CDK Contracting Company

Plain-English summary

CDK Contracting Company contested eight of twelve citations and sought dismissal of the related civil penalty proceeding, arguing that MSHA proposed the penalties too late after a fatal accident investigation at the Portland Plant and Quarry. The penalties were proposed 13 to 15 months after the citations and more than 10 months after MSHA's final accident report. Judge Richard W. Manning found the delay reasonable and found adequate cause based on the fatality-related assessment work, staffing shortages, and the time needed to evaluate the citations. For the eight contested citations, he held that CDK could have prevented any prejudice by requesting a pre-penalty hearing while it knew its construction project and workforce were ending. He found no significant prejudice for the four uncontested citations and denied the motion to dismiss.

Decision snapshot

• Governing provisions: 30 U.S.C. § 815(a); 29 C.F.R. §§ 2700.20 and 2700.25
• Outcome: The motion to dismiss the eight citation contests and related civil penalty proceeding was denied.
• Key point: A contractor that knows its project and witnesses may end can request a pre-penalty hearing, and may not later rely on that avoidable witness loss to establish prejudice from a reasonable penalty delay.

Full text (FMSHRC public release)

FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION
1244 SPEER BOULEVARD #280
DENVER, CO 80204-3582
303-844-3577/FAX 303-844-5268
February 3, 2003

CDK CONTRACTING COMPANY, : CONTEST PROCEEDINGS
Contestant :
: Docket No. WEST 2001-348-RM
: C/O No. 7943017; 3/20/2001
:
: Docket No. WEST 2001-350-RM
: C/O No. 7943033; 4/05/2001
v. : Docket No. WEST 2001-422-RM
: Order No. 7935403; 4/23/01
:
: Docket No. WEST 2001-423-RM
SECRETARY OF LABOR : Order No. 7935404; 4/23/2001
MINE SAFETY AND HEALTH :
ADMINISTRATION (MSHA), : Docket No. WEST 2001-424-RM
Respondent : Order No. 7935406; 4/23/2001
:
: Docket No. WEST 2001-427-RM
: Citation No. 7935409; 4/23/2001
:
: Docket No. WEST 2001-428-RM
: Citation No. 7942519; 4/23/2001
:
: Docket No. WEST 2001-429-RM
: Citation No. 7943037; 4/23/2001
:
: Mine ID 05-00037 L35
: Portland Plant/Quarry
:
:
SECRETARY OF LABOR, : CIVIL PENALTY PROCEEDING
MINE SAFETY AND HEALTH :
ADMINISTRATION (MSHA), : Docket No. WEST 2002-461-M
Petitioner : A.C. No. 05-00037-05506 L35
:
v. :
: Portland Plant & Quarry
CDK CONTRACTING COMPANY, :
Respondent :

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             ORDER DENYING CDK CONTRACTING COMPANY’S
                         MOTION TO DISMISS

    CDK Contracting Company (“CDK”) filed a motion to vacate the twelve citations and

orders of withdrawal (the “citations”) in these cases and to dismiss the civil penalty proceeding.
These cases involve six section 104(a) citations, four section 104(d) orders, and two section
104(a)/107(a) citation/orders.1 As grounds for the motion, CDK argues that the Secretary failed
to propose penalties for the alleged violations within a reasonable time after the termination of
the Secretary’s investigation of a fatal accident at the Portland Plant and Quarry as required by
section 105(a) of the Mine Act. The Secretary opposes the motion.

     On February 24, 2001, a fatal accident occurred when a CDK employee fell from a

scaffold ladder at the Portland Plant and Quarry. CDK was a construction contractor at that site.
The Department of Labor’s Mine Safety and Health Administration (“MSHA”) commenced its
investigation of the accident that day. On February 27, 2001, MSHA issued two of the section
104(a) citations. On or about March 22, 2001, MSHA issued a section 104(a) citation and a
section 104(a)/107(a) citation/order. MSHA issued the remaining citations at issue in these
cases in April 2001. CDK contested eight of the twelve citations in a timely manner. MSHA
issued its final report on the investigation of the accident on July 9, 2001. The citations were
terminated by MSHA on various dates between February 27 and July 13, 2001. On May 17,
2002, MSHA issued its proposed assessment of penalty under 29 C.F.R. § 2700.25. CDK timely
filed its contest of the proposed penalties. MSHA proposed penalties for the citations between
13 and 15 months after they were issued and more than 10 months after it issued its final report
on the accident.

                  I. SUMMARY OF THE PARTIES’ ARGUMENTS

    CDK argues that these cases must be dismissed because the Secretary failed to notify

CDK of the proposed penalties within a reasonable time after the citations were issued, as
required by the Mine Act. The Secretary is required “within a reasonable time after the
termination of such inspection or investigation [to] notify the operator . . . of the civil penalty to
be assessed . . . .” 30 U.S.C. § 815(a). CDK argues that notification of the proposed penalty
amount more than 13 months after the citations were issued is not within a reasonable time under
the Mine Act. CDK maintains that the Secretary cannot establish that this delay was reasonable.
Although these cases involve a fatal accident, the facts are not complex and were fully known by
the time the citations were issued. In addition, CDK argues that several of the citations at issue
in these cases were issued during a routine inspection rather than as a consequence of the fatal
accident.

   1
      Citation No. 7943029 was vacated by MSHA on June 4, 2001, although it is still listed

in the Secretary’s petition for assessment of penalty in WEST 2002-461-M. Because this
citation has been vacated, I have not discussed it in this order.

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    The Secretary maintains that the proposed penalties were issued within a reasonable time

given the circumstances of these cases. She also argues that she demonstrated just cause for any
delay. The Secretary states that the special assessments group of MSHA’s Office of
Assessments was extremely busy during 2001-02. She states that this group has only four
employees and two of these employees were unavailable during the relevant period of time. The
Secretary points to the fact that during 2001, 2,153 “routine” special assessments were proposed,
217 “fatal/serious injury related” special assessments were proposed, and 204 “section 110(c)”
special assessments were considered. In the first nine months of 2002, the numbers were 1,949,
183, and 158, respectively.

    The Secretary contends that the relevant time period did not begin to run until MSHA

completed its accident investigation. She maintains that the fatality that triggered the
investigation was extremely serious and several citations were referred for special assessment.
She states that careful consideration of the facts and consideration of the statutory criteria
consumed considerable time. All but one of the citations was of a significant and substantial
nature and they were all issued during MSHA’s investigation of the fatal accident. The citations
were in the Office of Assessments from August 6, 2001 until May 17, 2002. There was a
backlog of cases in the office for special assessments during that time because one of the four
assessors was on extended leave and the other was unavailable as a result of a training program.
In addition, the Secretary states that the supervisor of the special assessments group was heavily
involved in the development of MSHA’s standardized information system, which will
completely replicate the records into a web-based system.

     The Secretary believes that the reasonableness of time should be analyzed by taking into

consideration the length and circumstances of the delay, the prejudice to the opposing party by
reason of the delay, and the circumstances compelling relief. The Secretary contends that CDK
suffered no actual prejudice because both parties used the time to conduct discovery and prepare
for trial. The mere potential for prejudice is insufficient. Dismissal of civil penalty proceedings
because of a delay that was not prejudicial would clearly run counter to the concern for safe and
healthful working conditions that led to the creation of the civil penalty program. The Secretary
points to the legislative history of the Mine Act in which the Senate Committee on Human
Resources stated that “there may be circumstances, although rare, when prompt proposal of a
penalty may not be possible, and the Committee does not expect that the failure to propose a
penalty with promptness shall vitiate any proposed penalty proceeding.” (S. Rep. 95-181, at 34,
reprinted in Senate Subcomm. on Labor, Comm. on Human Res., Legislative History of the
Federal Mine Safety and Health Act of 1977, at 622 (1978)).

     In response to the Secretary’s opposition, CDK states that MSHA’s failure to adequately

staff its special assessments group does not constitute adequate cause for the delay. There was
not an unusually high number of special assessments during 2001-02 and these cases are not
particularly complex. The Commission accepted a lengthy delay in proposing a penalty when
the caseload of the assessments office increased exponentially. Steele Branch Mining, 18
FMSHRC 6, 14 (Jan. 1996). There has been no showing of such an increase here.

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     Finally, CDK argued that the Secretary’s delay actually prejudiced its ability to defend

itself in these cases. CDK states that it is no longer operational and that it is in the process of
winding down its corporate affairs. It has only one employee at the present time. As a
consequence, its potential witnesses are no longer employees of CDK. In addition, those former
employees who have knowledge of the facts are no longer in the immediate geographical vicinity
of the Portland Plant & Quarry. These key witnesses live in such far flung places as Virginia
Beach, Virginia; San Pablo, Colorado; Ponca City, Oklahoma; Aztec, New Mexico; Eldorado,
Arkansas; Goldendale, Washington; Wickenburg, Arizona; and San Juan, Puerto Rico. The
hourly employee who worked with the deceased and who is the only individual with first-hand
knowledge of the events leading up to the accident is believed to reside in Mexico. CDK states
that the whereabouts of other witnesses is unknown. CDK believes that it will suffer actual
prejudice if it is unable to secure the assistance of these individuals in the preparation of its
defense and secure their presence at the hearing.

    I permitted the Secretary to respond to CDK’s reply because, for the first time, CDK

presented argument that it suffered actual prejudice. The Secretary states that CDK’s attempt to
establish prejudice ignores or mischaracterizes several key factors in the cases. The Secretary
states that CDK continued working at the Portland Plant & Quarry for many months after the
citations were issued. All of the key witnesses were interviewed by MSHA and extensive
discovery was taken, including the deposition of many potential witnesses. She states that
witnesses frequently move away from the area of the mine. More importantly, CDK knew that it
was working on a short-lived construction project in Colorado, yet it neither opposed the
Secretary’s motion to stay the pre-penalty contest proceedings nor filed a motion to lift the stay.

                           II. ANALYSIS OF THE ISSUES

    The Commission has excused the late filing of proposed penalties based on claims of

excessive work load, but it made clear that such claims will not receive blanket approval. Steele
Branch, 18 FMSHRC at 14; Salt Lake County Rd. Dept., 3 FMSHRC 1714, 1717 (July 1981).
The assessment in Steele Branch arose in 1991-92 when there was a dramatic increase in the
number of penalty assessments. See Rhone-Poulenc of Wyoming Co., 15 FMSHRC 2089, 2094
(Oct. 1993). In the present cases, the delay was in large measure caused by the fact that two of
the four MSHA employees assigned to the special assessments office were not available for a
significant period of time. One employee was on extended leave for an unspecified reason, the
other was in training, and the supervisor was heavily involved in developing a new information
system. These excuses are not nearly as compelling as the excuse offered by the Secretary in
Steele Branch.

   The accident in these cases was serious and required an analysis of the facts by the Office

of Assessments. Proposing penalties following a fatal accident requires a high degree of
diligence on the part of assessment office employees and those MSHA officials who review the
proposals. The office’s staff was reduced and the supervisor’s assistance was compromised by a
major project. It is important to remember that a penalty is typically proposed within three to
nine months after a citation is issued, so the delay in these cases is not as great as it may first

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appear. In addition, the Secretary does not begin the assessment process until a citation is
terminated and any investigation has been completed. Some of the citations in these cases were
terminated in July 2001, when the investigation report was issued. They were all issued during
MSHA’s investigation of the accident. I find that the penalties involved in these cases were
proposed within a reasonable time.

    I also find that the Secretary established adequate cause for any delay. I agree with Judge

Michael Zielinski’s analysis of this issue in Paiute Aggregates, Inc., 24 FMSHRC 950, 954 (Oct.
2002). In that case, Judge Zielinski concluded that the Secretary did not establish that the entire
14 month delay was due to factors beyond her control because she was unable to provide a week-
by-week description of the events that occurred while the Office of Assessments was considering
what penalties to propose. Id. Nevertheless, he held that it is clear that Congress intended that
“delays in proposing penalties should not nullify penalty proceedings.” Id. Paiute Aggregates
arose under circumstances that are quite similar to the present cases. The showing necessary to
establish adequate cause will vary depending upon the length and circumstances of the delay.
Paiute Aggregates, Inc., 24 FMSHRC 943, 946 (Oct. 2002) (Judge Zielinski). Thus, a case
involving an egregious delay will require greater justification to meet the adequate cause test.
Id. Here the rather short delay was caused by the Secretary’s failure to adequately staff its
special assessment office. While this excuse may not be sufficient to justify a lengthy delay, I
believe that it satisfies the adequate cause test in this case, given the admonition of Congress
cited above, because the penalties were proposed only a few months later than is typical for the
Office of Assessments.

    CDK argues that it was actually prejudiced by the delay because its witnesses moved

away after its Colorado project was completed and the company is winding down its affairs.
Although I agree with the Secretary that witnesses frequently move away before a hearing can be
scheduled, the situation presented by this case is more serious because CDK’s construction
project has been completed and CDK no longer employs any of its witnesses. Although CDK
may not have known at the time the citations were issued that the company would be going out
of business, it knew that its construction project in Colorado would be ending and that many of
its employee witnesses would be moving elsewhere.

    Section 105 of the Mine Act gives mine operators the right to request a hearing on the

merits before penalties are proposed. The Commission’s Procedural Rule 20 sets forth an
operator’s right to contest citations. 29 C.F.R. § 2700.20. The Commission has long held that
an operator can contest any citation or order before a penalty is proposed by the Secretary.
Energy Fuels Corp., 1 FMSHRC 299, 307-09 (May 1979). CDK protected its rights when it
contested the citations in the contest proceedings set forth in the above caption. Although the
Commission generally expects operators to wait until a penalty is proposed before requesting
that the case be heard, it recognizes that situations will arise in which a hearing on the merits
should be held before the Secretary proposes a penalty. If an operator files a pre-penalty notice
of contest under Procedural Rule 20 and believes that it requires a hearing before the Secretary
files her proposed penalty assessment under Procedural Rule 25, it can file a motion with the
administrative law judge asking that the case be set for hearing. In a companion case to Energy

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Fuels, the Commission provided some examples in which a pre-penalty hearing may be
desirable.

           Although it is arguably unlikely that the operators [in these
           consolidated cases] will need a hearing before a penalty is
           proposed (the alleged violations having been abated and the
           citations containing no special findings), it might nevertheless be
           desirable for a hearing to be scheduled quickly if, for example, the
           allegedly violative conditions often recur, if continuing abatement
           efforts are expensive, or if another case is being heard on the same
           issue and early consolidation would be helpful.

Helvetia Coal Co., 1 FMSHRC 321, 322 (May 1979). While the closing of a mine or the
winding down of an operator’s business is not listed as an example, it is clearly the type of case
in which a pre-penalty hearing is desirable.

    CDK did not object to the Secretary’s motion to stay the eight pre-penalty contest cases.

CDK knew that its Colorado project was coming to an end and, at some point, also knew that
CDK itself would be winding down its operations. Yet, CDK neither advised me of that fact nor
asked that the stay be lifted so that a hearing could be scheduled.2 The parties engaged in
extensive discovery during the period of the stay and depositions were taken of many of CDK’s
potential witnesses. CDK could have requested that a hearing be scheduled before its witnesses
were terminated from employment or upon the completion of discovery. All relevant issues in
these eight citations could have been litigated at such a hearing, including whether the alleged
violations occurred and, if so, whether they were significant and substantial and the result of
CDK’s unwarrantable failure to comply with the safety standards. Negligence and gravity issues
could have also been adjudicated. All elements of a citation that are subject to eyewitness
testimony can be litigated before a penalty is proposed. At the very least, CDK could have made
sure that the testimony of its key witnesses was preserved in deposition testimony.

    I find that any prejudice suffered by CDK as a result of the Secretary’s delay in

proposing penalties for the eight citations that it contested could have been prevented if CDK
had requested a pre-penalty hearing on the merits of the citations. By forgoing its right to
request a pre-penalty hearing when it knew that it would be closing its operations, CDK
surrendered its right to claim that it was prejudiced by the Secretary’s delay in proposing
penalties in these cases.

   CDK did not contest four of the citations at issue under Procedural Rule 20. I agree with

CDK that the Mine Act does not “impose on operators the burden to routinely seek an expedited
hearing prior to assessment of penalties in order to have a fair opportunity to prepare and present

   2
    Counsel for CDK advised me of the status of CDK’s operations in October 2002, five

months after the Secretary proposed penalties in these cases.

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its defense.” (CDK Reply at 13). An operator should ordinarily be able to contest citations and
penalties in the penalty proceeding without being concerned that it will take so long for the
Secretary to initiate the penalty case that its defense will be compromised. Nevertheless, a
construction contractor understands that its involvement at a mine will come to an end and that
its employees will move on to other jobs. A contractor who is issued citations following a fatal
accident would be well advised to directly contest the citations if it knows that its work at a mine
will be ending within a year or two. Such citations are likely to be specially assessed by MSHA,
an investigation will be conducted which may include a section 110(c) investigation, and
penalties will not be proposed as quickly as they normally are by MSHA. Such proceedings
sometimes take years to be resolved, even in the best of circumstances. Key witnesses for even a
stable production operator are often no longer working at the mine by the time a case is heard if a
fatal accident is involved.

    In this instance, there is no doubt that CDK will be inconvenienced by the fact that it is

no longer operating in Colorado and is winding down its business. Its costs will be higher and
some of the witnesses it would like to call may not be available. CDK did not state when its
work at the Portland Plant and Quarry came to an end or when it decided to cease all operations.
CDK may have faced some of these same obstacles if the penalties had been proposed several
months earlier. With respect to the citations that were not contested under Procedural Rule 20,
taking into consideration the length and circumstances of the delay, I find that CDK did not
establish that it was significantly prejudiced by the fact that the Secretary proposed the penalties
a few months later than they would have been if the citations were not issued during a fatality
investigation.

                                       III. ORDER

    I find that although the Secretary took several months longer to propose penalties for the

citations than normal, the penalties were proposed within a reasonable time. In the alternative, I
find that the Secretary demonstrated adequate cause for the delay. I also find that, by not
requesting a pre-penalty hearing, CDK waived its right to claim prejudice with respect to the
contested citations because it knew that it would be shutting down its operations and terminating
its employee witnesses. Finally, I conclude, for the reasons stated above, that CDK was not
seriously prejudiced with respect to the citations that it did not contest under Procedural Rule 20.
Consequently, CDK Contracting Company’s motion to dismiss is DENIED.

                                          Richard W. Manning
                                          Administrative Law Judge




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Distribution:

Karen L. Johnston, Esq., Jackson & Kelly,1099 18th Street, Suite 2150, Denver, CO 80202 (Fax
and First Class Mail)

Gregory W. Tronson, Esq., Office of the Solicitor, U.S. Department of Labor, P.O. Box 46550,
Denver, CO 80201-6550 (Fax and First Class Mail)

RWM

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