Noranda Alumina, L.L.C. v. Fed Mine Sfty & Hlth Re , 841 F.3d 661 ( 2016 )

Case: 16-60049 Document: 00513750471 Page: 1 Date Filed: 11/08/2016
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 16-60049 FILED
November 8, 2016
NORANDA ALUMINA, L.L.C., Lyle W. Cayce
Clerk
Petitioner,
v.
THOMAS E. PEREZ, SECRETARY, DEPARTMENT OF LABOR; FEDERAL
MINE SAFETY & HEALTH REVIEW COMMISSION,
Respondents.
On Petition for Review of an Order of the
Federal Mine Safety & Health Review Commission
Before CLEMENT, PRADO, and OWEN, Circuit Judges.
EDWARD C. PRADO, Circuit Judge:
This is a petition for review of an order of the Federal Mine Safety &
Health Review Commission (“FMSHRC” or “the Commission”) denying a
motion to reopen. Because the Commission applied its precedents arbitrarily
in denying this motion to reopen, we GRANT the petition for review and
REMAND for further proceedings.
I. BACKGROUND
Noranda Alumina, LLC (“Noranda”) operates an alumina refinery near
Gramercy, Louisiana. In March or April 2014, a contractor detected mercury
in one part of the Gramercy facility. That same month the Mine Safety and
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Health Administration (“MSHA”) inspected the facility and issued two
citations to Noranda for failing to test for mercury. See 30 C.F.R. §§ 47.21,
56.5002. Noranda requested a “safety and health conference” with MSHA
pursuant to 30 C.F.R. § 100.6. This conference was held on June 12, 2014, but
Noranda failed to persuade MSHA to withdraw its citations.
In July 2014, MSHA assessed penalties in the amount of $38,573 for the
citations. Notice of this assessment arrived at Noranda’s Gramercy facility on
July 18, 2014. On that same day, the facility’s Environmental Health and
Safety Manager, Louis DeRose, unexpectedly quit. DeRose had been
responsible for dealing with MSHA. In DeRose’s absence, the assessment came
to the attention of Environmental Manager Bud Preston, who was generally
unfamiliar with MSHA and the citations at issue. Preston brought the
assessment to then-Plant Manager Dave Hamling. Believing it was a bill,
Preston asked Hamling whether Noranda should pay it. Hamling apparently
assumed that counsel had reviewed the citations and had advised paying the
assessment. Hamling therefore approved the payment on July 23, 2014. In
August 2014, Hamling also left the company.
On September 23, 2014, Noranda’s upper management and counsel
realized that the assessment had been paid. Noranda apparently had intended
to contest the citations rather than pay the assessment. By this time, the
thirty-day deadline to contest MSHA penalty assessments had passed. See 30
U.S.C. § 815(a) (“[T]he operator has 30 days within which to notify the
Secretary [of Labor] that he wishes to contest the citation or proposed
assessment of penalty.”). The citation and penalty had therefore become “a
final order of the Commission.” Id.
Noranda filed a motion to reopen on October 31, 2014, seeking to
adjudicate the citation and penalty on the merits. Noranda claimed that it had
intended to contest the citations and that its prior payment was mistakenly
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approved. The Secretary of Labor made two arguments in opposition to
Noranda’s motion to reopen. First, the Secretary argued that Noranda failed
to “provide an explanation that constitutes adequate or good cause for its
failure” to timely contest the assessment. In connection with this argument,
the Secretary stated: “The Commission and the Courts have repeatedly held
that the fact that a party had inadequate or unreliable internal procedures
does not constitute an adequate excuse under Rule 60(b)(1).” Second, the
Secretary argued, Noranda did “not identify facts that, if proven on reopening,
would constitute a meritorious defense.”
On December 18, 2015, the Commission denied Noranda’s motion.
Because failure to timely contest an assessment after the departure of an
employee constituted “an inadequate or unreliable internal processing
system,” the Commission held that Noranda “ha[d] not established grounds for
reopening the assessment.” This petition for review followed.
II. JURISDICTION AND STANDARD OF REVIEW
A party aggrieved by an order of the Commission may seek review in
either the Court of Appeals for the District of Columbia or the “court of appeals
for the circuit in which the [safety] violation is alleged to have occurred.” 30
U.S.C. § 816(a)(1); see also Pendley v. Fed. Mine Safety & Health Review
Comm’n, 601 F.3d 417, 422 (6th Cir. 2010). That court then has “exclusive
jurisdiction” over the case. 30 U.S.C. § 816(a)(1). Because Noranda’s alleged
violations occurred in Louisiana, this Court has jurisdiction.
Abuse of discretion is the appropriate standard of review in this case.
Courts review FMSHRC orders under the “Mine [Safety & Health] Act and
general administrative law principles.” Pendley, 601 F.3d at 422. The
Administrative Procedure Act does not generally apply. 30 U.S.C. § 956; see
also Pendley, 601 F.3d at 422. In both judicial and administrative contexts,
courts review denials of motions to reopen for abuse of discretion. See Diaz v.
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Stephens, 731 F.3d 370, 374 (5th Cir. 2013) (reviewing denial of Rule 60(b)
motion for abuse of discretion); Lone Mountain Processing, Inc. v. Sec’y of
Labor, 709 F.3d 1161, 1163 (D.C. Cir. 2013) (reviewing FMSHRC denial of
motion to reopen for abuse of discretion).
Our review of motions to reopen in the immigration context is
instructive. There we apply “a highly deferential abuse-of-discretion
standard.” Zhao v. Gonzales, 404 F.3d 295, 303 (5th Cir. 2005). We will affirm
the decision of the Board of Immigration Appeals (“BIA”) “as long as it is not
capricious, without foundation in the evidence, or otherwise so irrational that
it is arbitrary rather than the result of any perceptible rational approach.”
Gomez-Palacios v. Holder, 560 F.3d 354, 358 (5th Cir. 2009). We have made
clear, however, that “[t]he BIA may not apply its precedents arbitrarily.”
Rodriguez-Manzano v. Holder, 666 F.3d 948, 954 (5th Cir. 2012). If an agency
does “depart from its settled policies,” it must “offer[] a reasoned explanation”
for such departure. Wellington v. INS, 108 F.3d 631, 637 (5th Cir. 1997) (citing
INS v. Yang, 519 U.S. 26, 32 (1996)). As the First Circuit has held,
“administrative agencies must apply the same basic rules to all similarly
situated supplicants. An agency cannot merely flit serendipitously from case
to case, like a bee buzzing from flower to flower, making up the rules as it goes
along.” Henry v. INS, 74 F.3d 1, 6 (1st Cir. 1996).
III. DISCUSSION
The Commission denied Noranda’s motion to reopen because its failure
to timely contest the penalty “result[ed] from an inadequate or unreliable
internal processing system.” As explained below, the Commission has not
applied its “internal processing system” rule consistently. Thus, we find that
the Commission abused its discretion by arbitrarily denying Noranda’s motion
to reopen.
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A. The Mine Safety & Health Act
We begin by discussing the relevant agency structures and procedures.
The Federal Mine Safety & Health Act of 1977 (“Mine Act”), 30 U.S.C. § 801 et
seq., distributes policymaking and adjudicatory functions to two separate
agencies. Under this framework, “MSHA plays the roles of police and
prosecutor, and the [FMSHRC] plays the role of judge.” Lone Mountain, 709
F.3d at 1162. MSHA, under the aegis of the Department of Labor, regulates
mine safety standards, inspects mining operations, and issues citations and
penalties for regulatory violations. 29 U.S.C. § 557a; 30 U.S.C. §§ 813–14.
FMSHRC administrative law judges (“ALJs”) are responsible for trial-level
review of MSHA citations and penalties, see 29 C.F.R. § 2700.50–.69, while the
Commission itself primarily conducts appellate review of ALJ orders, see 29
C.F.R. § 2700.70–.79. The Commission has authority to prescribe its own rules
of procedure. 30 U.S.C. § 823(d)(2). Except where otherwise specified in the
Mine Act, agency regulations, or APA, the Commission has chosen to “be
guided so far as practicable by the Federal Rules of Civil Procedure and the
Federal Rules of Appellate Procedure.” 29 C.F.R. § 2700.1(b).
MSHA may cite mine operators for violations of the Mine Act and
applicable safety regulations. 30 U.S.C. § 814(a). By statute, a cited mine
operator has thirty days to notify the Secretary that the operator “wishes to
contest the citation.” 30 U.S.C. § 815(a). Once the citation is issued, MSHA
proposes a penalty assessment. 30 C.F.R. § 100.3. The operator then has thirty
days to challenge this proposed penalty. 30 C.F.R. § 100.7(b)(2). An operator
may challenge a penalty assessment without challenging the underlying
citation. 29 C.F.R. § 2700.21(b). In fact, MSHA and the Commission discourage
challenges to citations as “a needless use of . . . resources” unless an early
hearing is warranted. Marfork Coal Co., 28 FMSHRC 842, 843 (2006) (quoting
Secretary of Labor’s brief).
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Failure to challenge the penalty assessment within thirty days of receipt
renders the citation and penalty “a final order of the Commission and not
subject to review by any court or agency.” 30 U.S.C. § 815(a). Drawing on
Federal Rule of Procedure 60(b), however, the Commission permits mine
operators to move to reopen final orders. Jim Walter Res., Inc., 15 FMSHRC
782, 789 (1993) (“[W]e hold that a final order of the Commission may be
reopened by the Commission in appropriate circumstances pursuant to Rule
60(b).”). As the D.C. Circuit explained in Lone Mountain:
Over the years, mine operators have failed to respond to MSHA
citations and proposed penalty assessments within the thirty-day
windows prescribed by 30 U.S.C. § 815(a) and subsequently have
sought the Commission’s lenience by filing motions to reopen. In
turn, the Commission has developed a body of precedent regarding
how to treat such motions based on the facts in each case.
709 F.3d at 1163. Recognizing that “default is a harsh remedy,” the
Commission reopens final orders where “the defaulting party can make a
showing of adequate or good cause.” Martin Marietta Aggregates, 22 FMSHRC
1178, 1179 (2000). “In accordance with Rule 60(b)(1),” the Commission may
reopen a case “on the basis of inadvertence, mistake, or excusable neglect” by
the defaulting party. Id. The case may proceed on the merits before an ALJ
upon reopening. See Lee Mech. Contractors, Inc., 38 FMSHRC 44, 45 (2016).
B. The Commission’s Abuse of Discretion
Noranda primarily argues that the Commission abused its discretion by
ignoring its own precedent. This precedent, according to Noranda, requires
reopening a final order when an operator demonstrates its intent to contest the
order. In addition, Noranda argues that it did have an effective internal
processing system, contrary to the Commission’s finding. Noranda also points
to cases where the Commission granted a motion to reopen despite an
inadequate internal processing system. In response, the Secretary of Labor
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distinguishes factually similar cases cited by Noranda and offers additional
justifications for the Commission’s decision. Both parties also discuss whether
Rule 60(b) requires reopening.
As an initial matter, this Court may only review reasoning articulated
by the agency at the time of its decision. See, e.g., Burlington Truck Lines, Inc.
v. United States, 371 U.S. 156, 168 (1962) (“[C]ourts may not accept appellate
counsel’s post hoc rationalizations for agency action . . . .”). There may be
factors that support a denial of Noranda’s motion to reopen, such as the
Secretary’s opposition to the motion, and Noranda’s delay in filing its motion.
But these post hoc rationalizations cannot retroactively justify the agency’s
decision. Furthermore, we will not review the Commission’s decision against
our own Rule 60(b) jurisprudence. Because the Commission is “guided” by the
Federal Rules of Civil Procedure only “so far as practicable,” 29 C.F.R. §
2700.1(b), we will defer to the agency’s own jurisprudence on procedural
matters. 1
In Lone Mountain, the D.C. Circuit addressed an FMSHRC denial of a
motion to reopen on one of the grounds advocated by Noranda—that the
Commission abused its discretion by ignoring its own precedent without
explanation. 709 F.3d at 1163. There too, the Commission denied an operator’s
motion to reopen in part because the operator’s “failure to contest a proposed
assessment result[ed] from an inadequate or unreliable internal processing
system.” Lone Mountain Processing, Inc., 33 FMSHRC 2373, 2375 (2011). Lone
Mountain had timely contested the underlying citation, but not the penalty
assessment. Lone Mountain, 709 F.3d at 1163. Yet in previous cases, Lone
1Notably, the Commission has not promulgated any regulations concerning motions
to reopen, although it has provided nonbinding guidance on its website. See Fed. Mine Safety
& Health Review Comm’n, Requests to Reopen, http://www.fmshrc.gov/content/requests-
reopen.
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Mountain argued, the Commission “repeatedly stated that the timely
challenge to a citation gives a ‘clear’ indication” of intent to contest the penalty.
Id. (quoting Oldcastle Stone Prods., 31 FMSHRC 1103, 1104 (2009)). In
remanding for reconsideration, the court reasoned that the Commission failed
either to distinguish Lone Mountain’s case from prior decisions or to explain
why departure from precedent was necessary. Id. at 1164. Had the Commission
considered its prior orders, “it would have explained why they do not apply in
Lone Mountain’s case. But despite their obvious relevance, the Commission
failed even to mention or discuss, let alone distinguish, those orders.” Id. Thus,
the court found the Commission’s order arbitrary and capricious. Id.
Like Lone Mountain, Noranda pointed the Commission to factually
similar cases in which the Commission reopened a final order. In Kaiser
Cement Corp., 23 FMSHRC 374 (2001), for example, the Commission granted
a motion to reopen even though the operator’s failure to timely contest the
penalty was due to “internal mismanagement.” Id. at 375. The operator in
Kaiser Cement experienced a “miscommunication during a transition period”
when the employee responsible for handling MSHA citations left the company.
Id. An employee unfamiliar with MSHA’s contest procedures inadvertently
paid the penalty even though the operator had already filed a notice of contest.
Id. Likewise, in Doe Run Co., 21 FMSHRC 1183 (1999), the operator
mistakenly paid the penalty “because the employee normally responsible for
the initial review of any proposed assessment, the safety administrator, was
out of the country.” Id. at 1184. In both cases, the Commission found that the
operator had intended to contest the penalty, and that its payment was
inadvertent or mistaken. Id.; Kaiser Cement, 23 FMSHRC at 375. Thus, the
Commission granted the motion to reopen in each case.
The Commission failed to explain why it did not follow Kaiser Cement or
Doe Run. Of course, the Commission is not bound by its precedent. See
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Atchison, Topeka & Santa Fe Ry. Co. v. Wichita Bd. of Trade, 412 U.S. 800, 808
(1973). Nor must it distinguish every prior decision that features somewhat
similar facts. Lone Mountain, 709 F.3d at 1164. In particular, an agency
decision may “stand without elaborate explanation where distinctions between
the case under review and the asserted precedent are so plain that no
inconsistency appears.” Id. (quoting Bush–Quayle ’92 Primary Comm., Inc. v.
Fed. Election Comm’n, 104 F.3d 448, 454 (D.C. Cir. 1997)).
But an agency “may not apply its precedents arbitrarily.” Rodriguez-
Manzano, 666 F.3d at 954. In this case, the FMSHRC articulated one principle:
“where a failure to contest a proposed assessment results from an inadequate
or unreliable internal processing system, the operator has not established
grounds for reopening the assessment.” Although stated like a rule, it is not so
applied. The Commission routinely grants motions to reopen where the
operator’s internal processing system is at fault. Kaiser Cement and Doe Run
are older examples, perhaps predating the Commission’s internal processing
system rule. 2 But more recently, in Warrior Coal, LLC, 36 FMSHRC 870
(2014), the operator blamed its delay in contesting a penalty on “an unknown
error in its internal mail delivery.” Id. at 871. The Commission granted the
motion without mentioning the internal processing system rule. Id. In another
case involving Pinnacle Mining, the operator failed to timely contest a penalty
“because its safety manager, who [was] responsible for handling proposed
assessments, was on Christmas vacation when the proposed assessment was
delivered.” Pinnacle Mining Co., 38 FMSHRC 422, 422–23 (2016). Again, the
Commission granted the motion to reopen without reference to the internal
processing system rule. Id. at 423. In another case decided shortly after
2 The oldest case cited by the Commission in support of this rule is Pinnacle Mining
Co., 30 FMSHRC 1061 (2008), decided seven years after Kaiser Cement and nine years after
Doe Run.
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Noranda (though not cited by the petitioner), the Commission reopened a
proposed penalty even though the operator’s failure to timely challenge the
assessment was due to an “internal processing error.” C.R. Briggs, 37
FMSHRC 2754, 2755 (2015). The Commission did not explain why it reopened
the case despite this error.
Perhaps these cases are distinguishable from Noranda’s. The Secretary
offers two distinctions, which we address in turn. First, Noranda did not
formally contest the citations, as Kaiser Cement and Doe Run did. As the D.C.
Circuit noted in Lone Mountain, contesting a citation indicates an operator’s
intent to contest the penalty. 709 F.3d at 1163. But since deciding Kaiser
Cement and Doe Run, the Commission has come to discourage citation contests.
See Marfork Coal, 28 FMSHRC at 843. Moreover, Noranda did request a
“safety and health conference” to try to persuade MSHA to withdraw the
citations. This request could have indicated Noranda’s intent to contest the
penalty. Second, the Secretary opposed Noranda’s motion whereas it did not
oppose Warrior Coal’s or C.R. Briggs’s. Warrior Coal, 36 FMSHRC at 871; C.R.
Briggs, 37 FMSHRC at 2755. But the Secretary did oppose Pinnacle Mining’s
motion in 2016. Pinnacle Mining, 38 FMSHRC at 423. Thus, Noranda’s case is
not obviously distinguishable from these prior precedents.
Even if these cases are obviously distinguishable based on some
unspoken factor, the Commission failed to “apply the same basic rule[] to all
similarly situated supplicants.” Henry, 74 F.3d at 6. In this case, the
Commission applied a rule that, on its face, admits of no exception. Yet Kaiser
Cement, Doe Run, Warrior Coal, and Pinnacle Mining are all exceptions.
Indeed, the Secretary does not even argue that the operator’s default in those
cases resulted from something other than an inadequate internal processing
system. But the Commission did not cite its internal processing system rule in
those cases, let alone explain why it did not apply. Based on our review of the
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Commission’s orders, an inadequate internal processing system is not why the
Commission denies a motion to reopen. Instead, it is merely a reason the
Commission cites when it chooses to deny a motion to reopen. When the
Commission chooses to grant a motion to reopen, it ignores this rule.
Other than relying on an inconsistently applied rule, the Commission did
not describe the factors that motivated its disposition in this case. Its decision-
making process was therefore “arbitrary rather than the result of any
perceptible rational approach.” Gomez-Palacios, 560 F.3d at 358.
On remand, the Commission may very well deny Noranda’s motion to
reopen. “[B]ut it must do so with more clarity than it showed in the first
instance.” Lone Mountain, 709 F.3d at 1164. In particular, the Commission
should describe the factors it uses in deciding motions to reopen. And if the
Commission again departs from factually similar precedent, it should justify
this departure.
IV. CONCLUSION
For the foregoing reasons, we GRANT the petition for review and
REMAND for further proceedings.
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