Genwal Resources, Inc.

Plain-English summary

Genwal Resources sought dismissal because MSHA proposed penalties more than a year and a half after the citations were terminated and filed the penalty petitions about 30 days after the procedural deadline. The company also cited a change in ownership, the former safety director's move to MSHA, and prejudice from the passage of time. Judge Richard W. Manning held that the deadlines were not jurisdictional, accepted MSHA's explanation involving increased contests and work following the Crandall Canyon emergency, and found that Genwal had not identified specific prejudice. He denied dismissal, allowed the late petitions, and left open the possibility of an equitable remedy if Genwal later proved citation-specific prejudice at a hearing.

Decision snapshot

• Governing provisions: 29 C.F.R. §§ 2700.25, 2700.26, and 2700.28(a); 30 U.S.C. § 815(a)
• Outcome: Genwal's motion to dismiss was denied, and the Secretary's motion to file the penalty petitions late was granted.
• Key point: Delay alone does not require dismissal when filing deadlines are nonjurisdictional and the operator has not shown specific prejudice.

Full text (FMSHRC public release)

FMSHRC ALJ Decision

FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

721 19TH STREET, SUITE 443

DENVER, CO 80202-2500

303-844-3577/FAX 303-844-5268

July 23, 2009

SECRETARY OF LABOR,

MINE SAFETY AND HEALTH

ADMINISTRATION (MSHA)

Petitioner

v.

GENWAL RESOURCES, INC.,

Respondent

CIVIL PENALTY PROCEEDINGS

Docket No. WEST 2008-0939

A.C. No. 42-01715-145920-01

Docket No. WEST 2008-0940

A.C. No. 42-01715-145920-02

Crandall Canyon Mine

ORDER DENYING MOTION TO DISMISS

AMENDED PREHEARING ORDER

On July 16, 2008, the Secretary of Labor filed petitions for assessment of civil penalty in
these cases under section 105(d) of the Federal Mine Safety and Health Act of 1977, 30 U.S.C. §
801, et seq. (“Mine Act”). She also filed a motion to file these petitions out of time. Genwal
Resources, Inc, filed its answer to the petition within 30 days. In its answer, Genwal opposed
the Secretary’s motion to file the petitions for penalty out of time and asked that the cases be
dismissed on several grounds. The cases were assigned to me on March 19, 2009, without a
resolution of these issues. Genwal filed another motion to dismiss on June 29, 2009, and the
Secretary filed an opposition.

These cases involve three citations issued under section 104(a) of the Mine Act, a citation
issued under section 104(d)(1) and an order issued under section 104(d)(2). The citations were
issued in July 2006 and the order was issued in July 2007. The total proposed penalty is
$11,080.00. In her motion to file the petitions for penalty late, the Secretary states that Genwal’s
notice of contest of the proposed penalties was filed on April 30, 2008. Commission Procedural
Rule 28(a) required the Secretary to file the petitions for penalty within 45 days after Genwal
contested the penalties, which would be no later than June 16, 2008. 29 C.F.R. § 2700.28(a).
She attributes the late filing of her penalty petition to “an increased workload and administrative
oversight by the [MSHA] field office.” She argues that the time limit in the Commission’s rule
does not impose a jurisdictional limitation and that, because the Mine Act states that petitions for
penalty must be filed “within a reasonable time,” the court should examine whether reasonable
cause existed for the Secretary’s delay. A declaration of Price, Utah, Field Office Supervisor
William M. Taylor was submitted in support of her motion.

Genwal’s motion to dismiss raises a number of additional issues. It states that the cases
should be dismissed “because the citations were written while the mine was under its previous
ownership and because of the extreme prejudice that has been created by the passage of time and
the events that have occurred since these citations were written on July 27, 2006.” (Motion, p.
1). The mine was purchased by its current owner on August 9, 2006. Genwal states that as part
of the purchase agreement, outstanding penalties and fines were addressed and the parties agreed
that the former owner would be responsible for all MSHA penalties that had not yet been
assessed during its period of ownership. In negotiating these terms, Genwal represents that
neither the current owner nor the former owner of the company could have foreseen that “MSHA
penalties would take in excess of two (2) years to be assessed, and therefore, extreme prejudice
has been created by the passing of time.” Id. 1-2. Genwal also maintains that the information
contained in the declaration of MSHA’s field office supervisor is not relevant because the
Secretary had “one full year to assess the penalties for the citations at issue prior to the
occurrence of the events referenced in the declaration. . . .” Id. 2.

In addition, Genwal states that the citations were served on the company’s safety
director, Jim Pruitt. Because Mr. Pruitt is now an MSHA inspector, Genwal argues that it “will
undoubtedly face obstacles in attempting to interview Mr. Pruitt for discovery purposes . . . .”
Id. 2.

Section 105(a) of the Mine Act provides:

If, after an inspection or investigation, the Secretary issues a
citation or order under section 104, [she] shall, within a reasonable
time after termination of such inspection or investigation, notify
the operator . . . of the civil penalty proposed . . . .

(30 U.S.C. §815(a); emphasis added). This statutory provision requires the Secretary to propose
penalties within a reasonable period of time after a citation or order of withdrawal has been
terminated.

The Secretary states that Genwal contested the penalties on or about April 30, 2008.
Commission Procedural Rule 26, 29 C.F.R. § 2700.26, provides that a mine operator must notify
the Secretary that it wishes to contest a proposed penalty assessment within 30 days of its
receipt. Consequently, it can be estimated that Genwal received the Secretary’s proposed
penalty assessment on or about March 31, 2008. The citations at issue were terminated on or
about August 7, 2006. Thus, it took the Secretary more than a year and a half to propose
penalties for these citations. The Commission’s procedural rules do not set forth a time limit for
the Secretary to propose penalties. Rule 25 simply states that the Secretary “shall notify the
operator . . . of the violation alleged [and] the amount of the proposed penalty assessment. . . .”
29 U.S.C. § 2700.25.

The record reveals that the Secretary filed her petition for assessment of penalty about 77
days after Genwal filed its notice of contest of the penalties. As stated above, Commission
Procedural Rule 29 provides that the Secretary shall file her petition for assessment of penalty
within 45 days of receipt of a mine operator’s contest of a proposed assessment.

The declaration of Field Office Supervisor Taylor states that the field office was not able
to process and submit to the Office of the Solicitor the “packets” necessary for the petition for
assessment of penalty until early July 2008. He states that the Price, Utah, field office was
“diligently involved” in providing information to investigative panels and the public following
the entrapment of miners at the Crandall Canyon Mine starting in August 2007. All available
office personnel were involved in this effort. The declaration also states that, at about the same
time, the number of penalty contests drastically increased both nationwide and in Utah. He
states that the delay in processing Genwal’s penalty contest was not “due to any dilatory intent
on the part of the agency.”

It is well settled that the Secretary’s failure to meet time deadlines when filing penalty
proposals and petitions for assessment of penalty is not jurisdictional. The statutory processing
deadlines generally are intended to “spur the Secretary to action” rather than to confer rights on
litigants that limit the scope of the Secretary’s authority. Sec’y of Labor v. Twentymile Coal Co.,
411 F.3d 256, 261 (D.C. Cir. 2005).

The key events can be summarized as follows:

July 27, 2006              Citations issued

August 7, 2006           Citations terminated

March 31, 2008          Penalty proposed under Procedural Rule 25

April 30, 2008            Penalty contested by Genwal under Procedural Rule 26

July 16, 2008              Petition for Assessment Penalty filed under Procedural Rule 28

August 15, 2008         Answer filed by Genwal

There can be no dispute that the citations were issued about three years ago. Almost one
year of the delay in these cases can be attributed to this Commission. The Commission’s
caseload increased significantly during this period. The Secretary’s petition for assessment of
penalty was filed only about 30 days after the due date. The biggest delay was at the Price field
office and MSHA’s Office of Assessments. Although the citations were terminated on August 7,
2006, the Secretary did not propose penalties until March 31, 2008.

Dismissal is a harsh remedy. Genwal alleges that it has been prejudiced by this delay,
but it does not set forth any specifics. It argues that the length of time establishes prejudice.
Genwal also relies on the transfer of ownership of the company because neither party to the sale
“could have foreseen that MSHA penalties would take in excess of two (2) years to be assessed.”
(Motion, 1- 2). It is well established that the mere passage of time is not sufficient to establish
prejudice. Indeed, it often takes the Office of Assessments nine to twelve months to propose a
penalty. Section 105(a) of the Mine Act was written to encourage compliance with the
Secretary’s safety and health standards rather than to create an avenue for respondents to limit
the scope of the Secretary’s authority. Genwal admitted that arrangements were made in the
purchase agreement for the payment of outstanding penalties assessed for citations issued prior
to the purchase date. Genwal knew that it had been issued the subject citations and that penalties
had not yet been proposed.

The Senate committee that was instrumental in drafting the Mine Act specifically stated
in its report that the committee “does not expect that the failure to propose a penalty with
promptness shall vitiate any proposed penalty proceeding.” S. Rep. No. 95-181, at 34 (1977),
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). I accept the Secretary’s explanation
for her delay and find that it was reasonable under the circumstances. Other administrative law
judges have reached similar conclusions in other cases. See, Wabash Mine Holding Co., 27
FMSHRC 672, 685-88 (October 2005) (15 month delay); Mountain Coal Co., 31 FMSHRC
____, No WEST 2009-189 (June 30, 2009) (2 year delay).

If these cases do not settle and Genwal is able to establish at a hearing that the delay
prejudiced its ability to offer evidence in its defense with respect to specific citations, then I will
consider whether an equitable remedy is appropriate. For the reasons set forth above, Genwal’s
motion to dismiss these cases is DENIED and the Secretary’s motion to file late petitions for the
assessment of civil penalty is GRANTED.

In order to encourage the parties to settle these cases, counsel for the Secretary shall
contact Respondent to discuss settlement. If a settlement is reached, a motion for its approval
shall be filed by the Secretary no later than August 19, 2009. If the parties are not able to settle
the cases, counsel for the Secretary shall, on or before August 20, 2009, initiate a conference call
with me to discuss the status of the cases and potential hearing dates.

Richard W. Manning

Administrative Law Judge

Distribution:

Matthew B. Finnigan, Esq., Office of the Solicitor, U.S. Department of Labor, 1999 Broadway,
Suite 1600, Denver, CO 80202 (Fax and First Class Mail)

Jason D. Witt, Esq., Assistant General Counsel, Coal Services Group, 56854 Pleasant Ridge
Road, Alledonia, OH 43902 (Fax and First Class Mail)

RWM