You Have The Right to Remain Concerned: The clash between MSHA special investigations and civil penalty cases WV Coal Association Mining Symposium January 27, 2016 Robert Huston Beatty, Jr. Dinsmore & Shohl LLP 215 Don Knotts Blvd., Suite 310 Morgantown, WV

Dinsmore uses reasonable efforts to include accurate, complete and current (as of the date posted) information in this presentation. The information herein speaks as of its date. Accordingly, information may no longer be accurate as the passage of time may render information contained in, or linked to, this presentation outdated. Dinsmore is not responsible or liable for any misimpression that may result from your reading dated material. This presentation is not a substitute for experienced legal counsel and does not provide legal advice or attempt to address the numerous factual issues that inevitably arise in any dispute. RESPONSIBLE ATTORNEY: Robert Huston Beatty, Jr. 2

Overview Of An MSHA Civil Penalty Case MSHA civil penalty cases begin with MSHA issuing enforcement actions for alleged violations of the Mine Act and MSHA regulations. Those violations are eventually assessed a civil penalty by the Office of Assessments. Commission civil penalty cases originate from an operator’s challenge of the enforcement actions under Section 105(a) of the Mine Act. It is difficult to determine the exact amount of time MSHA will take to assess an operator’s citations and orders. Over the past several years MSHA has significantly reduced the amount of time to assess civil penalties (with the exception of special assessments). 3

Timeframes For Processing MSHA Civil Penalty Cases Following penalty assessment the timeframes for initiating an operator challenge, and moving the case to a Commission Administrative Law Judge (“ALJ”) are well established by the Federal Mine Safety and Health Review Commission’s (“Commission”) Procedural Rules. The operator has 30 days after receipt of the proposed penalty assessment to notify the Secretary of its intent to contest the proposed assessment (Commission Procedural Rule § ). Within 45 days of the receipt of a timely contest of a proposed penalty assessment, the Secretary must file a Petition for Assessment of Civil Penalty with the Commission(Commission Procedural Rule § ). Within 30 days of the operator’s receipt of the Petition for Assessment of Civil Penalty, the operator must file an Answer (Commission Procedural Rule § ). From receipt of the proposed assessment to the filing of the answer is approximately 105 days. At this point the case is generally ready for assignment to a Commission ALJ. 4

Overview Of MSHA’s 110 Investigation Nearly all MSHA 110 investigations stem from the issuance of elevated enforcement actions which include: 104(b) Failure to abate orders; 104(d) Unwarrantable Failure citations and orders; 104(e) Pattern of Violation orders; 104(g) Training orders; 107(a) Imminent danger orders; And also: A mine accident; A complaint (such as false reporting or equipment misrepresentation); A review of citations/orders for possible knowing or willful violations; Citations issued for working in violation of a withdrawal order. 5

Overview of An MSHA 110 Investigation MSHA Elevated Enforcement Actions issued Three year average (all MSHA)3537 Three year average (Coal): 1415 Three year average (Metal/Non Metal)2122 MSHA elevated enforcement actions provide plenty of opportunities for special investigations. 6

Mine Act Section 110(c) A primary source of MSHA special investigations arise from Section 110(c) which states: (c) Whenever a corporate operator violates a mandatory health or safety standard or knowingly violates or fails or refuses to comply with any order issued under this Act or any order incorporated in a final decision issued under this Act, except an order incorporated in a decision issued under subsection (a) or section 105(c), any director, officer, or agent of such corporation who knowingly authorized, ordered, or carried out such violation, failure, or refusal shall be subject to the same civil penalties, fines, and imprisonment that may be imposed upon a person under subsections (a) and (d). 7

Timeframes For Processing MSHA 110 Investigations MSHA’s stated goal is to conduct comprehensive investigations as “expeditiously as possible” in accordance with the timeframes established in MSHA’s Special Investigations Procedures Handbook (Chapter 4). All timeframes for 110 investigations are initiated from the date of the issuance of the citation/order, or from the date when MSHA had actual notice of the subject incident. Within 30 calendar days from issuance of the citation/order a determination must be made by the DM whether to initiate an investigation or take no further action. 8

Timeframes For Processing MSHA 110 Investigations All section 110 investigations must be initiated within 60 calendar days of the issuance of the underlying citation/ order. The investigation will be considered initiated when the investigator makes personal contact with a potential witness. Within 150 calendar days a district-recommended case must be submitted to Technical Compliance and Investigation Office (“TCIO”). Within 220 calendar days the 110(c) case is forwarded to the Office of Assessments. Within 240 calendar days criminal referrals are forwarded to the DOJ. If the required deadline cannot be met the DM will submit an extension request in writing with valid justification to TCIO. 9

Timeframes For Processing MSHA 110 Investigations Unlike a civil penalty case MSHA’s special investigation process is not subject to the timeframes established by the Commission’s Procedural Rules. The timeframes established in MSHA’s Special Investigations Procedures Handbook are routinely ignored by MSHA. Over the past six or seven years, MSHA’s delay in the 110 investigation process seldom impacted civil penalty cases because of the Commission’s backlog. Commission ALJ’s were able to dodge the clash of 110 and civil penalty cases by granting defense counsel’s stay request in the civil penalty case pending MSHA’s completion of the 110 investigation. Approximately two years ago a Commission ALJ publically highlighted the impact MSHA’s delay was having on civil penalty cases. He urged the DOL to remedy the problem as soon as possible. 10

Timeframes For Processing An MSHA 110 Investigation Little has changed with MSHA’s processing of 110 investigations over the past couple of years. Delays are common and sometimes extend for years. Defense counsel is now experiencing an about face at the Commission as ALJ’s are beginning to deny stay requests. Why? It appears the Commission’s backlog has been reduced to the point that Commission ALJ’s are now looking for cases to fill their dockets. 11

Timeframes For Processing An MSHA 110 Investigation In a recent case we requested a stay in the civil penalty case. MSHA had not completed the 110 investigation, and we argued the penalty case should be delayed so the parties could consolidate the two matters into a single hearing- the judicial economy argument. The ALJ initially granted the stay request only to later rescind his decision and order the parties to initiate discovery in the civil penalty case even though penalties had not been issued against the operator’s agents in the 110 matter. In essence the ALJ stated that the Commission has more time now to hear cases and he was not going to use judicial economy as a reason to consolidate the operator and agent cases - instead, there is a real likelihood of two separate hearings. So much for due process and judicial economy! 12

Issues Created By The Clash Between Civil Penalty Cases And 110 Investigations For Mine Operators: Potential for substantial increases in legal fees and expenses for two hearings before the Commission due to the ALJ’s refusal to stay the civil penalty case. Impact on the operator’s ability to defend elevated enforcement actions as a result of forced discovery in the civil penalty case: Potential issues with operator agents verifying sworn discovery responses in the civil penalty case. Potential issues with operator agents providing sworn deposition testimony in the civil penalty case. Potential issues with operator agents providing sworn testimony in the civil penalty hearing before the ALJ. 13

Issues Created By The Clash Between Civil Penalty Cases And 110 Investigations Possible discontinuation of the “joint representation agreements” between operator’s counsel and agents due to potential conflict of interest issues. Commission ALJ denials of stay orders will also likely: Empower MSHA to continue its practice of ignoring the timelines established to insure investigations are conducted expeditiously. *Provide additional incentive for MSHA to delay 110 investigations to capitalize on evidence they obtained during discovery in the civil penalty case. Provide additional incentive for MSHA to open more 110 investigations to gain an advantage in settling operator challenges to elevated enforcement actions – “the swap.” 14

Issues Created By The Clash Between Civil Penalty Cases And 110 Investigations For Operator Agents All of the issues listed above are applicable to agents of mine operators, as well as the following: MSHA 110 investigations typically result in monetary penalties against operator agents. However, the statute’s language provides MSHA with far broader authority. Any director, officer, or agent of such corporation who knowingly authorized, ordered, or carried out such violation, failure, or refusal shall be subject to the same civil penalties, fines, and imprisonment that may be imposed upon a person under subsections (a) and (d).” The reference in the language above regarding possible imprisonment under subsection (d) is problematic depending on the facts surrounding the underlying elevated enforcement action. 15

Issues Created By The Clash Between Civil Penalty Cases And 110 Investigations The threat of criminal sanctions, however slight, highlights the significance of an AJL’s order forcing discovery in a civil penalty case prior to MSHA concluding its 110 investigation. What about MSHA 110 investigative interviews? MSHA 110 investigative interviews are voluntary and are not sworn statements by the agent. Discovery depositions on the other hand are involuntary and the witness is required to take a sworn oath. 16

Tips For Dealing With The Clash Between MSHA Civil Penalty Cases And 110 Investigations For operators: Avoid situations where MSHA can issue elevated enforcement actions. Educate and train foreman and other operator agents on the elements of elevated enforcement actions, and the 110 investigation process. “Lawyer up” operator agents as soon as they are identified in an MSHA 110 investigation. Consider separate counsel for the agents to avoid potential conflicts. Continue to seek stays in the civil penalty case with Commission ALJ’s. 17

Tips For Dealing With The Clash Between MSHA Civil Penalty Cases And 110 Investigations For Operator Agents: Seek legal counsel immediately if you are named in a 110 investigation. Refrain from discussing the 110 investigation with MSHA until you are fully advised of your rights and responsibilities. Discuss with counsel whether or not you will provide an interview statement to the MSHA investigator. Remember – it is voluntary. Be keenly aware of the possibility of the overlap between the operator’s civil penalty case and MSHA’s 110 investigation. 18

Tips For Dealing With The Clash Between MSHA Civil Penalty Cases And 110 Investigations If you are asked to verify discovery requests in a civil penalty case explore options with the operator to have someone outside of the 110 investigation do the verification. If you receive a deposition notice in a civil penalty case related to an open 110 investigation consider discussing the following options with your counsel: Seeking a protective order from the ALJ in the civil penalty case. Inquire about any potential rights you may have under the Fifth Amendment. The Fifth Amendment typically applies in criminal cases, but an argument can be made that it also applies in certain civil administrative proceedings. In re Gault 387 U.S. 1; 87 S. Ct. 1428; 18 L. Ed. 2d 527; 1967 U.S. Lexis 1478; 40 Ohio Op. 2d, 178 December 6, 1966, Argued May 15, 1967, Decided. Use of the Fifth Amendment should only be consider with the advice of counsel. 19