North County Sand & Gravel, Inc. v. Secretary of Labor, MSHA

Plain-English summary

North County Sand & Gravel sought attorney fees and expenses after the judge reduced an MSHA fall-protection penalty from the Secretary's original $35,500 demand to $3,500 and modified several citation designations. Judge Richard W. Manning held that North County was a prevailing party because the merits decision changed the parties' legal relationship and gave the operator substantial relief. He treated the original $35,500 demand as part of the agency's position even though the Secretary reduced it to $5,961 after the hearing. The Secretary failed to show that the special assessment was substantially justified because he did not explain how it reflected the required penalty criteria and did not review known procedural gaps until after the operator had incurred hearing costs. The judge granted the EAJA application, ordered the parties to negotiate the reimbursement amount, and retained jurisdiction pending a monetary award.

Decision snapshot

• Governing authority: 5 U.S.C. § 504; 29 C.F.R. § 2704.105(a)
• Outcome: North County's EAJA application was granted, with the reimbursement amount left for negotiation or later decision.
• Key point: A post-hearing reduction does not erase an agency's earlier penalty demand from the EAJA analysis when that demand drove the litigation and was not substantially justified.

Full text (FMSHRC public release)

FEDERAL MINE SAFETY AND HEALTH
REVIEW COMMISSION

Office of
Administrative Law Judges

721 19th Street, Suite
443

Denver, CO 80202-2536

303-844-3577/ FAX
303-844-5268

May 13, 2014

NORTH
COUNTY SAND & GRAVEL,

INC.,  

Applicant

v.

SECRETARY
OF LABOR

MINE
SAFETY AND HEALTH    

ADMINISTRATION
(MSHA),                  

Respondent

EQUAL
ACCESS TO JUSTICE  PROCEEDING

Docket
No. EAJ 2014-1-J

Formerly
WEST 2010-365-M

Mine
ID 04-05632

Mine:
Roadrunner 32

INTERIM DECISION

Appearances:               Timothy
J. Turner, Esq., Office of the Solicitor, U.S. Department of Labor, Denver,
Colorado for Petitioner

C.
Gregory Ruffennach, Esq., Washington D.C. for Applicant

Before:                        Judge
Manning

This case is before me upon an
application for the award of fees and expenses under the Equal Access to
Justice Act (“EAJA”) 5 U.S.C. 504 and the Commission’s regulations at 29 C.F.R
2704. North County Sand & Gravel, Inc., filed the application against the
Department of Labor’s Mine Safety and Health Administration based upon my
decision in North County Sand & Gravel, Inc., 35 FMSHRC 3217 (Sep.
2013) (ALJ).

North County seeks an award
in the amount of $40,180.60 under the EAJA, alternatively under 29 C.F.R
2704.105(a) and 29 C.F.R 2704.105(b). North County
attests, and the Secretary does not oppose, that it satisfies the basic
requirements to be eligible to receive an EAJA award under 29 C.F.R
2704.104.[1]

I find that North
County is entitled to an EAJA award under 29 C.F.R 2704.105(a). I furthermore
order the parties to confer upon the amount of reimbursement to be awarded to
North County.

I. BACKGROUND

The underlying case concerned one
citation that MSHA issued under section 104(d)(1) of
the Federal Mine Safety and Health Act of 1977, 30 U.S.C. §815(c)(3) (the “Mine Act” or “Act”). A hearing in that case,
concerning Citation No. 7980681 of Docket No.
WEST 2010-365-M, was held on May 1, 2013, in San Bernardino, California.[2] The parties presented testimony and
documentary evidence and filed post-hearing briefs.

On
April, 16, 2009, MSHA Inspector Steven Soderburg issued Citation No. 7980681
under section 104(d)(1) of the Mine Act, alleging a violation of section
56.15005 of the Secretary’s safety standards. The inspector designated Citation
No. 7980681 as significant and substantial (“S&S”) and highly likely to
cause an injury that could reasonably be expected to be fatal. He also alleged
that the violation was the result of North County’s reckless disregard and
unwarrantable failure. The Secretary proposed a specially assessed penalty of
$35,500 for this citation.

Citation
No. 7980681 alleged that Inspector Soderburg saw the owner and president of
North County, Michael LaPaglia, standing upon a portable crusher without fall
protection. The ground was 11 feet below where LaPaglia stood. The Secretary
provided photographs and called Inspector Soderburg to testify to show where
LaPaglia was standing when the inspector issued the citation and also provided
proof to show that LaPaglia was an experienced miner who had owned North County
for over 20 years. Counsel for the Secretary focused her efforts upon
impeaching LaPaglia’s testimony by asking questions about specific details concerning
when North County purchased the cited portable crusher and when it obtained legal
title to the crusher. These events occurred years earlier and were irrelevant.

At
hearing, North County contested the citation and its designations, but stated
that the “number one reason” it brought the citation to hearing was the large
penalty that the Secretary proposed. (Tr. 125 in WEST 2010-365-M). North County
focused upon providing evidence to show that the Secretary did not consider
factors required by the Secretary’s penalty regulation at 30 C.F.R. § 100.3(a)[3]
and that the penalty was too high based upon the factors set forth in section
110(i) of the Mine Act.[4]
North County called one witness, LaPaglia, to testify.

I issued a decision on the
merits on September 26, 2013. In that decision, I modified the citation at
issue, reducing the penalty to $3,500, the negligence designation from reckless
disregard to high, the likelihood from highly likely to reasonably likely, and
reduced the Secretary’s designation of fatal for the likely injury.

The day of the
hearing, May 1, 2013, North County filed a Motion to Strike the Secretary’s
Specially Assessed $35,500 Proposed Penalty. In that Motion to Strike, North County
argued that the Secretary’s special assessment procedure was arbitrary and
unlawful because the Secretary’s general principles used to determine the
amount of special assessments modify the part 100 penalty scheme, but did not undergo
notice and comment rule making required by the Administrative Procedure Act. (Ex.
R-3). North County argued that the special assessment general procedures
removed the requirement that the Secretary base penalties upon the six penalty
criteria and make narrative findings of his consideration of those criteria. (R.
Mot. to Strike at 9). The special assessment policies produce penalties
contrary to the scheme mandated by congress in the Mine Act by inflating
penalties against small, compliant operators. Due to what North County asserted
to be the unlawful procedures used to determine and apply the specially assessed
penalty, it asserted in its Motion to Strike that the $35,500 special
assessment at issue should be removed.

On
July 22, 2013, the Secretary filed a substitution of counsel and on July 23,
2013, prior to submitting a post hearing brief, the Secretary filed a Motion to
Amend the Penalty Proposal and to Deny North County’s Motion to Strike as Moot.
The Secretary’s Motion to Amend reduced the proposed penalty from $35,500 to
$5,961, removing the special assessment. North County subsequently opposed the
Secretary’s Motion to Amend, objecting to the assertion that the amendment of
penalty mooted its Motion to Strike. In response, the Secretary filed a motion
in support of its Motion to Amend. On July, 30, 2013, I issued an order
granting the Secretary’s Motion to Amend and finding North County’s Motion to
Strike moot because the subject special assessment was no longer at issue after
I granted the Secretary’s Motion to Amend. North County Sand & Gravel,
Inc., 35 FMSHRC 2318 (July 2013) (ALJ). In that order, I limited my ruling
to the civil penalty proceeding, specifically stating that the ruling did not
address or affect an EAJA claim. Id at 2320.

II. PARTIES’
ARGUMENTS

North county argues that it is entitled
to fees and expenses under 29 C.F.R 2704.105(a) because it was a prevailing
party and the position of the Secretary was not substantially justified. The
judge lowered the penalty. The initial penalty is the Secretary’s position
“upon which the adversary adjudication [was] based[.]” 29 C.F.R 2704.105(a). The
judge’s de novo penalty determination of $3,500 must be compared to the original
proposed penalty of $35,500. The judge made a decision on the merits and the
Secretary can no longer demand a higher penalty for Citation No. 7980681, which
makes North County a prevailing party. The judge’s penalty was a de novo
assessment that provided the necessary judicial imprimatur and was not affected
by the Secretary lowering the penalty.

The Secretary, North County argues, provided
no evidence to support the extreme nature of the penalty and did not address
the history, good faith, or size of North County. North County references the
argument in its Motion to Strike that the procedure used in the special
assessment of Citation No. 7980681 violated 30 C.F.R. 100.5(b). The assessment
was also not proportional to other penalties assessed against North County,
inconsistent with penalties assessed to other operators for violations of
section 56.15005, and was substantially in excess of the properly assessed
penalty under 30 C.F.R 100.3. The Secretary’s post trial decision to remove the
special assessment also supports the argument that the $35,500 penalty was
unreasonable and unjustified.

North
County also notes that the judge removed the reckless disregard determination
from Citation No. 7980681 because the Secretary presented “no evidence” to show
that LaPaglia knew of his violation of the standard but ignored it. North
County Sand & Gravel, 35 FMSHRC at 3223. Section 56.15005 does not
designate a height at which fall protection must be worn, which shows that the
Secretary based its argument upon unjustified inferences and not objective factors.

If North County is not a prevailing
party under 29 C.F.R 2704.105(a), it argues that it is entitled to attorney
fees and expenses under 29 C.F.R 2704.105(b) because the demand of the
Secretary was unreasonable and substantially in excess of the judge’s decision.

The Secretary argues that North County
was not a prevailing party because the Secretary, not the judge, voluntarily
removed the special assessment and lowered the penalty to $5,961. The judge
never ruled upon the $35,500 penalty because the Secretary voluntarily amended
the penalty. The judge also affirmed the Secretary’s unwarrantable failure and S&S
designations and found that North County’s high negligence caused Citation No. 7980681.

Even if North County was a prevailing
party, the Secretary asserts that his position was substantially justified. A
reasonable person could find that the underlying violation was the result of North
County’s reckless disregard because LaPaglia owned the mine. The highly likely
designation was also reasonable because the inspector had a reasonable belief
that the cited conduct would recur. The fatal designation of Citation No.
7980681 was justified based upon the inspector’s experience and the judge’s
finding that a fatality was possible. Citation No. 7980681 violated a Rule to
Live By, which led to a special assessment of the penalty. MSHA also followed
its usual procedures to propose a penalty under special assessment and did not
review the application of those procedures to this case until after the hearing.

The Secretary cites Colorado Lava
to argue that if North County was a prevailing party, then section 2704.105(b)
is inapplicable under Commission precedent. Colorado Lava Inc., 27 FMSHRC
186, 195 (Mar. 2005). The Secretary’s position is substantially justified and
therefore is also reasonable under 29 C.F.R 2704.105(b). The Secretary’s
proposed penalty of $5,961, furthermore, was not substantially in excess of the
judge’s decision.

III. DISCUSSION
AND ANALYSIS

Commission procedural rules state that “a prevailing applicant may receive an award of fees and
expenses incurred in connection with a proceeding, or in a significant and
discrete substantive portion of the proceeding, unless the position of the
Secretary was substantially justified.” 29 C.F.R 2704.105(a).

The “position of the agency”
includes the “position taken by the Secretary in the adversary adjudication”
and “the action or failure to act by the Secretary upon which the adversary
adjudication is based.” 29
C.F.R 2704.105(a). A position may “encompass both the agency’s prelitigation
conduct and…subsequent litigation positions,” but “only one
threshold determination for the entire civil action is to be made.” Commissioner,
I.N.S. v. Jean, 496 U.S. 154, 159 (1990).

Section 5 U.S.C. 504(a)(1), implemented
by the Commission in 29 C.F.R 2704.105(a), requires that a party to the action
be a prevailing party to be awarded funds in an EAJA claim. The term
“prevailing party” is a term of art that means “one
who has been awarded some relief by the court[.]” Buckhannon Bd. and Care
Home, Inc. v. West Virginia Dept. of Health and Human Resources, 532 U.S.
598, 603 (2001). A prevailing party must prevail on the merits of some
of its claims and receive at least nominal relief. See
Buckhannon, 532 U.S. at 603-04 (citing Farrar
v. Hobby, 506 U.S. 103, 113
(1992)). The D.C. Circuit interpreted Buckhannon to impose a three part test to
determine prevailing party status, “(1) there must be a
“court-ordered change in the legal relationship” of the parties; (2) the
judgment must be in favor of the party seeking the fees; and (3) the judicial
pronouncement must be accompanied by judicial relief.” District of
Columbia v. Straus, 590
F.3d 898, 901 (D.C. Cir. 2010) (quoting Thomas
v. National Science Foundation, 330 F.3d 486,
492-93 (D.C. Cir. 2003)).

Once a party is established
as the prevailing party, EAJA mandates that the Commission award fees and
expenses to the prevailing party unless the Secretary proves that “the position of the agency was substantially justified or that
special circumstances make an award unjust.” 29 C.F.R
2704.100.

The government bears the
burden to show that its position was substantially justified. Scarborough v.
Principi, 541 U.S. 401,414 (2004). The Secretary must justify his position
“to a degree that could satisfy a reasonable person” to prove that his actions
were substantially justified. Pierce v. Underwood, 487 U.S. 552, 564-566
(1988). The substantially justified standard demands more than
non-frivolousness, but less than a showing that the government's “‘decision to
litigate was based on a substantial probability of prevailing.’” Taucher v. Brown–Hruska, 396 F.3d 1168,
1173 (D.C. Cir. 2005) (quoting Spencer
v. NLRB, 712 F.2d 539, 557
(D.C. Cir. 1983)). The position must be
“substantially justified on the law and facts[.]” Contractor's Sand and
Gravel, Inc. v. Federal Mine Safety and Health Review Com'n, 199 F.3d 1335,
1340 (D.C. Cir. 2000).

Secretary’s Position in the Underlying
Case

I find that the position of the Department
of Labor pertinent to North County’s EAJA claim includes the Secretary’s demand
for $35,500. Only one determination of the Secretary’s position can be used in
an EAJA proceeding; each change in position does not warrant a separate
finding. Jean, 496 U.S. at 159. The Secretary’s original position demanded
a penalty of $35,500 from North County for its violation of section 56.15005. The
Secretary adhered to this position throughout the proceeding including during
the hearing. The large monetary amount of the proposed penalty caused North
County to contest the penalty, incur substantial legal fees, and proceed to
hearing. The Secretary adhered to this position for years and it composed both
“the position taken by the Secretary in the adversary adjudication” and “the action or failure to act by the Secretary upon which
the adversary adjudication is based.” 29 C.F.R 2704.105(a).

The Secretary consistently maintained that
the proposed penalty of $35,500 was appropriate from the onset of the
litigation until more than two months after the close of the hearing. The
Secretary’s actions led North County to incur substantial legal fees. The aim
of EAJA is to deter the government from forcing small entities to incur legal
fees when the government’s position is unjustified; here, allowing the
government to change its entrenched position to avoid an EAJA claim defeats the
purpose of EAJA. The government stood by its position through the adversary
adjudication and North County had already incurred attorney fees, regardless of
the post-hearing amendment that the Secretary made. The adjudication was based
upon the Secretary’s prehearing and litigation position that included a
proposed penalty of $35,500 and that is the position that is pertinent to this
EAJA award.[5]

The Secretary argues that had North
County filed its Motion to Strike earlier, the parties could have resolved the
case without a Motion for Summary Decision or hearing; I disagree. North County
raised this issue in its answer to the Secretary’s penalty petition. Moreover,
North County filed a Motion for Summary Decision on June 30, 2012 that, among
other issues, argued that MSHA’s special assessment did not consider the six
penalty criteria in the Mine Act and the Secretary’s penalty regulations and that
the Secretary “provided absolutely no information as to how the $35,500 penalty
was determined.” (R.’s Motion for Summary Decision at 11-14).[6]
Thus, North County presented the core argument included in its Motion to Strike
to the Secretary well before the hearing, but the Secretary did not change his
position and, in all likelihood, did not review the legitimacy of the special
assessment at that time. The Secretary only reduced his proposed penalty,
changing his position and settlement offer, after participating in the hearing
and appointing new counsel as his representative. Ms. Mucklow, the Secretary’s
counsel until July 2013, apparently showed no interest in reviewing the basis
for the special assessment or in otherwise settling the case.

North County’s Prevailing Party Status

I find that North County is a prevailing
party under 29 C.F.R 2704.105(a) because in the underlying proceedings, (1) I
ordered a change in the relationship of the parties (2) in favor of North
County which (3) provided judicial relief to North County. In my September 26,
2013, decision, I ordered a final disposition of Citation No. 7980681, which
modified the citation and removed the Secretary’s ability to further change the
penalty or designations of the citation. The modifications all favored North
County: I lowered the negligence designation from reckless disregard to high,
found that the cited condition was reasonably likely and not highly likely to
lead to an injury, and that the likely injury would not be fatal.[7]
Most important to this proceeding is the significant reduction of penalty that
North County received. North County declared that its main objective at hearing
was to achieve a reduction in the proposed penalty and tailored its arguments
and presentation of evidence to achieve that goal. North County achieved its primary
goal of a penalty reduction and is therefore a prevailing party, even though I
found that they owe more than zero dollars.[8]
My conclusion that a penalty of $3,500 was appropriate for the violation was
not based on the Secretary’s motion to amend the penalty.

The decision provided judicial relief
and changed the legal relationship of the parties by modifying the citation and
lowering the penalty owed by North County. The legal relationship between the
parties changed, North County prevailed in some of its claims and was awarded relief
by the court; North County is therefore a prevailing party for the purposes of
this EAJA proceeding.

Substantial Justification

The Secretary did not
fulfill his burden to substantially justify his position on the law and facts; he did
not adhere to the requirements of 30 C.F.R. 100 and provided no convincing
evidence that he was justified to initially propose and then litigate a $35,500
penalty. Once an applicant shows that it was a prevailing party, the Secretary bears
the burden to justify his position “to a degree that could satisfy
a reasonable person.” Pierce v. Underwood, 487 U.S. at 564-66. Although the
Secretary substantially justified his positions concerning his negligence and
gravity designations that I modified following the hearing,[9]
he did not justify the amount of his proposed penalty. The Secretary’s Objection
to Application for Award of Attorney’s Fees and Expenses ignores the
criteria required by 30 C.F.R. 100.3(a) and 30 C.F.R. 100.5(b)[10]
and argues that the Secretary’s procedures, which were either inapplicable or
not followed, justified his position; the Secretary did not satisfy a
reasonable person that his position was justified.

The Secretary did not
provide evidence to show that he proposed the penalty after considering all the
factors that the Mine Act requires, as set forth in 30 C.F.R.
100.3(a) and 30 C.F.R. 100.5(b). The Secretary did not address the penalty
factors or explain why a penalty of $35,500 was appropriate under the Mine Act.
The Mine Act mandates that Secretary formulate penalties based upon the six
criteria in section 100.3(a). To justify the specific penalty amount in an EAJA
case, therefore, the Secretary must show how he applied the penalty criteria to
the facts of the case or at least address why the amount was reasonable.

In the underlying case, furthermore, the
penalty was the focus of the dispute and the Secretary should have supported
that penalty by demonstrating its consideration of all the factors required by
the Mine Act. The Secretary had numerous opportunities to provide that
information and justify his penalty, but he failed to do so. North County
challenged the validity of the specially assessed penalty in its answer to the
Secretary’s penalty petition and in its motion for summary decision. In his
opening statement at the hearing, counsel for North County asserted that his primary
goal at hearing was the reduction of the penalty. The
basic facts of the violation, which were easy to discern from photographs, were
the only proof presented by Mucklow at the underlying hearing. These facts
allowed me to uphold the violation as well as the Secretary’s S&S and unwarrantable
failure designations, but they do not justify the large proposed penalty, especially
considering the mine’s small size, the company’s sparse history of previous
violations, and its demonstrated good faith. I determined that North County was a
small operator with only two employees at the Roadrunner 32 Mine at the time
the citation was issued. 35 FMSHRC at 3223. The mine had a history of three
violations, none of which were S&S. (Id.; Ex. G-19 in WEST
2010-365-M). The mine operated on an intermittent basis. North County employed
between 20 and 25 people at other facilities but most worked in operations that
were not subject to the Mine Act. (Tr. 130-31 in WEST 2010-365-M).

When North County filed its Motion to Strike,
the Secretary did not oppose the motion by supporting the validity of its
special assessment by addressing the six penalty criteria; the Secretary chose
instead to avoid doing so and removed the special assessment. In its motion to
amend the penalty, the Secretary stated: “After reviewing the arguments
presented in Respondent’s motion and revisiting the evidence of the
circumstances surrounding the citation at issue, the Secretary has determined
that the conditions surrounding the violation at issue do not warrant a special
assessment.” (Motion at 2). At no point in the underlying proceedings did the
Secretary show how the penalty amount was formulated, how it related to the
penalty factors in section 100.3(a), or show that he even considered all the
factors. The Secretary’s Petition for Assessment of Penalty, as filed with the
Commission, did not include Narrative Findings for a Special Assessment or any
other documents setting forth the basis for the proposed penalty.

I reject the Secretary’s
argument that his $35,500 proposed penalty was justified because he abided by
his “own policies.” (Sec’y Br. at 12). The Secretary states that he decided to
lower his proposed penalty “based on procedural gaps within the specific
assessment process[.]” (Sec’y Br. at 6, 13-14). These “procedural gaps” could
have and should have been discovered by the Secretary long before the citation
was adjudicated at a hearing. When North County challenged the special
assessment in its motion for summary decision, the Secretary should have
conducted a review of his special assessment of the citation. His failure to do
so is not a defense to North County’s EAJA claim.

The Secretary’s assertion
that his position is justified because MSHA specially assesses all violations
of its “Rules to Live By” actually undermines his position. As North County
points out, MSHA’s “Rules to Live By” policy referenced by the Secretary did
not exist when the penalty was proposed, which shows that the Secretary could not
possibly have abided by it when assessing this penalty.[11] The Secretary cannot revise the past
to make the position he took in the past appear justified.

The timing of the
Secretary’s amendment of its penalty, moreover, is suspicious. North County
disputed the specially assessed penalty throughout the proceedings, including
in its answer to the penalty petition filed February 18, 2010 and in its Motion
for Summary Decision filed on January 30, 2012. The Secretary maintained that
his initial penalty proposal was appropriate and only reconsidered the penalty
after North County filed its Motion to Strike and the Secretary substituted
counsel.

Once an operator shows that
it is a prevailing party, the Secretary bears the burden to show that his
position was substantially justified. I find that the Secretary failed to
fulfill this burden. The Secretary’s justification of his position in this case
could satisfy no reasonable person.[12]
The arguments that there were procedural gaps within the assessment process at
issue and that the Secretary did not review the penalty procedures until after
North County filed its Motion to Strike actually support that it was
unreasonable for the Secretary to pursue such a high penalty against a small
operator; he did not follow his own procedures and did not bother to review the
procedures that the disputed penalty was based upon, but adhered to the penalty
throughout the adjudication. The Mine Act requires the Secretary to base his proposed
penalty upon the six penalty criteria and therefore he is required to present his
consideration of those factors to the court. This failure, in addition the
arguments that the Secretary did present, make it clear that the Secretary did
not fulfill his burden to justify his position. North County is
entitled to an EAJA fee award under 29 C.F.R 2704.105(a).

IV. ORDER

It
is ORDERED that North County’s EAJA application for attorney’s fees and
expenses is GRANTED. The parties are FURTHER ORDERED TO
CONFER before May 21, 2014, in an attempt to reach agreement
upon the specific reimbursement to be awarded. An agreement as to the amount of
reimbursement to be awarded will not preclude either party from appealing this
decision upon entry of my final order. If an agreement is reached, a Joint
Stipulation on Reimbursement shall be submitted to me on or before June
4, 2014. The relief may be a lump sum payment.

If an agreement cannot be reached, the
parties are FURTHER ORDERED to submit their respective
positions upon the disputed issues, with any necessary supporting arguments,
case citations, and citations to the record, on or before June 18, 2014.
Each party shall submit specific proposed dollar amounts with explanations
for the amount chosen.

I retain jurisdiction over this case
until I issue a specific award to North County. Consequently, this decision
will not become a final appealable decision until I issue an order containing a
monetary award.

/s/
Richard W. Manning

Richard
W. Manning

Administrative
Law Judge

Distribution:

Timothy
J. Turner, Esq., Office
of the Solicitor, U.S. Department of Labor, 1999 Broadway, Suite 1600, Denver,
CO 80202-5708 (Certified Mail)

C.
Gregory Ruffennach, Esq., 1629 K Street, N.W. STE 300, Washington DC 20006-1621
(Certified Mail)

[1] Section
2704.104 requires that only small entities that are parties to the adversary
adjudication may seek EAJA awards. The standards are different for individuals
and entities, but focus on net worth and number of employees. North County has
a net worth less than “$7 million and not more than 500 employees.” 29 C.F.R
2704.104(b)(3)(iii).

[2] Pamela Mucklow
represented the Secretary prior to and at the hearing. On July 22, 2013,
Timothy Turner filed a Substitution of Counsel and became the Secretary’s
counsel.

[3] Section
100.3(a) states, in part:

The amount of the proposed civil penalty shall be based on
the criteria set forth in sections 105(b) and 110(i) of the Mine Act. These
criteria are: 

(i) The appropriateness of the penalty to the
size of the business of the operator charged; 

(ii) The operator's history of previous
violations; 

(iii) Whether the operator was negligent; 

(iv) The gravity of the violation; 

(v) The demonstrated good faith of the operator
charged in attempting to achieve rapid compliance after notification of a
violation; and 

(vi) The effect of the penalty on the
operator's ability to continue in business.

30
C.F.R. 100.3(a).

[4] Section 110(i) of the Mine Act states, in part:

The
Commission shall have authority to assess all civil penalties
provided in this Act. In assessing civil monetary penalties, the Commission
shall consider the operator's history of previous violations, the
appropriateness of such penalty to the size of the business of the operator
charged, whether the operator was negligent, the effect on the operator's
ability to continue in business, the gravity of the violation, and the
demonstrated good faith of the person charged in attempting to achieve rapid
compliance after notification of a violation.

30
C.F.R. 110(i).

[5] I reject the
Secretary’s argument that the decrease in penalty was a voluntary change and
not the product of judicial action. I assessed the penalty de novo and my
assessment of a $3,500 penalty was not influenced by the fact that the Secretary
amended the penalty after the hearing.

[6]
By order
dated April 12, 2012, I denied the motion because material facts were in
dispute as to the merits of the citation.

[7] I reject the
Secretary’s argument that he was victorious based upon the affirmation of the
unwarrantable failure and S&S designations of Citation No. 7980681. Every
modification made to the citation was adverse to the Secretary’s position. Any
success achieved by the Secretary would affect the extent of North County’s
victory, which subsequently would diminish the fees awarded to North County. Hensley
v. Eckerhart, 461 U.S. 424, 432 (1983).

[8] North County
argues that if it is not a prevailing party it is entitled to relief under
section 2704.105(b). The Secretary made a demand that substantially exceeded my
decision and was unreasonable, but I find that North County is not eligible for
relief under section 2704.105(b). A party that does not prevail may be entitled
to attorney’s fees under EAJA if “the demand of the Secretary is substantially
in excess of the decision of the Commission and is unreasonable when compared
with such decision[.]” 29 C.F.R 2704.105(b). Section 2704.105(b) does not apply
to prevailing parties because prevailing parties “could
argue that they meet the requirements of the ‘excessive demand’ prong of section 504(a)(4) in nearly every
instance, rendering it essentially meaningless (although the Secretary's demand
must also be determined to be ‘unreasonable’).” Colorado
Lava, Inc., 27 FMSHRC at 189.

[9] Although I did
not uphold all the designations proposed by the Secretary, they were not
unreasonable for the purposes of this EAJA proceeding. The reasonableness
standard of the EAJA is a distinct legal standard. The judicial decision in the
proceeding underlying the EAJA claim can be relevant, but is not determinative.
Halverson v. Slater, 206 F.3d 1205, 1208 (D.C. Cir. 2000) (citing F.J.
Vollmer Co., Inc. v. Magaw, 102
F.3d 591, 595 (D.C. Cir. 1996)).

[10] Section
100.5(b) mandates that “[w]hen MSHA
determines that a special assessment is appropriate, the proposed penalty will
be based on the six criteria set forth in § 100.3(a). All findings shall be in
narrative form.” 30 C.F.R. 100.5(b). 

[11] The Rules to
Live By policy was enacted in March 2010, but the Secretary filed his Petition
for Penalty on January 15, 2010.

[12] North
County argues that the Secretary’s special assessment procedure is inherently unreasonable.
In this instance I find that the application and litigation of that procedure
was unreasonable, but it is unnecessary for me to rule upon the procedure in
general and therefore I decline to do so. I limit my findings to the specific
facts and circumstances presented by this case.