Guidelines for Contesting Citations, and When to Use Them.
I am often asked for advice on whether or not to contest a citation. The answers are always different, but the principles are all the same. As such, I thought I would take this opportunity to try to lay those out again for everyone to consider, along with a couple of thoughts about the process in general.
As many of you already know, unless the penalty is extremely high, the penalties alone are very seldom the sole reason why a particular citation is challenged. However, I’m not sure that everyone looks at the penalties in a way that reflects their true impact on operations. The key to a true understanding of the impact of penalties is the recognition of the fact that they are not deductible expenses. Because of that, they come out of the net profits, rather than the gross income. Thus, the amount of the penalties can be directly correlated to the number of tons produced. In other words, if your net profit per ton is $1.00 (remember, I’m a lawyer so I have to use easy math in my examples), then a $100 penalty is equivalent to the loss of 100 tons of production. In other words, the penalties may have more impact than one would initially realize. This not only helps to figure out what effort should be devoted to contesting penalties but it also helps to understand the true budgetary impact of compliance costs in terms of citations that are avoided.
Additional Enforcement Consequences
At this point, everyone should understand the importance of contesting citations where placement in the Pattern of Violations program is in play. However, an in-depth understanding of how the penalty system works will result in better decisions on when to contest a given citation. For instance, there can be significant consequences resulting from repeated violations of the same standard. Penalty points are added after an operator accumulates six final orders for violation of the same standard over a 15-month period. The points that are added after that depend on repeat violations per inspector day (RPID) for operators and simply based on additional citations for contractors.
The Mine Safety and Health Administration’s (MSHA) website will only alert you to how many final violations of a given standard you have in the last 15 months. It does not tell you where in the 15-month period they fall, nor does it tell you how many citations are alleging violations of that standard are pending but have not yet become final. It is essential to be aware of both of those factors if you want to make a truly informed decision as to whether or not a citation should be contested in order to avoid or reduce consequences from repeat violations. One hint is that it is sometimes worth contesting the citation just to see if the standard can be changed in order to avoid additional future penalties resulting from this aspect of the penalty regulations.
By far, the most important factor in contesting a citation is either the cost of the abatement that MSHA is expecting or the effect that abatement will have on continuing operations. It is very often the case that the abatement of a legally questionable citation with a relatively small penalty turns out to be extraordinarily expensive or disruptive to operations. In a number of cases, we have seen MSHA expect abatements that would literally result in a mine shutdown because of additional costs or reduced production associated with the abatements.
This is particularly frustrating because the Mine Act doesn’t allow the method of abatement, but rather, only “the reasonableness of the length of time for abatement.” Clever lawyers have figured out ways to challenge the method of abatement indirectly, but they are relatively high risk. In other words, those types of challenges ought to be reserved for cases where the abatement would have a significant negative impact and the challenger has a relatively strong case on the merits. Frankly, I have proposed this strategy only a handful of times during my 35-plus years of practice and it has never gone all the way to trial. In each case, a satisfactory compromise has been worked out that avoided litigation.
Collateral Enforcement Consequences
There are plenty of enforcement consequences besides increased penalties (for instance the unwarrantable series, pattern of violations, failure to abate orders) that need to be addressed or avoided, if at all possible. Each of these issues has a number of its own unique characteristics that would drive a legal strategy. In fact, there are so many of them, and the consequences are so well known, that there is no benefit to going through them in the general terms that this article demands. The bottom line is that good monitoring of your various enforcement issues will lead to better results at reduced legal costs.
I can’t leave this out. Sometimes a citation is so outrageous or meritless that one feels that it must be challenged lest MSHA run roughshod over a given operation. The decision to challenge a citation purely out of principle is particularly difficult when the citation in question has a low penalty, the solicitor won’t settle and the cost of litigation could be high.
Given all of these issues, you might be asking when you should litigate or simply try to settle. The answer is that you shouldn’t make a decision as to whether to challenge a given citation unless you know in advance what result would be ideal and desirable. We often find that those decisions are being made in the midst of the process and, to the extent they haven’t been made in advance, they become increasingly difficult.
The litigation process is never very satisfying. But the bottom line is that the more you know about the issues, the more objective you are about what you want, and the better you understand the process, the less frustrating it will be.