Noranda Alumina, L.L.C. v. Perez

• Decision Date: 08 November 2016
• Docket Number: No. 16-60049,16-60049
• Citation: 841 F.3d 661
• Parties: Noranda Alumina, L.L.C., Petitioner, v. Thomas E. Perez, Secretary, Department of Labor; Federal Mine Safety & Health Review Commission, Respondents.
• Court: U.S. Court of Appeals — Fifth Circuit

841 F.3d 661

Noranda Alumina, L.L.C., Petitioner,

v.Thomas E. Perez, Secretary, Department of Labor; Federal Mine Safety & Health Review Commission, Respondents.

No. 16-60049

United States Court of Appeals, Fifth Circuit.

Filed November 8, 2016

Avidan Meyerstein, Jackson Lewis P.C., Henry Chajet, Roy Brian Hendrix, Esq., Husch Blackwell, L.L.P., Washington, DC, Jillian R. Orticelli, Esq., Jackson Lewis, P.C., Hartford, CT, for Petitioner.

Elizabeth Johnston, Walter Christian Schumann, Esq., Counsel, Walter Christian Schumann, Esq., Counsel, U.S. Department of Labor, Office of the Solicitor, Mine Safety & Health Division, Arlington, VA, Michael A. McCord, John Thomas Sullivan, Federal Mine Safety & Health Review Commission, Office of General Counsel, Washington, DC, for Respondent.

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 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 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. 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, 117 S.Ct. 350, 136 L.Ed.2d 288 (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.

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).

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. §

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