Secretary of Labor v. Argus Energy WV, LLC

Plain-English summary

MSHA cited Argus Energy after a haul truck was operated with a broken spot mirror and no completed pre-operational inspection record. The citation alleged a significant-and-substantial violation of 30 C.F.R. § 77.1606(a) and carried a proposed penalty of $666. The parties proposed removing the S&S designation, changing the injury likelihood from reasonably likely to unlikely, and reducing the penalty to $532. Judge William B. Moran found that the motion offered only the Secretary's litigation-risk conclusions and no case-specific facts supporting those changes. He denied the settlement and directed the Secretary either to submit an adequately supported agreement or prepare for hearing.

Decision snapshot

• Cited standard: 30 C.F.R. § 77.1606(a)
• Outcome: The proposed settlement was denied, and the case was directed toward a prompt hearing.
• Key point: A settlement reducing gravity findings and penalty must include facts that allow the Commission to perform its review under section 110(k).

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 28, 2017

SECRETARY
OF LABOR                           )           CIVIL PENALTY PROCEEDING 

MINE
SAFETY AND HEALTH                )                        

ADMINISTRATION
(MSHA)                   )           Docket No. WEVA 2017-0158

Petitioner,                                            )           A.C.
No. 46-07809-426807

)

v.                                                         )

)
          Mine: Kiah Creek Preparation

ARGUS
ENERGY WV, LLC           ,                       )          

Respondent.                                        )           Judge
Moran                          

ORDER
DENYING SETTLEMENT MOTION

This civil penalty
proceeding arises under the Federal Mine Safety and Health Act of 1977, 30
U.S.C. § 801 et seq. (2012) (“Mine Act” or “Act”). Before the Court is the
Secretary of Labor’s Motion to approve settlement (“Motion”). If there was any
doubt that the Secretary continues to seek an emasculated construction of
section 110(k) of the Mine Act, neutering the Commission’s role, this
submission makes the intention clear. Despite the clear language of Section
110(k) 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,” the Secretary continues
his effort to thwart the statutory language and Congress’ expressed intent
regarding the provision. Accordingly, the Motion must be DENIED. As the
Secretary continues to balk at compliance with the statutory provision, this
case is to be set for a prompt hearing.

A single citation is
involved in this docket. The standard cited, 30 C.F.R. § 77.1606(a), titled,
“Loading and haulage equipment; inspection and maintenance,” provides at
subsection (a), “Mobile loading and haulage equipment shall be inspected by a
competent person before such equipment is placed in operation. Equipment
defects affecting safety shall be recorded and reported to the mine operator.” 30
C.F.R. § 77.1606(a).

The issuing inspector’s
104(a) citation stated, “[t]he spot mirror was busted out on the Komatsu HD 785
Haulage Truck, No. 137. Equipment defects affecting safety shall be recorded
and reported to the mine operator. There was no pre-operational record
completed and reported to the mine operator on this date for this piece of
mobile equipment. This truck was being operated to haul overburden on mine
property.” Citation No. 8128099. The inspector marked the citation as S&S,
with the gravity of the injury as “reasonably likely,” the injury reasonably
expected to be fatal, affecting 1 (one) person, with moderate negligence. [1] Id . The
citation was assessed at $666.00. Secretary’s Petition, Exhibit A. Thus, while
the broken mirror triggered the inspector’s inquiry, it was the failure to conduct
the pre-operational inspection and to record the defect which is the gravamen
of the citation.

The Secretary’s Motion .

Oddly, though the
Motion presented by the Secretary is described as being submitted, “[ p ] ursuant
to Section 110(k) of the Federal Mine Safety and Health Act of 1977 (“Mine
Act”) and Commission Procedural Rule 31” Motion at 1 (emphasis added), the
Court finds that the submission is not pursuant [2] to
that section, as it is not in accordance with its plain terms.

Instead, the Secretary informs
that “[r]epresentatives for the Secretary and Respondent have discussed the
alleged violation and MSHA’s proposed penalty, and have agreed to settle the
contested citation and penalty in the above-captioned docket as follows:
Citation No. 8128099 shall be modified to delete the significant and
substantial (“S&S”) finding, change the gravity designation from reasonably
likely to unlikely and reduce the penalty from $666.00 to $532.00.” Motion at
1-2. The settlement represents a 20% reduction from the proposed penalty. The
$666.00 figure was derived after applying a 10% reduction for good faith. [3]

The Secretary then
announces that he

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. 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 the
alleged violation is resolved and can be used as a basis for future enforcement
actions. [4]
A resolution of this matter in which the violation is resolved is of
significant value to the Secretary and advances the purposes of the Act.

Motion at 2.

The Motion continues that
“[t]o assist the Commission in evaluating the appropriateness of the settlement
under Section 110(i), the Secretary presents the following information in
support of the penalty agreed to by the parties.” Id. As the following
“information” from the Secretary reveals, all that is presented by the
Secretary is his conclusion that the “S&S and gravity determinations in the
citation at issue shall be modified as discussed above .” Id . (emphasis
added).

That “discussion above”
from the Secretary is free of any facts pertaining to the violation itself. Instead,
it rests upon the Secretary’s odds-making, upon his evaluation of “the value of
the compromise, the likelihood of obtaining a better settlement and the
prospects of coming out better or worse after a trial.” Id .

The Commission’s
function, so says the Secretary, is limited to “whether the agreed-upon penalty
amount is consistent with the agreed-upon substantive modification.” Motion at
2-3. Thus, the Secretary pronounces that he “ has determined that
the S&S and gravity determinations in the citation at issue shall be
modified as discussed above. Substantive modifications to citations and
orders, including the S&S designation, are within the prosecutorial
discretion of the Secretary. Mechanicsville Concrete Inc ., 18 FMSHRC 877
(1996)” The Commission’s review of settlement proposals involving such
substantive modifications is limited to whether the agreed-upon penalty amount
is consistent with the agreed-upon substantive modification. Here, a $134.00
reduction in the penalty from $666.00 to $532.00 is appropriate and supported
by the reduction in the gravity findings.” Motion at 2-3 (emphasis added). In
the Court’s estimation, the Secretary improperly conflates his presently
existing prosecutorial discretion to vacate citations without any explanation with
the claim that the information supplied in settlements is also entirely within
his discretion.” (“ Mechanicsville ”). [5]

Discussion

While
it should be obvious that the Secretary elected to supplant CLR Trent as his
representative with a Regional Counsel because the relatively small penalty
involved makes it a superficially attractive vehicle to assert its broad claim
of settlement authority, the subject of section 110(k) is not solely about
money. Congress’ overarching concern was about the safety and health of miners.
 The Commission took note of this as well in its American Coal decision,
wherein it observed, “a settlement agreement involving violations of mandatory
safety standards affects all miners working in the cited mine. Thus, the miners
may be likened to a class affected by a settlement.” American Coal at 1984.
Here, the Secretary’s Motion says not a word about the health or safety
of the mining industry’s “most precious resource – the miner.” 30 U.S.C. §
801(a).

Further, even on the
subject of the civil penalty amount itself, on numerous occasions, this Court
has expressed that the amount of information it requires in support of a
reduced penalty is proportional to the percentage reduction of that penalty. Significant
reductions require more supporting facts than modest reductions. But, in either
scenario, the facts are to be tied to the considerations identified in the
gravity and negligence sections of the citation or one of the other statutory
penalty factors that the Commission has the authority to assess, as identified
in section 110(i) of the Act.

The Commission, both in its Black Beauty
and American Coal decisions has made this quite clear. As it noted in American
Coal , which also referenced its decision in Black Beauty , [6]

the legislative history of section
110(k) reveals that Congress authorized the Commission to approve the
settlement of contested civil penalties in order to ensure that penalties serve
as an effective enforcement tool, prevent abuse, and preserve the public interest. [7] 34 FMSHRC
at 1862. The Commission and its Judges must have information sufficient to
carry out this responsibility. Consequently, through its procedural rules, the
Commission has required parties to submit facts supporting a penalty amount
agreed to in settlement. In particular, Commission Procedural Rule 31 requires
that a motion to approve penalty settlement must include for each violation the
penalty proposed by the Secretary, the amount of the penalty agreed to in
settlement, and facts in support of the penalty agreed to by the parties. 29
C.F.R. § 2700.31(b)(1). Rule 31 also requires that “[a]ny order by the Judge
approving settlement shall set forth the reasons for approval and shall be
supported by the record.” 29 C.F.R. § 2700.31(g). The requirements to provide
factual support in the settlement proposal and for the Judge’s decision
approving settlement to be supported by the record have been largely unchanged
since the inception of the Commission’s procedural rules in 1979.

The American Coal Company ,
38 FMSHRC 1972, 1981 (Aug. 2016)

The Secretary’s self-aggrandizement
of power regarding settlements, despite Congress’ clear statement that no proposed
penalty which has been contested before the Commission shall be compromised,
mitigated, or settled except with the approval of the Commission , should
not come as a surprise. [8]

The essential problems
with the Secretary’s claim, if accepted, are twofold. First, it would render
the statutory provision and the legislative history for section 110(k) nugatory.
Second, in each instance, the Secretary could present such boilerplate
language, untethered to any facts in support of a reduced likelihood of injury
or illness, the nature of the expected injury, the number of persons affected
or the degree of negligence.  

Accordingly, for the foregoing reasons,
and though the Secretary may believe he knows best in terms of the information
needed for settlement approvals, Congress has determined otherwise by virtue of
section 110(k).  The Secretary may either submit an appropriately based
settlement or prepare for a hearing.

SO ORDERED .

/s/
William B. Moran

William
B. Moran  

Administrative
Law Judge

Distribution:

Robert S. Wilson, Esq., U. S. Department of Labor, 201 12 th
Street South, Suite 401, Arlington, VA 22202-5450, [email protected]

David C. Trent, CLR, U. S. Department of Labor, MSHA, 4499 Appalachian
Highway, Pineville, WV 24874

Tiffany Fannin, Esq., 2408 Sir Barton Way, Suite 325,
Lexington, KY40509,  [email protected]

[1] The violation
was abated upon installation of a new spot mirror.

[2] “Pursuant” is
defined as “in accordance with.” Webster’s New World College Dictionary 4th ed.
1166; “‘pursuant’ means in conformity to,” Brotherhood of Ry and S.S. Clerks,
Freight Handlers, Exp.& Station Emp. v. Railway Express Agency, Inc. , 238
F.2d 181, (6th Cir. 1956).

[3] 30 C.F.R.
§100.3(f) affords a “10% reduction in the penalty amount of a regular
assessment where the operator abates the violation within the time set by the
inspector.”

[4] Even this
non-informative basis is incorrect. The Secretary spins the tale that, even if
he were to win at a hearing and even if the civil penalty was similar to the
settlement, or the penalty was even greater, “it would not necessarily be a
better outcome from the enforcement perspective than the settlement, in which the
alleged violation is resolved and can be used as a basis for future enforcement
actions .” Motion at 2 (emphasis added).  However, the Motion itself seems
to refute the notion that this settlement can be used as a basis for future
enforcement actions, as the settlement terms provide, “[e]xcept for
proceedings under the Act, Respondent contends that nothing contained herein is
intended to be deemed an admission of a violation of the Act or regulations.” Settlement
Motion at 3.

[5] The Secretary
employs an expansive reading to the Mechanicsville decision and this
Court does not believe it is on point. First, that case went to hearing; it was
not a settlement. As the issuing inspector never marked the violation as
S&S, the issue was whether the judge could find an S&S violation sua
sponte. The Commission’s decision was limited to that issue, holding, “we
conclude that the judge lacked authority to find, sua sponte , that
Mechanicsville’s violation was S&S and we reverse the judge’s conclusion
that the violation was S&S.” Mechanicsville at 882. However, the
Commission affirmed “the judge’s assessment of a $200 civil penalty.” Id. It
also noted that “[i]n contested civil penalty cases, the Mine Act requires that
the Commission make an independent penalty assessment based on the statutory criteria
of section 110(i) of the Act, 30 U.S.C. § 820(i).” Sellersburg Stone Co .,
5 FMSHRC 287, 291 (March 1983), aff’d , 736 F.2d 1147, 1152 (7th Cir.
1984). The Commission has explained that “[t]he determination of the amount of
the penalty that should be assessed for a particular violation is an exercise
of discretion by the trier of fact. This discretion is bounded by proper
consideration of the statutory criteria and the deterrent purpose underlying
the Act’s penalty assessment scheme.” Id. at 881 (internal citation
omitted).

[6] Black Beauty
Coal Co ., 34 FMSHRC 1856, 1862 (Aug. 2012).

[7] The Commission,
in American Coal , noted that “[t]he Secretary downplays the significance
of the legislative history. . . . However, Congress chose to explain the purpose
of section 110(k) and the Commission’s role in approving settlements in
unusually specific terms. That legislative history cannot be ignored simply
because of the passage of time or because it may be convenient for the
Secretary to do so.” 38 FMSHRC at 1986, n 5.

[8] The Secretary,
it will be recalled, previously attempted an overreach in another matter,
taking the position that he need not announce the basis for a claimed pattern
of violations until after the conclusion of a hearing on such a charge. Sec.
v. Brody Mining LLC , 37 FMSHRC 1914, 1928-29 (Sept. 2015).