Secretary of Labor v. Bundy Auger Mining, Inc.

Plain-English summary

Bundy Auger Mining faced two section 104(d)(1) enforcement actions involving an unsafe highwall condition and inadequate working-area examinations. Judge William B. Moran had rejected an initial settlement that reduced both specially assessed penalties by 30 percent because its supporting explanations did not connect the proposed reductions to the cited standards. The amended motion explained Bundy's contractor relationship with the mine owner, its reliance on the owner's instructions, its lack of authority and equipment to reshape the pit, and its mistaken belief that MSHA had approved its response. The judge found that these additional facts supported the reductions, while again rejecting generic litigation-risk language as a substitute for citation-specific facts. He approved penalties totaling $4,410 instead of $6,300 and dismissed the case upon payment.

Decision snapshot

• Cited standards: 30 C.F.R. §§ 77.1004(b) and 77.1713(a)
• Outcome: The amended settlement was approved, reducing total penalties from $6,300 to $4,410.
• Key point: A previously deficient settlement can be approved when an amended motion supplies facts connecting the operator's conduct and responsibilities to the proposed penalty reductions.

Full text (FMSHRC public release)

FEDERAL MINE SAFETY AND HEALTH REVIEW
COMMISSION

OFFICE OF ADMINISTRATIVE LAW JUDGES

1331 Pennsylvania
Avenue, NW, Suite 520N

Washington, DC
20004-1710

Phone: (202) 434-9933
| Fax: (202) 434-9949

June 9, 2017

SECRETARY
OF LABOR,                                :     CIVIL PENALTY PROCEEDING

MINE
SAFETY AND HEALTH                      :

ADMINISTRATION
(MSHA),                        :     Docket No. WEVA 2015-1036

Petitioner,                          :     A.C.
No. 46-09415-391343

v.                                                   :    

:    

BUNDY
AUGER MINING, INC.,                    :     Mine: Lost Flats Highwall Miner

Respondent.                      :

DECISION APPROVING
AMENDED SETTLEMENT MOTION

Before: Judge
Moran

This
matter arises under the Federal Mine Safety and Health Act of 1977, 30 U.S.C. §
801 et seq. (2012) (“Mine Act”) and is before the Court upon a petition for
assessment of a civil penalty under section 105(d) of the Federal Mine Safety
and Health Act of 1977. On May 25, 2017, the Court issued its Decision Denying
Settlement Motion and following that, the case was set for a hearing scheduled to
commence on August 29, 2017.  On June 1, 2017, the Secretary filed a Motion for
Reconsideration. [1]
That Motion for Reconsideration included an Amended Motion for Decision and
Order Approving Settlement, which contained significant additional information
in support of the proposed settlement and, as a consequence, the Court is now
able to approve the settlement. [2]
Motion for Reconsideration at 16-22. However, while the settlement can now be
approved, the Motion continues to include disconcerting assertions which are
antithetical to the Commission’s Congressionally delegated statutory obligation
under 30 U.S.C. § 820(k) and which require additional comment from the Court.

Background

In
the Court’s May 25, 2017 Decision Denying Settlement Motion, it was noted that   
“2 (two) specially assessed alleged violations of the Mine Act [were in issue].
One is a section 104(d)(1) citation, No. 9082933, and the other is a section
104(d)(1) order, No. 9082935.   While the proposed penalty amounts differ,
$2,900 in the case of No. 9082933, with a settlement figure of $2,030, and
$3,400 in the case of 9082935, with a settlement figure of $2,380, both
reductions amount to the ubiquitous 30% penalty reduction that has appeared in
other cases.” [3]
Decision Denying Settlement at 1.

The
section 104(d)(1) citation, No. 9082933, involved 30 C.F.R. § 77.1004(b),
titled “Ground control; inspection and maintenance; general,” which provides at
subsection (b) that “Overhanging highwalls and banks shall be taken down and
other unsafe ground conditions shall be corrected promptly, or the area shall
be posted.” 30 C.F.R. § 77.1104(b). The Court noted that “[t]he entire text of
the 57 words offered as ‘justification’ for the 30% reduction regarding the (d)(1)
Citation, No. 9082933 state[d], ‘Respondent presented evidence that it relied
upon the representations of the owner Operator that it was only required to set
the miner back 20 feet in order to be in compliance with the ground control
plan. In consideration of this evidence and the risks inherent in proceeding to
trial, the Secretary agreed to the reduction in penalty.’” Motion at 3.

However,
once boilerplate language was removed, the essence of the justification offered
was that the Respondent relied upon the representations of the owner Operator
that it was only required to set the miner back 20 feet in order to be in
compliance with the ground control plan. Id . The Court then explained
that the Motion was insufficient because the standard does not speak at all in
such terms. Rather,

[i]t deals only with unsafe
ground conditions, requiring that they “shall be corrected promptly, or the
area shall be posted.” 30 C.F.R. § 77.1004(b). The standard makes no mention of
ground control plans [and it] offers nothing to explain how the claim that
Bundy Auger Mining was allegedly told by the “owner Operator,” that “it was
only required to set the miner back 20 feet in order to be in compliance with
the ground control plan,” applies to the requirements of the standard. [Further,
the Motion offered] no explanation of the relationship between Bundy Auger and
the unnamed ‘owner Operator,’ nor how that relationship would absolve Bundy
from compliance with the standard or reduce the amount of its penalty liability
[nor did the Motion explain] the asserted relevance of the claim that, if the
miner was set back 20 feet . . .  

Id . at 4-5.

Problems
of the same ilk existed for the other matter, the section 104(d)(1) order, No.
9082935. That involved standard 30 C.F.R. § 77.1713(a), titled, “Daily
inspection of surface coal mine; certified person; reports of inspection,”
which provides that,

[a]t least once during each
working shift, or more often if necessary for safety, each active working area
and each active surface installation shall be examined by a certified person
designated by the operator to conduct such examinations for hazardous
conditions and any hazardous conditions noted during such examinations shall be
reported to the operator and shall be corrected by the operator.

30
C.F.R. § 77.1713(a).

The
Order alleged that “[t]he operator failed to conduct an adequate on-shift
examination to identify hazardous conditions in the active working area at the
Taylor Highwall Mine, Pit #001.” Decision Denying Settlement Motion at 5.

As
set forth in more detail in the Decision Denying Settlement Motion, effectively
only 17 words were offered to support the penalty reduction and those words
were simply an echo of the justification presented for the other matter,
Citation No. 9082933. As the Court noted, the justification was empty, being “devoid
of any meritorious explanation for the proposed reduction.” Id. at n.3.  

The
Secretary’s Motion for Reconsideration

In
conjunction with the Secretary’s “Motion for Reconsideration,” (“Reconsideration”)
the Secretary provided an “Amended Settlement Motion with additional factual
support .” (“Amended Motion”). Reconsideration at 1 (emphasis added).

Near
the end of its lengthy resubmission, most of which is a regurgitation of material
previously submitted, the Secretary finally offers in its Amended Motion for
Citation No. 9082933 that

[t]he subject violations were
issued in the course of a technical compliance investigation of the Ground
Control Plan submitted on March 9, 2015 for the Moran Coal Company’s [4]
Taylor Highwall Mine owned by ARJ Construction Co. ("owner Operator").
Bundy Auger is the independent contractor retained by ARJ to mine the Taylor
Highwall. ARJ was also issued citation No. 9082934 and Order No. 9082936 for
violations of the same standard. Those violations were accepted as issued.
In reaching this settlement, the Secretary considered evidence gathered during
a related 110(c) investigation that revealed that when similar over-steepened
spoils were cited on March 26, 2015, Bundy Auger's foreman was instructed by
the owner-operator that the only remedial effort required was moving the miner
20 feet back from the highwall. Respondent presented evidence that its agents
were never instructed to develop or maintain berms along the base of the low
wall. In addition, the contracting agreement between ARJ and Bundy provided
that the responsibility of maintaining the pit rested solely with ARJ. After the
miner was relocated, Bundy auger resumed mining of the highwall as it
understood that this had been approved by MSHA per representations made by
agents of the owner-operator. The Operator contends, and the issuing Inspector
does not dispute that there was probable confusion concerning Bundy's
understanding of what was required of it after similar conditions were cited by
him on March 26.The evidence presented tended to indicate that Bundy Auger's
agents were acting in good faith and with the understanding, albeit mistaken,
that its actions were in compliance with MSHA and Inspector Jones'
instructions. Therefore, the Secretary believes Respondent's negligence, while
high was somewhat less than originally assessed and that the reduction of the
assessed penalty in this particular case is consistent with his enforcement
responsibility under the Mine Act.

Amended
Motion at 4-5 (emphasis added).

The
Amended Motion also provided, with regard to Order No. 9082935, that

[e]vidence presented by
Respondent and gathered during the course of MSHA's investigation indicate that
in the week preceding the issuance of the subject violations, Bundy Auger's
foreman had been conducting the requisite examinations and recording conditions
in the pit, including instances of over-steepened spoils. Respondent presented
evidence indicating, however, that it did not have the authority or the
equipment necessary to lower the height of the low wall or expand the width of
the pit and that such authority rested solely with ARJ. Additionally, the evidence
presented indicated Bundy Auger's agents were acting in good faith and with the
understanding that its actions were in compliance with MSHA and Inspector
Jones' instructions. Therefore, the Secretary believes that the reduction of
the assessed penalty in this particular case is consistent with his enforcement
responsibility under the Mine Act.

Amended
Motion at 6-7.

Accordingly,
with this new submission, the Secretary now has provided facts sufficient to
support the proposed penalty reduction and on that basis, the settlement is now
approved. However, more must be expressed about persistent disconcerting
elements in the amended settlement motion.

Although
this Court has already provided in a number of its previous orders denying
insufficiently supported settlements several examples from the Secretary’s
own submissions which contain the kind of facts needed in order to justify
penalty reductions for proposed settlements, by the Amended Motion in this
very case , the Secretary has again demonstrated that he fully knows how to
provide the kind of supporting information required for the Commission to
perform its statutory responsibilities under section 110(k) of the Mine Act and
that it is neither burdensome nor difficult to provide this information.

Yet,
before ultimately providing the needed supporting information, and then only in
the context of its Amended Motion, the Secretary begins once again with
his new formulation, which is an undisguised attempt to avoid presenting
violation-related facts to support the reduced penalties.

Thus,
the Secretary now routinely offers up, in place of useful information, the
following language:  

In reaching the settlement, the
Solicitor's Office reviewed Citations, the inspector's notes, and discussed at
length, with the issuing inspector and other MSHA personnel, the positions
between the parties during the course of negotiations. . . . In this case, the
mine operator and the Secretary reached a compromise to resolve a docket of 2
contested violations and proposed the terms of the settlement agreement in a
motion to the Court. [with the motion often adding that] [u]nder the proposed
settlement, [mine operator’s name inserted here] agreed to accept the
violations as issued by the MSHA inspector, including the levels of gravity and
negligence alleged [and the operator] also agreed to pay [some percentage of the
original] penalty proposed by MSHA. . . . In reaching this settlement, the
Secretary has evaluated the value of the compromise, the likelihood of
obtaining a better settlement, and the prospects of coming out better or worse
after a trial. In deciding that such a compromise is appropriate, the Secretary
has not given weight to the costs of going to trial as compared to the possible
monetary results that would flow from securing a higher penalty total. He has,
however, considered the fact that he is maximizing his prosecutorial impact in
settling this case on appropriate terms and in litigating other cases in which
settlement is not appropriate. The Secretary believes that maximizing his
prosecutorial impact in such a manner serves a valid enforcement purpose. Even
if the Secretary were to substantially prevail at trial, and to obtain a
monetary judgment similar to or even exceeding the amount of the settlement, it
would not necessarily be a better outcome from the enforcement perspective than
the settlement, in which all alleged violations are resolved and violations
that are accepted can be used as a basis for future enforcement actions. A
resolution of this matter in which all violations are resolved is of
significant value to the Secretary and advances the purposes of the Act. Thus,
the Secretary requests that Court (sic) to reconsider rejection of the proposed
settlement agreement.

Reconsideration
at 2-3.

It
must therefore be directly called out that what is going on here is a power
struggle.  As the language quoted above now appears routinely in the
Secretary’s settlement motions, it was not created by some maverick attorney
within the Solicitor’s Office but rather obviously originated at some higher
level. But this is not a power struggle over some ambiguous provision of the
Mine Act, the language for which it can be claimed equally by the Commission
and the Secretary of Labor as containing unclear or indefinite terms. Rather,
the terms of section 110(k) could not be more clear, providing, without
ambiguity on the subject of “Compromise, mitigation, and settlement of penalty,”
that “[n]o proposed penalty which has been contested before the
Commission under section 815(a) of this title shall be compromised,
mitigated, or settled except with the approval of the Commission .” 30
U.S.C. § 820(k) (emphasis added).  Although the words in the provision could
not be clearer, the legislative history also confirms the statutory terms and
the Commission has made note of this fact in its decisions on this issue. Yet,
the Secretary has treated the words in that Congressionally-expressed legislative
history as “old,” as if they had an expiration date. It should also be noted
that one will not find the words “The Secretary” anywhere in section 110(k) and
Congress certainly knew how to refer to the “Secretary of Labor” when it wanted
to, as it defined “Secretary” in the Mine Act to mean the “Secretary of Labor”
and then proceeded to refer to the Secretary of Labor hundreds of times
in that Act, but with no such reference to the Secretary in section 110(k).

As
the Court noted in its May 2, 2017 Order Denying Settlement Motion

in the larger picture, if this
formulation were to be accepted by the Court, apart from the failure to meet
110(k)’s language, every case the Secretary submitted for settlement
hereafter could adopt essentially the same language presented here. In that
way, though it failed to prevail before this Court, and then failed again
before the Commission and, effectively, failed for a third time , after
he decided to withdraw his appeal before the United States Court of
Appeals for the District of Columbia of those prior denials, this non-factually
based language in his present motion, if accepted, would enable the Secretary
to achieve his original goal of unfettered, unreviewable settlement offerings
before the Commission.

Order Denying Settlement at 6-7.

Emphasis
about this point was made in the Court’s May 19, 2017 Order Denying Secretary’s
Motion to Certify May 2, 2017 Order for Interlocutory Review, in The
American Coal Company (“Interloc Denial”) where it was observed that if the
Secretary’s position were accepted that

[b]ased on the calculations above
of litigation risk, a 30 percent reduction is reasonable from the Secretary's
perspective in exchange for a guarantee that none of the violations will be set
aside or modified.… Because the violations are all being admitted, an
across-the-board reduction in penalties is reasonable,” then “all dockets for
which all violations are admitted, could form the justification for a 30%
reduction. But that is not all. As just mentioned, applying the same reasoning,
if the principle were to be accepted, it could be applied to justify any other
across-the-board percentage figure that the Secretary tossed out.

2017
WL 2306332 at *5 (emphasis omitted).

Restated, the Court also noted
that

if the Secretary’s expression was
deemed sufficient here, then in future cases, the Commission could not
logically assert any section 110(k) considerations where all violations were
admitted. Such a result would effectively neuter the Commission’s review authority
under section 110(k). Beyond ignoring the plain language of that section, the
Commission could not reasonably object to a higher percentage reduction.
Accordingly, if the Secretary’s position were adopted, a 40 or 50 percent
reduction, or more, would also fit within the Secretary’s authority.

Id.
(emphasis
omitted).  

WHEREFORE, with the above-described chronic
problems identified, the amended motion for approval of settlement having
provided legitimate factual grounds in support of the reduced penalties, the
Motion is now hereby GRANTED . 

Within
30 days of the date of this Order, Respondent shall send a check in the amount
of $4,410 made payable to "U.S. Department of Labor/MSHA", to P.O.
Box 790390, St. Louis, MO 63179-0390. Upon receipt of payment, the case is
dismissed.

SO
ORDERED.

/s/
William B. Moran

William B. Moran

Administrative
Law Judge

Distribution:

Joseph
G. Jacobs, Bundy Auger Mining, Inc., PO BOX 249, Stanville, KY 41569

Helga
P. Spencer, Esq., U.S. Department of Labor, Office of the Regional Solicitor,
170 S. Independence Mall West, Suite 700 East, Philadelphia, PA 19106-3306

[1] As distinct
from the e-CMS filing date, the Motion for Reconsideration and the accompanying
Amended Motion for Decision and Order Approving Settlement are dated May 31,
2017.

[2] Because this
decision approves the Amended Motion, the previously scheduled hearing is
now CANCELLED.

[3] The originally assessed total
amount was $6,300.00, and the proposed settlement total is for $4,410.00.

[4] There is no
“Moran Coal Company.” The Secretary acknowledged this in an email response to
the Court’s inquiry about this, advising, “References to Moran Coal were made
in error. The Taylor Highwall Mine (ID No. 1800794) is owned by ARJ
Construction. The related violations which were issued to ARJ, copies of which
are attached, were not contested and accepted as issued. Citation 9082934 was
assessed a penalty of $5,200 and Order 9082936 was assessed a penalty of
$6,100. Both penalties have been paid in full.” June 6, 2017 email to the Court
from Solicitor’s Office Attorney Helga Spencer