Chapter 10 CRISIS MANAGEMENT: HANDLING THE MAJOR DISASTER AND PROTECTING THE COMPANY

• Jurisdiction: United States

Mining Law
Chapter 10

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CRISIS MANAGEMENT: HANDLING THE MAJOR DISASTER AND PROTECTING THE COMPANY
William Michael, Jr. Lindsey Schmidt ¹Greenberg Traurig, LLP Minneapolis, Minnesota

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TABLE OF CONTENTS

§ 21.01 Introduction

§ 21.02 Managing the Crisis

[1] Understanding the Crisis and Liability at Stake

[a] The Media-Public-Government Fallout

[b] Legal Liability

[i] Mine Act Liability

[A] Operators

[B] Individuals

[C] Practical Considerations

[ii] Workers' Compensation and Tort Claims

[iii] Negligent Homicide

[iv] False Statement and Obstruction of Justice

[v] Securities Exchange Commission Disclosures

[vi] Suspension and Debarment

[2] Strategic Planning and Message Preparation

[a] Assembling a Team

[b] Internal Investigation

[i] Document Collection

[ii] Data Preservation

[iii] Witnesses Interviews

[iv] Privileged Communications

[A] Attorney-Client Privilege

[B] Work-Product Doctrine

[3] Tactical Planning and Message Delivery

[a] Notification of MSHA

[b] Media Plan

[c] MSHA Authority to Direct Rescue Operations

[d] Government Investigations

[i] On-Site Investigations

[ii] Search Warrants

[iii] Subpoenas

[A] Subpoenas Duces Tecum

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[B] Subpoenas ad Testificandum

[iv] Employee Interviews

[4] Preventing Disasters with Smart Mining

[a] The Internet of Things

[b] Digital Twin Technology

[c] Threat of Hacking and Cyber Attacks

§ 21.03 Conclusion

§ 21.04 Appendix I: Execution of Search Warrants at Corporate Offices

[1] Introduction
[2] The Law
[3] General Precautions
[4] Execution of the Search Warrant
[5] Post Search Warrant

§ 21.05 Appendix II: Response to Subpoenas

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§ 21.01 Introduction

Mining is a valuable, yet dangerous business for the individuals associated with the occupation. Since the value of mining was first understood, the industry has experienced explosions, collapses, fires, floods, machinery malfunctions, and a host of other horrors that have shut down mines, caused significant legal challenges for companies and caused the deaths of numerous workers. Despite modern technology and revised safety regulations, mining disasters are not relegated to history, but instead remain a constant threat. Since the enactment of the Federal Mine Safety and Health Act of 1977 (the "Mine Act"), there have been ten accidents resulting in the tragic death of five or more miners. Following a lull in the 1990s, since the year 2000, there have been five more mining tragedies.²

Mine operators struggle to protect their employees but, when they fail, it is not only the individuals who are at risk. Zealous media can fan the flames of public outcry, stirring regulators, investigators, and overeager politicians into action. The unique challenges presented by those thrust into the public arena are exacerbated in the age of social media where consumers have morphed from passive recipients of information into content generators with the megaphone platforms such as Twitter, Facebook, Instagram, and TikTok at their fingertips, enabling them to reach millions in a matter of minutes.³ Lawsuits and sanctions may follow, crippling a business's ability to continue operations, taxing its financial strength, and endangering the reputations, careers, and even the liberty of its employees.

The fate of Murray Energy in the aftermath of the Crandall Canyon disaster is a prime example of a company's vulnerability after an accident. The collapse that trapped six miners in the Crandall Canyon mine in August 2007 was followed immediately by the descent of 24-hour news media on the scene. Investigations of all varieties followed, with administrative agencies scouring the area

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and Congress threatening to call in law enforcement authorities. The nation's major newspapers carried stories of condemnatory congressional reports, all met by attorneys' outraged replies.⁴

Three years later, the United States saw one of its worst mining disasters since the passage of the Mine Act when a massive explosion occurred inside of Massey Energy's Upper Big Branch coal mine located in West Virginia.⁵⁶ The tragedy resulted in twenty-nine fatalities and was followed by an onslaught of public and civil recourse--prompting congressional and criminal investigations, spurring securities litigation from the Mine's own investors, and concluding in a record-breaking $10.8 million fine.⁷

Though the harm to the miners in any disaster is sudden and devastating, the damage to the company's reputation can be nearly as swift, and the impact on the company and its managers may also be crushing. In the end, however, the danger is not avoidable-not for the miners and not for the mine operators. Instead, the aim of this chapter is to show how mine operators can prepare themselves to cope with an accident's aftermath and minimize the dangers and damages. Section 21.02[1] describes the stakes, laying out the elements of the modern media-government-public barrage, as well as the multitude of avenues for liability. Section 21.02[2] describes the essential strategic elements of a company's crisis response, setting forth the "big picture" requirements for maintaining a defense. Section 21.02[3] describes the tactical elements of a company's response, spelling out the specific actions necessary to manage the public, the media, and the government. With command over these strategic and tactical tools, a company can better hope to manage the crisis and prevent what is already a disaster from becoming a catastrophe.

§ 21.02 Managing the Crisis

[1] Understanding the Crisis and Liability at Stake

The reasons to tread carefully after a major accident are nearly innumerable, but this section breaks them into two broad categories: First, a company's actions will be subject to intense monitoring in

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the hours, days, and weeks after a disaster. The media, the public, and the government will all have their eyes (and cell phones) open for missteps and evidence of wrongdoing, and news of either will spread quickly. Second, any misstep may potentially give rise to substantial legal liabilities, including administrative penalties, tort claims, and even criminal sanctions. This section will make it clear that with so many challenges, it is nearly impossible for a mine operator to respond correctly without a well thought out and documented plan in place well before disaster strikes.

[a] The Media-Public-Government Fallout

The modern world is not patient with tragedy. The local one•hour news program of yesteryear is gone, and in its place is a swarm of 24-hour news outlets who are compelled to fill time and who thrive on grief, often influencing the news through their need to fill airtime. Add to this the onslaught of social media attention that any disaster will garner, and within minutes, a one-sided message may reach the masses. From there, politicians and celebrities eager to snatch headlines, personal injury lawyers salivating over a potentially large judgment, and a community grief-stricken and seeking answers create a picture of the multi-front assault that a mine operator faces from the moment word of a mine disaster spreads.

A mine operator dealing with trapped miners is in a poor position to manage its message delicately. Proper decision-making results from careful deliberation but, in an emergency situation, immediate decisions and statements are demanded. When miners' safety is at stake, a mine operator surely will put rescue efforts before media messages and, with rescue efforts at the fore• front, a mine operator is unlikely to have the mindset required to simultaneously develop an effective public relations and legal strategy from whole cloth.

Despite the maelstrom, a company's message must be sound at every stage. Because the public may simply catch the first tweet and not follow the full evolution of a story, a hasty blunder may be the only message the public receives, regardless of retraction efforts. Getting the message right on the second try may be too late, however, because once something goes wrong with the message, any number of things can go wrong for the mine operator. Indeed, a company's stock price may drop if the investing community perceives the disaster as a sign of a company's crumbling infra-structure or as a cavalier approach to safety. Family members may develop ill will toward the company, and the public may find new ways to criticize the company's response at every step.

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[b] Legal Liability

Naturally, rescue operations take first priority for any operator after a mining disaster. Soon thereafter, however, an operator must begin to consider the threats of legal liability, of which there are a variety. The Mine Act provides the most obvious threat, setting civil and criminal penalties for safety violations. Liability under workers' compensation statutes or tort law is also a danger, assuming there are injuries or deaths. Fatalities could also result in a criminal charge of negligent homicide. Finally, malfeasance of a more procedural nature could lead to charges of false statement or obstruction of justice. In most cases, these civil and criminal sanctions can apply equally to individuals and the business entity.

[i] Mine Act Liability

[A] Operators

For operators, a safety violation can result in anything from a minor civil fine to a significant criminal sanction. Civil penalties for a single violation range between $2,000 and $74,775.⁸ The Mine Safety and Health Administration (MSHA) will choose the lower end for innocent violations that result in no harm, and the higher end for negligent violations that result in serious injury or death.⁹ The civil penalty limit rises to $274,175 for repeat violations deemed to be "flagrant," with the same factors affecting the actual penalty assessed.¹⁰ But if the violation was committed willfully, criminal action against operators is...