Rock Products

NOV 2014

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www.rockproducts.com ROCK products • NOVEMBER 2014 41 MSHA's Decision is Unreviewable Judge McCarthy's Aug. 5, 2014, decision adopts the D.C. Cir‐ cuit's and Fourth Circuit's holdings that MSHA's decision on whether to cite a production operator, an independent con‐ tractor, or both for independent contractor violations is "com‐ mitted to agency discretion by law" and therefore is unreviewable by the Commission or the appellate courts. See Speed Mining, Inc., v. FMSHR, 528 F.3d 310 (4th Cir. 2008); Twentymile Coal Co., 456 F.3d at 155. While Speed Mining and Twentymile addressed MSHA's author‐ ity to issue civil penalty citations, Judge McCarthy concluded that the courts' underlying rational was equally applicable to MSHA's decision to issue imminent danger orders. The conclusion that MSHA's decision is not reviewable is based on long‐standing U.S. Supreme Court case law, which has ruled that "review [of an agency's decision] is not to be had if the statute is drawn so that a court would have no meaningful stan‐ dard against which to judge the agency's exercise of discretion." Heckler v. Chaney, 470 U.S. 821, 830 (1985). Judge McCarthy, as well as the D.C. Circuit and Fourth Circuit held that the Mine Act and MSHA's enforcement guidelines in the PPM do not provide a meaningful standard. In support of this understanding, Judge McCarthy concluded that MSHA's en‐ forcement guidelines "are merely a general statement of policy that do not curtail [MSHA's] discretion" and "lack the certainty to bind the Secretary's discretion in choosing which party to issue a citation and order." See Cloverlick Coal Co. Judge McCarthy ruled that "[t]he four enumerated instances when the Secretary may issue a citation or order to a produc‐ tion operator are merely illustrative examples to put the in‐ dustry on notice of when it is 'normally appropriate' to deviate from the standard procedure of issuing a citation to the party responsible for the hazardous condition or practice." Id. Thus, MSHA's decision to issue an imminent danger order or penalty citation against a mine operator for independent contractor vi‐ olations is unreviewable, even when MSHA departs from its own enforcement policies. Under these recent court rulings, a production operator is fore‐ closed from requesting that the Commission or the appellate courts review MSHA's decision‐making for abuse of discretion or fairness, although the production operator still retains the right to challenge the existence of the violation or imminent danger, and the proposed penalty. Interestingly, this understanding is in direct opposition to the Ninth Circuit's holding in Cyprus Indus. Mineral Co., 664, F.2d at 1120, which applied an abuse of discretion test to MSHA's de‐ cision to issue an imminent danger order to a production op‐ erator for violations committed by its independent contractor. It is also in direct opposition to the Commission's earlier argu‐ ments that it should and does have the ability to review MSHA's ability to issue citations under the purpose and scope of the Mine Act. While the Cyprus decision is over 30 years old, op‐ erators or contractors located in the Ninth Circuit might wish to challenge Judge McCarthy's decision to see whether that Cir‐ cuit might take a position different from that taken by the D.C. Circuit and the Fourth Circuit. Contractual Strategies to Reduce Risk While a mine operator cannot contractually waive its liability under the Mine Act or challenge MSHA's issuance of an order or citation for hazardous conditions created by independent con‐ tractors, clearer and stronger contractual provisions can be used to protect both parties' financial and employee interests and reduce the likelihood that a citation will be issued. Liability from violations committed by other parties can be re‐ duced by reviewing the contracts and ensuring that the fol‐ lowing provisions are included: • Require each party to comply with all requirements under the Mine Act and MSHA standards and regulations. This is commonly done by simply requiring that the party comply with all state, federal or local laws and regulations. In view of the law surrounding liability for MSHA violations, you should carefully consider specific language regarding com‐ pliance with MSHA regulations. • Require independent contractors to issue a plan to the mine operator about how it will complete the work in a safe man‐ ner and comply with all MSHA requirements. • Require the independent contractor to provide safety records and prior MSHA citation history. • Require the independent contractor to train employees on how to comply with applicable MSHA standards and re‐ quirements, and require documentation that such training has been performed. • Require each party and its employees to stop work where an MSHA violation is obvious or if there is imminent danger of death or serious injury regardless of which party created it. • Require the independent contractor to create and maintain all required reports and documentation showing compliance with Part 50 reporting and recordkeeping requirements, and to provide documentation to the mine operator that such records are being created and maintained. Also require that the operator have the right to audit such records upon request. • Require that each party correct any hazards or violations within its control regardless of whether identified by the in‐ dependent contractor or the mine operator in a reasonable timely manner and at no cost to the other party. • Require each party to indemnify the other against MSHA ci‐ tations or imminent danger orders issued as a result of the other's actions, including, where appropriate, the cost of at‐ torney's fees for defending such litigation. The use of standard contract language in these situations may well have high cost consequences for either party, even where each has a robust contractor safety and compliance program. What this means is that standard contract lan‐ guage may not be applicable or help solve disputes in this situation. Remember that contracts are intended to address disputes before they happen. If care is not taken to account for these unique circumstances, it is inevitable that that goal will not be achieved. E

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