Shedding Light on Special Assessments
Operators should be diligent in contesting special assessments and seeking justification for penalty calculations.
by Patrick W. Dennison
In 2007, new penalty regulations were promulgated that increased penalties associated with the citations/orders issued by the Mine Safety and Health Administration (MSHA). The regulations also provided that the Secretary of Labor could elect to waive the regular penalty assessment and propose a “special assessment.” Special assessments increase the penalty beyond regular assessments for the types of violations that “may be of such a nature or seriousness that it is not possible to determine an appropriate penalty under these provisions.” 72 Fed. Reg. 13592. Recently, the number of proposed special assessments has increased, and the Secretary has proposed special assessments even for typical run-of-the-mill enforcement actions.
The Mine Act authorizes the Federal Mine Safety and Health Review Commission and its judges to assess penalties. 30 U.S.C. § 820(i). The Secretary’s regulations at 30 C.F.R. § 100.3 establish MSHA’s system for proposing a penalty as a “regular assessment” based on the assignment of points that account for the six statutory criteria: the operator’s history of previous violations, the appropriateness of the penalty to the size of the operator’s business, the operator’s negligence, the effect of the penalty on the operator’s ability to continue in business, the gravity of the violation, and whether the operator abated the violation in good faith. 30 U.S.C. § 820(i). Those points are then added and the total corresponds with a predetermined penalty amount. Pursuant to Section 100.5(a), the Secretary “may elect to waive the regular assessment” and instead propose a “special assessment.” 30 C.F.R. § 100.5. There is no specific criterion, however, for what conditions may warrant a special assessment or precisely how to determine the amount of a special assessment. Instead, MSHA uses a matrix and converts the total number of special assessment points to calculate the special assessment. A specially assessed penalty ranges from $200 to $70,000 for non-flagrant violations with an increase in penalty of $1,455 per penalty point (to a maximum of $220,000) for violations designated as flagrant.
For regular assessments, operators are provided a breakdown of calculations used in determining the proposed penalty with every Petition for Assessment (Exhibit A form). When the Secretary levies a special assessment, however, the operator is no longer privy to such calculations and instead receives a redacted “Exhibit A” form. The redacted form provides no information regarding the amount of points assigned to calculate the penalty, and operators are left to speculate how the assessments office arrived at the inflated penalty that may be five or six times the regular assessment.
In determining penalties, the Commission and its ALJs make penalty determinations de novo, and neither the ALJ nor the Commission is bound by the penalties proposed by the Secretary. Douglas R. Rushford Trucking, 22 FMSHRC 598, 600 (Rev. Comm. May 2000); Cantera Green, 22 FMSHRC 616, 622 (Rev. Comm. May 2000); 30 U.S.C. § 820(i); Spartan Mining Co., 30 FMSHRC 699, 723 (Rev. Comm. Aug. 2008). Yet, the Commission has held that, when a judge determines penalties that “substantially diverge from those originally proposed [by the Secretary], it behooves the Commission and its judges to provide a sufficient explanation of the bases underlying the penalties assessed by the Commission.” Sellersburg Stone Co., 5 FMSHRC 287, 293 (Rev. Comm. March 1983).
In litigation, the Secretary rarely elects to disclose any justification for levying a special assessment and often refuses to provide any requested information pertaining to a special assessment on the basis that it is protected by the “deliberative process” privilege. Deliberative process is a qualified privilege (meaning it may be overcome if the party seeking disclosure can demonstrate sufficient need) that purports to protect the consultative functions of government by maintaining the confidentiality of advisory opinions, recommendations, and deliberations comprising part of a process by which government decisions and policies are formulated. It attaches to inter- and intra-agency communications that are part of the deliberative process preceding the adoption and promulgation of an agency policy.
When the Secretary claims deliberative process, judges have split on whether such information is discoverable. Several judges have required the Secretary to disclose information and documentation despite the privilege claim. See e.g., Consolidation Coal Co., Docket No. WEVA 2011-940 (ALJ Barbour July 2012); Big Ridge Inc., Docket No. LAKE 2011-716 (ALJ Zielinski March 2012) (granting, in part, as to the inspector’s recommendations); CDK Contracting Co., 25 FMSHRC 289 (ALJ Manning May. 2003); Aggregate Industries, West Central Region, Inc., 25 FMSHRC 88 (ALJ Manning Feb. 2003); American Coal Co., 33 FMSHRC 2352 (ALJ Melick Sept. 2010).
Other judges have upheld the privilege. See e.g., Pocahontas Coal Co. LLC, 34 FMSHRC 903 (ALJ Feldman April 2012); Hidden Splendor Resources Inc., 33 FMSHRC 2345 (ALJ Rae Sept. 2011); Humphrey Enterprises Inc., 2011 WL 7463292 (ALJ Paez Dec. 2010); Big Ridge Inc., Docket Nos. LAKE 2012-262 et al. (ALJ McCarthy Nov. 2012). As a consequence, operators, as well as judges, are often left without any justification for the increased penalty due to the lack of transparency of the special assessment process.
Despite the split above, recent decisions have called into question the Secretary’s cryptic and arbitrary application of special assessments. In doing so, judges have substantially reduced the Secretary’s specially assessed penalty. In American Coal Co., Docket Nos. LAKE 2011-183, 184, 242 (ALJ Zielinski June 13, 2013), ALJ Zielinski (noting that the specially assessed penalty was 245 percent above the regular assessment) found that the “lack of transparency in the Secretary’s special assessment process…coupled with the Secretary’s refusal to disclose the bases for specially assessing a penalty, can frustrate attempted explanations” and reduced the total penalties from $161,200 to $18,500. Additionally, in Big Ridge, Inc., Docket No. LAKE 2011-716, ALJ Zielinski decreased the proposed penalty from $211,500 to $16,500, finding that the factors relied upon by the Secretary in support of specially assessing the alleged violations “shed little light” on the rationale for such increases as they simply refer to the “same factors that are taken into account in the regular assessment process.”
Additionally, in Freeport McMoran Morenci, Inc., Docket No. WEST 2011-1003-M (ALJ Miller Jan. 23, 2013) ALJ Miller rejected the specially assessed penalty stating that “[F]or some reason, not addressed by the Secretary, the proposed penalties were not subject to the penalty criteria, but were specially assessed. While the Secretary addressed the penalty criteria to some extent, it was not addressed in a manner that would lead me to believe that the penalty should be anything above the normal standard.”
These decisions indicate that, when the Secretary petitions for penalties above the normal formula, she must establish the existence of aggravating factors to justify an increase beyond the criteria provided for a regular assessment. If the Secretary provides either no justification or an insufficient justification, judges should not consider the Secretary’s proposed penalty despite the Commission requiring its judges to provide explanations for penalties that “substantially diverge” from those originally proposed. Special assessments are intended to be levied solely in extraordinary circumstances where the regular formula cannot be utilized. Absent such circumstances, special assessments are inappropriate. Operators are well-served to remain diligent in contesting special assessments and compelling the Secretary to justify any special assessment.
Patrick W. Dennison is an associate in Jackson Kelly PLLC’s Pittsburgh office, where he is in the Occupational Safety and Health Practice Group. He can be reached at 412-434-8815 or via email at firstname.lastname@example.org.