The proposed fine, voted on unanimously by the state Industrial Commission, supported a report by the state Division of Occupational Safety and Health that cited major workplace-safety violations during the Yarnell Hill fire.
The Serious Accident Investigation report said the Arizona State Forestry Division wrongly put the protection of "non-defensible structures and pastureland" ahead of the safety of the elite Granite Mountain Hotshots frontline wildland firefighters who died after getting trapped in the fire, 80 miles northwest of Phoenix, when monsoon-storm winds changed direction and turned the blaze into a fast-moving inferno that overran the firefighters.
The forestry department "knew that suppression of extremely active chaparral fuels was ineffective and that wind would push active fire toward non-defensible structures," yet the division kept the hotshots on the mountains, the report said.
Not removing the hotshots promptly, even after commanders realized they could not control the flames -- a violation of established policies -- led to the hotshots' deaths, the report said.
In addition, hotshot lookout Brendan McDonough, who survived, and another 61 firefighters were exposed to risk of "smoke inhalation, burns and death," it said.
In addition, the team that ran the firefighting operations June 30, when the firefighters died, was understaffed, which led to "an organization that lacked the initial cohesion needed" to successfully fight the fire, the report said.
Making matters worse, the hotshots were tired, having just returned from fighting two other fires, the report said, suggesting their exhaustion might have impaired their judgment.
The investigators recommended the forestry division pay a $70,000 penalty, as well as $25,000 to the families or estates of the 19 firefighters who died, for a total of $545,000.
An additional $14,000 in fines was recommended for other safety violations.
The forestry division said in a statement it "fully cooperated" with investigators but declined to comment on the report's findings.
The division has three weeks to appeal the citations and penalties.
Gov. Jan Brewer's office also declined to comment, citing pending legal action, the Arizona Republic reported.
The fire, which burned June 28 to July 10, scorched some 8,400 acres, or more than 13 square miles, destroyed 129 structures and forced hundreds of residents to evacuate.
It started when a lightning bolt ignited a small area on the mountains west of the former gold-mining village of Yarnell.