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Judge fines coal miner Murray Energy amid bonus plans controversy

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Judge fines coal miner Murray Energy amid bonus plans controversy

Anadministrative law judge of the Federal Mine Safety and Health ReviewCommission ordered Murray EnergyCorp. and its subsidiaries to withdraw controversial and to pay a civilpenalty of $150,000 to the Secretary of Labor within 40 days starting May 2.

OnJuly 31, 2015, the Secretary of Labor filed a complaint on behalf of six UnitedMine Workers of America representatives working at the Monongalia County mine,the Ohio County mine, the Marshall County mine, the Marion County mine, theHarrison County mine and the Powhatan No. 6 mine. The mines are operated bywholly owned subsidiaries of Murray Energy.

Thecontroversial "Safety and Production Bonus Plans" were implemented in2015 at the six underground mines and offered bonuses amounting from $50 to$250 per shift tied to production.

Accordingto the May 2 order from the FMSHRC, the plans imposed conditions for the minersto be qualified for the monetary rewards. One is to be "physically presentthe entire shift," two is "if a 'lost time accident' occurs thatincapacitates a crew member, the entire crew is disqualified from receiving thebonus for that shift" and finally, if a Mine Safety and HealthAdministration inspector issues a citation tagged as "significant andsubstantial," all members are disqualified from earning the bonus for thatday.

Thesecond condition discouraged miners from reporting injuries they acquired fromthe job amid fears of disqualification from the bonuses, the complaint alleged.At the Marshall County coal mine, UMWA's local president testified that a minerhesitated to report his shoulder injury because "he didn't want to takemoney off of everybody," as stated in the filing.

Minerswere also hesitant in reporting dangerous conditions since it would result toan MSHA inspection, which will take the crew's time away from production andwould lessen their chance of earning a bonus. Chairman of the Safety Committeeat the Harrison County mine said she received fewer reports about safetyhazards while the bonus plans were in effect.

"Testimonyat hearing indicated that the effect of the bonuses is to create pressure onminers to maximize short-term production at the expense of safety," noted thecommission. The bonuses are based on the amount of coal produced by the wholecrew, resulting to workers getting pressured to work fast to avoid taking awaypotential bonuses from the other workers, it said.

Theplan's provisions related to MSHA citations "create peer pressure againstmaking complaints, since the entire crew loses the bonus if a violation isfound," said the commission.

Respondentsargue that their reason for implementing the bonus plan was to improveproduction and safety at the mines but Murray's Senior Vice President JohnForelli was not able to reach a definite conclusion as to whether the planswere effective in improving production or any clear patterns related to safety,said the commission.

Aftercareful consideration of all arguments presented, Administrative Law JudgeMargaret Miller also ordered Murray and its related subsidiaries to post anotice at each of the six mines indicating that "miners have a right tofile any claim of interference without fear of harassment or , that the bonus plans arerescinded effective immediately, that the mine has interfered with the rightsof the miners in putting the plans in place, and that all bonuses earned upuntil that date will be paid as promised," as stated in the filing.

Murray Energy said in a statement provided to S&P GlobalMarket Intelligence that "AdministrativeLaw Judge Miller was wrong in her decision and we will immediately appeal.Murray American Energy Inc.'s Safety and Production Bonus Plan incentivizessafety and productivity at our operations, while keeping safety at theforefront. Indeed, safety is, and always has been, the absolute highestpriority at Murray Energy Corporation. Judge Miller has shown herself to be verybiased against coal operators."