Signal Peak admits violating mine safety rules

Signal Peak Energy, which operates an underground coal mine near Roundup, Montana, has admitted to violating mining health and safety standards and has agreed to pay a $1mn fine as part of a proposed plea agreement.

At an initial appearance before a magistrate judge for the US District Court for District of Montana on 7 October, attorney John Sullivan pleaded guilty on behalf of Signal Peak to four counts of a willful violation of health and safety standards. The company has agreed to pay a maximum penalty of a $250,000 fine for each count of the conviction.

Signal Peak and former senior management at the mine were accused by federal prosecutors of violating environmental safety and worker safety standards at the mine between 2013 and 2018. Former senior management have also been accused of directing employees to violate the rules, including telling workers in the summer of 2013 to pump mine wastewater known as slurry into abandoned sections of the mine. This type of disposal would have required US Mine Safety and Health Administration and US Environmental Protection Agency approval, which the company did not obtain, the US Attorney's Office for the District of Montana said.

"Signal Peak's conduct showed a blatant and callous disregard for its own workers' health and safety and for protecting the environment," said Leif Johnson, acting US attorney for the federal district of Montana.

Other violations cited by the US attorney included an incident in 2015 where former senior managers of Signal Peak directed employees to drill two bore holes into the ground to dispose of more mine waste. Additionally, in May and January 2018, Signal Peak failed to report two injuries of its miners as mandated, the US attorney said. According to prosecutors, both times, injuries were reported as occurring at home when they actually occurred in the mine.

Signal Peak said its owners did not have knowledge of, and were not implicated in, any wrongdoing, and the government has not brought charges against any current mine employee.

"The company's guilty plea resulted from unauthorized actions of a small group of Signal Peak employees who failed to conduct themselves in a manner consistent with the company's values and applicable law," Signal Peak said. "When notified of this misconduct, Signal Peak immediately terminated each of these employees and has undertaken significant remedial actions to ensure that such misconduct does not reoccur."

Signal Peak also said it was "a victim of these former employees' actions, suffering losses in the many millions of dollars" related to the former employees' conduct.

The company's plea agreement with federal prosecutors is subject to a pre-sentence investigation by the US Probation Office and approval by the federal district court. The court has set a sentencing date of 31 January 2022. If the court rejects the plea agreement, Signal Peak will be able to withdraw its guilty plea and will proceed to trial.

Prosecution against the company is part of a larger federal investigation into mine management and conduct. The company's former vice president of surface operations Larry Wayne Price was sentenced the five years in prison for defrauding companies of $20mn. Zachary Ruble, a former surface mine manager at Signal Peak, was sentenced to probation for conspiring to defraud Signal Peak of $2.3mn.

Another former Signal Peak employee, Dale Lee Musgrave, has pleaded not guilty to charges of alleged cocaine trafficking and false claims on mining records and is pending trial. Some others at the company as well as some vendors and lenders have also been charged in connection to illegal activity at Signal Peak.

Federal prosecutors have said in court filings that former mine chief executive Brad Hanson also knew of the illegal activities at Signal Peak. But Hanson died in February 2020 before he could be charged.

By Elena Vasilyeva