Secretary of Labor v. The American Coal Company and United Mine Workers of America and United Steel, et al.

Plain-English summary

MSHA issued The American Coal Company 32 citations, including 14 designated significant and substantial, for conditions cited between July and August 2010. The Secretary proposed a settlement that left every citation and its gravity and negligence allegations unchanged but reduced every penalty by 30 percent, citing only the nature of the citations, litigation uncertainty, and the parties' interest in settlement. The Judge denied approval because the proposal gave no facts supporting the reductions, and the Secretary declined to supply more facts on reconsideration. The Commission affirmed, holding that section 110(k) gives the Commission responsibility to approve contested-penalty settlements and permits Judges to require enough information to decide whether a settlement is fair, reasonable, appropriate under the facts, and protective of the public interest. It rejected the Secretary's request for a narrower consent-decree standard, clarified that uniform percentage reductions are not inherently improper, and remanded for further proceedings.

Decision snapshot

• Governing provisions: 30 U.S.C. §§ 820(i) and 820(k); 29 C.F.R. § 2700.31
• Outcome: The denial of the proposed 30 percent reductions for 32 penalties was affirmed, and the case was remanded for further proceedings.
• Key point: A settlement may use uniform percentage reductions, but the parties must provide facts that allow the Commission to evaluate the reduced penalties and protect the public interest.

Full text (FMSHRC public release)

FEDERAL MINE SAFETY AND
HEALTH REVIEW COMMISSION

1331 PENNSYLVANIA AVENUE, NW, SUITE 520N

WASHINGTON, DC 20004-1710

SECRETARY
OF LABOR                              :                                     

MINE
SAFETY AND HEALTH                    :

ADMINISTRATION
(MSHA)                       :

:

v.
                                               :        Docket No. LAKE 2011-13 

:                         

THE AMERICAN
COAL COMPANY           :

:

and                                           
 :                         

:

UNITED
MINEWORKERS                            :

Of AMERICA                                                 :

:                         

and                                           
 :

:                         

UNITED STEEL,
PAPER and FORESTRY,   :

RUBBER
MANUFACTURING,                    :                         

ALLIED and
INDUSTRIAL SERVICE        :

WORKERS INTERNATIONAL
UNION     :

BEFORE:
Jordan, Chairman; Young, Cohen, Nakamura, and Althen, Commissioners

DECISION

BY THE
COMMISSION:

In
this civil penalty proceeding, arising under the Federal Mine Safety and Health
Act of 1977, 30 U.S.C. § 801 et seq. (2012) (“Mine Act” or “Act”), a Commission
Administrative Law Judge denied a motion to approve a settlement between The
American Coal Company (“AmCoal”) and the Secretary of Labor because no factual
support had been provided for a 30% penalty reduction for each of the 32
citations issued to AmCoal by the Secretary. 35 FMSHRC 515 (Feb. 2013) (ALJ). The
Secretary subsequently filed a motion for reconsideration, in which the
Secretary refused to provide further factual support and challenged the basis
for the Judge’s action. The Judge again denied the motion. 36 FMSHRC 1489 (May
2014) (ALJ).

In
this interlocutory appeal of the Judge’s denial, the Secretary seeks to change
the course of more than 35 years of administrative practice and case law. The
Secretary has chosen this case to be the “test case” for advancing his position
that the Commission’s authority to review settlements of contested penalties
under section 110(k) of the Mine Act, 30 U.S.C. § 820(k),[1] is much
more limited than that described in Black Beauty Coal Co., 34 FMSHRC 1856,
1860-64 (Aug. 2012). See Intervenor’s Br., Ex. D (Memorandum from Heidi
Strassler, Assoc. Solicitor for Mine Safety and Health, to Regional Solicitors
(May 2, 2014)). The Secretary also seeks to have the Commission import and apply
the consent decree standard of review employed by the Second Circuit in SEC
v. Citigroup Global Markets, Inc., 752 F.3d 285 (2d Cir. 2014) (“Citigroup
II’). For the reasons that follow, we decline to do so and affirm in all
respects the Judge’s denial of the motion to approve settlement.

I.

Factual and Procedural Background

This
case involves 32 contested citations issued to AmCoal between July 13 and
August 12, 2010, 14 of which were designated as significant and substantial
(“S&S”).[2]
In February 2013, the Secretary filed a motion to approve a proposed settlement
and dismiss the proceedings. Under the proposed settlement, AmCoal would accept
the citations as written, including the allegations regarding gravity and
negligence, but pay a 30% across-the-board penalty reduction. The proposed settlement
states as the rationale for the reduction in penalties:

After further
review of the evidence, the Secretary has determined that a reduced penalty is
appropriate in light of the parties’ interest in settling this matter amicably
without further litigation. In recognition of the nature of the citations at
issue, and the uncertainties of litigation, the parties wish to settle the
matter with a 30% reduction in the total assessed penalty with no changes in
gravity or negligence for any of the citations at issue.

Mot.
to Approve Set. at 2-3.

The
Judge issued a decision denying the settlement motion based upon his reading of
section 110(k), its legislative history, and the Commission’s decision in Black
Beauty.

35
FMSHRC at 515-17. He reasoned that the motion failed to provide adequate
factual support for the penalty reductions, and stated that the
across-the-board reduction for each of the citations was itself a “red flag.” Id.

The
Secretary subsequently filed a motion for reconsideration. In the motion, the
Secretary requested that the Judge reconsider his conclusions that section
110(k) compelled him to reject the settlement for lack of factual support, and
that section 110(k) does not permit the Secretary to negotiate settlement
agreements structured as a uniform percentage reduction of penalties. S. Mot.
for Recon. at 4. The Secretary’s counsel stated that:

Exercising her
professional judgment as a representative of the Secretary, she considered the
value of the proposed compromise; the prospects of coming out better, or worse,
after a full trial; and the resources that the Secretary would need to expend
in going through a trial. The Secretary, through the undersigned counsel,
represents that the proposed settlement is in the public interest and is
compatible with MSHA’s enforcement goals.

Id.

The
Judge again denied the motion to approve settlement. 36 FMSHRC at 1502. The
Judge concluded that the Secretary had not altered the terms of the original
settlement agreement or provided further explanation to justify it. Id.
at 1489.

The Secretary subsequently
filed a motion requesting that the Judge certify his ruling for interlocutory
review. The Judge denied the motion and issued a certification for
interlocutory review on his own motion. The Secretary then filed a petition for
interlocutory review with the Commission.  In light of the Judge’s
certification and the Secretary’s petition, we issued an order granting interlocutory
review on the issue of whether the Judge erred in denying the Secretary’s
motion to approve settlement.

We also issued
an order permitting intervenor participation by the United Mine Workers of
America (“UMWA”) and the United Steel, Paper and Forestry, Rubber
Manufacturing, Energy, Allied Industrial and Service Workers International
Union (“United Steel Workers”), and amicus curiae participation by former U.S.
Representative George Miller.[3]
In addition, we heard oral argument. 

II.

Disposition

On review, the
Secretary argues that the Judge erroneously denied the settlement proposal and
rejected across-the-board percentage penalty reductions based on an incorrect
reading of section 110(k). He contends that section 110(k) should be interpreted
in light of the separation of powers principle that settlement decisions
involve policy choices that the U.S. Constitution vests in political branches,
not in court-like agencies like the Commission.

The Secretary
asserts that enforcement agencies are generally presumed to have unreviewable
discretion to settle enforcement actions. Citing Heckler v. Chaney, 470
U.S. 821, 834 (1985), he submits that such a presumption can be overcome only
where the controlling statute both (1) indicates an intent to circumscribe
agency enforcement discretion; and

(2) provides meaningful standards for
defining the limits of that discretion. The Secretary argues that section
110(k) does not satisfy the second prong of the Chaney test because the
statute provides no meaningful standards for judicial review of settlements,
and that the Commission’s role is no different than that of a “generalist
court.” S. Br. at 19-22; S. Reply Br. at 6-7.

The
Secretary further contends that section 110(i) of the Act, 30 U.S.C. § 820(i),[4] cannot
supply the standard that section 110(k) does not provide, that the Act’s legislative
history does not provide a standard for limiting the Secretary’s prosecutorial
discretion, and that to the extent Commission Procedural Rule 31, 29 C.F.R. §
2700.31, provides a substantive standard, the rule exceeds the Commission’s
authority to promulgate only procedural rules. He asserts that when reviewing
settlement proposals, the Commission should apply the consent decree standard
of review applied by the Second Circuit in Citigroup II. Under the
Secretary’s theory, the Judge was not entitled to request any additional
information supporting the reduction in penalties.

The
UMWA and United Steel Workers respond that the Judge correctly denied the
settlement motion. They argue that section 110(k) plainly requires that
proposed settlements be approved by the Commission and delegates to the
Commission the authority to effectuate that mandate. Former Congressman Miller supports
the position of the intervenors. 

A.        The
Commission’s Role in Approving Settlements

Section
110(k) of the Mine Act sets forth the requirements for the approval of
proffered settlements of contested penalties. It provides:

No proposed penalty
which has been contested before the Commission under section 105(a) shall be
compromised, mitigated, or settled except with the approval of the Commission. No
penalty assessment which has become a final order of the Commission shall be
compromised, mitigated, or settled except with the approval of the court.

30
U.S.C § 820(k). Thus, section 110(k) states in very clear language that the
Commission has the exclusive responsibility for approving all proposed
settlements of contested civil penalties.

The
legislative history of section 110(k) describes the Congressional rationale
behind the provision in great detail. The Senate Report states that the
“compromising of the amounts of penalties actually paid” had reduced “the
effectiveness of the civil penalty as an enforcement tool.” S. Rep. No. 95-181,
at 44 (1977), reprinted in Senate Subcomm. on Labor, Comm. on Human
Res., Legislative History of the Federal Mine Safety and Health Act of 1977,
at 632 (1978) (“Legis. Hist.”). The Committee explained that in investigating
the penalty collection system under the Federal Coal Mine Safety and Health Act
of 1969, it learned “that to a great extent the compromising of assessed
penalties [did] not come under public scrutiny,” and that “[n]egotiations
between operators and Conference Officers of MESA [MSHA’s predecessor] are not
on the record.” Id. It noted that even after a petition for civil
penalty had been filed, “settlement efforts between the operator and Solicitor [were]
not on the record, and a settlement need not be approved by the Administrative
Law Judge.” Id.

In
fashioning a solution to this problem, Congress emphasized the need for
transparency in the penalty process, stating that “the purpose of civil
penalties, [that is,] convincing operators to comply with the Act’s
requirements, is best served when the process by which these penalties are
assessed and collected is carried out in public,” where miners, Congress, and
other interested parties “can fully observe the process.” Id. at 633. “To
remedy this situation,” section 110(k) “provides that a penalty once proposed
and contested before the Commission may not be compromised except with the
approval of the Commission” and that a “penalty assessment which has become the
final order of the Commission may not be compromised except with the approval
of the Court.” Id.

Congress
explained that “[b]y imposing [the] requirements” of section 110(k), it “intend[ed]
to assure that the abuses involved in the unwarranted lowering of penalties
as a result of off-the-record negotiations are avoided.” Id. (emphasis
added). Congress expressed its “inten[t] that the Commission and the Courts
will assure the public interest is adequately protected before any reduction in
penalties.” [5]
Id.

Based
on the language of section 110(k) and its legislative history, the Commission reaffirmed
in Black Beauty that Congress authorized the Commission to approve the
settlement of contested penalties in section 110(k) “[i]n order to ensure
penalties serve as an effective enforcement tool, prevent abuse, and preserve
the public interest.” 34 FMSHRC at 1862 (citations omitted). In effectuating
this Congressional mandate, the Commission and its Judges consider whether the
settlement of a proposed penalty is fair, reasonable, appropriate under the
facts, and protects the public interest.

The
Commission’s consideration of proffered settlements has worked well for more
than 35 years.[6]
Indeed, a majority of proceedings under the Mine Act have been settled, and the
vast majority of settlement agreements submitted for approval have been
approved by Commission Judges.[7]

The
Secretary argues that the Commission’s review should be more limited than that
described in Black Beauty because section 110(k) should be interpreted
in light of the separation of powers principle that settlement decisions
involve policy choices that are vested in political branches, not in court-like
agencies like the Commission. He further argues that the Commission’s function
in reviewing settlement proposals is no different than that of a generalist
court.

The
Commission is an independent federal agency that shares a unique split
enforcement scheme under the Mine Act with the Secretary of Labor. Under the
split enforcement scheme of the Mine Act, Congress has given the Secretary and
the Commission separate roles and functions, particularly with respect to civil
penalties. Section 110(i) describes the distinct roles of the Secretary and the
Commission with respect to the proposal and assessment of penalties: the
Secretary proposes penalties based on an available summary of information and
need not make factual findings, while the Commission assesses “all” penalties
under the Act, based upon its consideration of six specified criteria.

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. In proposing civil penalties under this Act,
the Secretary may rely upon a summary review of the information available to
him and shall not be required to make findings of fact concerning the above
factors.

30
U.S.C. § 820(i). See Mach Mining, LLC v. Sec’y of Labor, 809 F.3d 1259,
1264 (D.C. Cir. 2016) (citing Sellersburg Stone Co. v. FMSHRC, 736 F.2d,
1147, 1151-52 (7th Cir. 1984)) (other citations omitted) (noting
“split-function” of penalty scheme under the Mine Act); Thunder Basin Coal
Co. v. Reich, 510 U.S. 200, 208 (1994) (“Only the Commission has authority actually
to impose civil penalties proposed by the Secretary, § 820(i), and the
Commission reviews all proposed civil penalties de novo according to six
criteria.”).

The
Commission cannot accurately be compared to a generalist court or any other
judicial or administrative entity owing deference to the unreviewable
settlement decisions of an executive agency. Section 113(a) of the Mine Act
requires Commissioners to have certain qualifications to carry out the
Commission’s functions under the Act.[8]
30 U.S.C. § 823(a) (stating that the Commission shall be comprised of “five
members, appointed by the President by and with the advice and consent of the
Senate, from among persons who by reason of training, education, or experience
are qualified to carry out the functions of the Commission under this Act”); see
Thunder Basin, 510 U.S. at 214 (noting the “Commission’s expertise” in
construing the Mine Act).

It
is also noteworthy that civil penalties under the Mine Act ultimately become
final orders or decisions “of the Commission,” not of the Secretary. Uncontested
penalties, that is, penalties that have been proposed by the Secretary but have
not been contested by an operator or miner under section 105(a) or 105(b) of
the Mine Act, are “deemed a final order of the Commission” 30 days after
the operator or miner receives the penalty notification from the Secretary. 30
U.S.C. §§ 815(a), 815(b) (emphasis added). Contested penalties that are the
subject of proceedings before the Commission and its Judges ultimately become
part of final decisions of the Commission under section 113(d) of the Act, 30
U.S.C. § 823(d). Similarly, in cases in which an operator has defaulted on a
proposed penalty assessment by failing to timely answer the Secretary’s penalty
petition, the Judge’s default order on the penalty becomes a “final decision
of the Commission” 40 days after its issuance. 30 U.S.C. § 823(d)(1); see,
e.g., Horton v. Coal River Mining, LLC, 38 FMSHRC ___, slip op. at 2, No.
WEVA 2013-1183-D (June 28, 2016) (emphasis added). Under section 110(k), courts
of appeals may review a proffered settlement of a “penalty assessment which has
become a final order of the Commission.” 30 U.S.C. § 820(k) (emphasis
added).

With
respect to settlements of contested penalties, section 110(k) explicitly grants
approval authority to the Commission.[9]
The very existence of section 110(k) makes comparisons between the Commission’s
review of settlement proposals with settlement review by other agencies and
courts inappropriate. The Department of Labor and the Occupational Health and
Safety Review Commission (“OSHRC”) share a split-enforcement scheme under the
Occupational Safety and Health Act of 1970 (“OSHAct”), while other agencies
that follow this model are rare. However, there is no provision similar to
section 110(k) in the OSHAct. Indeed, the parties have not revealed a single
provision in any federal statute that is similar to section 110(k).

Accordingly,
the Secretary’s contentions that separation of powers principles are relevant
have no merit. First, because the Department of Labor and the Commission are
wholly separate Article II agencies, such principles do not come into play. Second,
although Congress gave the Secretary most of the enforcement powers under the
Act, it expressly chose to give to the Commission the authority to assess
penalties and approve settlements – powers that usually are given to an
enforcement agency. Congress spoke clearly in this regard.

B.        Reviewability

We similarly find unavailing
the Secretary’s challenge to the scope of the Commission’s review of proposed
settlements. The Secretary argues that enforcement agencies are generally
presumed to have unreviewable discretion to settle enforcement actions. He contends,
“[t]he default presumption of unreviewability is overcome, however, only where
the controlling statute both (1) ‘indicate[s] an intent to circumscribe agency
enforcement discretion,’ and (2) ‘provide[s] meaningful standards for defining
the limits of that discretion.’” S. Br. at 19, quoting Heckler, 470 U.S.
at 834. He states that section “110(k) does not, however, satisfy the second
part of the Heckler test because the statute provides no meaningful or
substantive standards that limit the Secretary’s prosecutorial discretion when
the Secretary negotiates settlement agreements.” S. Br. at 19-20. The Secretary
concludes that because Congress gave the Commission “no law to apply” when
reviewing settlement agreements, “the scope of [the Commission’s] reviewing
function is, at best, limited.” Id. at 20.

As
the Secretary argues, courts have determined that the presumption of
nonreviewabilty generally extends to an agency’s decision to settle an action. See
Speed Mining, Inc. v. FMSHRC, 528 F.3d 310, 317 (4th Cir. 2008), citing
Baltimore Gas and Elec. Co. v. FERC, 252 F.3d 456, 461-62 (D.C. Cir. 2001).
However, a “presumption of nonreviewability may be overcome by congressional
limitations.” Baltimore Gas and Elec., 252 F.3d at 459.

Section
110(k) is an explicit expression of Congressional authorization that rebuts any
presumption of unreviewability. The Commission does not review the Secretary’s decision
to settle. Rather, the Commission reviews the proposed reduction of civil
penalties in settlements.

Moreover,
the Secretary misreads Heckler v. Chaney to support his argument that the
Commission’s review is “at best, limited.” In Heckler, the Supreme Court
explained that if a statute does not set forth a meaningful standard against
which to review an agency’s exercise of discretion, the statute may be read to
make the agency’s decisionmaking unreviewable.

[R]eview is not
to be had if the statute is drawn so that a court would have no meaningful
standard against which to judge the agency’s exercise of discretion. In such a
case, the statute (‘law’) can be taken to have ‘committed’ the decisionmaking
to the agency’s judgment absolutely.

470
U.S. at 830. The Court did not speak in terms of “limited” review but, rather,
spoke in terms of an agency’s actions under a statute being reviewable or
not depending upon whether there are manageable standards for that review.[10]

Section
110(k) explicitly limits the Secretary’s authority to reduce contested
penalties in settlement and grants the Commission authority to approve
proposed settlements. If the statute fails to set forth a meaningful standard
for the Commission’s review of reduced contested penalties in settlement, section
110(k) could be read to make the Commission’s exercise of discretion
unreviewable.[11]
As discussed below, however, there are meaningful standards for the
Commission’s review of settlement proposals.

C.        The
Commission’s Standard for Reviewing Proposed Settlements of Contested Penalties

As
discussed above, in Black Beauty the Commission stated that the
legislative history of section 110(k) reveals that Congress authorized the
Commission to approve the settlement of contested civil penalties in order to
ensure that penalties serve as an effective enforcement tool, prevent abuse,
and preserve the public interest. 34 FMSHRC at 1862.

The
Commission and its Judges must have information sufficient to carry out this
responsibility. Consequently, through its procedural rules, the Commission has
required parties to submit facts supporting a penalty amount agreed to in
settlement. In particular, Commission Procedural Rule 31 requires that a motion
to approve penalty settlement must include for each violation the penalty
proposed by the Secretary, the amount of the penalty agreed to in settlement,
and facts in support of the penalty agreed to by the parties. 29 C.F.R.

§ 2700.31(b)(1).
Rule 31 also requires that “[a]ny order by the Judge approving settlement shall
set forth the reasons for approval and shall be supported by the record.” 29
C.F.R. § 2700.31(g). The requirements to provide factual support in the
settlement proposal and for the Judge’s decision approving settlement to be
supported by the record have been largely unchanged since the inception of the
Commission’s procedural rules in 1979. See 44 Fed. Reg. 38,226, 38,230
(June 29, 1979).[12]

The
Commission has recognized that standards for such factual support may be found
in section 110(i). For instance, in Black Beauty, the Commission held
that it was not error for the Judge to request factual support relating to the six
criteria set forth in section 110(i) for her consideration of the penalties
agreed to by the parties. 34 FMSHRC at 1864 (“The Judge did not abuse her
discretion in requiring the Secretary to provide further factual support to
demonstrate the penalty criteria as they relate to the subject penalties.”).  

The
Secretary asserts that it is inappropriate for a Judge to consider section
110(i) factors when considering whether to approve a proposed penalty
settlement. We disagree. Congress recognized that the approval of a proposed
penalty reduction in settlement is part of the assessment and collection process.
As stated in the Senate Report:

The Committee
strongly feels that the purpose of civil penalties, convincing operators to
comply with the Act’s requirements, is best served when the process by which
these penalties are assessed and collected is carried out in public, where
miners and their representatives, as well as the Congress and other interested
parties, can fully observe the process.

To
remedy this situation, Section 111(l) [later codified as section 110(k)]
provides that a penalty once proposed and contested before the Commission
may not be compromised except with the approval of the Commission.

S.
Conf. Rep. No. 95-181, at 45 (1977), reprinted in Legis. Hist. at 633
(emphasis added). Thus, in Black Beauty, the Commission reasoned that its
authority to “assess all civil penalties provided in [the] Act” under section
110(i) “clearly includes contested penalties that are the subject of a
settlement agreement.” 34 FMSHRC at 1862.

Upon
reviewing information supporting a reduced penalty agreed to by the parties,
the Commission Judge need not make factual findings with respect to each of the
section 110(i) factors as a Judge would in the assessment of a penalty after
hearing. Rather, the Judge considers such information in the evaluation of
whether the proposed reduction of penalties is fair, reasonable, appropriate
under the facts, and protects the public interest.

We
note that parties may submit facts supporting a settlement that fall outside of
the section 110(i) factors but that support settlement. For instance, parties
may provide factual support demonstrating that the operator has provided
additional training or made relevant engineering or personnel changes. As the
Commission observed in Black Beauty, section 110(k) “contains no
explicit restrictions on what a Commission Judge may consider when reviewing a
settlement proposal.” 34 FMSHRC at 1865. Such a conclusion does not mean that
the Commission’s review is unbounded. Rather, it means that there may be
considerations beyond the six statutory criteria of section 110(i) that are
relevant to whether a settlement proposal is fair, reasonable, appropriate
under the facts, and protects the public interest.

Although
the language of section 110(k) contains no explicit restrictions on the
Commission’s review, the Commission’s review of proposed settlements of
contested penalties is bounded. Such boundaries are provided by section 110(i)
of the Mine Act, the Act’s legislative history, and the Commission’s Procedural
Rules. See, e.g., Padula v. Webster, 822 F.2d 97, 100 (D.C. Cir. 1987)
(citations omitted) (“Judicially manageable standards may be found in formal
and informal policy statements and regulations as well as in statutes.”); Cargill,
Inc. v. United States, 173 F.3d 323, 335 (5th Cir. 1999) (considering
legislative history to discern meaningful standard for an agency’s exercise of
discretion).

D.        The
Second Circuit’s Consent Decree Standard

The
Secretary argues that when reviewing settlement proposals, the Commission
should apply the consent decree standard of review applied by the Second
Circuit in Citigroup II. Under that standard, the Commission would
consider whether the proposed settlement (1) is legally sound, (2) is clear,
(3) resolves the claims in the penalty petition, and (4) is not tainted by
improper collusion or corruption. 752 F.3d at 294-95. The Secretary argues that,
under this standard, he is entitled to deference with respect to his
determination that the proposed settlement is in the public interest.

The
Secretary’s application of the Citigroup II standard to the 32 citations
at issue in this case is set forth in approximately five pages of his brief. S.
Br. at 49-53. He asserts that the proposed settlement is legally sound because
section 110(k) does not prohibit uniform percentage reductions in penalties; that
the settlement is clear because there is no doubt about the penalties AmCoal
has agreed to pay or the effect of the conceded violations on AmCoal’s history
of violations; that the settlement reflects a resolution of the actual claims
because no citations have been erroneously added or omitted; and that there have
been no allegations of improper collusion or corruption. Id.

In
Citigroup II, the Second Circuit broke with nearly three decades of
practice by eliminating the consideration of the “adequacy,” or the substantive
validity, of a consent decree entered into by the Securities and Exchange
Commission (“SEC”), and by focusing instead on the procedural propriety of the
decree. 752 F.3d at 294-95. The court explained that it was excluding the
requirement that a consent decree must be adequate because the adequacy factor
was borrowed from the review standard applied to class action settlements, and
that the factor was inapt in the context of a proposed SEC consent decree. Id.
at 294. The court noted that if the decree involves injunctive relief, the court
must determine that the “public interest would not be disserved” by the decree.
Id. at 294. It stated that since the SEC has the “job of determining whether
the proposed S.E.C. consent decree best serves the public interest,” the SEC’s
decision merits “significant deference.” Id. at 296.

Adoption
of the Second Circuit’s consent decree standard would effectively render
section 110(k) meaningless. “[A] fundamental rule of construction is that
effect must be given to every part of a statute . . . , so that no part will be
meaningless.” Daanen & Janssen, Inc., 20 FMSHRC 189, 194 (Mar. 1998)
(quoting Sekula v. FDIC, 39 F.3d 448, 454 (3d Cir. 1994).  Because
penalties become final orders or decisions “of the Commission,” Commission
Judges must necessarily determine the basic procedural propriety of proposed
settlements requested by the Secretary even if section 110(k) were absent from
the Mine Act.

As
discussed above, Congress enacted section 110(k) in order to remedy a problem
involving abuses involved in behind-the-scenes compromises by MSHA’s
predecessor, and to ensure that penalties serve as an effective enforcement
tool. Congress explicitly stated its “inten[t] that the Commission and the
Courts will assure the public interest is adequately protected before any
reduction in penalties.” S. Conf. Rep. No. 95-181, at 45 (1977), reprinted
in Legis. Hist. at 633. Thus, Congress intended that the Commission have
the job of determining whether a reduced penalty in settlement serves the
public interest.

The
Citigroup II standard is also distinguishable because a settlement
agreement involving violations of mandatory safety standards affects all miners
working in the cited mine. Thus, the miners may be likened to a class affected
by a settlement. In addition, under the Mine Act, violations accepted by an
operator in a settlement agreement may be considered as part of the operator’s
history of violations in the assessment of future civil penalty assessments. See
Amax Lead Co. of MO, 4 FMSHRC 975, 978-79 (June 1982).

The
D.C. Circuit applies a consent decree standard of review that, unlike the
Second Circuit’s, includes the adequacy factor. See, e.g., Citizens for a
Better Env’t v. Gorsuch, 718 F.2d 1117, 1126 (D.C. Cir. 1983) (citations
omitted) (considering whether the “settlement is fair, adequate, reasonable and
appropriate under the particular facts and that there has been valid consent by
the concerned parties.”); United States v. MTU America, Inc., 105 F.
Supp.3d 60, 63 (D.D.C. 2015) (noting that courts must “consider both procedural
and substantive fairness in their analysis of proposed consent decrees.”). The
Secretary did not note or discuss this standard.

Finally,
the lack of detail required by the Second Circuit’s consent decree standard, as
evident in the Secretary’s terse application of the standard, is completely inconsistent
with the need for transparency that section 110(k) was enacted to address.[13] Indeed,
the Secretary’s counsel asserted during oral argument that “uncertainties of
litigation,” if proffered as the only rationale for settlement, would be
sufficient factual support for the Commission’s review. Oral Arg. Tr. at 67. Of
course, the phrase “uncertainties of litigation” is devoid of content; all
litigation contains uncertainties. Accordingly, we decline to adopt the Citigroup
II standard in the Commission’s review under section 110(k).

E.        The
Judge’s Denial of the Proposed Settlement

The
Commission reviews a Judge’s denial of a proposed settlement under an abuse of
discretion standard. Shemwell v. Armstrong Coal Co., 36 FMSHRC 1097,
1101 (May 2014); see also Calle-Vujiles v. Ashcroft, 320 F.3d
472, 475 (3d Cir. 2003) (citations omitted) (“If an agency ‘announces and
follows – by rule or by settled course of adjudication—a general policy by
which its exercise of discretion will be governed,’ that exercise may be
reviewed for abuse.”). An abuse of discretion may be found where there is no
evidence to support the Judge’s decision or if the decision is based on an
improper understanding of the law. Shemwell, 36 FMSHRC at 1101.

We
conclude that the Judge did not abuse his discretion by denying the motion to
approve the subject proposed settlement. As discussed above, a Judge must have
information sufficient to carry out the Commission’s responsibility under
section 110(k). Parties are required to provide facts in support of a penalty
agreed to in settlement by the Commission’s Procedural Rules. 29 C.F.R. §
2700.31(b)(1).

Here,
the Secretary provided no facts to support the proposed penalty reductions
agreed to by the parties. When the Secretary initially filed the motion to
approve the proposed settlement, the Secretary noted that the original
allegations regarding the subject penalties would remain unchanged, but that
the parties wished to settle the matter by a uniform penalty reduction of 30% “[i]n
recognition of the nature of the citations at issue, and the uncertainties of
litigation.” Mot. to Approve Set. at 2. Upon the Judge’s denial of the motion based
on insufficient factual support, the Secretary filed a motion for
reconsideration with the Judge but refused to provide further factual support. Rather,
the Secretary merely represented to the Judge that “the proposed settlement is
in the public interest and is compatible with MSHA’s enforcement goals.”[14] S. Mot. for
Recon. at 4.

This
is not a case where the Commission Judge has impermissibly substituted his
views of enforcement policy for those of the Secretary.[15] Rather,
the Judge requested facts to support the proposed settlement of 32 reduced
penalties, and the Secretary refused to provide any facts whatsoever. The Judge
did not abuse his discretion by denying approval of the settlement without any
supporting facts.

Nor
did the Judge conclude that the Secretary’s ability to structure settlements as
uniform penalty reductions was impermissible under the Mine Act. Rather, the
Judge stated that the percentage reduction was a red flag, and that “information
is needed to justify any reductions.” 36 FMSHRC at 1501 (emphasis in original).
The Mine Act does not prohibit uniform penalty reductions, nor has the
Commission rejected the structuring of settlements based on uniform penalty
reductions, and nothing in our decision should be construed as implying that
they are improper per se. The Judge did not err in requesting facts
supporting the reduction.

In
sum, the Secretary’s repeated failure to provide any facts to support the proposed
reduction of 32 penalties through a settlement agreement is inconsistent with the
requirements of the Act, Congressional intent, and Commission procedure. Accordingly,
we conclude that the Judge did not err in denying the proposed settlement.

III.

Conclusion

For
the reasons discussed above, we conclude that the Judge did not err in denying
the proposed settlement, affirm the denial, and remand this matter for further proceedings.

/s/ Mary Lu
Jordan

Mary Lu Jordan, Chairman

/s/ Michael G.
Young

Michael G. Young,
Commissioner

/s/ Robert F.
Cohen, Jr.

Robert F. Cohen
Jr., Commissioner

/s/ Patrick K.
Nakamura

Patrick K.
Nakamura, Commissioner

/s/ William I.
Althen

William I.
Althen, Commissioner

[1]
Section
110(k) provides in relevant part that a proposed penalty that has been
contested can be settled only if approved by the Commission.

[2] The S&S
terminology is taken from section 104(d)(1) of the Act, 30 U.S.C.

§
814(d)(1), which distinguishes as more serious any violation that “could significantly
and substantially contribute to the cause and effect of a . . . mine safety or
health hazard.”

[3]
AmCoal
decided not to file a brief in this case.

[4]
Section
110(i) of the Act provides that the Commission is to assess all final civil penalties
under the Act.

[5]
The
Secretary downplays the significance of the legislative history. S. Br. at
30-31 (“the statements about collection and litigation expenses and the
Commission’s role in determining the public interest are highly specific criteria
that . . . should not be construed as legal restrictions”), 32-38; see also
Oral Arg. Tr. at 10, 24. However, Congress chose to explain the purpose of
section 110(k) and the Commission’s role in approving settlements in unusually
specific terms. That legislative history cannot be ignored simply because of
the passage of time or because it may be convenient for the Secretary to do so.

[6]
The
Secretary’s position in this case represents a reversal of a long-standing
institutional position. See Amicus Br. at 13 (quoting the Secretary’s
response to an audit by the General Accountability Office in which the
Secretary explains that supporting reasons for settlements are presented to the
Commission and that “MSHA and SOL agree that transparency in any resulting
civil penalty settlement agreement is essential to ensure public confidence”).

[7]
Former
Congressman Miller noted that “[i]n the past five years, Commission ALJs have approved
38,501 settlements and rejected only 17 (excluding the settlement in this
case), or 0.04% of all settlements submitted for approval.” Amicus Br. at 14. Counsel
for the UMWA aptly described the Secretary’s position in this proceeding as “a
solution in search of a problem.” Oral Arg. Tr. at 30.

[8]
The Senate
Report explains:

The Committee
believes that an independent Commission is essential to provide administrative
adjudication which preserves due process and instills much more confidence in
the program.

The Commission is to have
five members, who shall be selected from among those who by reason of training,
education, or experience are qualified for consideration. This qualification is
not intended to limit the selection of members to technicians. It is the
Committee’s expectation that nontechnicians with requisite administrative
experience or persons whose qualifications are based upon either formal
training or practical experience in mine safety and health or related matters
would qualify for appointment.

S. Conf. Rep. No. 95-181, at 47
(1977), reprinted in Legis. Hist. at 635.

[9]
Because
the language of section 110(k) is clear, concepts of deference are not
relevant. The Secretary does not argue that his interpretation of section
110(k) is owed deference under Chevron U.S.A. Inc. v. Natural Resources Defense
Council, Inc., 467 U.S. 837 (1984).

Even if we were to consider the language
of section 110(k) to be silent or ambiguous, our reading of the provision would
be entitled to deference under Chevron because the Commission is charged
with administering that provision. See North Am. Drillers, LLC, 34
FMSHRC 352, 356 n.5 (Feb. 2012). If a Court were to decide that section 110(k)
was not clear and declined to give the Commission deference under Chevron,
any interpretation of section 110(k) advanced by the Secretary may be entitled
to a lesser degree of deference under Skidmore v. Swift & Co., 323
U.S. 134, 139-40 (1944), since the Secretary’s interpretation is not embodied
in a citation or rules promulgated by MSHA. See, e.g., Vulcan Constr.
Materials, L.P. v. FMSHRC, 700 F.3d 297, 316 (7th Cir. 2012). Under Skidmore,
the Secretary’s position that he need not provide factual support for reduced
penalties in settlements would not be persuasive since it is a reversal of a contrary
position held for decades. Id. (considering whether an interpretation
had the power to persuade based in part on the consistency in an agency’s
earlier and later pronouncements).

[10] The Secretary
has acknowledged “that the Chaney presumption of unreviewability is
rebutted by the existence of [s]ection 110(k).” S. Reply Br. at 4.

[11]
We note
that the Commission’s exercise of discretion in granting or denying petitions
for discretionary review under section 113(d)(2)(A) of the Mine Act, 30 U.S.C.
§ 823(d)(2)(A), is unreviewable. See Eagle Energy, Inc. v. Sec’y of Labor,
240 F.3d 319, 324-25 (4th Cir. 2001).

[12] Contrary to the
Secretary’s argument, Rule 31 is not a substantive provision. See S. Br.
at 40-41. The Commission has explained that
a “critical feature” of a procedural rule is that “it covers agency actions
that do not themselves alter the rights or interests of parties, although it
may alter the manner in which parties present themselves or their viewpoints to
the agency.” Drummond Co., 14 FMSHRC 661, 688 (May 1992) (citations
omitted). In contrast, substantive or legislative rules “grant rights, impose
obligations, or produce other significant effects on private interests” and
“constrict the discretion of agency officials by largely determining the issue
addressed.” Id. at 684 (citations omitted). The requirement in Rule 31
for parties to provide factual support is clearly procedural in that it directs
parties to conform with a requirement in the manner in which they present their
settlement to the Commission without constricting the Commission’s discretion
in determining whether to approve the settlement.

[13]
We find
revealing the observation with respect to the Citigroup II standard that
“between the court’s explicit exclusion of the adequacy factor and its emphasis
on procedural propriety, the court likely foreclosed all meaningful substantive
review,” and that the Citigroup II standard will “practically speaking,
result in the rubber-stamping of consent decrees.” Securities Regulation –
Consent Decrees – Second Circuit Clarifies that a Court’s Review of an SEC
Settlement Should Focus on Procedural Propriety, 128 Harv. L. Rev. 1288,
1291, 1292 (2015).

[14]
The
Secretary’s counsel made this representation after stating, “Exercising her
professional judgment as a representative of the Secretary, she considered the
value of the proposed compromise; the prospects of coming out better, or worse,
after a full trial; and the resources that the Secretary would need to expend
in going through a trial.” S. Mot. for Recon. at 4. We note the Committee’s
statement in the Senate Report that, “the need to save litigation and
collection expenses should play no role in determining settlement amounts.” S.
Conf. Rep. No. 95-181, at 44-45 (1977), reprinted in Legis. Hist. at 632-33.

[15]
The
Secretary stated during oral argument that Judges “second-guess[] the kinds of
enforcement and prosecutorial decisions that the Secretary present[s] for
approval.” Oral Arg. Tr. at 71. The Secretary may seek appellate review of any
perceived abuses by the Commission’s Judges. See, e.g., Knox Cty. Stone Co.,
3 FMSHRC 2478 (Nov. 1981).