[1] [T]he operator’s history of previous violations, [2] the appropriateness of such penalty to the size of the business of the operator charged, [3] whether the operator was negligent, [4] the effect on the operator’s ability to continue in business, [5] the gravity of the violation, and [6] the demonstrated good faith of the person charged in attempting to achieve rapid compliance after notification of a violation.

30 U.S.C. § 820(i).

In keeping with this statutory requirement, the Commission has held that “findings of fact on the statutory penalty criteria must be made” by its judges. Sellersburg Stone Co., 5 FMSHRC 287, 292 (Mar. 1983). Once findings on the statutory criteria have been made, a judge’s penalty assessment for a particular violation is an exercise of discretion, which is bounded by proper consideration of the statutory criteria and the deterrent purposes of the Act. Id. at 294; Cantera Green, 22 FMSHRC 616, 620 (May 2000). In exercising this discretion, the Commission has reiterated that, in determining the amount of a penalty, a judge is not bound by the penalty recommended by the Secretary. Spartan Mining Co., 30 FMSHRC 699, 723 (Aug. 2008). The Commission also emphasized that when a penalty determination “substantially diverge[s] from those originally proposed, it behooves the . . . judge[] to provide a sufficient explanation of the bases underlying the penalties assessed.” Id. (citing Sellersburg Stone Co., 5 FMSHRC at 293). The Commission warned in Sellersburg that, without an explanation for such a divergence, the “credibility of the administrative scheme providing for the increase or lowering of penalties after contest may be jeopardized by an appearance of arbitrariness.” Sellersburg Stone Co., 5 FMSHRC at 293.

Recently, in Black Beauty Coal Co.,34 FMSHRC 1856 (Aug. 2012), the Commission reaffirmed that Congress intended the settlement of a penalty to be a transparent process that is open to public scrutiny and it is the Commission that has final approval authority of any settlement. The Commission has long recognized that Commission jurisdiction attaches to a case once an operator contests the Secretary’s proposed assessment of penalty. Id. at 1862. The Commission has promulgated rules regarding the submission of settlements, which dictate that it is the ALJ’s duty to set forth the reasons for approval, and that such approval “shall be supported by the record.” 29 C.F.R. § 2700.31(g). In that regard, the Commission has stated that the statutory language contained in section 110(k) of the Mine Act, 30 U.S.C. § 820(k) contains no explicit restrictions on what a Commission Judge may consider when reviewing a settlement proposal. “Thus, Congress provided a broad mandate to the Commission (and its Judges), charging it with reviewing and approving all settlements of penalty cases pending before it and imposing no explicit limits on what should be consider in review.” Black Beauty Coal Co., 34 FMSHRC at 1865. The Commission further explained that “it is eminently appropriate for a Judge to acknowledge the need for deterrence in deciding whether or not to approve a settlement[.]” Id at 1866.

The information provided by the Secretary in these cases does not support a finding that the proposed settlement penalties are appropriate after considering the six penalty criteria in section 110(i). Moreover, the proposed settlements do not further the deterrent purposes of the Act. While significant factual support was provided in the motions, the motions lacked facts relevant to support the proposed modifications. A brief review of each proposed settlement is set forth below. Overall, the CLR has modified a majority of the citations by eliminating the S&S finding and reducing the negligence to low. She seeks to modify the penalties to 40% of the originally proposed amount in the best case, and to as little as 5% of the originally proposed amount in another. I review hundreds of settlements over the course of a year, and have seen no other representative of the Secretary who consistently proposes and/or agrees to such drastic modifications to the citations and reductions in penalty.

I also take issue with the fact that the CLR has, in many instances, modified the number of persons affected and used the Part 100 criteria to significantly reduce penalties without an adequate explanation. The CLR defends her use of Part 100 and does not grasp that the Commission is not bound by that regulation. Additionally, her justifications for radical penalty reductions include a dissertation on the rigors of mining, and other safety measures which are required by the Mine Act. Finally, while the CLR has used boilerplate language regarding the remaining penalty criteria, the exhibit A that is referenced to support the history element of the penalty is not included in the file. I find that the Secretary has not sufficiently justified the extreme reductions in penalty in these cases.

On February 8, 2013, the Secretary, through the CLR, filed two Marfork settlement agreements that drastically reduced the penalty by at least 90% in each case. The settlement motions included long explanations of the proposed modifications, but I find that they did not justify the reductions sought. The explanations described facts related to gravity, when it was the negligence that had been proposed to be reduced. Similarly, the number of persons affected was reduced in many instances based upon inadequate or unsubstantiated statements. Given that the number of persons affected is a way to easily manipulate the penalty, it is important that relevant facts accompany such reduction. As a result of the errors in the motion, I contacted the parties and explained that I could not approve the settlement as written and suggested that the CLR look at the Commission’s decision in Cumberland Coal, 33 FMSHRC 2357 (Oct. 2011), for guidance regarding S&S. I further suggested that she review the MSHA regulations regarding the meaning of negligence. The CLR responded by email and, instead of addressing the gravity and negligence issues as I suggested, she explained that the CLRs have a large case load and therefore cannot conduct conferences with operators. Accordingly, she treats the contest to the penalty as if it were a pre-penalty contest. In doing so, she opines that she must be fair to both sides. She stated:

Due to our large caseload, our CLR’s who in the past held numerous Health & Safety conferences resolving many incorrectly issued citations, no longer have time to hold the regular Health & Safety Conferences. As a result, the Coal Operators have not been afforded an opportunity to get incorrectly cited citations modified prior to the assessment and litigation process. If the Health & Safety Conferences had been held, the citations/orders would most likely have been corrected at that time, eliminating the need for further litigation. It is this reasoning as to why the Part 100 penalty is being used

Email from Linda Hrovatic, CLR, MSHA, to Judge Margaret Miller, FMSHRC, (February 19, 2013 11:23 AM MDT).

The CLR also explained that District 4 has seen two major mine disasters in recent years and, consequently, the inspectors, many of whom are inexperienced, are under pressure to write citations. As a result, inspectors are “over-writing” the citations. The errors in the citations as originally written would have been found, she states, if the mine operator had held a safety and health conference prior to contesting the penalties. She stated that, because MSHA would have used Part 100 in addressing penalties during the safety and health conference, she was justified in relying upon those penalties in a settlement proposal.

Because the explanation sent by email from the CLR did not address the concerns raised about the settlement, I scheduled a telephone conference with the parties. During that call, I asked the CLR to look at the definition of negligence and S&S. I also explained that the penalty criteria found at Part 100 does not apply once the case is before the Commission, and that, in my view, a change from 7 persons affected to 3 has minimal impact on the gravity and the subsequent penalty. If the CLR wishes to give it a greater impact, then it must be adequately justified. The attorney for the operator, predictably, defended the CLR, saying that she was thorough and fair, and that the negligence and gravity are a “matter of opinion.” The parties agreed to take another look at the proposed settlement.

On March 13, 2013, the parties filed an amended motion in Docket Nos. WEVA 2012-1526 and WEVA 2012-1651 and, while the new motions addressed some errors with the negligence and raised the penalties from a 90% reduction to a 75% reduction, they continued to lack meaningful facts to support the reduction.

During the pendency of the two dockets named above, the CLR filed a number of other settlement requests, at least one of which I approved, i.e., WEVA 2012-962, with a reduction of nearly 80% off of the originally proposed assessed penalty. When I observed the patterns beginning to emerge in the submitted settlement motions, including the same modifications and lack of justification discussed above, I determined that the CLR was not carrying out the purposes of the Mine Act. Accordingly, I have rejected the settlement motions and deny the CLR’s request to enter an appearance in these cases. What follows is a docket by docket summary of selected parts of the proposed settlement motions.

Docket No. WEVA 2012-1651, as amended, reduces the penalty from $35,100.00 to $14,040.00. While an improvement over the first proposed order, the agreement modified many citations to one person affected, thereby significantly reducing the penalty. It also eliminates the S&S designation of 3 of the 5 violations. One of the violations that does not eliminate the S&S designation nevertheless suggests reducing the penalty from $1,111.00 to $499.00 based primarily upon a discussion of gravity. Even though the CLR purports to strictly adhere to the Part 100 point system, she does not always do so.

Docket No. WEVA 2012-1526, as amended, reduces the penalty from $14,295.00 to $4,448.00. Two of the four violations, those with the largest penalties, are reduced to non-S&S. The Secretary states that management wasn’t aware of the violation, or there were other safety measures in place. Yet this docket, along with the one discussed above, deals with the belt entry, malfunctioning CO sensors and air movement. The fire sensors on the belt were not functioning, and the roof bolter was not in permissible condition. I conclude from these proposed settlements that the CLR did not consider the appropriate facts that relate to the gravity of the violation.

Docket No. WEVA 2012-1431 contains 13 violations assessed at $22,572.00 with a proposed reduction to $5,303.00. The settlement proposed to change nearly every citation to non-S&S, and most to low negligence. Two of the violations relate to escapeways used during an emergency. The negligence changes to “low” have no acceptable explanation, or explain simply that management was not aware of the condition. The Secretary’s regulations, however, explain that “high” negligence exists if management knew or should have known of the condition and there are no mitigating circumstances, while “moderate” negligence exists if there are mitigating circumstances, and “low” negligence exists if there are considerable mitigating circumstances. 30 C.F.R. § 100.3(d) Table X. Based on the motions before me, there are not mitigating circumstances in these cases to justify low negligence. Given the changes the CLR seeks to make, a significant penalty reduction follows. However, those penalty reductions are not justified. For example, according to the motion, on at least one citation with a proposed change to non-S&S, the penalty was reduced from $2,678.00 to $100.00. With regard to Citation No. 8150887, which was issued for a power cable with holes in it, the motion proposes to modify the citation to non-S&S and reduce the penalty from $3,405.00 to $687.00. The motion incorrectly relies on harsh mining conditions and other required safety measures as mitigating circumstances. The citations in the docket also address monitors, belt spillage, and roof conditions, all during the same inspection.

Docket No. WEVA 2012-1232 involves a proposed reduction in penalty from $2,138.00 to $394.00, the modification of the two alleged S&S citations to non-S&S, and the modification of two citations to low negligence because management didn’t know about the condition.

Finally, Docket No. WEVA 2012-941, contains three citations originally assessed at $18,830.00 and reduced to $4,689.00. The justifications for the modifications include statements like “loose roof was not specifically identified” and in general the mine is in compliance with many other MSHA standards. In one citation, the motion asserts that the accumulation citation is not S&S because “hot to the touch” is not enough to sustain the designation and no heat gun was used to ascertain just how hot the subject area was.

There are errors in each docket and a pattern common to each proposed settlement. With regard to modifications of gravity, many of the modifications rely on the rigors of mining for justification and the many other safety precautions required by the regulations, making it nearly impossible to sustain and S&S designation. Further, she does not relate the definition of the levels of negligence to the violation described or the modification proposed. Finally, whatever this CLR would like her role to be, once the penalties are contested, they are not in the prehearing penalty safety & health conference phase, and, Part 100, while it may be a useful tool, it is not mandated. By focusing on the Part 100 changes, the Secretary fails to see the total picture in proposing reductions in cases that are before the Commission and particularly in relying on the number of persons affected as the sole basis for significantly reducing a penalty. While the Secretary has provided justification, little of it supports a reasonable basis to modify the gravity and negligence, or to support fewer persons affected, as she asserts, and consequently there is no basis to reduce the penalties by such significant amounts.

I have considered the representations and documentation submitted and I conclude that the proposed settlements are not appropriate under the criteria set forth in section 110(i) of the Act. The motions to approve settlement are DENIED. The CLR may not appear in these cases and the parties have thirty (30) days to restructure or further explain the proposed settlements before these cases are set for hearing.

/s/ Margaret A. Miller

Margaret A. Miller

Administrative Law Judge

Distribution:

Linda G. Hrovatic, CLR, U.S. Department of Labor, MSHA, District 4, 100 Bluestone Road, Mount Hope, WV 25880

Max L. Corley III, Dinsmore & Shohl, LLP, P.O. Box 11887, Charleston, WV 25339-1887