Court Opinion

ID: 185066
Source: CourtListenerOpinion
Date Created: 2011-02-05 02:27:23+00
Date Added: 2024-06-11T17:26:12.929599
License: Public Domain

199 F.3d 1335 (D.C. Cir. 2000)
Contractor's Sand and Gravel, Inc.,Petitionerv.Federal Mine Safety and Health Review Commission and Secretary of Labor, Respondents
No. 98-1480
United States Court of AppealsFOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 10, 1999Decided January 7, 2000

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.
Before:  Sentelle, Randolph and Rogers, Circuit Judges.
Opinion for the Court filed by Circuit Judge Sentelle.
Sentelle, Circuit Judge:

1
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

2
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. § 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.  § 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 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. § 56.2 (1999).

3
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.

4
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. § 56.12025 prohibited frame grounding.  Specifically,  the Secretary alleged:

5
The grounding system set up by [CSG] did not con-form 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....

6
The use of structural frames as grounding conductors is not recognized by MSHA....

7
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."

8
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 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. § 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

9
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. § 504.  The  Secretary resisted the award, asserting that MSHA's position  "was substantially justified" as contemplated in 5 U.S.C.  § 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

10
The EAJA provides, in pertinent part, that a "prevailing  party other than the United States" in "an adversary adjudication" 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. § 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

11
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. § 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.

12
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:

13
The decision of the adjudicative officer ... shall be madepart of the record containing the final decision of theagency and shall include written findings and conclusionsand the reason or basis therefor.  The decision of theagency on the application for fees and other expensesshall be the final administrative decision under this sec-tion.

14
5 U.S.C. § 504(a)(3).

15
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.

16
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, 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. § 504(a)(3) commits to its review the decision of the  ALJ.

B. The Merits

17
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 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.

18
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.

19
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 add recreates the fundamental error about which we have  cautioned this and other agencies on prior occasions in other  contexts.

20
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.  § 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.

21
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. § 56.2.  The Administration not only did not prove 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.

22
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 rule making 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.

23
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 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.

24
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.

25
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 irrelevant 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").

26
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

27
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.

28
So ordered.