Section 110(k) of the Federal Mine Safety and Health Act of 1977 (“Mine Act”) provides that settlements of proposed penalties must be approved by the Federal Mine Safety and Health Review Commission (“Commission”):
No proposed penalty which has been contested before the Commission under section 105(a) shall be compromised, mitigated, or settled except with the approval of the Commission. No penalty assessment which has become a final order of the Commission shall be compromised, mitigated, or settled except with the approval of the court.
30 U.S.C. § 820(k). The Commission’s procedural rules require that any motion for settlement must include, among other things, factual support for the proposed settlement. The rules likewise require that any order approving a settlement must set forth the reasons for approval which must be supported by the record. These requirements have remained largely unchanged since the Commission’s procedural rules were first instituted in 1979. Additionally, 35 years of case law has consistently affirmed the Commission’s authority to review settlements for adequacy and to require factual support to be proffered therefore. Nevertheless, the Secretary has decided to challenge the Commission’s authority, injecting some degree of uncertainty into this seemingly well-settled area of mine safety and health law.
The Secretary has chosen The American Coal Company, Docket No. LAKE 2011-13 (“American Coal”), as its test case. American Coal involves 32 contested enforcement actions issued between July 13, 2010 and August 12, 2010, including 14 S&S enforcement actions. A settlement was ultimately reached in the case and American Coal agreed to accept all enforcement actions as written in exchange for an across-the-board reduction of 30% in the penalty amounts for each enforcement action. The Secretary filed a motion in February 2013 seeking approval of the proposed settlement from ALJ Moran. The motion did not contain any factual support for the penalty reductions but rather included the following assertion in support of the settlement:
After further review of the evidence, the Secretary has determined that a reduced penalty is appropriate in light of the parties’ interest in settling this matter amicably without further litigation. In recognition of the nature of the citations at issue, and the uncertainties of litigation, the parties wish to settle the matter with a 30% reduction in the total assessed penalty with no changes in gravity or negligence for any of the citations at issue.
American Coal Company, Docket No. LAKE 2011-13 at 2. ALJ Moran denied the motion because it did not set forth factual support for the penalty reductions. ALJ Moran further observed that the across-the-board nature of the penalty reductions raised red flags.
The Secretary then filed a motion asking ALJ Moran to reconsider his ruling. The Motion for Reconsideration likewise did not assert any facts in support of the settlement. It merely stated that the Secretary’s counsel exercised her professional judgment to reach the decision to settle after considering the value of the proposed settlement, chances of success at the hearing, and the expenditure of resources required to proceed to hearing. The Motion for Reconsideration further asserted in a conclusory fashion that the Secretary had determined the proposed settlement to be in the best interests of the public and consistent with MSHA’s enforcement goals. ALJ Moran denied the Motion for Reconsideration and ultimately certified his ruling for interlocutory appeal, after which the Secretary petitioned the Commission for interlocutory review.
On appeal to the Commission, the Secretary argued that Section 110(k) should be interpreted to limit the Commission’s authority to review settlements “in light of the separation of powers principle that settlement decisions involve policy choices that are vested in [the] political branches, not in court-like agencies like the Commission.” American Coal Company, Docket No. LAKE 2011-13 at 6. The Secretary urged that the Commission’s role in reviewing proposed settlements is no broader than that of a “generalist court.”
The Commission squarely rejected the Secretary’s separation of powers argument, reasoning that the Commission is not akin to a “generalist court,” but is rather an independent federal agency that shares a split enforcement scheme with the Secretary. More specifically, Congress bestowed upon the Secretary and the Commission separate roles and functions in regard to civil penalties, which are spelled out in Section 110(i) of the Mine Act. Pursuant to Section 110(i), the Secretary proposes penalties and the Commission assesses all penalties based upon six criteria enumerated in Section 110(i). Accordingly, the Secretary and the Commission are two wholly separate and distinct Article II bodies given enforcement powers by Congress, which distinguishes the Commission’s review of the Secretary’s proposed settlements from an Article III generalist court’s review of the policy decisions of a separate political branch. Moreover, observed the Commission, unlike the judges who sit on generalist courts, Commissioners are required to have certain qualifications and expertise specific to mine safety and health. The Commission also held that the very existence of Section 110(k), which explicitly grants the Commission the power to approve settlements proposed by the agency, renders any comparison to generalist courts without merit. The Commission also relied upon the legislative history of the Mine Act, which, in the Commission’s view, suggests that Congress created the Commission specifically to ensure that penalties are strong enough to coerce compliance with the Mine Act and serve as an effective enforcement tool, prevent abuses that were previously inherent in the negotiation of settlements out of the public view, and ensure that the public interest is adequately protected.
The Secretary also argued that it is generally presumed that enforcement agencies have unreviewable discretion to settle enforcement actions. Such a presumption, argued the Secretary, cannot be overcome unless there is a statute that prescribes meaningful standards for defining the limits upon the agency’s discretion. The Commission also rejected this argument. It recognized that, although a presumption of non-reviewability generally extends to an agency’s decision to settle an action, the presumption “‘may be overcome by congressional limitations.’” American Coal Company, Docket No. LAKE 2011-13 at 9 (quoting Baltimore Gas and Elec. Co. v. FERC, 252 F.3d 456, 459 (D.C. Cir. 2001).). The Commission held that Section 110(k) is “an explicit expression of Congressional authorization that rebuts any presumption of unreviewability.” Id. It explicitly limits the Secretary’s authority to reduce penalties in settlements while granting authority to the Commission to approve proposed settlements. The Commission also distinguished its review of proposed penalties from an agency’s decision to settle. The Commission further held that Section 110(i) of the Mine Act contains standards for the Commission’s review of penalties that are sufficient to overcome any presumption of non-reviewability. Moreover, because the Commission holds the authority to review proposed penalty reductions to ensure the public interest is protected it is proper for it to require factual support for the same.
The Secretary’s final argument was that the Commission should apply to its review of settlements the same standard applied by the United States Court of Appeals for the Second Circuit to consent decrees entered into by the Securities and Exchange Commission. The consent decree standard focuses on the procedural propriety of a proposed settlement, excludes a review for substantive adequacy of the proposed settlement, and affords deference to the Secretary’s determination that the proposed settlement is in the public interest. The Commission also rejected this argument, reasoning that application of such a standard would render Section 110(k) meaningless. The Commission also held that application of the consent decree standard would be contrary to Congress’ stated intent to remedy abuses that were occurring with compromises reached out of the public view. Additionally, the Court recognized that the consent decree standard employed by the D.C. Circuit does include substantive adequacy of the consent decree as a factor for consideration.
It is expected that the Secretary will appeal the Commission’s decision in American Coal to the United States Court of Appeals. Accordingly, operators and practitioners should expect some uncertainty in the approvals of settlements until the issues of the Commission’s authority to review settlements and the scope of any such review are resolved. Dinsmore attorneys have continued to see cases where the Secretary has proposed Motions to Approve Settlement that are devoid of assertions of factual support in spite of the Commission’s decision in American Coal. Although foreign to the standard practice in mine safety and health cases, if the Secretary is intent on filing such a motion, practitioners and operators would be well advised to at least consider the prospect of filing their own motion. Otherwise the settlement could be rejected and the operator could risk losing the benefit of its bargain.