regarding four of the
six civil penalty criteria set forth in section 110(i) of the Act
(30 U.S.C. � 820(i)) and my findings regarding the remaining two
criteria, "ability to continue in business" and "size." In
assessing the penalty, I am instructed by the Commission to make
specific findings and be guided by principles set forth in Sunny
Ridge Mining Co. (19 FMSHRC 254 (February 1997) (see Ambrosia
II., 19 FMSHRC at 823-824).
In Sunny Ridge, which was decided after Judge Fauver's
October 1996 decision, the Commission held that when assessing a
civil penalty in a section 110(c) case, a judge must make
findings on the penalty criteria as they apply to the individual
who has been found liable and must be mindful of facts such as
"the individual's income and family support responsibilities, the
appropriateness of a penalty in light of the individual's job
responsibilities, and an individual's ability to pay" (19 FMSHRC
at 272).
When applying these principles to the criterion of "ability
to continue in business," the Commission stated the relevant
inquiry is whether the penalty "will effect the individual's
ability to meet his [or her] financial obligations" (Ambrosia II,
19 FMSRHC at 824). With respect to the criterion of "size," the
Commission directed an inquiry into "whether the penalty is
appropriate in light of the individual's income and net worth"
(Id.).
Because section 110(c) places liability upon individual
corporate directors, officers, or agents and because the
Commission has emphasized the effect of the penalty upon the
individual who has been found liable under section 110(c), Steen
argues it was an error for Judge Fauver to state that he would
consider Steen's financial information on the basis of household
income and financial obligations. Steen also maintains it would
be an error for me to consider any part of Mrs. Steen's income in
assessing the penalty. Rather, I should consider "only ...
Steen's income, net worth and financial obligations and explain
how they affect the penalty" (Reply Brief Following Commission's
Second Remand 3 (emphasis added)). In other words, Steen would
have me exclude from consideration all income earned by his wife
and a percentage of household liabilities equal to the percentage
of her contribution to household income.
I decline to do so. Implicit in Judge Fauver's decision to
consider Steen's income and financial obligations on the basis of
household income and financial obligations is the fact the Steens
do not live economically discrete lives. Like most domestic
partners, they function as an economic unit. They commingle
economic resources and jointly assume economic responsibilities.
They file a joint federal income tax return ( Stip., Exh. D).
They jointly hold real property (Stip., Exh. C). Personal
property, such as automobiles and household property, is titled
jointly (Id.). They have a joint personal checking account (See
Statement Concerning Dental Expenses). Moreover, as may be
inferred from the list of expenses, they are equally liable for
most, if not all, of their debts (Stip., Exh. B). I must make
findings based on fiscal reality not its artificial segmentation.
Therefore, I will consider their joint income as Steen's income,
their joint property as his property, and their joint liabilities
as his liabilities.
ABILITY TO CONTINUE IN BUSINESS
The parties stipulated to monthly family expenses of $2,715
(Exh. B-1) ($3,115 less medical and dental expenses of $400)
and Steen submitted documentation to substantiate the dental
balance owed or to be incurred (Stipulation 2; Statement
Concerning Dental Expenses). The dental statement details
expenses paid from August 12 1996 through June 16, 1997
($2,276). It also indicates two additional appointments
scheduled for Mrs. Steen in late June 1997, and August 1997,
for an examination of work already performed. The statement
declares as of June 19, 1997 "[a]ll of ... [Mrs. Steen's]
major work appears to have been completed." The statement
does not indicate an existing balance is due.
With no major dental work anticipated, and with no existing
balance, it appears that as of June 19, Steen and Mrs. Steen
have paid most of her past due dental bills, and her future
dental expenses will be for forthcoming appointments and
routine dental work. Recognizing unexpected medical and
dental expenses can arise and estimating future expenses is
to some extent an exercise in imprecision, I conclude
allocating $250 a month to medical and dental expenses is
reasonable.
Therefore, based upon the parties' stipulations and Steen's
statement concerning dental expenses, I find Steen has
monthly family expenses of $2,965 ($3,115 less $400 plus
$250).
To meet these expenses, Steen has available to him monthly
family income of $3,156 (Stip., Exh. A). This leaves a
balance of $191 per month. Presently Steen is meeting his
financial obligations with money to spare.
SIZE
The parties stipulated that Steen's annual net income is
$20,300 and his combined annual net income is $37,873
(Stip., Exh. A). Steen's net income is well above the
"poverty level" for a family of three ($12,517 in 1996
according to the U.S. Department of Commerce
(http://www.census.gov/hhes/poverty/
threshld/thresh96.html)). Moreover, Steen has significant
equity in his home ($43,610) and he has automobiles and
other personal property worth $5,500 (Stip., Exh. C). In
light of his income and net worth, I conclude Steen is well
able to pay a penalty of at least moderate size, provided
the penalty is amortized.
THE PENALTY
Judge Fauver concluded that Steen exhibited high negligence
in authorizing the violation of section 77.404(a). He also
found the violation was serious, and that the criteria of
good faith abatement did not apply (18 FMSHRC at 1875).
These findings were affirmed by the Commission (Ambrosia II,
19 FMSHRC at 823-824). Judge Fauver also found, and the
Commission affirmed, Steen's employer, Ambrosia, had an
average history of previous violations and he noted there
was no indication Steen previously violated section 110(c)
of the Act (18 FMSHRC at 1875; Ambrosia II, 19 FMSRHC at
823-824).
Weighing these factors, along with Steen's income, family
support responsibilities, and net worth, I conclude that a
total penalty of $2,000 is warranted and that it should be
payed in installments for 12 consecutive months. I
recognize the penalty and payments will not be
inconsequential for Steen, given his obligations and income,
but then neither was his knowing and egregious violation of
section 77.404(a).
It bears repeating the highlift was operating with brakes
that could not hold on a 30 to 40 degree ramp, through a
tipple yard with unobstructed access to a nearby highway,
and with an operator who did not have a seatbelt (16 FMSHRC
at 2299). Steen had full knowledge of all these conditions,
yet he allowed the highlift of operate for at least 5 and
possibly 6 working days (16 FMSHRC at 2302), endangering
himself (Steen actually operated the highlift while it had
defective brakes (Id.)), the highlift operator, other
miners, and the public.
It also bears repeating, as Judge Fauver pointed out
originally, that section 110(c) is included in the Act to
deter this kind of violation.
TWO LESSONS
Two cautionary lessons attend this case. First, a foreman
of a corporate operator who knows of existing violations of
the Mine Act or its standards must promptly remedy them. A
foreman who fails to act does so at his or her fiscal peril.
Second, through Sunny Ridge, the Secretary is on notice
concerning the type of information the Commission deems
necessary to establish the "ability to continue in business"
and "size penalty" criteria. The burden of proof is on the
Secretary. Failure to offer the evidence through
stipulation or documentation prior to the closing of the
evidentiary record will result in a judge being unable to
consider the criteria and, most likely, in a much lower
civil penalty. This will necessitate more intensive
prehearing preparations by the Secretary, since, in all
probability, judges will not look favorably on requests to
submit the information post hearing.
ORDER
Steen shall pay a civil penalty of $2,000. Payment shall be
made in 11 consecutive installments of $166.66 each and the
12th installment of $166.74. Payments will begin on
November 1, 1997, and continue on the first day of each
succeeding month until the full amount has been paid. Upon
full payment of the penalty, this proceeding is DISMISSED.
David F. Barbour
Administrative Law Judge
Distribution:
T. J. O'Malley, Esq., Office of
the Solicitor, U. S. Department
of Labor, 3535 Market Street,
Philadelphia, PA 19104 (Certified
Mail)
Frank G. Verterano, Esq.,
Verterano & Manolis, 2622
Wilmington Road, New Castle, PA
16105-1530 (Certified Mail)
William P. Getty, Esq., Meyer,
Unkovic &Scott, 1300 Oliver
Building, Pittsburgh, PA 15222
(Certified Mail)