June 1, 2010
A federal anti-shredding statute may provide a new avenue for MSHA criminal enforcement.
By Marci Fulton
The tragic events at the Upper Big Branch mine in West Virginia this April were followed by the inevitable scramble to determine not only what went wrong at the mine, but how the regulatory system responsible for the safety and health of America’s miners may have failed. Days following the accident, President Obama instructed the Department of Labor and the Mine Safety and Health Administration (MSHA) “to strengthen enforcement of existing laws and close loopholes” in mine safety and health.
The public’s misunderstanding of the regulatory enforcement environment under which mines operate is illustrated by President Obama’s concern that mines were able to “fil[e] endless appeals instead of paying fines and fixing safety problems.” Anyone familiar with MSHA knows that an operator’s exercise of its statutory due process right to challenge a citation and its associated penalty does not absolve the mine of remedying the alleged violation before the merits of the citation are adjudicated. However, with such intense scrutiny focused on its actions, MSHA will likely attempt to take very strong enforcement positions in the coming year.
Suggestions for legislative action abound (such as resurrection of the S-Miner Act), but such change occurs slowly and the agency is under pressure to take immediate action; a position that may result in hasty decisions not necessarily geared toward improving health or safety. While waiting for a legislative “fix,” MSHA will undoubtedly reexamine the tools already available to it under the Mine Act and other federal statutes. A similar reexamination occurred following the Sago and Crandall Canyon tragedies in 2006 and 2007 when MSHA “rediscovered” the pattern of violations sanction that had been authorized by law since 1978, but which had remained largely unused.
As part of this effort, the agency may direct its focus at increasing civil and criminal penalties. The Mine Act already provides for various civil and criminal penalties. For example, an operator’s or its agent’s willful violation of a mandatory health or safety standard, or the knowing refusal to comply with a Section 104 or 107 order, will, at most, result in a civil penalty of $220,000 and a fine of $250,000, one year in jail, or all of the above [30 U.S.C. § 820(c) and (d)]. Additionally, knowingly making a false statement or providing a false record to MSHA can result in a fine of $10,000, imprisonment of up to five years, or both [30 U.S.C. § 110(f)]. Operators may see an increased focus by MSHA on enforcement under these two sections of the Mine Act. Additionally, the industry may see MSHA, in conjunction with the Department of Justice, turning toward other, broader federal criminal statutes with more severe penalties.
In the wake of 2001’s Enron scandal, the United States undertook sweeping changes to its criminal code in an effort to “clarify and close loopholes in the existing criminal laws relating to the destruction or fabrication of evidence and the preservation of financial and audit records” [S. Rep. No. 107-146, at 14 (2002)]. 18 U.S.C. § 1519 provides:
Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States…, or in relation to or contemplation of any such matter or case, shall be fined under this title, imprisoned not more than 20 years, or both.
Though passed in response to an accounting scandal, this statute is quite broad in reach. MSHA inspections or investigations are unquestionably matters within the jurisdiction of the agency and, therefore, documentation presented or withheld in connection with such matters are subject to the statute. While it does not appear as though this criminal statute has ever been raised in an MSHA context, if MSHA is seeking means of stricter enforcement, enforcement under this section may not be far behind.
Although enforcement has not yet been pursued in connection with Mine Act violations, the Department of Labor is familiar with the application of the statute in the OSHA context. In 2009, as part of a multi-count criminal indictment, a company and one of its managers were charged with “altering the condition of a cement mixer and concealing from the [OSHA] inspectors that they had bypassed a safety device designed to shut down the cement mixer when its doors were opened, which led to the amputation of three of an employee’s fingers” [U.S. v. Atlantic States Cast Iron Pipe Co., 612 F. Supp. 2d 453, 512 (D. N.J. 2009)]. The company manager in question was sentenced to 70 months in federal prison for his obstruction of justice and other crimes, and the company was placed on monitored probation and assessed an $8 million fine. Similarly in the MSHA context, were a mine employee to alter or destroy relevant pre-shift examinations, training records, or other documents to be provided to MSHA, that employee could face enforcement under § 1519.
The accurate completion of records has always been a requirement under the Mine Act, and we often take for granted the fact that individuals know that the falsification or wrongful destruction of records is not acceptable. However, in the few instances in which we have had to assist companies or individual employees accused of making false statements or falsifying records, more often than not, these circumstances have arisen where an individual acted out of panic and without thinking about the possible criminal consequences of their actions.
Accurate recordkeeping and the proper maintenance of records should be second nature to your employees, and it can only become second nature if the responsibility for accurate recordkeeping is emphasized as part of regular training and employees are disciplined for failure to comply with policies and expectations set forth by the company. Accordingly, all individuals responsible for completing, compiling, collecting, or preserving documents to be provided to MSHA should be aware of the far-reaching implications of § 1519, as well as potential criminal violations under the Mine Act itself.
Remember the first rule of responding to any investigatory request for information: you have only two options — respond truthfully or don’t respond at all. AM
Marci M. Fulton is an associate at Patton Boggs LLP’s Denver office. She may be reached via phone at 303-894-6121 or via e-mail at email@example.com.