Moose Lake Aggregates, LLC (Commission decision, January 18, 2012)

Plain-English summary

Moose Lake Aggregates asked to reopen penalty assessments that its administrative staff had routinely paid without determining whether the company wanted to contest them. The Commission majority found that this practice was an inadequate internal processing system and that the operator remained responsible for training employees who receive MSHA correspondence at its address of record. The majority also found unexplained delays of more than three months for the first motion and almost eleven months for the second. It denied both reopening motions with prejudice. Chairman Mary Lu Jordan would have reopened the first assessment as a payment mistake but agreed that the second motion was too late.

Decision snapshot

• Governing provision: 30 U.S.C. § 815(a)
• Outcome: Both motions to reopen the final penalty assessment were denied with prejudice.
• Key point: Routine payment without a reliable contest-review process, combined with unexplained delay, does not establish good cause to reopen a final assessment.

Full text (FMSHRC public release)

Federal Mine Safety and Health Review Commission

FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

601 NEW JERSEY AVENUE, NW

SUITE 9500

WASHINGTON, DC 20001

January 18, 2012

SECRETARY OF LABOR, 

MINE SAFETY AND HEALTH 

ADMINISTRATION (MSHA) 

v.

MOOSE LAKE AGGREGATES, LLC 

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Docket No. LAKE 2011-625

A.C. No. 20-03081-241408-M

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

ORDER

BY: Duffy, Young, Cohen, and Nakamura, Commissioners

This matter arises under the Federal Mine Safety and Health Act of 1977, 30 U.S.C.
§ 801 et seq. (2006) (“Mine Act”). On May 2, 2011, the Commission received from Moose Lake Aggregates, LLC (“Moose”) a motion made by counsel seeking to reopen a penalty assessment that had become a final order of the Commission pursuant to section 105(a) of the Mine Act, 30 U.S.C. § 815(a).

Under section 105(a) of the Mine Act, an operator who wishes to contest a proposed penalty must notify the Secretary of Labor no later than 30 days after receiving the proposed penalty assessment. If the operator fails to notify the Secretary, the proposed penalty assessment is deemed a final order of the Commission. 30 U.S.C. § 815(a).

We have held, however, that in appropriate circumstances, we possess jurisdiction to reopen uncontested assessments that have become final Commission orders under section 105(a). Jim Walter Res., Inc., 15 FMSHRC 782, 786-89 (May 1993) (“JWR”). In evaluating requests to reopen final section 105(a) orders, the Commission has found guidance in Rule 60(b) of the Federal Rules of Civil Procedure under which, for example, a party could be entitled to relief from a final order of the Commission on the basis of mistake, inadvertence, or excusable neglect. See 29 C.F.R. § 2700.1(b) (“the Commission and its Judges shall be guided so far as practicable by the Federal Rules of Civil Procedure”); JWR, 15 FMSHRC at 787. We have also observed that default is a harsh remedy and that, if the defaulting party can make a showing of good cause for a failure to timely respond, the case may be reopened and appropriate proceedings on the merits permitted. See Coal Prep. Servs., Inc., 17 FMSHRC 1529, 1530 (Sept. 1995).

Moose’s president, Kenneth Smith, asserts that his administrative assistant routinely paid proposed assessments without his specific knowledge. Moose states that it had never contested citations, and always paid them routinely. In addition, Moose states it was unaware that section 104(d) citations were of a more serious nature and could potentially trigger prosecutions under section 110(c). Moreover, Moose asserts that unless the requested relief is granted, the mine could be placed under MSHA’s ‘excessive history of violations’ scheme.

The Secretary opposes the request to reopen and notes that the routine payment of assessments is insufficient to justify reopening. The Secretary contends that the operator’s procedures for processing proposed assessments were inadequate because there was no procedure for reliably determining whether the operator wished to contest the proposed assessment. In addition, the Secretary states that ignorance of the law is not a basis for reopening under Rule 60(b).

Moreover, the Secretary asserts that the prospect of significant consequences, such as an excessive history of violations, militates against reopening since it calls for increased care in properly processing proposed assessments.

On September 28, 2011, the Commission sent Moose a letter asking it to explain why it failed to timely contest the proposed assessment, why it filed its request to reopen more than 30 days after discovering that the assessment was not timely contested, and what office procedures were implemented to prevent such failure in the future. In response, Moose asserts that the proposed assessment arrived at the offices of Kenneth Smith, Inc., a distinct business from Moose. The administrative staff at Kenneth Smith, Inc. was instructed to pay all invoices as they arrive, and was not aware of the proper manner in which to contest MSHA citations. Moose’s president, Kenneth Smith, instructed his employees to contest future proposed assessments and, from then on, send all MSHA invoices directly to him.

The Commission has made it clear that where a failure to contest a proposed assessment results from an inadequate or unreliable internal processing system, the operator has not established grounds for reopening the assessment. Pinnacle Mining Co., 30 FMSHRC 1061, 1062 (Dec. 2008); Pinnacle Mining Co., 30 FMSHRC 1066, 1067 (Dec. 2008); Highland Mining Co., 31 FMSHRC 1313, 1315 (Nov. 2009); Double Bonus Coal Co., 32 FMSHRC 1155, 1156 (Sept. 2010); Oak Grove Res., LLC, 33 FMSHRC 103, 104 (Feb. 2011). In this case, we conclude that the lack of any procedure to determine whether the proposed assessment should be contested represents an inadequate or unreliable internal processing system. Sloss Indus., Corp. v. Eurisol, 488 F.3d 922, 935-36 (11th Cir. 2007); Gibbs v. Air Canada, 810 F. 2d 1529, 1537 (11th Cir. 1987). We also note that it is the operator’s responsibility to make sure that its employees receiving mail at its address of record are properly instructed regarding the significance and correct processing of MSHA correspondence.

Moreover, in considering whether an operator has unreasonably delayed in filing a motion to reopen, we find relevant the amount of time that has passed between the date the proposed assessment became a final order of the Commission and the operator’s filing of its motion to reopen. See, e.g., Left Fork Mining Co., 31 FMSHRC 8,11 (Jan. 2009); Highland Mining Co., 31 FMSHRC 1313, 1316 (Nov. 2009). Here, the operator asserts that the proposed assessment became a final order of the Commission on January 19, 2011, but fails to provide an explanation for filing its motion to reopen more than three months later, on April 29, 2011. Furthermore, the operator’s second motion to reopen the remaining citations in proposed assessment No. 000241408 was filed almost eleven months later, on December 7, 2011.

Having reviewed Moose’s requests and the Secretary’s response, we conclude that Moose has failed to establish good cause for reopening the proposed penalty assessment, and deny its motions with prejudice.

/s/ Michael F. Duffy

Michael F. Duffy, Commissioner

/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

Chairman Jordan, concurring and dissenting:

The proposed penalty assessment for Citation No. 6504472 was not received at the mine. Rather, it arrived at the offices of Kenneth Smith, Inc. Kenneth Smith is the president of Moose Lake Aggregates, LLC, but Kenneth Smith, Inc. is a separate corporate entity.

The administrative staff at Kenneth Smith, Inc. had previously been instructed to immediately pay all bills. The affidavit of Trudy Petersen states that she thought the proposed penalty assessment was a bill, and she paid it pursuant to these instructions. In my view, this constitutes a mistake which, under Rule 60(b), should serve as a basis to reopen this final order. See Kaiser Cement Corp., 23 FMSHRC 374 (Apr. 2001) (granting request to reopen a penalty assessment when the operator inadvertently paid two proposed penalties, and citing cases). Moreover, as my colleagues acknowledge, the operator states in its revised motion to reopen that now all MSHA invoices are sent directly to Kenneth Smith “in an effort to avoid a future administrative mistake resulting in a missed filing deadline.”

In light of the above, I would grant relief and reopen this final order. However, I agree with my colleagues that the operator’s second motion to reopen the remaining citations, which was filed almost eleven months after it became a final order, should be denied.

/s/ Mary Lu Jordan

Mary Lu Jordan, Chairman

Distribution:

Adele L. Abrams, Esq.

Law Office of Adele L. Abrams, P.C.

4740 Corridor Place, Suite D

Beltsville, MD 20705

W. Christian Schumann, Esq.

Office of the Solicitor

U.S. Department of Labor

1100 Wilson Blvd., Room 2220

Arlington, VA 22209-2296

Melanie Garris

Office of Civil Penalty Compliance

MSHA

U.S. Dept. of Labor

1100 Wilson Blvd., 25th Floor

Arlington, VA 22209-3939

Chief Administrative Law Judge Robert J. Lesnick

Federal Mine Safety & Health Review Commission

601 New Jersey Avenue, N. W., Suite 9500

Washington, D.C. 20001-2021