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ALJ Has Right to Refuse Settlements and to Consider the Deterrent Effect Of Civil Penalties

By Ellen Smith

The Federal Mine Safety and Health Review Commission ruled that its administrative law judges are permitted to consider the deterrent effect of a proposed penalty when deciding whether or not to approve a settlement, and an ALJ did not abuse her authority when requesting that the Solicitor’s Office turn over additional information before the settlement was approved.

The case was one of first impression on whether a penalty could be increased as a deterrent. The ruling was issued by Chairman Mary Lu Jordan, Commissioner Patrick Nakamura and former Commissioner Robert Cohen, who said in the majority opinion that “deterrence is a principal basic to and underlying the entire statutory scheme of imposing civil penalties.” Commissioner Michael Young and former Commission Michael Duffy dissented, saying that deterrence is implicit in the application of the six statutory civil penalty criteria.

The decision stems from three cases where ALJ Margaret Miller rejected a settlement when the Dept. Of Labor Solicitor's Office agreed to an 80 percent reduction, but did not provide a sufficient explanation for the reductions.

The ALJ said the reduction “would not adequately effectuate ‘the deterrent’ purpose underlying the Act's penalty assessment scheme," and that such extreme reductions “would encourage operators to contest the penalties in the hope of receiving such a reduction.” Miller also stated that ALJs are required by Commission precedent to provide a sufficient explanation when a penalty assessment diverges substantially from a proposed penalty, and in these settlements the Solicitor's Office did not provide a sufficient explanation for the penalty reductions.

The Solicitor’s Office claimed that a judge may not consider deterrent effects of penalty amounts agreed to by the parties as a factor independent of the six statutory criteria in section 110(i) of the Mine Act. The mining company argued that the ALJ erroneously usurped the Secretary’s prosecutorial role, and that an ALJ has no authority to review underlying modifications of citations.

On the issue of reviewing a settlement, the Commissioners said, “The plain language under 110(k) of the Mine Act explicitly authorizes the Commission to review a proffered settlement of a contested penalty.” The majority also quoted the legislative history showing one of the stated goals of the revamped Mine Act in 1977 was to bring transparency to the entire civil penalty process and the importance of an ALJ review of settlements.

The majority opinion pointed out that in 1980 the Commission deleted a requirement that an ALJ had to discuss the six statutory criteria. “In deleting this requirement, the Commission stated the amendment was ‘intended to enhance the flexibility of the Judges to approve settlements.’ We believe such flexibility should also include the option of explicitly taking into account the deterrent effect of the penalty when reviewing a settlement proposal.”

The Commission also relied on federal court cases stating that “deterrence provided by monetary sanctions is essential” to the enforcement of the Mine Act.

“Simply put, we refuse to require our Judges to apply blinders when reviewing settlement proposals, and to ignore the central and most obvious purpose of civil penalties – to ensure operator compliance with safety measures – when deciding whether such penalties are appropriate,” the majority wrote. “Deterrence is a principle basic to and underlying the entire statutory scheme of imposing civil penalties. Thus, deterrence can and should infuse the Judge's consideration of whether or not to approve a settlement.”

Ellen Smith is the owner of Legal Publication Services, publisher of Mine Safety & Health News, She has been covering mining issues since 1987 and has won 31 journalism awards for her reporting, including the 2010 Magnum Opus Award for Outstanding Achievement in Custom Media. Ellen can be reached at 585-721-3211, or at This email address is being protected from spambots. You need JavaScript enabled to view it..