Secretary of Labor v. American Sand Company, LLC

Plain-English summary

American Sand timely contested three of four penalties on an assessment, but MSHA's stamped copy showed the fourth contest box was unmarked. The company later sent a letter explaining why it challenged that penalty and filed a reopening motion within 30 days after receiving a delinquency notice. The Commission majority found that the company had been unaware the fourth penalty had become final and acted promptly once notified. It reopened the proceeding, vacated the default, and remanded the case with a penalty petition due within 45 days. Chair Arthur Traynor dissented because the company's copy showed the fourth box marked while MSHA's authenticated copy did not, and he found no benign explanation for the discrepancy.

Decision snapshot

• Cited authority: 30 U.S.C. § 815(a)
• Outcome: The default was vacated, the fourth penalty was reopened, and the case was remanded.
• Key point: A prompt reopening motion and evidence of unawareness supported relief despite failure to mark the penalty on MSHA's received assessment form.

Full text (FMSHRC public release)

FEDERAL MINE SAFETY AND HEALTH REVIEW
COMMISSION

1331
PENNSYLVANIA AVENUE, NW, SUITE 520N

WASHINGTON,
D.C. 20004-1710

SECRETARY OF
LABOR,                             :

MINE SAFETY AND HEALTH                     :

ADMINISTRATION (MSHA)                       
:         Docket No. SE 2019-0252-M

:         A.C. No. 40-00798-492842

v.                                              
:

:

AMERICAN SAND COMPANY, LLC                :

BEFORE: Traynor, Chair; Althen and Rajkovich, Commis s io n ers

ORDER

BY:  Althen and Rajkovich, Commissioners

This matter
arises under the Federal Mine Safety and Health Act of 1977, 30 U.S.C. § 801 et
seq. (2012) (“Mine Act”). On September 19, 2019, the Commission received from American
Sand Company, LLC (“American Sand”) a request 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”); Jim Walter Res., Inc ., 15 FMSHRC
782, 786-89 (May 1993). 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 will be permitted. See Coal Prep. Servs., Inc ., 17 FMSHRC 1529,
1530 (Sept. 1995).

The assessment at issue consists of
four violations and their corresponding penalties. [1]
The assessment was delivered to the operator on June 10, 2019. Subsequently, MSHA
received a contest (a marked assessment form) from the operator for three of
the penalties on June 28, 2019. [2]
However, allegedly the fourth penalty, assessed for Citation No. 94228055, was not
timely contested and therefore became a final order on July 10, 2019.

On August 15, 2019, the operator
detailed its reasons for challenging the fourth penalty in a letter to the
Commission; the letter was received by the Commission on August 23, 2019. Soon
after, on August 26, 2019, MSHA mailed a delinquency notice to the operator;
the delinquency notice was received by the operator on August 30, 2019.

The operator filed a motion to
reopen the final order on September 19, 2019. The operator claims that the
penalty at issue was timely contested. In support, the operator attaches a copy
of the marked assessment form allegedly returned by the operator to MSHA. The
Secretary filed an opposition to the motion to reopen on September 25, 2019, claiming
that the operator failed to timely contest the penalty at issue, and that the
operator informed MSHA that it would pay the penalty. In support, the Secretary
attaches a different copy of the marked assessment form allegedly returned by
the operator to MSHA.

The proposed assessment sent by
MSHA contained four blank boxes, placed next to each corresponding violation
and penalty. An operator could indicate a contest for any penalty by marking
the corresponding blank box. The operator’s version shows that all four boxes in
the assessment were marked, indicating that all the penalties were timely
contested.

In contrast, the Secretary’s
version shows that only three of the boxes were marked. In the Secretary’s
version, the fourth box for the penalty at issue remained unmarked, indicating
that the fourth penalty was not timely contested.

However, only the Secretary’s
version included a page with the operator’s signature, and a stamp which indicated
the date and time of MSHA’s receipt of the marked assessment. This shows that the
Secretary’s version is an accurate copy of the contest received by MSHA. Consequently,
we find that the penalty at issue was not timely contested and therefore,
became a final order of the Commission.

After reviewing the evidence, we
nevertheless decide to reopen the final order because the operator implicitly
provides a reasonable explanation for its delinquency and because it acted
promptly after receiving the delinquency notice. In Highland Mining Co., 31
FMSHRC 1313, 1317 (Nov. 30, 2009), the Commission required the operator to
provide a reasonable explanation for its delinquency. The August 15 letter by American
Sand to the Commission provides just such an explanation. The letter highlighted
the operator’s reasons for challenging the penalty for Citation No. 9428055, and
was marked for Docket No. SE 2019-178, which was the related contest docket
containing the other three violations.

The letter was sent after the assessment
became a final order on July 10, 2019 but before the operator received the
delinquency notice on August 30, 2019. The operator prepared the letter challenging
the penalty and listed the letter under the related contest docket (SE
2019-178) because it was unaware that the penalty had become a final order. Therefore,
the operator demonstrated a lack of knowledge of the final order and of the
need to prepare a reopening request until it received the delinquency notice.

In Pinnacle
Mining Co., 38 FMSHRC 422 (Mar. 2016), we determined that the operator’s
unawareness that the penalty assessment was delinquent constituted a sufficient
explanation for the operator’s delay in filing a request to reopen. Similarly,
here we determine that the operator’s unawareness of the final order
constitutes a reasonable explanation for its delinquency.

Moreover, under our precedent in Highland,
31 FMSHRC at 1316-1317, a motion to reopen is presumptively considered as
having been filed within a reasonable amount of time if it is filed within 30
days of an operator’s receipt of its first notification from MSHA of its
failure to contest the penalty. As set forth above, the operator was unaware of
the final order until it received the delinquency notice on August 30, 2019. The
operator filed its motion to reopen on September 19, 2019. Therefore, the
operator’s motion to reopen was filed well within 30 days of the operator’s receipt
of its first notification from MSHA of the failure to contest the penalty.

Consequently, we find that the
operator filed its motion to reopen within a reasonable amount of time. Having
reviewed American Sand’s request and the
Secretary’s response, we find that the operator’s reasonable explanation
for the delinquency and its request to reopen, filed fewer than 30 days after it
received the delinquency notice, demonstrate the operator’s good faith, and
merit reopening of the case.

In the interest of justice, we hereby reopen the
proceeding and vacate the Default Order. Accordingly, this case is remanded to
the Chief Administrative Law Judge for further proceedings pursuant to the Mine
Act and the Commission’s Procedural Rules, 29 C.F.R. Part 2700. Accordingly,
consistent with Rule 28, the Secretary shall file a petition for assessment of penalty
within 45 days of the date of this order. See
29 C.F.R. § 2700.28.

/s/ William I.
Althen

William I. Althen,
Commissioner

/s/ Marco M. Rajkovich,
Jr.

Marco M. Rajkovich, Jr., Commissioner

Chair Traynor, dissenting:

I must conclude that the operator has
failed to demonstrate that granting its motion would be in the interest of
justice. The operator’s filings do not indicate any reason the operator
introduced what it purported to be the proposed assessment form it transmitted
to the Secretary – a form showing the fourth box was ‘checked’ indicating the
operator’s intent to contest the citation at issue. The apparently authentic
form provided by the Secretary - which includes the operator’s signature and
the Secretary’s file stamp indicating the date the form was received - clearly
shows the fourth box is not checked. The operator does not supply and I cannot
see on the record before me a plausibly benign explanation for this discrepancy
between the document the operator put forward and the authentic document
provided by the Secretary.

Our adversary system for the resolution of disputes rests
on the unshakable foundation that  truth  is
the  object  of the system’s
process which is designed for the purpose of dispensing  justice . However, because no one has an
exclusive insight into truth, the process depends on the adversarial
presentation of evidence, precedent and custom, and argument to reasoned
conclusions—all directed with unwavering effort to what, in good faith, is
believed to be true on matters material to the disposition. Even the slightest
accommodation of deceit or a lack of candor in any material respect quickly
erodes the validity of the process. As soon as the process falters in that
respect, the people are then justified in abandoning support for the system in
favor of one where honesty is preeminent.

Hanover
Ins. Co. v. United States , 146 Fed. Cl.
447, 450 (2019) (quoting United States v. Shaffer Equipment Co. , 11 F.3d
450, 457 (4th Cir. 1993)).

Though the operator filed its motion in a
timely fashion and might otherwise be entitled to the relief sought, the
apparent attempt to introduce an inauthentic document prevents me from
concluding the motion is made in good faith or that the interests of justice are
served by granting the motion.

/s/ Arthur R.
Traynor, III

Arthur R.
Traynor, III, Chair

Distribution (e-mail):

Steven
Chambers

Safety
& Compliance Coordinator

American
Sand Company LLC

6210
Rutledge Pike

Knoxville TN 37924

[email protected]

John M. McCracken, Esq.

Office of the Solicitor

U.S. Department of Labor

Mine Safety and Health Division

201 12 th Street South, Suite 401

Arlington, VA 22202-5452

[email protected]

Archith Ramkumar

Appellate Counsel

U.S. Department of Labor

Office of the Solicitor

[email protected]

April Nelson, Esq.

Office of the Solicitor

U.S. Department of Labor

Mine Safety and Health Division

201 12 th Street South, Suite 401

Arlington, VA 22202-5452

[email protected]

Melanie Garris

U.S. Department of Labor

Office of Civil Penalty Compliance

Mine Safety and Health Administration

201 12th Street South, Suite 401

Arlington, VA 22202-5452

[email protected]

Chief Administrative Law Judge Glenn Voisin

Federal Mine Safety & Health Review Commission

1331 Pennsylvania Avenue, NW, Suite 520N

Washington, DC 20004-1710

[email protected]

[1]
Assessment No. 000492842 consists of Citation Nos. 9428055, 9428056, 9428057,
and 9428058. Despite this, the Secretary erroneously seems to imply that the
assessment only covers two of these four citations (“MSHA’s records show that
Case Number 000492842 is for Citation Nos. 9428055 and 9428056, that were
issued on June 6, 2019 (Attachment A)”). Sec’s Opp. at 3.

[2]
The Secretary mistakenly claims that MSHA received the operator’s contest (the marked
assessment form), which the Secretary characterizes as a hearing request, on
July (rather than June) 28, 2019.