PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON. Entered: March 6, 2006

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1 045060alj wpd PUBLIC SERVICE COMMISSION OF WEST VIRGINIA CHARLESTON Entered: March 6, 2006 CASE NO COAL-NOV CASE NO COAL-NOV CASE NO COAL-NOV CASE NO COAL-NOV HORIZON NATURAL RESOURCES, Ashland, Kentucky; MID-VOL COAL SALES, INC., Bluefield, West Virginia; IMPERIAL RESOURCES LLC, Bluefield, West Virginia; RICHARD G. PRESERVATI, Princeton, West Virginia; SOUTHERN MINERALS, INC., Princeton, West Virginia. Appeal/Request for hearing on administrative sanctions issued regarding CRTS violations/sanctions dismissed. FINAL ORDER DISMISSING VIOLATIONS AND ADMINISTRATIVE SANCTIONS PROCEDURAL HISTORY By Notice of Violation (NOVs) letters dated August 16, 2004, August 26, 2004, September 20, 2004, and October 22, 2004, the following Coal Shippers: Horizon Natural Resources, Mid-Vol Coal Sales, Inc., Imperial Resources, LLC, Richard G. Preservati, and Southern Minerals, Inc., were notified by the of the possible administrative sanctions that would be imposed as a result of the Coal Shippers allegedly loading commercial motor vehicles with coal for transport on the Coal Resource Transportation System (CRTS) in amounts which caused the gross vehicle weights to exceed the lawful maximum weight limits established by Article 17A of Chapter 17C of the W. Va. Code. Therefore, pursuant to W. Va. Code 17C-17A-lO(a), administrative sanctions would be imposed for the alleged violations of W. Va. Code

2 17C-17A-9-(~)(1). The administrative sanctions in the four (4) NOVs total nine thousand dollars ($9,000.00). The Coal Shippers were also informed that the specified violations and sanctions, as noted in the NOVs, would become Final Orders of the Commission unless the Coal Shippers exercised their right to a hearing by notifying the Executive Secretary of the in writing within twenty (20) days of receipt of the NOV. On September 13, 2004, September 15, 2004, and October 12, 2004, written requests for hearing on the alleged violations in Case Nos COAL-NOV, COAL-NOV and COAL-NOV were filed by Gary L. Colley, Senior Counsel, Horizon Natural Resources. On November 5, 2004, a written request for a hearing on the alleged violations in all cases was filed by Scott Caudill, counsel for Southern Minerals, Inc. The two Coal Shippers contend that Horizon Natural Resources and Southern Minerals, Inc., are not responsible for the original violations or the sanctions imposed by the Notices of Violation, and that the sanctions should instead be the responsibility of Imperial Resources, et al. The No. 4 Mine located at the Mid-Vol mining operation in McDowell County, West Virginia, was sold by Horizon to Imperial Resources, LLC, Mid-Vol Coal Sales, Inc., and Richard G. Preservati, on June 10, Counsel also enclosed a Motion to approve the sale (with a copy of the Asset Purchase Agreement attached) and a copy of the May 29, 2004 Order entered by Judge William S. Howard, in the Chapter 11 bankruptcy proceedings of Horizon Natural Resources Company, et al. (including Mid-Vol Leasing, Inc.), approving the sale. The letter also confirmed that Horizon, through its Mid-Vol Leasing subsidiary, was a shipper of coal from the No. 4 Mine prior to June 10, A request for formal hearing on the issues was made if the response does not clear up the fines against Horizon Natural Resources. On September 20, 2004, October 14, 2004, and November 8, 2004, Staff Attorney Charles W. Covert filed Memoranda to which were attached the certified mail return receipts for the NOV letters issued herein. Counsel requested that one hearing be set in regard to all matters in these cases, to be held no sooner than sixty (60) days from the request for hearing. The NOV letter regarding Case No COAL-NOV was received by Horizon on August 23, Therefore, the hearing request filed September 15, 2004, was made untimely and outside of the statutory time frame of twenty (20) days of receipt of the NOV, and a hearing had not already been set for another party involved in the same transactions following a timely request for such hearing. The NOV letter regarding Case Number COAL-NOV was received by Horizon on August 30, Therefore, the hearing request filed September 13, 2004, was made timely and within twenty (20) days of receipt of the NOV. The NOV letter regarding Case No COAL-NOV was received by Horizon on September 27, Therefore, the hearing request filed September 30, 2004, was made timely and within twenty (20) days of receipt of the NOV. 2

3 The NOV letters regarding Case No COAL-NOV were received by the shippers on October 26, 27 and 28, Therefore, the hearing request filed November 5, 2004, by Scott Caudill, was timely and within twenty (20) days of receipt of the NOVs. The counsel also noted in the hearing request that Southern Minerals, Inc., has temporarily, and under protest, assumed the duties of "shipper" at the site at issue in the NOVs. By Amended Notice of Violation (NOV) letter, dated October 21, 2004, the same Coal Shippers, i.e., Horizon Natural Resources, Mid-Vol Coal Sales, Inc., Imperial Resources, LLC, Mr. Richard G. Preservati and Southern Minerals, Inc., were notified by the of the alleged violations addressed in the August 26, 2004 NOV. By Procedural Order dated October 27, 2004, Staff was granted until November 8, 2004, to show good cause why these cases should not be dismissed and removed from the Commission's docket of open cases. The Order noted that the Notices of Violation (NOVs) could not be transferred to the actual chargeable shipper. Staff identified in the October 21, 2004 Amended Notice of Violation (NOV) five possible chargeable parties. The Order further noted that these cases should not remain open while Staff determines which is the actual violator. Failure to file a response to the Order on or before November 8, 2004, would result in the immediate entry of an Order dismissing these matters, without prejudice, from the Commission's docket of open cases. On November 8, 2004, Staff responded to the Procedural Show Cause Order of October 2, Staff represented that the instant cases should not be summarily dismissed because substantial compliance progress had been accomplished within the structure and sanctions of these cases. An Agreed Order was also presented by Staff dismissing certain parties, including Horizon Natural Resources, and establishing Southern Minerals, Inc., as the responsible reporting party on a temporary and/or protest basis. The response also noted that another factor complicating these matters is that the case will be influenced and/or decided by a pending Petition for Waiver case, which is Case No COAL-PW, B & K Loadinq Services, Inc. The Petition for Waiver in that case seeks to add definition and clarity to the terms "receiver" and "shipper" for reporting and sanction purposes, with one of the principals in B b K Loading Services, Inc., also being a principal in one of the entities involved in the instant Notice of Violation cases. Therefore, Staff moved for an enlarged time within which to file an Agreed Order establishing Southern Minerals, Inc., as the responsible reporting party and dismissing all other parties, with prejudice. The Agreed Order was filed thereafter, on November 15, 2004, and signed by Staff and counsel. By Commission Order dated August 3, 2005, and upon the specific facts presented in Case No COAL-PW, B & K Loadinq Services, Inc., the Commission granted the petition to waive Rule 2.10 of the Rules and Resulations for the Transportation of Coal by Commercial Motor Vehicles, 150 C.S.R. Series 27, and recognized B & K as a shipper. On January 30, 2006, Commission Staff filed a Final Recommendation. Commission Staff was of the opinion that it would be unfair and 3

4 unreasonable to prosecute the outstanding Notice of Violation cases captioned hereon, to-wit: COAL-NOV, COAL-NOV, COAL-S, and COAL-NOV, and recommended that they be dismissed. Commission Staff explained that the matters in these cases were held in abeyance for a considerable period of time and continued by Agreed Order pending the outcome of B b K Loadins Services, Inc., Case No COAL-PW. Staff mentioned that each of the respective Notices of Violation concern violations dealing with timely and accurate reporting and are not indicative of overweight coal shipment issues. Staff further explained that the issue raised in the B b K Loadins Services, Inc. waiver case dealt with the appropriate chargeable party, and who would be registered and designated as a shipper. The decided the issues raised by B b K s petition by Order dated August 3, 2005, and B b K was permitted to register as a shipper for all sites dealing with the outstanding NOVs. The issues, therefore, having been resolved in favor of the then-designated entity, Horizon Natural Resources, Staff was of the opinion that it would be unfair and unreasonable to prosecute the outstanding NOVs and recommended that they be dismissed. Based upon the foregoing, the Hearing Examiner is of the opinion that the NOVs shall be deemed null and void and these cases shall be dismissed. Since these proceedings are being dismissed and the subject NOVs are being deemed null and void, it is unnecessary to approve the Agreed Order changing the responsible party in these cases. FINDINGS OF FACT 1. On August 16, 2004, August 26, 2004, September 20, 2004, and October 22, 2004, the notified the following Coal Shippers: Horizon Natural Resources, Mid-Vol Coal Sales, Inc., Imperial Resources, LLC, Richard G. Preservati, and Southern Minerals, Inc.,, of the possible administrative sanctions that would be imposed resulting from the Coal Shipper allegedly loading commercial motor vehicles with coal for transport on the CRTS in amounts which caused the gross vehicle weights to exceed the lawful maximum weight limits. (See, August 16, 2004, August 26, 2004, September 20, 2004, and October 22, 2004 NOVs). 2. On September 13, 2004, September 15, 2004, and October 12, 2004, hearing requests on the alleged violations were filed by Horizon Natural Resources. The hearing request filed September 15, 2004, was untimely and outside the statutory time frame of twenty (20) days of receipt of the NOV, but the other requests were timely. (See, hearing requests filed September 13, 2004, September 15, 2004, and October 12, 2004). 3. On November 5, 2004, Southern Minerals, Inc., filed hearing requests on the alleged violations in all pending cases, contending that Southern Minerals, Inc., and Horizon Natural Resources are not responsible for the violations and sanctions and claiming that the sanctions should instead be charged to Imperial Resources, LLC. The hearing requests also contained information regarding the bankruptcy proceedings of Horizon Natural Resources. (See, hearing request filed November 5, 2004). Public Service Canmission 4

5 4. Commission Staff issued an Amended Notice of Violation (NOV) dated October 21, 2004, and identified the following five possible chargeable parties: Horizon Natural Resources, Mid-Vol Coal Sales, Inc., Imperial Resources, LLC, Mr. Richard G. Preservati and Southern Minerals, Inc. (See, Amended Notice of Violation dated October 21, 2004). 5. A Procedural Order was issued October 27, 2004, noting that the NOVs could not be transferred to the actual chargeable shipper and the cases should not remain open while the appropriate violator is determined. Staff was granted until November 8, 2004, to show good cause why these cases should not be dismissed and removed from the Commission's docket of open cases. (See, Procedural Order dated October 27, 2004). 6. Commission Staff filed a response to the Procedural Order of October 27, 2004, contending that the cases should not be summarily dismissed, because substantial compliance progress had been accomplished within these cases. Staff presented an Agreed Order dismissing certain parties and establishing Southern Minerals, Inc., as the responsible party. Staff also noted that the case will be influenced by the outcome of the pending B & K Loadins Services, Inc. case. The B & K case concerned the issue of who is the appropriate party to be registered and designated as a shipper for reporting and sanction purposes. Staff moved for an enlarged time frame within which to file an Agreed Order establishing Southern Minerals, Inc., as the appropriate party and dismissing all other parties. The Agreed Order was filed on November 15, (See, Commission's Response To Show Cause Procedural Order filed November 8, 2004 and case file generally). 7. The Commission granted the petition to waive Rule 2.10 of the Rules and Requlations for the Transportation of Coal by Commercial Motor Vehicles, 150 C.S.R. Series 27, and B & K Loading Services, Inc., was reorganized as a shipper. (See, Commission Order dated August 3, 2005). 8. On January 30, 2006, Commission Staff recommended that the August 16, 2004, August 26, 2004, September 20, 2004, and October 22, 2004 NOVs be dismissed because it would be unfair and unreasonable to prosecute the outstanding NOVs, based on the result of the B & K waiver case, which permitted B & K to register as a shipper including all sites concerning the outstanding NOVs. (See, Staff's Final Recommendation dated January 30, 2006). CONCLUSION OF LAW Upon consideration of all of the above, the undersigned Hearing Examiner is of the opinion that it is reasonable to dismiss the August 16, 2004, August 26, 2004, September 20, 2004, and October 22, 2004 NOVs as identified herein, for the reasons cited herein above. ORDER IT IS, THEREFORE, ORDERED that the August 16, 2004, August 26, 2004, September 20, 2004, and October 22, 2004 Notices of Violation issued to Horizon Natural Resources, Mid-Vol Coal Sales, Inc., Imperial Resources, 5

6 LLC, Richard G. Preservati, and Southern Minerals, Inc., be, and hereby are, deemed to be null and void and of no force or effect and, further, that these matters be, and hereby are, dismissed and removed from the Commission's docket of active cases. IT IS FURTHER ORDERED that the Commission's Executive Secretary serve a copy of this Order upon all parties to this proceeding by United States Certified Mail, return receipt requested, and upon Commission Staff by hand delivery. Leave is hereby granted to the parties to file a written appeal with the Executive Secretary of the Commission within ten (10) days of the date of this Order. If no appeal is so filed, this matter shall be closed and removed from the Commission's docket of open cases. BDD : barn aa.wpd Bridget D. Davis Hearing Examiner Public Service Comrnissicm 6