Secretary of Labor v. Steve B. Rees, employed by Prairie State Generating Company, LLC and Secretary of Labor v. Michael Welch, employed by Prairie State Generating Company, LLC

Plain-English summary

MSHA sought individual penalties against Prairie State employees Steve Rees and Michael Welch for allegedly knowingly authorizing, ordering, or carrying out a mine-safety violation. They moved to dismiss because MSHA waited about 28 months after the underlying inspection to issue the assessments, arguing that the delay impaired memories and made a witness harder to locate. Judge Alan G. Paez found adequate cause because the Secretary gave a nonfrivolous explanation based on increased caseload and the additional review required for individual-liability cases. He also found no actual prejudice because the claimed witness remained potentially available and ordinary memory loss was only inherent prejudice. The Judge denied dismissal and kept the cases set for hearing.

Decision snapshot

• Governing provisions: 30 U.S.C. §§ 815(a) and 820(c)
• Outcome: The respondents' motion to dismiss the individual-penalty proceedings for assessment delay was denied.
• Key point: A delayed individual penalty may proceed when the Secretary gives a nonfrivolous explanation and the respondents show only potential or inherent prejudice, not actual prejudice.

Full text (FMSHRC public release)

FEDERAL MINE SAFETY AND HEALTH
REVIEW COMMISSION

OFFICE OF
ADMINISTRATIVE LAW JUDGES

1331 PENNSYLVANIA
AVE., N.W., SUITE 520N

WASHINGTON, DC
20004-1710

TELEPHONE: 202-434-9950
/ FAX: 202-434-9949

August 26, 2015

SECRETARY
OF LABOR,

MINE
SAFETY AND HEALTH   

ADMINISTRATION
(MSHA),

Petitioner,

v.

STEVE B. REES,
employed by PRAIRIE STATE GENERATING COMPANY, LLC,

Respondent.

CIVIL
PENALTY PROCEEDING

Docket
No. LAKE 2015-130

A.C.
No. 11-03193-366707A

Mine:
Lively Grove Mine

SECRETARY
OF LABOR,

MINE
SAFETY AND HEALTH   

ADMINISTRATION
(MSHA),

Petitioner,

v.

MICHAEL WELCH ,
employed by PRAIRIE STATE GENERATING COMPANY, LLC,

Respondent.

CIVIL
PENALTY PROCEEDING

Docket
No. LAKE 2015-144

A.C.
No. 11-03193-366708A

Mine:
Lively Grove Mine

ORDER DENYING RESPONDENTS’ MOTION TO DISMISS 110(c)
DOCKETS

These
cases are before me under section 110(c) of the Federal Mine Safety and Health
Act of 1977 (“Mine Act”), 30 U.S.C. § 820(c). Chief
Administrative Law Judge Robert J. Lesnick assigned Docket Nos. LAKE 2015-144
and LAKE 2015-130 to me on January 29, 2015, and March 9, 2015, respectively. On
March 10, 2015, I consolidated these cases with Docket No. LAKE 2013-187, which
contains the order the Mine Safety and Health Administration (“MSHA”) issued to
Prairie State Generating Company, LLC (“Prairie State”), that forms the basis
of these proceedings. These consolidated cases are set for hearing on September
23–24, 2015.

I.  FACTUAL AND
PROCEDURAL BACKGROUND

MSHA
issued Order No. 8440269 to Prairie State on June 26, 2012. MSHA subsequently
initiated an investigation to assess Steven B. Rees (“Rees”) and Michael Welch (“Welch”)
(together, “Respondents”) for potential liability as agents of Prairie State
under section 110(c) of the Mine Act. On November 7, 2014, MSHA issued its
proposed penalties of $1,500.00 each to Rees and Welch, who contested the
penalty assessments on November 19, 2014. On January 19, 2015, the Secretary of
Labor (“Secretary”) filed his Petition for the Assessment of Civil Penalty in
Docket No. LAKE 2015-144, alleging that Welch knowingly authorized, ordered, or
carried out Prairie State’s violation of 30 C.F.R. § 75.360(a). Due to a
clerical error, the Secretary filed his Petition for the Assessment of Civil
Penalty in Docket No. LAKE 2015-130 on February 19, 2015, along with
a Motion to Permit Late Filing, which I granted.

On July 24, 2015, Respondents filed a
Motion to Dismiss and Memorandum of Law in support of the motion, requesting
these dockets be dismissed due to the Secretary’s delay in issuing the penalty
assessments to Rees and Welch. The Secretary filed a response in opposition to
the motion.

II.  PRINCIPLES
OF LAW

Section
105(a) of the Mine Act requires that the Secretary “shall, within a reasonable
time after the termination of [an] inspection or investigation, notify the
operator by certified mail of the civil penalty proposed to be assessed under
section 110(a) for the violation cited.” 30 U.S.C. § 815(a). The
Commission has held that the inquiry of what constitutes a reasonable time
“turns on whether the delay is reasonable under the circumstances of each case,
as the Commission examines whether adequate cause existed for the Secretary’s
delay in proposing a penalty and considers whether the delay prejudiced the
operator.” Sedgman, 28 FMSHRC 322, 338 (June 2006) (citing Salt Lake
Cnty. Rd. Dep’t, 3 FMSHRC 1714, 1716–17 (July 1981); Medicine Bow Coal
Co., 4 FMSHRC 882, 885 (May 1982); Steele Branch Mining, 18 FMSHRC
6, 13–14 (Jan. 1996); Black Butte Coal Co., 25 FMSHRC 457, 459–61 (Aug.
2003)). The Secretary can satisfy the showing of adequate cause by providing a
non-frivolous explanation for the delay. Long Branch Energy, 34 FMSHRC
1984, 1991 (Aug. 2012) (discussing the reasonable time requirement as embodied by
Commission Procedural Rule 28(a), 29 C.F.R. § 2700.28(a)). Once the
Secretary meets his burden, the operator must show some actual prejudice
arising from the delay. Id. Allegations of mere potential prejudice or
inherent prejudice are not sufficient. Id.

In determining the reasonableness of the
time it takes the Secretary to propose a penalty, the “starting point” in the
calculation is the completion of the Secretary’s inspection or investigation. Sec’y
of Labor v. Twentymile Coal Co., 411 F.3d 256, 261–62 (2005) (“Twentymile”);
Sedgman, 28 FMSHRC at 340.

Although the “reasonable time”
requirement does not explicitly extend to section 110(c), Commission
Administrative Law Judges have applied the requirement to penalty cases against
individuals under section 110(c) of the Mine Act. See Scott Carpenter, 36
FMSHRC 2311, 2313 (Aug. 2014) (ALJ); Steve Adkins, 35 FMSHRC 1481, 1482
(May 2013) (ALJ); Christopher Brinson, Gerald Hastings, Ronald
Colson, 35 FMSHRC 1463, 1465 (May 2013) (ALJ); Dyno Nobel East-Central
Region, 35 FMSHRC 265, 266 (Jan. 2013) ( ALJ). Both the Secretary and
Respondents apply the reasonable time requirement in section 105(a) of the Mine
Act and cite to the Commission’s two-part analysis for determining whether a
case should be dismissed for undue delay.[1]
(See Resp’ts Mot. at 4–5, 10–17; Sec’y Resp. at 5–6, 10.)

III.  ANALYSIS

Respondents
argue that MSHA failed to file its section 110(c) penalty assessments within a
reasonable time. (Resp’ts Memo. at 10–15.) Respondents further assert that MSHA
cannot establish adequate cause for the delay in this matter because the delay
between the initial inspection and the assessment was so long and the section
110(c) investigation was relatively simple. (Id. at 13–15.) Respondents
especially note that the Secretary made no effort to begin the investigation for
500 days, a delay nearly as long as MSHA’s internal guidance suggests that the
entire 110(c) investigation and assessment process should take. (Id. at
7, 14.) In addition, Respondents assert that the delay has caused prejudice in
the form of lost memories and missing witnesses. (Id. at 16–17.)

The
Secretary first asserts that it assessed the penalties within a reasonable
time, having completed the investigation into Respondents’ personal liability
on August 12, 2014, and issued the penalties on November 7, 2014.[2]
(Sec’y Resp. at 2–3, 8–10.) Additionally, the Secretary asserts that the
significant increase in MSHA’s caseload and the additional layers of review
necessary when individual agents’ interests are at stake slowed the
investigation and assessment process. (Id. at 9.) Finally, the Secretary
claims that Respondents have failed to show a legally cognizable prejudice. (Id.
at 9–12.)

The
Secretary’s paperwork for these investigations, submitted by Respondents, shows
the completed case file was forwarded to MSHA’s Technical Compliance and
Investigation Office (“TCIO”) on June 2, 2014. (Resp’ts Memo. at 21–22.) No
further activity appears in the Secretary’s paperwork. (Id.) The
Secretary avers the investigation was completed two months later, on August 12,
2014. (Sec’y Resp. at 3.) The Secretary’s penalty assessments in this matter
followed in November 2014. Commission precedent indicates that a delay in the
filing of penalty assessments by either three months or five months is not
unreasonable. See Sedgman, 28 FMSHRC at 341 (finding an 11-month
delay under section 105(a) to be reasonable).

Nevertheless, I look to both the
Secretary’s justification for the slow assessment and the Respondents’ claims
of prejudice. The Secretary’s simple explanation of a case backlog does little
to illuminate the five-month gap between the investigation’s completion and the
assessment, let alone the 28-month period from the initial inspection. Nevertheless,
the Commission has found delays in the prosecution of cases excusable when
explained by sharp increases in MSHA’s national caseload. See Long Branch,
34 FMSHRC at 1993–95; Rhone Poulenc of Wyo. Co., 15 FMSHRC 2089, 1993–94
(Oct. 1993). However, the Commission has recognized that the Secretary’s
workload rose substantially due to recent increased enforcement efforts and a
higher rate at which operators contest the resulting citations. See Long
Branch, 34 FMSHRC at 1993–95. Accordingly, the Secretary’s explanation for
the delay is not frivolous. Therefore, I determine the Secretary has established
adequate cause for the delay.

Given my finding of adequate cause, I
turn to Respondents’ allegations of prejudice. First, Respondents assert that
during the Secretary’s 28-month investigation, an important witness to the June
26, 2012, inspection left the mine and “will need to be found to provide his
recollection of the facts.” (Resp’ts Memo. at 16.) Although the disappearance
of a key witness could prejudice a party, Respondents have not claimed that
their witness cannot be found. Rather, Respondents assert that they potentially
may have difficulty contacting their witness. Respondents merely allege
potential prejudice, not actual prejudice.

Next, Respondents claim they are
prejudiced because Rees is no longer able to recall the events of June 2, 2014,
when the underlying order issued. (Resp’ts Memo. at 16.) In support,
Respondents point to MSHA’s interview of Rees from January 2014, in which Rees stated
that he could not remember any details from the June 2014 inspection. (Id.
at 16, 23–24.) Respondents’ argument fails to allege facts distinguishing this
case. With the passage of time, memories fade and details blur. This
degradation of evidence is inherent to any aging case, and is precisely why
Congress enacted a five-year statute of limitations for federal civil lawsuits.
See Gabelli v. S.E.C., 133 S.Ct. 1216, 1221 (2013). Barring
evidence showing that Rees’s memory loss resulted from something other than the
usual passage of time, Respondents assert only an inherent prejudice.[3]

Given the Secretary’s non-frivolous
explanation and Respondents’ failure to show that they were actually and
meaningfully prejudiced by the Secretary’s delay, I determine that the
Secretary’s petitions for penalty should not be dismissed at this stage of the
proceedings. I note, however, that it is the Secretary’s burden to prove his
charges “by a preponderance of the credible evidence.” In re: Contests of
Respirable Dust Sample Alteration Citations, 17 FMSHRC 1819, 1838
(Nov. 1995) (citing Garden Creek Pocahontas Co., 11 FMSHRC 2148, 2152
(Nov. 1989)), aff’d sub nom., Sec’y of Labor v. Keystone Coal Mining
Corp., 151 F.3d 1096, 1106–07 (D.C. Cir. 1998). A gap of more than three
years between an initial inspection and the eventual hearing regarding the inspection
raises significant questions about the reliability of any testimonial evidence
presented at that hearing.

Respondent’s Motion to Dismiss these
proceedings is hereby DENIED. These consolidated cases will be called
for hearing on September 23–24, 2015, in St. Louis, Missouri.

/s/ Alan G. Paez

Alan G. Paez

Administrative Law Judge

Distribution:
(Via Electronic Mail & U.S. Certified Mail – Return Receipt Requested)

Emelda Medrano, Esq., U.S.
Department of Labor, Office of the Solicitor, 230 S. Dearborn Street, 8th
Floor, Chicago, IL 60604

([email protected])

R.
Henry Moore, Esq., Jackson Kelly PLLC, Three Gateway Center, Suite 1500, 401
Liberty Avenue, Pittsburgh, PA 15222

([email protected])

Arthur
M. Wolfson, Esq., Jackson Kelly PLLC, Three Gateway Center, Suite 1500, 401
Liberty Avenue, Pittsburgh, PA 15222

([email protected])

/lct

[1] Although the
Secretary nominally suggests the Commission alter its approach to such cases,
Petitioner’s argument embraces the Commission’s requirement that actual
prejudice be present before a case can be dismissed for delay. (See Sec’y
Resp. at 10–13.)

[2] The Secretary
insists that the Commission lacks the authority to dismiss an assessed penalty where
an assessment was not filed in a reasonable time. (Sec’y Resp. at 2–8.) Contrary
to the Secretary’s assertion, it is a basic principle of administrative law
that a substantive agency proceeding may be overturned upon a showing of
prejudice. Salt Lake Cnty. Rd. Dep’t, 3 FMSHRC 1714, 1716 (July 1981). The
Commission has considered and rejected the Secretary’s contention. See
Sedgman, 28 FMSHRC at 338.

[3] I also note
that Rees’s lost recollection is somewhat self-serving. It was fully within
Rees’s power to memorialize the events of June 2, 2012, by taking notes of the
day.