Secretary of Labor v. Northshore Mining Company and Matthew Zimmer, Roger Peterson employed by Northshore Mining Company

Plain-English summary

An earlier judge found that Northshore failed to maintain elevated walkways, acted with reckless disregard and unwarrantable failure, and assessed a $60,000 penalty after rejecting MSHA's flagrant designation. The Commission affirmed, but the Eighth Circuit held that the violation was flagrant and remanded for reconsideration of the penalty. On remand, the judge relied on the prior statutory-factor findings and the appellate court's determination that flagrant violations occupy the Mine Act's most serious penalty category. He declined to anchor the result to MSHA's unexplained $130,200 special assessment and instead increased the penalty to $100,000.

Decision snapshot

• Cited standard: 30 C.F.R. § 56.11002
• Outcome: The penalty for the flagrant walkway violation was increased from $60,000 to $100,000.
• Key point: A flagrant designation warranted a substantially higher penalty, but the judge independently assessed the amount without relying on an unexplained special-assessment calculation.

Full text (FMSHRC public release)

FEDERAL MINE SAFETY AND HEALTH REVIEW COMMISSION

Office of the Chief
Administrative Law Judge

721 19th Street, Suite
443

Denver, CO 80202-2536

303-844-3577 FAX
303-844-5268

SECRETARY OF LABOR,

MINE SAFETY AND HEALTH

ADMINISTRATION, MSHA,

Petitioner,

v.

NORTHSHORE MINING COMPANY,

Respondent.

CIVIL PENALTY PROCEEDINGS

Docket No. LAKE 2017-0224-M

A.C. No. 21-00831-434118

Docket No. LAKE 2017-0248-M

A.C. No. 21-00831-435608

Mine: Northshore Mining Company

SECRETARY OF LABOR,

MINE SAFETY AND HEALTH

ADMINISTRATION, MSHA,

Petitioner,

v.

MATTHEW ZIMMER, employed by,

NORTHSHORE MINING COMPANY,

Respondent.

SECRETARY OF LABOR,

MINE SAFETY AND HEALTH

ADMINISTRATION, MSHA,

Petitioner,

v.

ROGER PETERSON, employed by,

NORTHSHORE MINING COMPANY,

Respondent.

CIVIL PENALTY PROCEEDING

Docket No. LAKE 2018-0141-M

A.C. No. 21-00831-457528 A

Mine: Northshore Mining Company

CIVIL PENALTY PROCEEDING

Docket No. LAKE 2018-0146-M

A.C. No. 21-00831-457527 A

Mine: Northshore Mining Company

DECISION UPON REMAND

These cases are before me upon petitions for assessment of civil
penalties filed by the Secretary of Labor (the “Secretary”), acting through the
Mine Safety and Health Administration (“MSHA”), pursuant to section 105(d) of
the Federal Mine Safety and Health Act of 1977, 30 U.S.C. § 815(d) (“the Mine
Act” or “the Act”). The four dockets involve a citation and order issued to
Northshore Mining Company (“Northshore”) and two 110(c) enforcement actions
against individuals. 30 U.S.C. § 820(c). However, the only issue before me is
the penalty amount to be assessed for Order No. 8897220, which is the subject
of docket number LAKE 2017-0248. For reasons set forth below, I assess a
penalty of $100,000.00.

PROCEDURAL HISTORY & BACKGROUND

These matters were originally before former Commission Judge
Margaret Miller. In her February 13, 2019 decision on the merits, Judge Miller
found, among other things, that, with regard to Order No. 8897220 [1] ,
Northshore violated section 56.11002 of the Secretary’s regulations, and that the
violation was a result of Northshore’s reckless disregard and unwarrantable
failure to comply. Northshore Mining Co. et al. , 41 FMSHRC 50 (Feb.
2019) (ALJ). Although the Secretary designated the order as “flagrant” and
proposed a specially assessed penalty of $130,200.00, Judge Miller found that
violation was not flagrant within the meaning of the Act and assessed a penalty
of $60,000.00. Id . at 69, 77.

Following the filing of petitions for discretionary review by both
parties, the Commission affirmed Judge Miller’s findings regarding reckless
disregard and unwarrantable failure, as well as her determination that the
violation was not flagrant. Northshore Mining Co. et al. , 43 FMSHRC 1
(Jan. 2021).

On appeal, the Eighth Circuit Court of Appeals (“Eighth Circuit”) denied
Northshore’s petition for review of the Commission’s conclusions on reckless
disregard and unwarrantable failure, but granted the Secretary’s cross-petition
for review of the Commission’s conclusions on the flagrant designation, and
reversed the Commission’s decision affirming Judge Miller’s deletion of the
flagrant designation. Northshore Mining, et al. v. Sec’y of Labor , 46
F.4th 718, 739 (8th Cir. 2022). The court remanded the matter to the Commission
“for consideration of whether the penalty amount for [the flagrant violation
described in Order No. 8897220] should be reassessed.” Id .

On May 30, 2024, the Commission remanded the matter to the Office of
the Chief Administrative Law Judge for consideration of the issue described by
the Eighth Circuit. On August 5, 2024, the Commission’s Chief Administrative
Law Judge assigned the dockets to this court.

I encouraged the parties to settle this matter by agreeing to an
appropriate penalty. They were unable to do so. On August 21, 2024, I ordered
the parties to file briefs in support of their respective positions on the
penalty to be assessed for Order No. 8897220. On September 12, 2024, the
parties filed their briefs.

PARTIES’ ARGUMENTS

The Secretary argues that, given the Eighth Circuit’s holding that
Order No. 8897220 is a flagrant violation, the originally proposed specially
assessed penalty of $130,200.00 should be assessed. Sec’y Br. 1. As support,
she cites the Commission’s recognition that it is Congress’s intent that a
“flagrant penalty . . . be severe enough to target ‘‘bad actors’ who fail to
take their safety responsibilities seriously…’” Sec’y Br. 2 (citing Northshore
Mining, et al ., 43 FMSHRC 1, 11 (Jan 2021) (citing 152 Cong. Rec. S4619
(daily Ed. May 16, 2000) (statement of Sen. Michael Enzi)). Here, despite Northshore
management’s knowledge that the outer walkways were structurally inadequate and
unsafe, Northshore made no efforts to make repairs or post warnings, and
instead allowed miners to access the area. Sec’y Br. 2. Moreover, the
Secretary’s proposed penalty is significantly less than both the statutory
maximum for flagrant violations and the projected cost of repairs. Sec’y Br.
2-3. Further reduction of the penalty would thwart “Congress’s intention that
flagrant violations carry stiff enough penalties to encourage compliance” and
incentivize “other operators to weigh the cost of litigation against the cost
of correcting known hazards.” Sec’y Br. 3-4.

In addition, the Secretary agues that Judge Miller’s
factual findings regarding the statutory penalty factors support the proposed
penalty. Sec’y Br. 3. The Secretary points to Judge Miller’s findings regarding
the gravity and negligence of the violation, and specifically her determination
that the violation was S&S, could result in serious injuries, and was a
result of Northshore’s reckless disregard and unwarrantable failure to comply
with the regulation. Sec’y Br. 3. Further, the Secretary notes that Northshore
stipulated that the penalty will not affect its ability to continue in
business. Sec’y Br. 4.

Moreover, the Secretary asserts that Judge Miller
identified hazards created by the violation and determined that those hazards
were reasonably expected to cause death or serious body injury. [2] Sec’y Br. 4. The
Secretary emphasizes that the Eighth Circuit found that substantial evidence
supported Judge Miller’s findings on those hazards, and that the hazards in
fact caused a serious injury to a miner. Sec’y Br. 4.

Finally, the Secretary notes that Judge Miller’s
originally assessed penalty was 88% of the maximum penalty allowed for
non-flagrant violations. Sec’y Br. 4. If this court assesses a flagrant penalty
using the same percentage of the maximum penalty allowed for flagrant violations,
the amount would be much higher than the Secretary’s proposed penalty of $130,200.00.
Sec’y Br. 4.

Northshore argues that Judge Miller’s original penalty
assessment of $60,000.00 for Order No. 8897220 should be upheld. It asserts
that the Act and the Secretary’s own penalty regulations do not require a
particular amount be assessed for a flagrant violation and, rather, afford the
judge “latitude to assess a penalty amount that . . . is appropriate.” NS Br.

9. Here, the Secretary offered no evidentiary basis for the proposed specially
   assessed penalty. [3]
   NS Br. 9-10. Although Judge Miller deleted the flagrant designation, she
   properly considered each of the statutory penalty criteria and declined to
   assess even the maximum penalty for non-flagrant violations. NS Br. 11-12.
   Finally, Northshore argues that, had Judge Miller fully considered certain
   evidence, her gravity and negligence determinations may have been affected,
   which could have in turn affected the size of the assessed penalty. NS Br.
   12-14.

DISCUSSION

Section 110(i) of the Mine Act states that “[i]n assessing civil
monetary penalties, the Commission shall consider the operator’s history of
previous violations, the appropriateness of such penalty to the size of the
business of the operator charged, whether the operator was negligent, the
effect on the operator’s ability to continue in business, the gravity of the
violation, and 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). Commission judges assess penalties de novo pursuant to section 110(i)
and are not bound by the Secretary’s proposed assessments or Part 100
regulations governing those proposed assessments. Solar Sources Mining, LLC ,
43 FMSHRC 367 (Aug. 2021). Moreover, although
Commission judges are required to explain significant deviations from the
Secretary’s proposed regular assessments, the same is not true with special
assessments. Solar Sources Mining, LLC , 42 FMSHRC 181, 197-199 (Mar.
2020). In addition, the Commission has cautioned its judges to “avoid the
unconscious effect” of “anchoring” their decision to the Secretary’s proposed
special assessments, and to, instead, assess penalties that are “commensurate
only with the actual factual findings after hearing.” Id. at 197-199
n.25.

Here, the
Secretary proposed a specially assessed penalty of $130,200.00 for Order No. 8897220.
In her decision on the merits Judge Miller specifically noted that the
Secretary’s originally proposed penalty of $130,200 was “based upon a finding
that the violation was flagrant[.]” In assessing a penalty of $60,000.00 Judge
Miller determined that the Secretary had not met her burden with regard to the
flagrant finding and stated the following regarding the statutory penalty
criteria:

However,
there is a violation of the mandatory standard, the violation is S&S and
unwarrantable. In addressing those issues, I addressed the negligence of the
operator and agree that the mine engaged in a reckless disregard of the
mandatory standard. I have also addressed the gravity of the violation and
found it to be a serious violation that would result in death or serious bodily
injury. I have also considered the history of assessed violations. . . . The
violation was abated in good faith. The mine has not raised the ability to pay.
Northshore is considered a large mine operator. Based upon my findings, I
assess a penalty of $60,000 for this violation.

41 FMSHRC at 77 (internal citation omitted).
Neither the Commission nor the Eighth Circuit disturbed Judge Miller’s findings
on the statutory penalty factors. Accordingly, the only issue before me is the
impact of the Eighth Circuit’s determination that the violation was flagrant on
Judge Miller’s originally assessed penalty of $60,000.00.

In its decision
remanding this matter back to the Commission, the Eighth Circuit acknowledged
that the purpose of the Mine Act “ was to create a graduated penalty scheme through which MSHA would
levy heftier fines for more egregious conduct by mine operators.” 46 F.4th at

732. The court went on to explain that the Mine Improvement and New Emergency
     Response Act (“the MINER Act”), among other things, amended the penalty section
     of the Mine Act and added the “flagrant” designation, which was meant for “the
     most serious type of violation.” Id .

Given that
flagrant violations are the most serious type of violation in the graduated
penalty scheme created by the Mine Act, it stands to reason that the penalty
assessed for a flagrant violation will generally be larger than the penalty
assessed for an identical violation that does not have a flagrant designation.

A violation is “flagrant” when it
involves a “a reckless or repeated failure to make reasonable efforts to
eliminate a known violation of a mandatory health or safety standard that
substantially and proximately caused, or reasonably could have been expected to
cause, death or serious bodily injury.” 30 U.S.C. § 820(b)(2). At the time in
question, flagrant violations could be assessed penalties as high as
approximately $250,000.00. Id., 30 C.F.R. § 100.5(e) (2016).

In
reversing the Commission and finding that Order No. 8897220 involved a flagrant
violation, the Eighth Circuit considered the three “key” terms in the Act’s
definition of “flagrant” – “(1) ‘reckless,’ (2) ‘known violation,’ and (3) ‘reasonably
could have been expected to cause ... death or serious bodily injury.’” 46
F.4th at 735. A brief review of the court’s analysis of those terms as relevant
to Order No. 8897220 is helpful to understand the seriousness of the violation.

First,
in finding that substantial evidence supported the determination that
Northshore acted “recklessly,” the Eighth Circuit rejected the Commission’s assertion
that an operator is “reckless” when it consciously or deliberately disregards a
safety issue. Id . Rather, it explained that “designating a violation as
flagrant does not require burying or hiding evidence of wrongdoing[,]” as the
Commission would have required, and that “Northshore’s unjustified declination to
begin repairing or even planning to repair the dangerous walkways suffice[d]”
for purposes of establishing that Northshore acted recklessly. Id .
Further, it specifically noted that neither the existence of a fall protection
policy, nor the hiring of an engineering firm to inspect the walkways, both of
which the Commission relied upon as substantial evidence to support deletion of
the flagrant designation, were actually efforts to fix the violation, i.e., the
poor condition of the subject walkway. Id .

Second,
in finding that substantial evidence supported the determination that Northshore
knew it was violating the regulation, the court pointed to Judge Miller’s
findings that there were work orders dating back to 2013 detailing concerns
about walkways, that the engineering firm hired by Northshore had recommended
that the walkway be restricted, that some of the walkways had not been
reinforced with steel plates like others had, and that mine mangers, employees
and engineers testified that the relevant walkway was not being maintained in a
safe condition. Id .

Third,
and finally, in finding that substantial evidence supported the determination
that the violation was reasonably expected to cause death or serious bodily
injury, the court pointed to Judge Miller’s findings regarding the multiple hazards
created by the violation and her determination that a serious injury was likely
even if Northshore’s fall protection policy was taken into consideration. Id .
at 735-736.

Although
it is clear that a considerable penalty is warranted for the flagrant violation
at issue in Order No. 8897220, I am troubled by the lack of transparency on the
Secretary’s part regarding how she arrived at the proposed specially assessed
penalty of $130,200.00. In other matters before this court the Secretary, as
part of the petition for assessment of a specially assessed penalty and in
addition to the special assessment narrative findings, has often provided a
special assessment “worksheet,” which a judge could use to understand how the
Secretary calculated the proposed special assessment, including how the
Secretary weighed the pertinent factors. As far as the court can determine, no
such document was filed the Commission, or accepted into evidence at hearing,
nor was any methodology for calculating the penalty discussed at hearing or in
the Secretary’s post hearing brief. In Solar Sources Mining, LLC , the Commission
alluded to the latitude Commission judges have when assessing a final penalty where
the Secretary proposed a specially assessed penalty. 42 FMSHRC 181, 197-199
(Mar. 2020). [4]
As a consequence, I have not relied upon the Secretary’s proposed “special
assessment” in determining an appropriate penalty to assess in this case. Instead,
in arriving at a final penalty, I have relied on Judge Miller’s findings on the
statutory penalty criteria, 41 FMSHRC at 60-66, 76-77, and the Eighth Circuit’s
findings regarding the flagrant violation.

Having
reviewed Judge Miller’s findings on the statutory penalty criteria and given
the Eighth Circuit’s determination that the violation was flagrant, I find that
a substantial penalty, greater than that which was originally assessed by Judge
Miller, is appropriate. Accordingly, I assess a penalty of $100,000.00 for
Order No. 8897220. The amount reflects this court’s acknowledgement of Judge
Miller’s findings on the statutory penalty criteria and the Eighth Circuit’s determination
that the violation was flagrant, a designation Congress reserved for the most
serious type of violation in the Mine Act’s graduated penalty scheme.

ORDER

Northshore
Mining Company is ORDERED TO PAY the Secretary of Labor the sum of $100,000.00
within 40 days of the date of this decision. [5]

/s/
Richard W. Manning

Richard
W. Manning

Administrative
Law Judge

Distribution

R. Henry Moore, Esq., Fisher & Phillips LLP, Six PPG
Place, Suite 830, Pittsburgh, PA 15222

( [email protected] )

Rebecca W. Mullins, Esq. and Emily Toler Scott, Esq., Office
of the Solicitor, U.S. Department of Labor, 201 12th Street South, Suite 401,
Arlington, VA 22202 ( [email protected]
[email protected] )

[1]
The Secretary issued Order No. 8897220 under section 104(d)(1) of the Act for a
violation of section 56.11002, which requires that “[c]rossovers, elevated
walkways, elevated ramps, and stairways shall be of substantial construction
provided with handrails, and maintained in good condition. Where necessary,
toeboards shall be provided.” 30 C.F.R. § 56.11002. The body of the order
states, in pertinent part, that the subject elevated walkway was not of
substantial construction and was not maintained in good condition, which
resulted in a failure of the walkway.

[2]
The Secretary also notes that Judge Miller considered and rejected Northshore’s
assertion that its fall protection policy lessened the injury expected. Sec’y
Br. 4.  

[3]
Northshore cites multiple Commission ALJ decisions for the general proposition
that judges may reject specially assessed penalties where the Secretary fails
to provide adequate bases for the proposed special assessment. NS Br. 10-11.

[4]
Judge Miller has declined to adopt proposed specially assessed penalties where
the Secretary’s support for such was lacking. Freeport McMoRan Morenci, Inc. ,
35 FMSHRC 172, 181 (Jan. 2013) (ALJ).

[5]
In addition to remanding to the Commission the issue discussed
herein, the Eighth Circuit also denied Northshore’s petition for review of the
Commission’s conclusion on reckless disregard and unwarrantable failure as
relevant to Citation No. 8897219 at issue in LAKE 2017-0224, and reinstated
Judge Miller’s penalty assessments for individual liability in docket numbers LAKE
2018-0141 and LAKE 2018-0146. As a result, Judge Miller’s penalty assessments
on those issues are final, i.e., $60,000.00 for Citation No. 8897219, $4,000.00
for Matthew Zimmer, and $4,000.00 for Roger Peterson. If Northshore, Mr. Zimmer
and Mr. Peterson have not yet paid those penalties, they are ORDERED
TO PAY the Secretary of Labor those amounts within 40 days
of the date of this decision. All payments ordered in this decision (check or
money orders) should be sent to U.S. Department of Labor, Mine Safety and
Health Administration, Payment Office, P.O. Box 790390, St. Louis, MO.
63179-0390; Electronic payments can be applied via
https://www.pay.gov/public/form/start/67564508  Please include Docket Number
& A.C. Numbers with payment.