Secretary of Labor v. Dickenson-Russell Coal Company, LLC

Plain-English summary

The Secretary and Dickenson-Russell proposed reducing a $971 citation penalty to $500 and removing its S&S designation. Judge Thomas P. McCarthy rejected the amended settlement because the parties did not request corresponding gravity and affected-miner modifications and because the Secretary claimed unilateral authority to remove S&S once the penalty contest was before the Commission. He held that contested citation modifications offered in settlement require Commission approval and factual support. Recognizing the recurring importance of the issue, he certified whether the Secretary could remove S&S without leave and whether the Commission could review nonmonetary settlement terms.

Decision snapshot

• Governing authority: 30 U.S.C. §§ 815(d), 820(i), and 820(k); 29 C.F.R. §§ 2700.31 and 2700.76(a)
• Outcome: The amended settlement was denied, and two settlement-review questions were certified for interlocutory review.
• Key point: Once Commission jurisdiction attaches, citation modifications exchanged for a penalty settlement require Commission approval and an adequate factual foundation.

Full text (FMSHRC public release)

FOR#2AA

FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

OFFICE OF ADMINISTRATIVE LAW JUDGES

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

WASHINGTON, DC 20004-1710

TELEPHONE: 202-434-9958 / FAX: 202-434-9949

February 21, 2013

SECRETARY OF LABOR

MINE SAFETY AND HEALTH 

ADMINISTRATION (MSHA),

Petitioner

v.

DICKENSON-RUSSELL COAL

COMPANY, LLC,

Respondent

CIVIL PENALTY PROCEEDING

Docket No. VA 2012-397

A.C. No. 44-06864-286093-01

Mine: Cherokee Mine

ORDER REJECTING AMENDED SETTLEMENT MOTION

ORDER FOR CERTIFICATION FOR INTERLOCUTORY REVIEW

Before: Judge McCarthy

This case is before me upon a Petition for Assessment of Civil Penalty under section
105(d) of the Federal Mine Safety and Health Act of 1977, 30 U.S.C. § 815(d). On August 23,
2012, the Secretary of Labor,

through its Solicitor’s Office, filed a motion seeking approval of a
proposed settlement pursuant to Commission Rule 31, 29 C.F.R. § 2700.31. The Solicitor
requested that Citation No. 8190957 be modified to delete the significant and substantial
designation and to reduce the proposed penalty from $971.00 to $500.00. The settlement,
however, did not proffer any factual justification for the proposed modifications.

On October 9, 2012, my office requested that the parties provide an amended settlement
consistent with Commission Rule 31(b)(1), 29 C.F.R. § 2700.31(b)(1), which provides, inter alia,
“[t]hat a motion to approve a penalty settlement shall include . . .  facts in support of the penalty agreed to by the parties.” The Secretary declined to do so and
expressed preference that the proposed settlement be rejected.

On October 15, 2012, I issued an Order rejecting the proposed settlement, which
admonished the Secretary’s Arlington counsel for a repeated refusal to comply with clear
instructions from the Commission and the Office of Administrative Law Judges requiring factual
support for proposed settlement submissions. This case was set for hearing on November 15,
2012, under separate cover.

On October 23, 2012, the Secretary filed an Amended Motion to Approve Settlement and
Motion to Cancel Hearing. In the amended motion, the Secretary provided the following factual
basis for the penalty reduction:

. . . [t]he Secretary submits the fact that the Respondent contends that its practice
is for every miner or group of miners to have a multi-gas detector accessible at all
times. This practice, the Respondent contends, suggests that anyone going to the
shelter would have a detector or be with a group that has one. The Secretary has
determined that the violation was less likely to result in a serious injury. The
Secretary also acknowledges that the number of people affected may have been
lower than originally determined by the inspector because at least some of the
miners the inspector observed near the refuge alternative may have been carrying
multi-gas detectors in accordance with the company’s practice.

Despite the Secretary’s determination that less that three people may have been affected,
the settlement did not propose that the citation be modified to reflect the Secretary’s
determination.

Similarly, the Secretary determined that the violation was “less likely to result in
a serious injury,” but did not request that the citation be modified accordingly. Instead, the
Secretary unilaterally withdrew the S&S designation without seeking approval from the
undersigned.

On November 1, 2012, my law clerk, Jason Riley, convened a conference call with
counsel for the Secretary, Scott Hecker; Associate Regional Solicitor, Douglas White; and
Respondent’s counsel, Cameron Bell. At the discretion of the Court, the transcript of the call
was incorporated into the record. During the call, the Secretary was asked to expound upon the
argument that the Secretary retained authority to modify citations and remove S&S designations
in the context of a settlement, without leave of the Commission.

Mr. Riley:        . . . . Mr. Hecker, concerning the S&S designation, in the settlement you
state that the Secretary has determined to delete the S&S designation but
do not request that the S&S designation be removed by the judge. I
believe you assert that it was within the prosecutorial discretion of the
Secretary to do so. Can you please elaborate on the Secretary’s position
on this matter?

Mr. Hecker:    Yes. Our motion contains case law in paragraph eight addressing the
unreviewable discretion of designation of S&S. Mechanicsville is cited
there, also RBK Construction. We believe those cases, these Commission
cases, point to the fact that it’s the Secretary’s discretion to designate in
the first instance an S&S finding on a violation and that it’s our right to do
so and that the Commission’s purview is over the approval of the
assessment on that violation. That’s the Secretary’s position and I believe
has been the Secretary’s position. Those cases are from 1993 and 1996 so
it’s a consistent position for an extended period of time.

. . . .

Mr. White:      It’s long been our position that the judge has authority - and there’s no
question about this - has authority to make ultimate determinations of S&S
and unwarrantable findings after a hearing, but prior to the hearing, it is
solely within the Secretary’s discretion to charge or to designate or un-designate S&S and unwarrantable findings . . . our position is that the
judge’s discretion is to approve penalty settlements and if for example
Dickenson and Russell had filed a pre-penalty contest here and we
negotiated with them and settled with them before there had ever been a
penalty proposed and we’d agreed to remove the S&S, the Commission
would have clearly no authority over that. It’s only in the context of a
penalty that the authority to review the settlement arises and it is the
penalty, that our position it’s the penalty that they have the authority to
review, not the designation of S&S or unwarrantable.

Conference Call Tr. at 1-2 (emphasis added).

Citing the Commission’s decision in Mechanicsville, the Secretary claims authority to
change the S&S status of a contested citation at any time prior to hearing. Id., citing
Mechanicsville Concrete, Inc., 18 FMSHRC 877 (June 1996). Such authority, the Secretary
argues, is consistent with the enforcement role delegated in the Mine Act and is analogous to the
unreviewable prosecutorial discretion afforded when determining that a citation be vacated. As
such, the Secretary claims that no factual basis is necessary for modification of the S&S
designation prior to hearing.

In Mechanicsville, MSHA issued a citation for the operator’s failure to install a
windshield wiper on a front-end loader, and designated the citation as non-S&S. 18 FMSHRC at

878. After hearing, however, the judge determined that the danger posed by the violative
     condition warranted that the citation be designated as S&S. Id. On appeal, the Commission
     found that the S&S designation was an enforcement responsibility granted exclusively to the
     Secretary under the Mine Act, and that the judge erred in determining, on his own initiative, that
     the violation was S&S. Id. at 789. The Commission reasoned that, while section 104(d) gives
     the Commission authority to affirm, modify, or vacate a citation, a judge may not make
     additional findings and conclusions that are absent from the original pleading. Id.

The Secretary’s reliance on Mechanicsville is misplaced. The question here is not
whether the Secretary has the unreviewable discretion to designate a citation as S&S – it is clear
that the Secretary is granted such exclusive authority. Rather, the issue presented is whether the
Secretary can modify a citation offered in consideration for Respondent’s acceptance of a
contested civil penalty proposal without seeking approval from the Commission.

After an MSHA inspector issues a citation, the Secretary is afforded ample time to
exercise prosecutorial discretion and modify a citation to correct for error or to more accurately
reflect the conditions or practices at the mine. In accordance with MSHA policy, the Secretary
may choose to pursue good-faith settlement efforts prior to contest or the formal filing of a civil
penalty petition. Press Release, Mine Safety & Health Admin., US Dep’t of Labor, MSHA to
Start Using Pre-Assessment Conferencing Procedures, 11-1703-NAT (Dec. 1, 2011), available at
http://www.dol.gov/opa/media/press/msha/MSHA20111703.htm. The Commission lacks
jurisdiction to review such pre-contest settlements.

Once the operator contests the Secretary’s proposed assessment of penalty, however,
Commission jurisdiction attaches. 30 U.S.C. 815(d).

. . . . When a proposed penalty is contested, the Commission affords an
opportunity for a hearing, “and thereafter . . . issue[s] an order, based on findings
of fact, affirming, modifying, or vacating the Secretary’s citation, order, or
proposed penalty, or directing other appropriate relief.” Id. (Emphasis added).
See also 30 U.S.C. § 810(i)(“The Commission shall have authority to assess all
civil penalties provided in this Act”). Thus, it is clear that under the Act the
Secretary of Labor's and the Commission's roles regarding the assessment of
penalties are separate and independent. The Secretary proposes penalties before a
hearing based on information then available to him and, if the proposed penalty is
contested, the Commission affords the opportunity for a hearing and assesses a
penalty based on record information developed in the course of an adjudicative
proceeding. See Senate Subcommittee on Labor, Committee on Human
Resources, 95th Cong., 2d Sess., Legislative History of the Federal Mine Safety
and Health Act of 1977, at 89, 632-635, 656-657, 666-662, 906-907, 910-911,
1107, 1316, 1328-29, 1336, 1348, 1360.

The respective governing regulations adopted by the Commission and the
Secretary regarding penalty assessments clearly reflect the Act’s bifurcated
penalty assessment procedure. Commission Rule of Procedure 29(b) provides:

In determining the amount of the penalty neither the judge
nor the Commission shall be bound by a penalty
recommended by the Secretary. . . .

29 C.F.R. § 2700.29(b). The Secretary's regulations in 30 C.F.R. Part 100
expressly apply only to the Secretary's proposed assessment of penalties. See also
47 Fed. Reg. 22287 (May 1982) (“If the proposed penalty is contested, the
[Federal] Mine Safety and Health Review Commission exercises independent
review and applies the six statutory criteria without consideration of these [MSHA
penalty assessment] regulations.”)

See Sellersberg Stone Co., 5 FMSHRC 287, 291 (Mar. 11, 1983) (emphasis in original).

Section 110(k) provides for Commission oversight of settlements where the Secretary has
agreed to compromise or mitigate a proposed penalty. The Act provides for this independent
review to guard against possible abuses of the Secretary in proposing settlements that are
inconsistent with the public interest or the Act’s objectives. Knox County Stone Co., 3 FMSHRC
2478, 2479 (Nov. 1981).

In proposing a settlement, the Secretary historically has moved the
Commission to amend the penalty and modify the citation itself. See, e.g., Energy Fuels Coal,
Inc., 11 FMSHRC 78 (Jan. 1989) (ALJ) (approving Secretary’s request that S&S designation be
removed); Consolidation Coal Co., 13 FMSHRC 473 (Mar. 1991) (ALJ) (approving Secretary’s
request that S&S designation be removed); Jim Walter Resources, Inc., 1992 WL 534707 (Aug.
1992) (ALJ) (approving parties’ joint motion to remove the S&S designation); Harvey W. Buche
Road Building, Inc., 27 FMSHRC 395 (Apr. 2005) (ALJ) (approving settlement modifying
citation’s negligence designation).

Such motions make eminent sense as the penalty and the
citation allegations are inextricably linked.

In assessing the appropriateness of a proposed settlement, the Commission and its judges
must consider the operator’s history of prior violations, the size of the operator’s business, the
operator’s negligence, the effect of the operator’s ability to continue business, the good faith of
the operator to achieve rapid abatement of the violation, the penalty’s deterrent effect, and the
gravity of the violation. 30 U.S.C § 820(i)(emphasis added); See Black Beauty Coal Co., 34
FMSHRC ___, slip op. at 10, Docket No. LAKE 2008-327 (Aug. 20, 2012). The S&S
designation is an important indicator of gravity. While the S&S designation itself does not
directly affect the proposed penalty under the Part 100.3 criteria that the Secretary uses to
formulate proposed civil penalties,

the Commission has held that S&S determination must be
premised on findings that the violation contributed to a discrete safety hazard that was reasonably
likely to result in an injury of a reasonably serious nature. See Mathies Coal Co., 6 FMSHRC 1,
3-4 (Jan. 1984). By agreeing to remove the S&S designation in a proposed penalty settlement,
the Secretary essentially concedes, for purposes of settlement, that injury was unlikely. Such a
concession has direct implications on the appropriateness of the Secretary’s proposed penalty and
is subject to the same judicial review afforded proposed penalty revisions.

In light of the foregoing, I reject the proposed settlement agreement in which the
Secretary seeks to unilaterally remove the S&S designation after the proposed assessment of
penalty has been contested before the Commission. I find that such action contravenes the intent
of Congress set forth in the foregoing legislative history concerning Commission oversight of the
settlement approval process, as sanctioned by the language in Section 110(k) of the Mine Act,
which provides that no proposed penalty which has been contested shall be settled, except with
the approval of the Commission. Accordingly, I conclude under Black Beauty, supra, that the
Secretary may not modify a contested citation, including the S&S designation, in the settlement
of a civil penalty proceeding, without Commission approval. Furthermore, as I found in Rock N
Roll Coal, supra, I find that any such modifications offered in consideration for Respondent’s
acceptance of a contested civil penalty proposal should be supported by adequate factual
foundation, as set forth in Commission Rule 31(b).

The Secretary has shown an unwillingness to accept this case law and the rationale
supporting prior settlement rejections by Commission Administrative Law Judges. See Black
Beauty Coal Co., 34 FMSHRC , slip op., Docket No. LAKE 2008-327 (Aug. 20, 2012); Rock
N Roll Coal, Inc., 33 FMSHRC 3253 (Dec. 2011) (ALJ); Dominion Coal Corp., 34 FMSHRC
, slip op., Docket No. VA 2012-227 (October 17, 2012) (ALJ); Dickenson-Russell Coal
Company, LLC, 2012 WL 6494599 (Oct. 2012) (ALJ); The American Coal Co. 35 FMSHRC
___, slip op., Docket No. LAKE 2011-13 (February 11, 2013). Absent a ruling from the
Commission on this matter, I do not expect the Secretary to abandon this position.

Commission Rule 76(a), 29 C.F.R. § 2700.76(a), provides that, upon the motion of the
judge or a party, the Commission may grant interlocutory review where the judge's interlocutory
ruling involves a controlling question of law and immediate review will materially advance the
final disposition of the proceeding. Although the parties have not moved that the issue presented
by this case be certified for interlocutory review, the large number of settlement motions filed for
approval with the Commission warrants further clarity as to the Commission’s role in reviewing
proposed settlements.

Further, the scope of the Commission’s authority to review non-pecuniary settlement provisions is obscured by a split decision in Madison Branch Management,
17 FMSHRC 859 (June 1995).

I find that it will materially advance the final disposition of the present case (and many
others like it) by certifying for interlocutory review the issue of whether the Secretary can remove
the contested S&S designation without leave of the Commission. If the Commission were to
reverse my rejection of the settlement motion, it would be unnecessary to reschedule this case for
hearing. Further, there would be no need for the Secretary to seek Commission approval when
proposing to modify a citation that has been contested. Under the Secretary’s theory, which I
reject, Commission approval would merely extend to a proposed penalty settlement.
Accordingly, I conclude that review by the Commission will materially advance resolution of this
proceeding and possibly hundreds of other settlements pending before Commission judges.

WHEREFORE, the Secretary’s Amended Settlement Motion is DENIED and it is
ORDERED that the following questions are CERTIFIED for review: (1) Whether the Secretary
can remove the S&S designation without leave of the Commission in settlement of a proposed
assessment of civil penalty that has been contested? (2) Whether the Act authorizes Commission
review of non-pecuniary settlement provisions?

/s/ Thomas P. McCarthy

Thomas P. McCarthy

Administrative Law Judge

Distribution:

A. Scott Hecker, Esq., Office of the Solicitor, U.S. Department of Labor, 1100 Wilson Blvd.,
22nd Floor West, Arlington, VA 22209-2247

Douglas N White, Esq., Office of the Solicitor, U.S. Department of Labor, 1100 Wilson Blvd.,
22nd Floor West, Arlington, VA 22209-2247

Robert S. Wilson, Esq., Office of the Solicitor, U.S. Department of Labor, 1100 Wilson Blvd.,
22nd Floor West, Arlington, VA 22209-2247

Cameron S. Bell, Esq., Penn Stuart, P.O. Box 2288, Abingdon, VA 24212

/tjr