Secretary of Labor v. Lo Down Energy, Inc.

Plain-English summary

Lo Down Energy sought to reopen a final penalty assessment after a mailed copy intended for its representative was not received before the contest deadline. The operator did not confirm delivery and then failed to respond to its representative for a week after the problem was discovered. The Commission noted that this was the operator's sixth untimely contest in about three years, with five involving mail-handling procedures. It also considered the operator's substantial delinquent penalties and found that its repeated failures showed an unreliable system and a lack of good faith. The Commission denied the motion to reopen.

Decision snapshot

• Cited authority: 30 U.S.C. § 815(a)
• Outcome: The motion to reopen the final penalty assessment was denied.
• Key point: Repeated mail-handling failures and substantial delinquencies can defeat a claim of excusable neglect.

Full text (FMSHRC public release)

FEDERAL
MINE SAFETY AND HEALTH REVIEW COMMISSION

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

WASHINGTON,
DC 20004-1710

SECRETARY
OF LABOR,

MINE
SAFETY AND HEALTH

ADMINISTRATION
(MSHA)

v.

LO
DOWN ENERGY, INC.

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Docket
No. WEVA 2024-0147

A.C.
No. 46-08659-590373

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BEFORE: Jordan,
Chair; Baker and Marvit, Commissioners

ORDER

BY THE COMMISSION:

This
matter arises under the Federal Mine Safety and Health Act of 1977, 30 U.S.C. §
801 et seq. (2018) (“Mine Act”). On January 16, 2024, the Commission received
from Lo Down Energy, Inc., a motion seeking to reopen a penalty assessment that
had become a final order of the Commission pursuant to section 105(a) of the
Mine Act, 30 U.S.C. § 815(a).

Under
section 105(a) of the Mine Act, an operator who wishes to contest a proposed
penalty must notify the Secretary of Labor no later than 30 days after
receiving the proposed penalty assessment. If the operator fails to notify the
Secretary, the proposed penalty assessment is deemed a final order of the
Commission. 30 U.S.C. § 815(a).

We
have held, however, that in appropriate circumstances, we possess jurisdiction to reopen uncontested
assessments that have become final Commission orders under section 105(a). Jim
Walter Res., Inc., 15 FMSHRC 782, 786-89 (May 1993) (“JWR”). In
evaluating requests to reopen final orders, the Commission has found guidance
in Rule 60(b) of the Federal Rules of Civil Procedure, under which the
Commission may relieve a party from a final order of the Commission on the
basis of mistake, inadvertence, excusable neglect, or other reason justifying
relief. See 29 C.F.R. § 2700.1(b) (“the Commission and its Judges shall
be guided so far as practicable by the Federal Rules of Civil Procedure”); JWR,
15 FMSHRC at 787. We have also observed that default is a harsh remedy and
that, if the defaulting party can make a showing of good cause for a failure to timely respond, the case may be
reopened and appropriate proceedings on the merits permitted. See Coal Prep.
Servs., Inc., 17 FMSHRC 1529, 1530 (Sept. 1995).

Records
of the Department of Labor’s Mine Safety and Health Administration (“MSHA”)
indicate that the proposed assessment was delivered on December 11, 2023, and
became a final order of the Commission on January 10, 2024.

Lo
Down Energy asserts the assessment was not timely contested due to mail
delivery issues. Specifically, the operator informed its representative on
December 18, 2023, that it would provide a copy of the assessment so it could
be contested. Lo Down Energy does not have the technology to scan and email
documents, so the assessment was sent by mail. The representative had not
received the assessment by December 29, so he attempted to contact the operator
by phone and email. He received no response until January 6, 2024, when the
operator informed him the assessment had been mailed. Neither the operator nor
its representative were able to locate the original mailed assessment. By the
time the operator was able to provide its representative with a partial
photographed copy of the assessment, the period for timely contest had expired.
Lo Down Energy proposes that the holiday season may have interfered with mail
delivery, and states that it will make arrangements for future assessments to
be scanned and sent in a timely manner.

The
Secretary opposes reopening the assessment. The Secretary suggests that Lo Down
Energy has an inadequate or unreliable process for contesting assessments. She notes
the operator’s recent history of delinquent penalties and untimely contests
arising from internal error, and states that past leniency does not give an
operator license for further noncompliance. Finally, the Secretary alleges that
the operator has failed to provide sufficient explanation for its failure to
timely contest, for example, offering no explanation for its failure to timely respond
to its representative’s communications.

The
Commission has long held that where a failure to contest a proposed assessment
results from an inadequate or unreliable internal
processing system, the operator has not established grounds for reopening the
assessment. E.g., Oak Grove Res., LLC, 33 FMSHRC 103, 104 (Feb.
2011); Highland Mining Co., 31 FMSHRC 1313, 1315 (Nov. 2009); Pinnacle
Mining Co., 30 FMSHRC 1066, 1067 (Dec. 2008). Here, the operator made no
effort to confirm that its representative had received the assessment contest paperwork,
and then failed to respond to its representative for a week once the delivery
issue was discovered. Moreover, this motion represents the sixth time in an
approximatley three year period where the operator was unable to timely file a
contest of a proposed penalty, five of which involve mail-handling procedures.[1]
Lo Down Energy’s internal processing system is not adequate or reliable. See
Rockwell Mining, LLC, 49 FMSHRC 491, 493 (June 2023) (five motions to
reopen in five years may cumulatively indicate an inadequate processing system);
Bresee Trucking Co., 34 FMSHRC 6, 8 (Jan. 2011) (previous similar
motions to reopen indicated a “pattern” of failures).

Furthermore, it is well recognized in
federal jurisprudence that the issue of whether the movant acted in good faith
is an important factor in determining the existence of excusable neglect. Pioneer
Inv. Servs. Co. v. Brunswick Assocs., Ltd. P’ship, 507 U.S. 380, 395
(1993); FG Hemisphere Assocs., LLC v. Democratic Republic of Congo, 447
F.3d 835, 838 (D.C. Cir. 2006). The Commission has likewise recognized that a
movant’s good faith, or lack thereof, is relevant to a determination of whether
the movant has demonstrated mistake, inadvertence, surprise or excusable
neglect within the meaning of Rule 60(b)(1) of the Federal Rules of Civil
Procedure. Lone Mountain Processing, Inc., 35 FMSHRC 3342, 3346 (Nov.
2013); M.M. Sundt Constr. Co., 8 FMSHRC 1269, 1271 (Sept. 1986); Easton
Constr. Co., 3 FMSHRC 314, 315 (Feb. 1981). Some of the factors relevant
to the good faith analysis are the number of delinquent
penalties outstanding, the period of time the delinquent penalties
accrued, and the seriousness of the citations underlying the aforementioned
penalties. Kentucky Fuel Corp., 38 FMSHRC 632, 633 (Apr. 2016); also
Oak Grove Res. LLC, 33 FMSHRC 1130, 1132 (June 2011).

Here,
the Secretary represents that Low Down Enery was notified in January of 2023 of
more than $14,500 in unpaid delinquent penalties for almost 60 violations
issued between 2019 and 2022. While Low Down Energy entered into a payment plan
with MSHA on these older penalties, it has already accrued an additional
$45,000 in additional delinquent penalties in the time since. The operator’s
multiple, prolonged failures to timely pay penalties frustrates the deterrent
pruposes of the Act and demonstrates that the operator is not acting in good
faith. Compare Kentucky Fuel, 38 FMSHRC at 633 (finding that an operator
with total outstanding penalties of over $350,000 spanning 140 cases over a
four year period had shown a disregard of final penalty assessments and was not
entitled to extraordinary relief).

Lo Down Energy asserts that it will take
steps to ensure future assessments are timely contested. However, given its
recent history, the operator should already have been on notice that additional
care was required, and should already have taken steps to improve its
processing system. We acknowledge that postal service delivery issues may have
contributed to the initial delay in contesting the assessment, and note that
the operator acted promptly in filings its motion to reopen. However, these are
insufficient to justify relief in view of the operator’s systemic issues.

Having reviewed Lo Down Energy’s request
and the Secretary’s response, we find that the operator has not justified
reopening the captioned proceeding. Accordingly, we deny Lo Down Energy’s
motion.

/s/ Mary Lu Jordan

Mary
Lu Jordan, Chair

/s/ Timothy J. Baker

Timothy J. Baker, Commissioner

/s/ Moshe Z. Marvit

Moshe Z. Marvit, Commissioner

Distribution:

James
F. Bowman

P.O.
Box 99

Midway,
WV 25878

[email protected]

April
Nelson, Esq.

Associate
Solicitor

Office
of the Solicitor

U.S.
Department of Labor

Division
of Mine Safety and Health

201
12th Street South, Suite 401

Arlington,
VA 22202

[email protected]

Emily
Toler Scott, Esq.

Counsel
for Appellate Litigation

Office
of the Solicitor

U.S.
Department of Labor

Division
of Mine Safety and Health

201
12th Street South, Suite 401

Arlington,
VA 22202

[email protected]

Melanie
Garris

USDOL/MSHA, OAASEI/CPCO

201 12th Street South, Suite 401

Arlington, VA 22202

[email protected]

Chief
Administrative Law Judge Glynn F. Voisin

Office
of the Chief Administrative Law Judge

Federal Mine Safety Health Review Commission

1331 Pennsylvania Avenue, NW Suite 520N

Washington, DC 20004-1710

[email protected]

[1] See Lo Down
Energy, Inc., 44 FMSHRC 252 (Apr. 2022) (reopening where contest
process was disrupted by employee’s illness); Lo Down Energy, Inc., 43
FMSHRC 519 (Dec. 2021) (reopening four dockets where assessments were misplaced
due to new mail-handling procedure).