Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-98-01480/USCOURTS-caDC-98-01480-0/pdf.json

Parties Involved:
Contractors Sand and Gravel, Inc.
Petitioner
Federal Mine Safety and Health Review Commission
Respondent
Secretary of Labor
Respondent

Document Text:

<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 10, 1999 Decided January 7, 2000

No. 98-1480

Contractor's Sand and Gravel, Inc.,

Petitioner

v.

Federal Mine Safety and Health Review Commission and

Secretary of Labor,

Respondents

On Petition for Review of an Order of the

Federal Mine Safety and Health Review Commission

C. Gregory Ruffennach argued the cause for petitioner.

With him on the briefs were Ronald E. Meisburg and William K. Doran.

Jack Powasnik, Attorney, U.S. Department of Labor, argued the cause for respondent. With him on the brief was W.

Christian Schumann, Counsel. Norman Michael Gleichman, General Counsel, entered an appearance.

USCA Case #98-1480 Document #488858 Filed: 01/07/2000 Page 1 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

Before: Sentelle, Randolph and Rogers, Circuit Judges.

Opinion for the Court filed by Circuit Judge Sentelle.

Sentelle, Circuit Judge: Contractor's Sand and Gravel,

Inc. ("CSG") petitions for review of a Federal Mine Safety

and Health Review Commission ("FMSHRC") decision vacating an Administrative Law Judge's ("ALJ") award of attorneys fees and expenses against the Secretary of Labor arising

out of an underlying proceeding in which CSG had successfully defended against citations and civil penalty assessments for

alleged violations of Mine Safety Regulations. The Commission responds both that it has the jurisdiction to review the

award and that the award was improper because the conduct

of the Secretary in the underlying litigation was "substantially justified." While we agree with the Commission that it

had jurisdiction to review the award, we agree with petitioner

that the conduct of the Department of Labor in the underlying Mine Act proceedings was not substantially justified.

Therefore, for the reasons more fully set out below, we allow

the petition for review.

I. Underlying Proceedings

A. The MSHA Citations

In March of 1993, Inspector Ann Frederick of the Mine

Safety and Health Administration ("MSHA"), purporting to

act under the Federal Mine Safety and Health Act of 1977

("Mine Act"), 30 U.S.C. s 801 et seq., issued numerous citations against petitioner Contractor's Sand & Gravel, Inc. and

its general manager Eric Shoonmaker. While most citations

were dismissed or otherwise disposed of, the one underlying

the present proceeding resulted in substantial administrative

litigation. This citation charged violation of 30 C.F.R.

s 56.12025, which requires that "[a]ll metal enclosing or

encasing electrical circuits shall be grounded or provided with

equivalent protection." The citation specifically alleged that

the grounding system employed by petitioner for its crusher

was not in compliance with law and constituted "an unwarrantable failure by [the] operator to comply with the standards" of the Mine Act. Secretary of Labor v. Contractors

USCA Case #98-1480 Document #488858 Filed: 01/07/2000 Page 2 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

Sand and Gravel Supply, Inc., 18 F.M.S.H.R.C. 384, 385

(ALJ 1996) (quoting citation). The citation did not allege that

the device was not grounded, but only that the method of

grounding--that is the use of the frame of the equipment as

the conduit to the ground--"has been forbidden for over

fifteen years." Id. In fact, neither section 56.12025, nor the

Secretary's regulatory definition applicable to the grounding

requirement of section 56.12025, nor any other statute or

regulation forbade frame grounding and never had. The

regulatory definition simply defines "electrical grounding" as:

"to connect with the ground to make the earth part of the

circuit." 30 C.F.R. s 56.2 (1999).

After testing confirmed that its method of grounding complied with the regulatory definition, CSG declined to modify

the structure to comply with the Secretary's instructions, and

proceeded to contest the citation. A second MSHA inspector

issued a closure order closing the entire crushing plant until

such time as the crushing operation was properly grounded

with a fourth wire. Only after CSG incorporated a second

grounding system according to the dictates of the inspectors

did MSHA lift the closure order. On May 27, 1993, MSHA

assessed a $7,000 civil penalty against CSG and a $6,000 civil

penalty against Shoonmaker personally, in contrast with the

Secretary's average penalty proposal of $66 and previous high

penalty proposal of $81. At no time during the entire proceeding did the inspectors or any other emissary of the

Secretary conduct any test to determine whether the frame

grounding employed by CSG in fact complied with the regulatory definition. CSG and Shoonmaker contested the excessive penalty assessments as well as the underlying violation.

The Secretary then initiated civil penalty proceedings against

both before the FMSHRC.

In the Mine Act proceeding, the Secretary initially advanced a position similar to the one that Frederick had

articulated in the citation, that is, she maintained that 30

C.F.R. s 56.12025 prohibited frame grounding. Specifically,

the Secretary alleged:

USCA Case #98-1480 Document #488858 Filed: 01/07/2000 Page 3 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

The grounding system set up by [CSG] did not conform to MSHA standards or to standards recognized in

the building and construction industries. The use of

feeder and stacker frames as grounding is prohibited by

the National Electrical Code....

The use of structural frames as grounding conductors

is not recognized by MSHA....

Subsequently, in response to a pre-hearing order by the ALJ,

and in apparent recognition that section 56.12025 does not

contain any provision forbidding frame grounding, that the

regulations have never adopted the National Electrical Code,

and that the Secretary's inspectors had never conducted any

inspection to determine compliance with the actual requirements of the actual regulatory scheme, the Secretary changed

her position and alleged that MSHA would establish a violation of section 56.12025 "by showing that the stacker and

crusher conveyor motors were not properly grounded. Specifically ... that these two motors did not have a ground lead

or 'fourth wire' ... [leaving] the motors without a proper and

effective ground...."

Just as the regulations did not forbid frame grounding,

neither did they affirmatively require "fourth wire grounding." Therefore, CSG moved for a summary decision from

the ALJ. The Secretary opposed that motion and filed a

cross-motion for summary disposition, arguing that a reasonably prudent person would infer the Secretary's contended

requirements and prohibitions from the cited sections and

that the Secretary's "interpretation" was therefore entitled to

"deference."

The ALJ recognized the single issue before him as being

whether CSG's use of frame grounding to create a path for

the electrical current to the ground violated section 56.12025.

He further recognized that the cited regulation did not prohibit frame grounding and that the Secretary had never

undertaken any rulemaking to extend an interpretation of the

grounding requirement forbidding frame grounding, or conversely requiring some other method. CSG entered the

battle of summary decision motions armed with evidence that

its method did in fact meet the ground requirement set forth

USCA Case #98-1480 Document #488858 Filed: 01/07/2000 Page 4 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

in the regulatory and definitional sections of Part 56. The

Secretary came with no evidence whatsoever that the grounding method did not meet the regulatory requirements nor any

other evidence that CSG or Shoonmaker had otherwise violated the cited regulations, or any other. There being no

dispute as to any material fact, the ALJ entered summary

decision in CSG's favor. See Contractors, 18 F.M.S.H.R.C. at

389. Specifically, the ALJ found that CSG "complied with

the requirement of the cited standard by intentionally

grounding the stacker conveyor and crusher discharge conveyor motors by using the stacker and crusher frames as

conductors in carrying ground fault current to the earth."

Id. at 387. The ALJ went on to note that Part 56 "clearly

provides that 'electrical grounding means to connect with the

ground to make earth part of the circuit.' " Id. at 387-88

(quoting 30 C.F.R. s 56.2). As CSG's evidence of compliance

with the regulation was uncontested, there was nothing else

to be heard. The Secretary did not appeal.

B. The EAJA Proceedings

After prevailing in every respect in the MSHA proceeding,

CSG sought an award of its costs and its fees under the

Equal Access to Justice Act ("EAJA"), 5 U.S.C. s 504. The

Secretary resisted the award, asserting that MSHA's position

"was substantially justified" as contemplated in 5 U.S.C.

s 504(a)(1). The ALJ rejected the substantial justification

claim and entered a fees and costs award in favor of CSG.

See Contractor's Sand and Gravel, Inc. v. Secretary of Labor,

18 F.M.S.H.R.C. 1820 (ALJ 1996). The Secretary appealed

the ALJ's award to the Federal Mine Safety and Health

Review Commission. On August 22, 1998, the Commission in

a 3-to-2 decision reversed the ALJ and vacated his award of

attorneys fees and expenses to CSG. See Secretary of Labor

v. Contractors Sand and Gravel, Inc., 20 F.M.S.H.R.C. 960

(1998). The present petition brings that decision of the

Commission before us for review.

II. Analysis

The EAJA provides, in pertinent part, that a "prevailing

party other than the United States" in "an adversary adjudiUSCA Case #98-1480 Document #488858 Filed: 01/07/2000 Page 5 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

cation" is entitled to an award from the agency that conducted the adjudication of fees and expenses incurred in connection with the proceeding. 5 U.S.C. s 504(a)(1). CSG sought

and received an EAJA award from the ALJ. The Administration did not and does not contest CSG's status as a

prevailing party, but both before the ALJ and the Commission and now before this court, resisted the award on the

basis of further language in section 504(a)(1) that conditions

the entitlement of the prevailing party by stating that the

award is to be made "unless the adjudicative officer of the

agency finds that the position of the agency was substantially

justified or that special circumstances make an award unjust."

Id. The Secretary argued and the Commission held that the

Administration's position was "substantially justified" within

the meaning of the EAJA. See Contractors, 20 F.M.S.H.R.C.

at 967. CSG's petition brings before us the Commission's

reversal of the ALJ's award. CSG argues that the Commission had no jurisdiction to review the award of the ALJ, and

further that, even if the Commission had jurisdiction, it erred

in reversing the ALJ's award. While we reject the petitioner's jurisdictional argument, we agree that the Commission

erred on the merits, and therefore allow the petition for

review.

A. The Commission's Jurisdiction

Before reaching the merits of CSG's petition, we first

consider CSG's argument that the Commission did not have

jurisdiction to review the ALJ's determination that the Administration's underlying conduct lacked substantial justification. CSG argues that its view is compelled by the language

of 5 U.S.C. s 504(a)(1) to the effect that the Agency is to

enter an EAJA award in favor of the prevailing party in an

adversary adjudication "unless the adjudicative officer of the

agency finds that the position of the agency was substantially

justified." (emphasis added). CSG argues that this "plain

language" commits the substantial justification issue to the

ALJ and that the Commission was therefore without authority to review it. The respondents contend that the statute

clearly contemplates agency review of the adjudicative officer's decision. We agree.

USCA Case #98-1480 Document #488858 Filed: 01/07/2000 Page 6 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

As respondents point out, although the statute contains the

language recited by petitioner, that language does not compel

the finality that petitioner attaches to it. In fact, the statute

goes on to provide:

The decision of the adjudicative officer ... shall be made

part of the record containing the final decision of the

agency and shall include written findings and conclusions

and the reason or basis therefor. The decision of the

agency on the application for fees and other expenses

shall be the final administrative decision under this section.

5 U.S.C. s 504(a)(3).

As the respondents argue, this language is far more consistent with a congressional contemplation of an administrative

law judge decision subject to the normal agency review than

it is with an ALJ decision legislatively vested with administrative finality. Concededly, it is true as petitioner argues that

the statute could literally encompass a model in which the

ALJ's decision would be final on the discrete question of

substantial justification, and would then become part of the

record upon which the final administrative decision designated in subsection (a)(3) would rest, but in which the other

elements of the fee award not committed to the ALJ would be

finally determined only by the highest agency decision maker.

However, the language is equally consistent with the model

forwarded by respondents in which the Commission not only

makes the final decision as to all other elements, but reviews

along with those elements the substantial justification finding

entered by the ALJ in the first instance.

Granted, we are not bound to defer to the agency's construction. The rule of Chevron U.S.A., Inc. v. Natural

Resources Defense Council, 467 U.S. 837 (1984), does not

apply. This is a statute of general application and not one

committed to administration by the Commission or the Secretary. We therefore make this choice between or among

possible alternatives as a classic question of law committed to

the court for decision, not the agency. See, e.g., Scheduled

Airlines Traffic Offices, Inc. v. Dep't of Defense, 87 F.3d 1356,

USCA Case #98-1480 Document #488858 Filed: 01/07/2000 Page 7 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

1361 (D.C. Cir. 1996). However, without deference, we find

the Commission's interpretation to be the more compelling on

the jurisdictional question. There is nothing extraordinary

about an administrative agency reviewing the findings of its

ALJ. Indeed, that is the normal procedure. (It would be so

extraordinary for a finding to be committed to an ALJ

without review that CSG has been able to offer no example.)

We think it unlikely that if Congress intended to adopt such

an extraordinary departure from the norm it would do so by

implication. We therefore agree with the Commission that 5

U.S.C. s 504(a)(3) commits to its review the decision of the

ALJ.

B. The Merits

The majority of the Commission in its 3-to-2 decision

reversing the ALJ's award of fees to CSG began by faulting

the approach of the ALJ in determining whether the Administration's position had been justified. According to the Commission "the judge's failure to independently review the

Secretary's position in the EAJA proceeding and apply a

distinct analysis under the appropriate EAJA standard was

erroneous and in itself, precludes affirmance of the judge's

determination." Contractors, 20 F.M.S.H.R.C. at 968 (emphasis in original). The Commission in this criticism addresses the ALJ's statement that " '[i]n the underlying proceeding,

I clearly indicated that the Secretary's position was unreasonable.... I again find that the Secretary's legal theory was

not reasonable and that there was no reasonable connection

between the Secretary's legal theory and the undisputed

facts.' " Id. (quoting Contractor's, 18 F.M.S.H.R.C. at 1822

(emphasis added by the Commission)). We would state at the

outset that we are a bit baffled by the Commission's approach

to its review of the ALJ's decision. The language of the ALJ

italicized by the Commission demonstrates on its face that he

did precisely what the Commission suggested he had not

done. That is, he reviewed for the second time an Administration position he had already found unreasonable and found

that it still was. As we have stated before, "[i]n some cases,

the standard of review on the merits is so close to the

reasonableness standard applicable to determining substantial

USCA Case #98-1480 Document #488858 Filed: 01/07/2000 Page 8 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

justification that a losing agency is unlikely to be able to show

that its position was substantially justified." F.J. Vollmer Co.

v. Magaw, 102 F.3d 591, 595 (D.C. Cir. 1996). In F.J.

Vollmer Co., an agency's application of its own regulation had

been held to be unreasonable. In the subsequent EAJA

review, a district judge concluded that the government sustained its burden of establishing that its action had been

substantially justified. We reversed, suggesting that it would

be neither surprising nor erroneous that a judge's conclusion

at the second stage would be consistent with his conclusion at

the first. Just so here.

To say that the Commission erred in its approach to the

ALJ's decision under review, does not, of course, answer our

question as to whether it erred in the merits review before it

and now before us. That review is governed by a principle

stated in Cinciarelli v. Reagan, 729 F.2d 801 (D.C. Cir. 1984):

"Once a plaintiff has been shown to be a prevailing party, the

burden is on the government to show that its litigation

position was substantially justified on the law and the facts."

Id. at 806. The Commission divided that inquiry into its two

component parts and expressly held that "the Secretary's

position had a reasonable basis in law," Contractors, 20

F.M.S.H.R.C. at 969, and that "the Secretary's position had a

reasonable basis in fact," id. at 973.

The Commission first expressed the reasonable proposition

that "[w]e begin our analysis of whether the Secretary's

position was substantially justified by examining whether her

position had a reasonable basis in law." Id. at 969. Unfortunately, the Commission's application of its approach was not

equal to the correctness of its statement. The Commission's

determination that the Secretary's position had a reasonable

basis in law is based entirely on an analysis which examines

the purpose of the regulations in terms of the overriding

objective of safety in the mine, and then goes on to conclude

that the Secretary, by presenting evidence that frame

grounding was not the safest way to ground equipment,

therefore had established a substantial justification in law.

This erroneous application echoes the fundamental error of

the MSHA's acts in the underlying controversy, and we might

USCA Case #98-1480 Document #488858 Filed: 01/07/2000 Page 9 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

add recreates the fundamental error about which we have

cautioned this and other agencies on prior occasions in other

contexts.

What the Secretary successfully defended before the Commission and what we reject here is precisely the same sort of

arbitrary overreach we previously rejected in Secretary of

Labor v. FMSHRC, 111 F.3d 913 (D.C. Cir. 1997). In that

case, the Administration had sought to enforce a citation

against a mine operator for collections of trash outside the

active workings of a mine as violative of a regulatory scheme

which by its terms "forbid[ ] accumulations of combustible

materials in active workings." Id. at 918 (citing 30 C.F.R.

s 75.400). Nothing about the rules promulgated by the

Secretary forbade the outside accumulation by the regulated

mine. The Commission, acting far more lawfully than in the

case before us, rejected the Secretary's attempt to penalize

accumulations not violating the rules. Before the Commission and before us, the Secretary urged the dangerousness of

collections of trash outside active workings. Although we

reversed a portion of the Commission's decision on other

grounds, we upheld its rejection of the Secretary's argument

on this point saying "[i]f collections of trash outside active

workings can be both permissible and hazardous, the fault lies

neither with the Mine Safety Act nor with the Commission's

legal reasoning, but with the Secretary's ... regulation,"

which did not forbid the relevant collections. Id. at 918.

Just so here.

As the dissenting Commissioners pointed out, the ALJ

properly noted that "under the plain meaning of section

56.12025, the Secretary failed to establish that CSG violated

the regulation." Contractors, 20 F.M.S.H.R.C. at 979 (Riley

& Verheggen, Comm'rs, dissenting) (citing 18 F.M.S.H.R.C.

at 387-88). The regulation required that the equipment be

grounded. The Secretary offered no evidence--none whatsoever--that the motors in question were not in fact grounded

as required by the regulation. The regulatory definition of

grounding simply defines "electrical grounding" as "to connect with the ground to make the earth part of the circuit."

30 C.F.R. s 56.2. The Administration not only did not prove

USCA Case #98-1480 Document #488858 Filed: 01/07/2000 Page 10 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

any failure to make the earth part of the circuit but offered

no evidence whatsoever on the subject and indeed did not

conduct any testing to determine whether CSG was in compliance or not. CSG offered undisputed evidence that it was.

To excuse its noncompliance, the Administration does as it

did in the trash collection case we discussed above: that is, it

discusses the safety implications of the practice which it

purports to punish. This discussion would be well and good if

the MSHA were engaged in a rulemaking to outlaw frame

grounding or to require fourth-wire grounding. But, as the

dissenting Commissioners pointed out, in at least two of its

uninterrupted prior losses on this same controversy, Administrative Law Judges have advised the Secretary that " ' "[i]f

the Secretary believes frame grounding should be prohibited,

the Secretary should initiate appropriate rulemaking to

achieve this goal." ' " Contractors, 20 F.M.S.H.R.C. at 983

(Riley & Verheggen, Comm'rs, dissenting) (quoting Secretary

of Labor v. F. Palumbo Sand & Gravel, 19 F.M.S.H.R.C. at

1440, 1444 (ALJ 1997) (quoting Contractors, 18 F.M.S.H.R.C.

at 388)). The dissenting Commissioners agree. So do we.

Nonetheless, the Secretary has not. It is not substantially

justifiable for an agency to persistently prosecute citizens for

violating a regulation that does not exist.

To track again the dissenting Commissioners, we note that

while a " 'string of losses' " is not determinative, it " 'can be

indicative' that an agency's position lacks substantial justification." Contractors, 20 F.M.S.H.R.C. at 983 (Riley & Verheggen, Comm'rs, dissenting) (quoting Pierce v. Underwood, 487

U.S. 552, 569 (1988)). Here, as the ALJ noted, every time

the Secretary has presented the theory that the use of a

particular grounding method other than that preferred by the

Secretary is violative of the regulation, the responsible Administrative Law Judge has considered that theory not reasonable. See Secretary of Labor v. Tide Creek Rock, Inc., 18

F.M.S.H.R.C. 390, 396-97 (ALJ 1996); Secretary of Labor v.

Mulzer Crushed Stone Co., 3 F.M.S.H.R.C. 1238 (ALJ 1981);

McCormick Sand Corp. v. Secretary of Labor, 2

F.M.S.H.R.C. 21 (ALJ 1980). Again, if all of these ALJs are

unwilling to buy the Secretary's expansive theory that the

USCA Case #98-1480 Document #488858 Filed: 01/07/2000 Page 11 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

commendable goal of promulgating safety permits the Secretary to prosecute activity which violates no existing rule, it is

time for the Secretary to repair to rulemaking, not to bring

one more unsupportable citation. The bringing of one more

is not substantially justified.

The Secretary's only other theory to sustain the Commission's conclusion of substantial justification is to advance the

proposition that the Secretary's interpretation of the grounding rule as requiring certain types of grounding and outlawing others not mentioned anywhere in the rules is an interpretation of longstanding. In support of this, neither the

Secretary nor the Commission majority have been able to

point to any interpretation at any time, yet they continue to

insist in the words of the citation served on petitioners, that

"[f]rame grounding has been forbidden for fifteen years."

The best support the Secretary can offer for this proposition

is the declaration of a single engineering employee of MSHA

who declared that in his tenure with the Administration the

Administration had never allowed the frames of mining equipment to serve as equipment grounding conductors. It is not

at all clear how the Secretary or the Commission concludes

that the testimony of a witness as to what his agency will

allow determines the standard of law against which citizens

can be forced to defend. Be that as it may, even assuming

that his understanding constituted agency policy, this would

not create sufficient grounds for substantial justification. As

we stated in F.J. Vollmer Co., "we do not see how merely

applying an unreasonable statutory interpretation for several

years can transform it into a reasonable interpretation." 102

F.3d at 598. Even more, we do not see how grafting onto the

plain language of a regulation a prohibition neither stated nor

implied in that regulation can convert the enforcement of that

imaginary rule into a substantially justified governmental act.

We note only in passing that the Commission's assertion

that the Secretary's position had a reasonable basis in fact

need not delay us, as we have demonstrated in the discussion

of the law that the Secretary's position had no basis in fact.

The fact that CSG was employing frame grounding is irreleUSCA Case #98-1480 Document #488858 Filed: 01/07/2000 Page 12 of 13
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

vant to substantial justification once it is established that the

use of that methodology is not a per se violation. The failure

of the Secretary to conduct testing, let alone offer evidence

that the testing demonstrated a violation of the real regulation, finishes the possibility that some reasonable basis in fact

existed. Furthermore, having dispensed with the reasonable

justification on the basis of law, we need not demonstrate that

the Secretary's actions fail the substantial justification standard on other grounds as well. See Air Transport Ass'n of

Canada v. FAA, 156 F.3d 1329, 1332 (D.C. Cir. 1998) (per

curiam) (rejecting a government argument that a claimant

should be denied an EAJA award where the government's

approach "was substantially unjustified on only one of several

possible bases").

Like the ALJ and the dissenting Commissioners, we have

no occasion to consider whether the extraordinarily large

fines imposed were independently substantially justified, given the substantial unjustification of the underlying citations.

III. Conclusion

For the reasons set forth above, we reverse the decision of

the Commission, and order that the award determined by the

ALJ be restored to petitioner. We remand this case for

further proceedings to determine the amount of an award to

compensate petitioner for the costs of pursuing the petition

for review in this court.

So ordered.

USCA Case #98-1480 Document #488858 Filed: 01/07/2000 Page 13 of 13