Secretary of Labor v. James C. Scott and Donnie B. Thomas, employed by Mill Branch Coal Corp.

Plain-English summary

MSHA sought individual penalties against a mine superintendent and shift foreman for allegedly failing to report a dangerous water inundation within 15 minutes. The agency proposed penalties of $4,000 and $3,500 about three years after the event, but only eight days after its special investigations ended. An ALJ dismissed the cases because the Secretary did not justify the lengthy investigations. The Commission held that section 105(a)'s reasonable-time period begins when an investigation ends, making the eight-day proposal period reasonable. It vacated the dismissals and remanded so the individuals could try to prove actual prejudice from the unusual delay as a due-process violation.

Decision snapshot

• Cited standards: 30 C.F.R. § 50.10(d); 30 C.F.R. § 75.1502
• Outcome: The dismissals were vacated, and both individual-liability cases were remanded for further proceedings.
• Key point: A long investigation does not alone bar an individual penalty case, but proven prejudice from the delay may support a due-process defense.

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.                                              
 :

:        Docket Nos.    VA 2018-0103

JAMES C. SCOTT,
employed by                     :                                VA 2018-0104

MILL BRANCH
COAL CORPORATION       :

:

and                                           
 :

:

DONNIE B.
THOMAS, employed by               :

MILL BRANCH
COAL CORPORATION       :

BEFORE:
Rajkovich, Chairman; Jordan, Young, Althen, and Traynor, Commissioners

DECISION

BY
THE COMMISSION:

These consolidated civil penalty
proceedings arise under the Federal Mine Safety and Health Act of 1977, 30
U.S.C. § 801 et seq. (2018) (“Mine Act” or “Act”), and involve penalties the Secretary
of Labor seeks to assess against James C. Scott and Donnie B. Thomas pursuant
to section 110(c) of the Mine Act, 30 U.S.C. § 820(c). [1]
For the reasons that follow, we vacate the order of the now-retired Judge
dismissing the proceedings (41 FMSHRC 563 (July 2019) (ALJ)), and remand the
cases to the Chief Administrative Law Judge for its reassignment and the resumption
of proceedings.

I.

Factual and
Procedural Background

On April 7, 2015, Scott and Thomas were
employed by Mill Branch Coal Corporation at its North Fork #6 Mine as
Superintendent and a shift foreman, respectively. The Secretary alleges that a
dangerous inundation of water in a section of that mine that day was discovered
by a Mine Safety and Health Administration (“MSHA”) inspector. The next day,
MSHA issued four citations and orders to Mill Branch in connection with the
inundation, including Order   No. 8178613, alleging that the inundation was not
reported to MSHA within 15 minutes, as required by 30 C.F.R. § 50.10(d). [2]
At the same time, MSHA began investigating the liability of the two miners for
at least two of the violations.

Mill Branch later filed timely notices
of contest with respect to the four orders and citations. Thereafter, on August
3, 2015, Mill Branch entered into bankruptcy proceedings.

In letters dated October 27, 2015, MSHA’s
Norton (VA) District Manager informed each of the two miners that MSHA was “proposing
to assess an individual civil penalty against you as an agent of Mill Branch”
for the violation cited in Order No. 8178613 as well as for violating 30 C.F.R.
§ 75.1502 (failure to follow the emergency evacuation and fire fighting plan), one
of the four cited violations. MSHA went on to explain that “[t]his proposed
penalty is based on information obtained during a special investigation
conducted under the Mine Act . . . .” [3]

Despite the foregoing letters, MSHA, when
it proposed penalties against Mill Branch in January 2016 in Docket Nos. VA 2016-105
& -106 for the four violations connected to the inundation, did not also propose
to assess a penalty against either miner. Furthermore, in July 2016, prompted in
large part by Mill Branch’s pending bankruptcy proceeding, the Secretary and
Mill Branch agreed to settle all four of the penalties, including the penalty
for Order No. 8178613. Based upon the Secretary’s motion for settlement, as
well as his subsequent supplemental representations discussed below, a Commission
Judge ordered Mill Branch to pay $33,071 for that violation, a reduction of 50
percent from the amount that the Secretary had proposed. See Decision
Approving Settlement, Docket Nos. VA 2016-105, et al. (Aug. 3, 2016).

Twenty months later, on April 12, 2018, the
Secretary proposed penalties against Scott and Thomas of $4,000 and $3,500, respectively.
The Secretary alleged that the two miners, as agents of Mill Branch, knowingly authorized,
ordered, or carried out
the violation of section 50.10(d) set forth in Order No. 8178613. A different
Judge was assigned to the miners’ cases.

Upon eventually learning some of the background
of the proceedings, the Judge issued a Show Cause Order. In that order, the
Judge focused on the timing of the section 110(c) penalty proposals, in
relation both to the much earlier settlement of the penalties against the
operator and to the issuance of Order No. 8178613, three years previously. The
Judge required the Secretary to supply information justifying such a course of conduct
in the cases. 41 FMSHRC 227, 229-30 (Mar. 2019) (ALJ). The Secretary replied
that the investigation ended on April 4, 2018, and penalties were proposed
eight days later on April 12, 2018.

The Judge was not satisfied with the substance
of the Secretary’s responses. The Judge rejected the Secretary’s contention
that the Commission can only review the appropriateness of the amount of time
that lapsed between the end of the MSHA 36-month investigation of the
miners and the agency’s proposal of penalties against them. Because he found
that the Secretary had failed to provide a justification for such a lengthy
investigation and that the Secretary had failed to demonstrate that the notices
of civil penalty were issued within a reasonable time as contemplated by the
Mine Act, the Judge dismissed the proceedings. 41 FMSHRC at 565-66.

The Commission granted the Secretary’s subsequent
petition for discretionary review of the dismissal order.

II.

Disposition

This case involves an issue that flows
from the dual enforcement scheme of the Mine Act. The Secretary is charged with,
among other things, inspecting mines, investigating health and safety
violations that are discovered, and proposing penalties for those violations. When
an operator or miner contests an alleged violation or the penalty proposed for
it, the Commission is then tasked with reviewing the proffered violation and
proposed penalty, including assuring due process in adjudicating the matter and
the ultimate assessment of any penalty.

A.        Applicable
Law

Section 105(a) of the Mine Act sets out
the Secretary’s obligations regarding the proposal of penalties, including the
timeliness of their proposal, as well as the finality of a penalty not
contested. [4]
Section 105(d) then explains the role that the Commission is to play in the
event of a timely contest of any enforcement action by the Secretary, including
the contest of a proposal of a penalty. [5]

One of the primary reasons the Mine Act
was enacted was to greatly improve upon the civil penalty assessment,
adjudication, and collection procedures of its main predecessor statute, the
Federal Coal Mine Health and Safety Act of 1969, 30 U.S.C. § 801 et seq. (1976)
(“Coal Act”). S. Rep. No. 95-181, at 43-45 (1977), reprinted in Senate
Subcomm. on Labor, Comm. on Human Res., Legislative History of the Federal
Mine Safety and Health Act of 1977 , at 631-33 (1978) (“ Legis. Hist. ”);
see generally Donovan v. Phelps Dodge Corp. , 709 F.2d 86, 91 (D.C. Cir.
1983). There was no language addressing the timing or timeliness of the
assessment process in section 109(a)(1) of the Coal Act, pursuant to which
MSHA’s immediate predecessor, the Mine Enforcement and Safety Administration of
the Department of the Interior, proposed penalties against mine operators. Nor
did the Coal Act demand timely action on the part of the predecessor to the Commission,
the Board of Mine Operations Appeals, a creation of that same Department. Consequently,
the Coal Act penalty procedures were “lengthy, and often repetitive,” becoming
ones which “encourage[d] delaying the ultimate payment of civil penalties.” S.
Rep. No. 95-181, at 44, Legis. Hist. at 632.

In
drafting the Mine Act, the responsible Senate Subcommittee stated that “[t]o be
effective and to induce compliance, civil penalties, once proposed, must be
assessed and collected with reasonable promptness and efficiency. To achieve
this objective S. 717 contains a number of significant departures from the
present practice under the Coal Act.” S. Rep.     No. 95-181, at 43, Legis.
Hist. at 631. Those departures, described as the “means by which the method
of collecting penalties is streamlined,” included that “civil penalties are to
be assessed by the . . . Commission rather than by the Secretary as prevails
under the Coal Act . . . . Where a penalty is contested, the normal proceedings
for the hearing of cases by the Commission controls.” S. Rep. No. 95-181, at
45-46, Legis. Hist. at 633-34. In creating the Commission, the Committee
stated that it “strongly believes that it is imperative that the Commission
strenuously avoid unnecessary delay in acting upon cases.” S. Rep. No. 95-181, at
48, Legis. Hist. at 636.

At
the same time, the legislative
history notes that when circumstances cause prompt proposal of a penalty to not
be possible, such event should not prevent imposition of a penalty. Thus the
Senate Report states, “there may be circumstances, although rare, when prompt
proposal of a penalty may not be possible, . . . the Committee does not expect
that the failure to propose a penalty with promptness shall vitiate any
proposed penalty proceeding.” S. Rep. No. 95-181, at 34, Legis. Hist.
at 622. Congress desired expeditious action but also anticipated that speed is
not achievable in all circumstances.

In a case interpreting the relevant
statutory language, Secretary of Labor v. Twentymile Coal Co , 411 F.3d
256
(D.C. Cir. 2005),
involving a late-filed penalty proposal, the D.C. Circuit focused on a
two-pronged inquiry: (1) was the delay in proposing the penalty a reasonable
one; and (2) did the operator demonstrate prejudice from whatever delay in fact
occurred? Id . at 262. More recently, in Long Branch Energy ,
34 FMSHRC 1984, 1990 (Aug. 2012), we explained “that Commission enforcement of
the filing time limits is a secondary consideration to the primary purpose of
section 105(d), i.e., ensuring prompt enforcement of the Act’s penalty scheme.”
See also Salt Lake Cty. Road Dep’t , 3 FMSHRC 1714, 1716 (July 1981) (“considerations
of procedural fairness to operators must be balanced against the severe impact
of dismissal of the penalty proposed upon the substantive scheme of the statute
and, hence, the public interest itself.”) . In another case we also stated that
“[w]hen reviewing a judge’s pre-trial rulings,” such as the one the Judge made here
in dismissing the proceedings, “the appropriate standard of review to apply . .
. is abuse of discretion, though any factual determinations he made in arriving
at his conclusion are subject to substantial evidence review.” Black Butte
Coal Co. , 25 FMSHRC 457, 459-60 (Aug. 2003). “[T]he Commission cannot
merely substitute its judgment for that of the . . . [J]udge . . . . The
Commission is required, however, to determine whether the [J]udge correctly
interpreted the law or abused his discretion and whether substantial evidence
supports his factual findings.” Asarco, Inc. , 12 FMSHRC 2548, 2555 (Dec.
1990).

B.        The
Judge’s Dismissal for the Alleged Failure to Comply with Section 105(a)

The
Secretary argues that the Judge made numerous legal errors in his order dismissing
the two section 110(c) cases. He contends that his obligation to propose
penalties “within a reasonable time” occurs only “after the termination of [an]
inspection or investigation.” PDR  at 13 (citing 30 U.S.C. § 815(a)). He thus
argues that the relevant time period in this case was eight days. The two
miners respond that the Judge properly required that the Secretary demonstrate
“adequate cause” for why it took three years for the penalties against them to
be proposed, and that substantial evidence supports the Judge’s conclusion that
the Secretary failed to make such a showing. They allege that the delay of more
than three years from the issuance of the citation to the operator to the
issuance of the section 110(c) penalty proposals has prejudiced them.

The Judge based his dismissal of
proceedings on our statement in Long Branch that “[i]n addressing
timeliness issues, . . . the Secretary is not free to arbitrarily ignore
reasonable time constraints that would ‘deny fair play to operators’ by
‘exposing operators to stale claims.’”   41 FMSHRC at 564 (quoting Long
Branch , 34 FMSHRC at 1989). The Judge applied the remainder of the
Commission’s Long Branch analysis to the facts at hand. Because in the
Judge’s view, the Secretary failed to provide a justification for not proposing
the 110(c) penalties until three years after issuing Order No. 8178613, the
Judge dismissed the proceedings. Id . at 564-65. [6]
This case, however, does not hinge on application of Commission
Procedural
Rule 28, 29 C.F.R. § 2700.28. The Secretary complied with Rule 28(a). Therefore,
Rule 28 was not applicable and does not provide a basis for dismissal.

The primary issue the Judge raised in his
Show Cause Order is the timeliness of the Secretary’s initial proposal of the section
110(c) penalties. We review his decision by looking first at the statute and
then at due process.

The most obvious statutory provision is
section 105(a). As seen, it states that “[i] f,
after an inspection or investigation, the  Secretary  issues
a citation or order under  section 104 , he shall, within a
reasonable time after the termination of such inspection
or investigation , notify the  operator  by
certified mail of the civil penalty proposed to be assessed . . . .” 30 U.S.C.    
§ 815(a) (emphasis added). [7]

Regardless of the
length of time the Secretary may have taken to investigate the section 110(c)
charges here, [8]
deference has been accorded the Secretary’s interpretation of section 105(a)
that the time period subject to the reasonableness requirement in that
provision begins only upon the completion of the investigation
necessary to support the penalty proposal.     See Twentymile , 411 F.3d at

261. Consequently, the Secretary explained that his investigations into the liability
     of the two individual miners under section 110(c) for the section 50.10(d)
     violation did not conclude until April 4, 2018. S. Resp. to Order to Show Cause
     at 1.

Thus, for present purposes, the
period subject to the “reasonable time” requirement of section 105(a) began on
April 4, 2018 with the conclusion of the section 110(c) investigations and
ended with MSHA’s proposal of penalties on April 12, 2018 — a period of eight
days.  PDR at 13-14. There is no question that, for purposes of section 105(a),
the eight-day period of time qualifies as “reasonable” for purposes of proposing
a penalty. See Long Branch , 34 FMHSHRC at 1991 n.11 (“C ommission
presumes that the Secretary’s agents generally act in good faith . . . .”). Consequently,
the Judge’s order dismissing these proceedings cannot be affirmed at this
juncture on the basis of section 105(a). [9]

Turning to the due
process issue, the Commission has recognized that the “[t] he fundamental
requirement of procedural due process is the opportunity to be heard ‘at a
meaningful time and in a meaningful manner’ appropriate to the nature of the
case .”      Capitol Cement Corp. , 21 FMSHRC 883, 893 (Aug. 1999) (emphasis
added) (quoting Mathews v. Eldridge , 424 U.S. 319, 333 (1976 ) . We note that the circumstances the miners’
cases present are undoubtedly unusual. [10] Cases against operators
and related cases against individual miners “are often consolidated for reasons
of judicial efficiency . . . .” S. Resp. to Show Cause Order  at 6. Moreover,
the Commission has recognized that there are common elements to operator and
individual miner liability cases, such as gravity. See Sunny Ridge Mining
Co. , 19 FMSHRC 254, 272 (Feb. 1997); see also Mize Granite Quarries,
Inc. , 34 FMSHRC 1760, 1764 (Aug. 2012) (Judge’s “finding that the
[operator’s] violation was not unwarrantable sufficiently explains why in her
view no penalties against the individuals should be assessed . . . .”). Should
the miners have suffered actual prejudice attributable to the unusual
procedural path this case has traveled to date, it is possible they have been
denied due process. We remand this
case back to the judge, where the miners will have the opportunity to provide
argument and evidence that they have been denied due process.

We do not find a statute bars the filing in this case, and in the absence of such a finding, the length of time, standing alone, does not bar the assessments. To establish a due process violation, the miners would have to submit on remand evidence of actual prejudice, not just allegations of potential or inherent prejudice. [11] See Long Branch , 34 FMSHRC at 1991-93;    see also Twentymile , 411 F.3d at 262; Valley Camp Coal Co ., 1 FMSHRC 791, 792 (July 1979) (reversing Judge’s decision dismissing penalty contest for failure to timely answer penalty petition because there was no showing that the Secretary had been prejudiced by the delay).  The Secretary would then have the opportunity to submit rebuttal evidence to the assigned Judge.              

III.

Conclusion

For
the foregoing reasons we vacate the Judge’s order dismissing the proceedings
and remand these cases to the Chief Administrative Law Judge for reassignment.

/s/ Marco M. Rajkovich,
Jr.

Marco M.
Rajkovich, Jr., Chairman

/s/ Mary Lu
Jordan

Mary Lu Jordan,
Commissioner

/s/ Michael G.
Young

Michael G.
Young, Commissioner

/s/ William I.
Althen

William I.
Althen, Commissioner

/s/
Arthur R. Traynor, III

Arthur R.
Traynor, III, Commissioner

[1] Section 110(c)
of the Mine Act provides:

Whenever a
corporate  operator  violates a  mandatory health or safety standard . . . , any
director, officer, or  agent  of such corporation who knowingly
authorized, ordered, or carried out such violation . . . shall be subject to
the same civil penalties, fines, and imprisonment that may be imposed upon a  person  under subsections (a) and (d) [that
provide for operator civil and criminal penalties, respectively].

30 U.S.C. § 820(c).

[2] Section
50.10(d) requires operators to notify MSHA within 15 minutes of the occurrence
of an “accident.” An “accident” is defined to include “[a]n unplanned
inundation of a mine by a liquid or gas.” 30 C.F.R. § 50.2(h)(4).

[3] The Secretary
did not enter copies of the letters into the record below; rather, they were
appended by the Secretary to his reply brief to the Commission. In that same
brief, the Secretary also disclosed that later in 2015, the miners had availed
themselves of the opportunity MSHA offered in the letters to confer with the
agency regarding their roles in the violations.

[4] Section 105(a)
states in pertinent part:

If,
after an inspection or investigation, the Secretary issues a citation or order
under  section 104 ,
he shall, within a reasonable time after the termination of such
inspection or investigation , notify the  operator  by
certified mail of the civil penalty proposed to be assessed under  section 110(a)  for the violation
cited. .
. . .  If, within 30 days from the receipt of the notification issued by the
Secretary, the operator fails to notify the Secretary that he intends to
contest the citation or the proposed assessment of penalty, and no notice is
filed by any miner or representative of miners under subsection (d) of this
section within such time, the citation and the

proposed assessment of penalty shall be
deemed a final order of the Commission and not subject to review by any court
or agency.

30 U.S.C. § 815(a) (emphasis
added).

[5] Section 105(d)
states:

If,
within 30 days of receipt thereof, an operator of a coal or other mine notifies
the Secretary that he intends to contest the issuance or modification of an
order issued under section 104, or citation or a notification of proposed
assessment of a penalty issued under subsection (a) or (b) of this section, . .
.or any miner or representative of miners notifies the Secretary of an
intention to contest the issuance, modification, or termination or any order
issued under section 104, . . . the Secretary shall immediately advise the
Commission of such notification, and the Commission shall afford an opportunity
for a hearing . . . , and thereafter shall issue an order, based on findings of
fact, affirming, modifying, or vacating the Secretary’s citation, order, or
proposed penalty, or directing other appropriate relief. . . . .

30 U.S.C. § 815(d).

[6]
Long
Branch
involved a specific procedural deficiency: a failure by the Secretary to file a
penalty petition within 45 days of receiving a timely notice of contest. In Long
Branch , the Commission expanded upon our earlier decision in Salt Lake
and held that in such cases,    a Judge, before permitting proceedings to go
further, can require the Secretary to provide “adequate cause” for his failure
to meet the 45-day time limit. 34 FMSHRC at 1989-91.     The Commission was
careful to point out in Long Branch that it was interpreting and
applying its own regulation and thus had considerable legal leeway to craft the
“adequate cause” standard. Id . at 1989.

[7] The Secretary
correctly points out that section 105(a) goes on to refer only to penalties
proposed pursuant to section 110(a), which governs penalties imposed upon
operators, not individual miners. Given our holding here, we need not resolve
the Secretary’s contention that, by implication, the terms of section 105(a) do
not govern penalties that the Secretary proposes to assess against individual
miners pursuant to section 110(c). We note, however, that both the Secretary
and the Commission have continually found it necessary to look to other
provisions of the Mine Act — such as sections 105(a) and section 105(d) set
forth above, along with section 110 — to give effect to the summary provisions
of section 110(c).

The Secretary also argues that,
notwithstanding its “reasonable time” language, section 105(a) cannot be read
to be a statute of limitations, so that by default 28 U.S.C. § 2462 applies to all
Mine Act civil penalty proceedings. That provision states in pertinent part
that “[e]xcept as otherwise
provided by Act of Congress, an action, suit or proceeding for the enforcement
of any civil fine, penalty, or forfeiture, pecuniary or otherwise, shall not be
entertained unless commenced within five years from the date when the claim
first accrued . . . .” See, e.g., 3M
Co. v. Browner , 17 F.3d 1453, 1455
(D.C. Cir. 1994) (holding 28 U.S.C. § 2462 to apply because civil
penalty at issue there “ contains no provision
limiting the time within which the [federal agency] must initiate the
administrative action.”). Because of our holding here, we leave the resolution
of this argument to a future case.

[8] Mine Act i nvestigations
are governed by section 103 of the Act, 30 U.S.C. § 813, which contains no
timeliness provision. Cf. 52 U.S.C. § 30107(a)(9) (providing that the Federal
Election Commission is “to conduct investigations . . . expeditiously”). Furthermore,
an investigation into a miner’s individual liability under section 110(c) for a
violation is, in particular, not perfunctory and thus may take time beyond that
that is necessary to investigate the operator for the violation. See Sedgman ,
28 FMHSRC 322, 341 (June 2006) (Commissioners Suboleski and
Young)
(characterizing as reasonable under section 105(a) the less than 11 months of
time between citation issuance and penalty proposal to the operator, given the
section 110(c) investigation that was also conducted).

[9]
Chairman Rajkovich and Commissioner Althen note, separately,
the following observations. The only record of the conduct of the
investigation after
December 2015 presently before us is the Secretary’s
statement that MSHA issued the assessment eight days after the Technical
Compliance and Investigation Office sent a letter requesting proposal of
assessments. Thus, the current
record precludes our determination of a number of issues.  Those
include: whether section 105(a) applies to section 110(c) assessments;
whether an investigation terminates in MSHA’s absolute discretion; whether
any person of interest, or   the Commission, may inquire as to when an
investigation was concluded for purposes of section 105(a); and,
whether (or how)  Long Branch  may affect our
evaluation of prejudice versus “reasonable time” in the conduct of
investigations pursuant to section 110(c). The
fact that we have not addressed those issues, here, has no bearing on their
consideration by the Judge on remand or by the Commission in future cases.

[10] Chairman Rajkovich and Commissioner Althen note,
separately, the undoubtedly unusual aspect of these cases with the following
observations. O n October 27, 2015, notification
was given to the miners of the intention to propose penalties against them. T he
violation under investigation was for failing to notify MSHA within 15 minutes
of the occurrence of an accident. This would not appear to be a complex matter
for investigation ;  yet the
investigation was not reported as completed until
more than two years later , on April 4, 2018. In
proposing the settlement in the operator’s case, the Secretary proffered that
the resolution would “conserve scarce resources” such as “inspectors spending
time preparing for and appearing at trial.” E-mail from Office of
Solicitor attorneys to Judge’s clerk (July 27, 2016). In the Prelimin ary Statements in these cases, however, the Secretary
identified as potential witnesses the two inspectors who had issued the
citations and orders against Mill Branch in the operator’s case. Further, there is no evidence that the Judge in the
proceeding against the operator was informed that Scott and Thomas were the
subjects of an investigation.

[11] To date, the
miners’ prejudice arguments have been made solely through argument of counsel,
with no supporting evidence, such as affidavits.