FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

OFFICE OF ADMINISTRATIVE LAW JUDGES

601 NEW JERSEY AVENUE, NW, SUITE 9500

WASHINGTON, DC 20001-2021

TELEPHONE: 202-434-9958 / FAX: 202-434-9949

January 10, 2012

            ORDER DENYING PETITIONER’S MOTION FOR RECONSIDERATION  OF ORDER REJECTING SETTLEMENT

Before:            Judge McCarthy

The Secretary’s Motion and Commission Rule 31

            On November 9, 2011, the Secretary of Labor, acting through counsel in the Solicitor’s office, submitted a Motion to Approve Settlement and a Consent Order Approving Settlement pursuant to Commission Rule 31, 29 C.F.R. § 2700.31, which provides:

§ 2700.31 Penalty settlement.

(a) General. A proposed penalty that has been contested before the Commission may be settled only with the approval of the Commission upon motion. In all penalty proceedings, except for discrimination proceedings arising under section 105(c) of the Mine Act, 30 U.S.C. 815(c), a settlement motion must be accompanied by a proposed order approving settlement. In discrimination proceedings, a party shall file a motion to approve settlement that includes the factual support described in paragraph (b)(1) of this section, and that shall be filed and served in accordance with the provisions of 29 CFR 2700.5 and 2700.7, respectively. In discrimination proceedings, a party need not file a proposed order.

(b) Content of motion.

(1) Factual support. A motion to approve a penalty settlement shall include for each violation the amount of 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. Rather than setting forth such information in detail, the motion may incorporate by reference the information which has been included in the accompanying proposed order as required by paragraph (c)(1) of this section.

(2) Certification. The party filing a motion must certify that the opposing party has authorized the filing party to represent that the opposing party consents to the granting of the motion and the entry of the proposed order approving settlement.

(c) Content of proposed order.

(1) Factual support. A proposed order approving a penalty settlement shall include for each violation the amount of 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. Forms for proposed orders approving settlement are available on the Commission’s website (http://www.fmshrc.gov). Although parties are not required to use the forms on the Commission’s website, if proposed orders fail to include pertinent information, the motion and proposed order may be rejected for filing by the Commission in accordance with paragraph (f) of this section. Proposed orders shall not be submitted in PDF format.

(2) Appearance by CLR. If a motion has been filed by a Conference and Litigation Representative (“CLR”) on behalf of the Secretary, the proposed order approving settlement accompanying the motion shall include a provision in which the Judge accepts the CLR to represent the Secretary in accordance with the notice of either limited or unlimited appearance previously filed with the Commission. A CLR does not need to obtain authorization from the Commission to represent the Secretary before the CLR files a motion to approve settlement and proposed order.

(d) Filing and service of motion accompanied by proposed order.

(1) Electronic filing. A motion and proposed order shall be filed electronically according to the requirements set forth in this rule and instructions on the Commission’s website (http://www.fmshrc.gov). Filing is effective upon the date of the electronic transmission of the motion and proposed order. The transmitting party is responsible for retaining records showing the date of transmission, including receipts.

(i) Signatures. Any signature line set forth within a motion to approve settlement submitted electronically shall include the notation “/s/” followed by the typewritten name of the party or representative of the party filing the document. Such representation of the signature shall be deemed to be the original signature of the representative for all purposes unless the party representative shows that such representation of the signature was unauthorized. See 29 CFR 2700.6.

(ii) Status of documents. A motion and proposed order filed electronically constitute written documents for the purpose of applying the Commission’s procedural rules (29 CFR part 2700), and such rules apply unless an exception to those rules is specifically set forth in this rule. Any copies of the motion and proposed order which have been printed and placed in the official case file by the Commission shall have the same force and effect as original documents.

(2) Filing by non-electronic means. A party may file a motion to approve settlement and an accompanying proposed order by non-electronic means only with the permission of the Judge.

(3) Service. A settlement motion and proposed order shall be served on all parties or, if parties are represented, upon their representatives, by the most expeditious means possible and at least five business days before the motion and proposed order are filed with the Commission. If a party cannot be served by email, facsimile transmission, or commercial delivery, a copy of the motion and proposed order may be served by mail. A certificate of service shall accompany the motion and proposed order setting forth the date and manner of service.

(e) Filing of motion and proposed order prior to filing of petition. If a motion to approve settlement and proposed order is filed with the Commission before the Secretary has filed a petition for assessment of penalty, the filing party must also submit as attachments, electronic copies of the proposed penalty assessment and citations and orders at issue. If such attachments are filed, the Secretary need not file a petition for assessment of penalty.

(f) Non-acceptance of motion and proposed order. If a party filing a motion to approve settlement and a proposed order fails to include in the motion and proposed order pertinent information required by this rule and the Commission’s instructions posted on the Commission’s website, the Commission will not accept for filing the motion and proposed order. Rather, the Commission will inform the filing party of the need for correction and resubmission.

(g) Final order. Any order by the Judge approving a settlement shall set forth the reasons for approval and shall be supported by the record. Such order shall become the final order of the Commission 40 days after issuance unless the Commission has directed that the order be reviewed. A Judge may correct clerical errors in an order approving settlement in accordance with the provisions of 29 CFR 2700.69(c).

            In her Motion to Reconsider, the Secretary requests that Citation No. 8093045 be modified to change the classification of the citation from a 104(d)(1) citation to a 104(a) citation and to reduce the level of negligence from “high” to “moderate.” The modification was accompanied by a reduction in the penalty from $13,609 to $3,690. No factual basis was provided to justify the proposed modification to the citation or the resulting change in penalty. In particular, no factual explanation of mitigating circumstances was offered by the Secretary.

            On December 8, 2011, the Secretary was informed by my office that I was unable to properly assess the adequacy of the proposed settlement without some factual basis for the proposed modification. Having failed to respond to my first request after eleven days, the Secretary was informed by my office that she would have until December 23, 2011 to submit a revised settlement. On December 20, 2011, following subsequent communication with the parties and after it became clear that the Secretary was not willing to comply with my request to provide additional factual support, I issued an Order rejecting the Secretary’s proposed settlement. In consideration of the impending holidays, the Order granted the Secretary an additional fifteen days to make the appropriate modification to the proposed settlement.

            On January 4, 2012, rather than submitting a revised settlement, the Secretary filed a Motion to Reconsider and Approve Settlement. In her Motion to Reconsider, the Secretary essentially contends that the Mine Act does not impose any duty to provide factual justification for settlement when the Secretary’s proposed reduction in penalty is consistent with the assessment criteria set forth in 30 C.F.R. § 100. Mot. at 2. The Secretary argues that the power to make substantive modifications to citations and orders is within the Secretary’s unreviewable prosecutorial discretion and that the Commission’s review of settlement proposals should be limited to whether the agreed upon penalty amount is consistent with the agreed upon substantive modification. Mot. at 3. The Secretary relies on the plain language in the last sentence of section 110(i) of the Act, which provides that “[i]n proposing civil penalties under this Act, the Secretary may rely upon a summary review of the information available to him and shall not be required to make findings of fact concerning the above factors.” Thus, the Secretary argues, the plain language of the Act does not require that she submit detailed factual findings in support of the penalty criteria. Id. Furthermore, the Secretary contends that providing detailed evidentiary or factual justifications for substantive modifications to citations and orders will necessarily require the Secretary to reveal her evidentiary evaluations, her legal theories, and her work product in a settlement motion, and inject the Commission into prosecutorial matters that would discourage voluntary settlements. Mot. at 4, 5. The Secretary also argues that it is absurd to conclude that the Secretary has unreviewable discretion to completely vacate a citation, but lacks the same level of discretion to make modifications short of vacation. Mot. at 4. Finally, the Secretary represents that the Respondent’s representative has reviewed and agrees with her Motion. Mot. at 5.

Analysis and Disposition

            The Commission derives its authority to review the adequacy of settlements proposed by the Secretary from section 110(k) of the Act which states that; “No proposed penalty, which has been contested before the Commission under section 105(a) shall be compromised, mitigated, or settled except with the approval of the Commission.” 30 U.S.C. § 820(k). Thus, the Secretary arguably maintains unreviewable prosecutorial discretion to modify the citation during pre-assessment conference proceedings before the matter is contested before the Commission, but absent such early intervention, the Commission retains authority to approve settlements of civil penalties in matters contested before the Commission. Congress, through Section 110(k), obviously thought it was important for miners' safety and health that the Commission review the Secretary's attempts to compromise, mitigate or settle proposed penalties in contested cases. Congress made clear, when it enacted the 1977 Mine Act, that the terms of all settlements had to be on the record and that the Commission has the final say on the settlement of contested cases. The following excerpt from the legislative history makes this clear:

In addition to the delay in assessing and collecting penalties, another factor which reduces the effectiveness of the civil penalty as an enforcement tool under the Coal Act is the compromising of the amounts of penalties actually paid. In its investigation of the penalty collection system under the Coal Act, the Committee learned that to a great extent the compromising of assessed penalties does not come under public scrutiny. Negotiations between operators and Conference Officers of MESA are not on the record. Even after a Petition for Civil Penalty Assessment has been filed by the Solicitor with the Office of Hearings and Appeals, settlement efforts between the operator and the Solicitor are not on the record, and a settlement need not be approved by the Administrative Law Judge. Similarly, there is considerable opportunity for off the record settlement negotiations with representatives of the Department of Justice while cases are pending in the district courts.

While the reduction of litigation and collection expenses may be a reason for the compromise of assessed penalties, the Committee strongly feels that since the penalty system is not for the purpose of raising revenues for the Government, and is indeed for the purpose of encouraging operator compliance with the Act's requirements, the need to save litigation and collection expenses should play no role in determining settlement amounts. The Committee strongly feels that the purpose of civil penalties, convincing operators to comply with the Act's requirements, is best served when the process by which these penalties are assessed and collected is carried out in public, where miners and their representatives, as well as the Congress and other interested parties, can fully observe the process.

To remedy this situation, Section 111(1) provides that a penalty once proposed and contested before the Commission may not be compromised except with the approval of the Commission. Similarly, under Section 111(1) a penalty assessment which has become the final order of the Commission may not be compromised except with the approval of the Court. By imposing these requirements, the Committee intends to assure that the abuses involved in the unwarranted lowering of penalties as a result of off the record negotiations are avoided. It is intended that the Commission and the Courts will assure that the public interest is adequately protected before approval of any reduction in penalties.

S. Subcomm. on Labor, Comm. on Human Resources, Federal Mine Safety and Health Act of 1977, S. Rep. 95-181, at 44 (1977), reprinted in 1977 U.S.C.C.A.N. 3401, 3445.

            Accordingly, the Commission has held that section 110(k) “directs the Commission and its judges to protect the public interest by ensuring that all settlements of contested penalties are consistent with the Mine Act’s objectives.” Knox County Stone Co., 3 FMSHRC 2478, 2479 (Nov. 1981). Thus, while it is within the Secretary’s prosecutorial discretion to vacate a citation, see, e.g., RBK Constr. Inc., 15 FMSHRC 2099 (Oct. 1993), once the citation is contested before the Commission, the final approval of any mitigation, compromise, or settlement is a quintessentially adjudicatory function. To perform that function in exercise of its statutory authority, the Commission has promulgated Rule 31 concerning penalty settlements, which provides, inter alia, that a motion to approve a penalty settlement shall include facts in support of the penalty agreed to by the parties. See, supra, Commission Rule 31(b)(1). Thus, “[s]ettlements are committed to the ‘sound discretion’ of the Commission and its judges” and they “are not bound to endorse all proposed settlements.” Madison Branch Management, 17 FMSHRC 859, 864 (June 1995).

             It is clear from the plain language of section 110(k), the legislative history quoted above, and Commission precedent and procedural rules that I am required to assess a proffered settlement that reduces a proposed penalty in a matter contested before the Commission against the penalty criteria of section 110(i) and the comprehensive objectives of the Act. Without having been provided with any factual basis to justify the modification at issue, I am unable to fulfill my obligations under the Act, and decline to approve the Secretary’s proposed settlement.

            The Secretary’s arguments to the contrary lack merit. The language of Section 110(i) relied on by the Secretary does little to advance her arguments in the settlement context. The final sentence in section 110(i) is a directive to the Secretary when issuing a proposed civil penalty, not when seeking Commission approval of a proposed settlement. It is reasonable to expect that a higher factual burden be placed on a settlement than when a civil penalty is initially proposed. In any event, the fact that the Secretary need not make findings of fact when proposing a settlement does not mean that the Commission cannot require them when approving a settlement in a contested case that reduces, compromises or otherwise mitigates the penalty. As shown above, the Secretary’s efforts at self-aggrandizement directly collide with Congressional intent that the Commission ensure that the public interest is adequately protected before approval of any reduction in penalties.

            I also find no merit in the Secretary’s argument that requiring a factual explanation for a proposed modification to a citation or order in a contested matter in the settlement context would require detailed findings of fact or be unduly burdensome. In the majority of cases, the Secretary need only proffer a short factual justification for the modification to the citation and concomitant reduction in penalty, which presumably has been provided by the operator and need not be agreed to by the Secretary. In cases where the alleged violative condition or practice is more severe or has resulted in actual injury or death of a miner, however, a more detailed justification may be required by the Commission to ensure compliance with the Act’s objectives. In either case, it has never been suggested that the Secretary must provide affidavits or weighty proffers to justify the proposed settlement.

            I similarly reject the Secretary’s argument that requiring a factual basis would compromise the Secretary’s thought processes, legal theories, or work product privilege. The factual basis for a settlement does not need to include the thought processes, legal theories, or work product of the Secretary to provide sufficient guidance as to whether the settlement effectuates the purposes of the Act. It needs to include a proffer of facts sufficient to justify the settlement. Such facts generally are not encompassed by the work product privilege, which applies to documents prepared in anticipation of litigation, not settlement. See, e.g. ASARCO, Inc., 12 FMSHRC 2548, 2557-58 (December 1990). The privilege is intended to prevent an unfair advantage to the opposing party. There is no such advantage to be gained in settling a case in the public interest. And if, for example, the Secretary agrees in a settlement that there is some validity to the respondent’s arguments, such an admission is not admissible if the settlement is rejected and the case heard.

            The Secretary contends by way of hypothetical that she should not be required to reveal her decision-making process in seeking approval of a settlement or admit that she lacks sufficient evidence to confidently pursue her case, such as when she does not want to compel a reluctant witness to testify. No such requirements are imposed on the Secretary. In such situations, the Secretary truthfully, but artfully, can set forth the factual basis for settlement without revealing deliberative process or mental impressions, or, if she cannot somehow do so and can no longer meet her burden of proof, she can exercise her discretion to vacate the underlying citation or order. What she cannot do, as the Secretary’s counsel audaciously has done here, is to fail to include in the settlement motion facts in support of the penalty agreed to by the parties, as set forth in Commission Rule 31(b)(1).

            The Secretary's Motion for Reconsideration of Order Rejecting Settlement fails to provide valid argument to justify her refusal to provide a factual basis for the settlement of the above-captioned matter. Accordingly, the Motion for Reconsideration is DENIED. A Notice of Hearing will issue under separate cover.

                                                                        /s/ Thomas P. McCarthy

                                                                        Thomas P. McCarthy

                                                                        Administrative Law Judge

Distribution:

Robert S. Wilson, Esq., Office of the Solicitor, U.S. Department of Labor, 1100 Wilson Blvd., 22nd Floor West, Arlington, VA 22209-2247

James F. Bowman, Rock N Roll Coal Company, Inc., P.O. Box 99, Midway, WV 25878

/tjr