Criteria and Procedures for Proposed Assessment of Civil Penalties, 13592-13646 [07-1402]

Agencies

• DEPARTMENT OF LABOR
• Mine Safety and Health Administration

[Federal Register Volume 72, Number 55 (Thursday, March 22, 2007)]
[Rules and Regulations]
[Pages 13592-13646]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 07-1402]



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Part IV





Department of Labor





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Mine Safety and Health Administration



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30 CFR Part 100



Criteria and Procedures for Proposed Assessment of Civil Penalties; 
Final Rule

Federal Register / Vol. 72, No. 55 / Thursday, March 22, 2007 / Rules 
and Regulations

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DEPARTMENT OF LABOR

Mine Safety and Health Administration

30 CFR Part 100

RIN 1219-AB51


Criteria and Procedures for Proposed Assessment of Civil 
Penalties

AGENCY: Mine Safety and Health Administration (MSHA), Labor.

ACTION: Final rule.

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SUMMARY: This final rule revises MSHA's existing civil penalty 
assessment regulations and implements the civil penalty provisions of 
the Mine Improvement and New Emergency Response (MINER) Act of 2006.
    This final rule will increase mine operator compliance with the 
Federal Mine Safety and Health Act of 1977 (Mine Act), as amended by 
the MINER Act, and the agency's safety and health standards and 
regulations, thereby improving safety and health for miners.

DATES: Effective Date: This final rule is effective April 23, 2007.

FOR FURTHER INFORMATION CONTACT: Patricia W. Silvey, Director, Office 
of Standards, Regulations, and Variances, MSHA, 1100 Wilson Boulevard, 
Room 2350, Arlington, Virginia 22209-3939, silvey.patricia@dol.gov, 
202-693-9440 (telephone), or 202-693-9441 (facsimile).

SUPPLEMENTARY INFORMATION:
I. Background
II. Discussion of Final Rule
    A. General Discussion
    B. Section-by-Section Analysis
III. Executive Order 12866
    A. Population at Risk
    B. Costs
    C. Benefits
IV. Feasibility
    A. Technological Feasibility
    B. Economic Feasibility
V. Regulatory Flexibility Act and Small Business Regulatory 
Enforcement Fairness Act (SBREFA)
    A. Definition of Small Mine
    B. Factual Basis for Certification
VI. Paperwork Reduction Act of 1995
VII. Other Regulatory Considerations
    A. The Unfunded Mandates Reform Act of 1995
    B. Treasury and General Government Appropriations Act of 1999: 
Assessment of Federal Regulations and Policies on Families
    C. Executive Order 12630: Government Actions and Interference 
With Constitutionally Protected Property Rights
    D. Executive Order 12988: Civil Justice Reform
    E. Executive Order 13045: Protection of Children From 
Environmental Health Risks and Safety Risks
    F. Executive Order 13132: Federalism
    G. Executive Order 13175: Consultation and Coordination With 
Indian Tribal Governments
    H. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use
    I. Executive Order 13272: Proper Consideration of Small Entities 
in Agency Rulemaking

I. Background

    On September 8, 2006, MSHA published a proposed rule to revise its 
civil penalty regulations (71 FR 53054). MSHA received written comments 
in response to the proposed rule. In addition, the agency held six 
public hearings on September 26, 2006 in Arlington, Virginia, September 
28, 2006, in Birmingham, Alabama, October 4, 2006, in Salt Lake City, 
Utah, October 6, 2006, in St. Louis, Missouri, October 17, 2006, in 
Charleston, West Virginia, and October 19, 2006, in Coraopolis, 
Pennsylvania. The comment period closed on October 23, 2006. On October 
26, 2006, MSHA reopened and extended the comment period to November 9, 
2006 (71 FR 62572). MSHA reopened the comment period to restate and 
clarify language in the proposed rule pertaining to the proposed 
deleting of the existing single penalty assessment provision. MSHA 
clarified that violations that would have been processed under the 
single penalty provision of the existing rule would, under the proposed 
rule, be processed under the regular assessment provision.
    In addition, MSHA reopened the comment period to provide interested 
persons additional time to comment on an issue that was raised at the 
public hearings in Charleston, West Virginia, and Pittsburgh, 
Pennsylvania, pertaining to safety and health conferences. MSHA stated 
that it intended to include a requirement in the final rule that a 
request for a safety and health conference be in writing and include a 
brief statement of the reason why each citation or order should be 
conferenced.
    The section-by-section analysis of the final rule addresses issues 
raised by comments and testimony.

II. Discussion of the Final Rule

A. General Discussion

    This final rule results in an across-the-board increase in 
penalties from the existing regulations; however, penalties increase 
more significantly for large mine operators, operators with a history 
of repeated violations of the same standard and for operators whose 
violations involve high degrees of negligence or gravity. The higher 
penalties in the final rule are intended to increase the incentives for 
mine operators to prevent and correct violations.
    MSHA notes that under the Federal Civil Monetary Penalty Inflation 
Adjustment Act of 1990 (Inflation Adjustment Act), as amended by the 
Debt Collection Improvement Act of 1996, the Agency is required to 
review and, as warranted, adjust penalties based on inflation at least 
every four years. On June 15, 2006, the MINER Act was enacted and 
amended section 110 of the Mine Act raising the maximum civil penalty 
to $220,000 for violations that are deemed to be flagrant. This final 
rule codifies the maximum penalty of $220,000 for flagrant violations. 
In addition, the MINER Act established minimum penalties of $2,000 and 
$4,000 for unwarrantable failure violations, and minimum penalties for 
failure to timely notify violations. Although this final rule does not 
increase the $60,000 maximum civil penalty for non-flagrant violations, 
the effect of the across-the-board penalty increases from the existing 
regulations is tantamount to an inflation adjustment. Due to these 
penalty increases, the penalties in this final rule will not be 
adjusted under the Inflation Adjustment Act until 2011.
    MSHA received numerous comments in support of and opposed to the 
proposed rule. Many commenters stated that the proposed penalty 
increases were unnecessary because between 1990 and 2005, both injuries 
and fatalities have steadily declined. Other commenters stated that the 
proposed increased penalties will not induce greater compliance with 
the Mine Act or MSHA's safety and health standards and regulations. 
Some of these commenters stated that the proposed increases will merely 
result in operators diverting money from safety and health programs to 
penalty payments. Other commenters expressed concern that MSHA did not 
provide evidence that increased penalties would result in increased 
compliance and requested that MSHA immediately release all of the 
citation and accident history data necessary to do a thorough analysis 
of the premise underlying the Agency's proposal. One commenter stated 
the example that in the year following MSHA's increase in penalties in 
2003, the number of citations actually increased by approximately 10%, 
from 110,038 to 121,225, and that that trend continued in 2005, when 
the number of citations again increased to 128,225. MSHA used 2005 
assessed violation data as the baseline for its calculations of the

[[Page 13593]]

impact of both the proposed and final rules. The Agency has placed this 
2005 violation data in the rulemaking record.
    Although some commenters stated that increasing penalties will not 
result in increased compliance by operators, MSHA's experience shows 
that penalties are an important tool in reducing fatalities, injuries, 
illnesses, and violations. The Supreme Court recognized that civil 
penalties provide a ``deterrence'' that necessarily infrequent 
inspections cannot generate. National Independent Coal Operators' Ass'n 
v. Kleppe, 423 U.S. 388, 401 (1976) (speaking of the Federal Coal Mine 
Health and Safety Act of 1969 (Coal Act)).
    The Agency recognizes that civil penalties alone may not 
significantly affect compliance with the Mine Act and MSHA's safety and 
health standards and regulations or reduce the number of mining 
accidents and injuries. The reductions in accidents and injuries that 
have been achieved since the civil penalty regulation was originally 
implemented are the result of a combination of factors such as stronger 
enforcement, changes in mining technology, improved training, accident 
reduction initiatives, compliance assistance activities, better safety 
and health programs and more attention to them on the part of mine 
management and miners, and the continued issuance of citations and 
orders and related civil penalties.
    In addition, the Agency recognizes that the citations and orders 
are issued to induce miner operators to correct hazardous conditions 
thus reducing miners' exposure. Experience and data show that far 
greater resources are associated with the correction of hazardous 
conditions than payment of a civil penalty. Correcting the hazardous 
condition may require an interruption in production or other scheduled 
activities, necessitating change in personnel and equipment.
    Nonetheless, civil penalties have contributed to improvements in 
fatalities and accident and injury rates in the mining industry. MSHA 
reviewed the Agency's accident and injury statistics for metal and 
nonmetal mines from 1973 to 2005. Since 1977, the year that the civil 
penalty sanction was applied to metal and nonmetal mining operations, 
the incidence rate for fatal injuries declined, and the incidence rate 
for the total of fatal injuries, non-fatal days lost injuries, and no 
days lost injuries also declined.
    In October 1977, when Congress discussed adopting mandatory civil 
penalties for metal and nonmetal mines under the Mine Act, the Senate 
Committee on Human Resources (Committee) discussed the relative 
improvements in rates of fatal and serious non-fatal occurrences in the 
coal industry, where civil penalties had been mandatory since 1970, 
versus the non-coal segment of the industry, where there had been no 
provision for civil penalties, mandatory or permissive. Comparing the 
fatal and disabling injury rates between coal mines and metal and 
nonmetal mines for the years 1966 through 1976, the Committee found 
that the comparison:

suggests clearly that even if the civil penalty system under the 
Coal Act has not been totally effective in implementation, the 
presence of the civil penalty sanction has resulted in substantial 
improvements which are not noted in the non-coal segment of the 
industry under the Metal Act.

S. Rep. No. 95-181, at 41 (1977).
    MSHA's approach under this final rule is consistent with the intent 
of the drafters of the Mine Act. One of the goals of revising the civil 
penalty regulations in this final rule is to place more emphasis on the 
most severe violations, such as those contributing to accidents and 
injuries, and the most severe violators, such as those operators who 
exhibit high levels of negligence. MSHA has achieved this goal by 
revising the point tables for Negligence and Gravity-Severity and -
Likelihood, so that the more severe violations will receive civil 
penalties at levels more likely to induce the operator's compliance.
    Penalties are one of many tools that Congress approved to ensure 
``a safe and healthful'' workplace for miners. Congress's intent was 
that civil penalties under the Mine Act be used to ``induce those 
officials responsible for the operation of a mine to comply with the 
Act and its standards.'' S. Rep. No. 95-181, at 41. Civil penalties 
were singled out by the sponsors of the Mine Act as ``the mechanism for 
encouraging operator compliance with safety and health standards.'' 123 
Cong. Rec. 4388 (1977) (Feb. 11, 1977) (statement of Sen. Williams).
    MSHA has structured the final rule so that increased penalties will 
induce operators to be more proactive in their approach to miner safety 
and health and will lead to overall safety and health improvements. 
Increasing penalties is consistent with Congress's intent that 
penalties:

be of an amount which is sufficient to make it more economical for 
an operator to comply with the Act's requirements than it is to pay 
the penalties assessed and continue to operate while not in 
compliance.

S. Rep. No. 95-181, at 41.

    In response to comments that stated that the proposed penalty 
increases were unnecessary because injuries and fatalities have 
steadily declined since 1990, MSHA notes that the Mine Act has resulted 
in significant improvements in the health and safety of miners. 
Nevertheless, a review of MSHA's historical data shows a high number of 
fatal accidents in 2006--47 fatalities in coal mines and 25 fatalities 
in metal and nonmetal mines--and a rising number of violations in the 
past three years, including a rising number of violations of the same 
standard and a rise in the number of serious violations.
    Several commenters supported increased penalties, but stated that 
the proposed increases were not sufficiently high to provide operators 
with enough compliance incentive. In support of this statement, these 
commenters provided the example that a violation that receives 50 
points under the existing regulations would only receive the minimum 
penalty under the penalty conversion table in the proposed rule. MSHA 
notes that points assigned in the penalty tables for each of the 
statutory criteria have been changed in the proposed rule and, that 
this change prevents accurate comparisons between points assigned in 
the penalty tables under the existing regulation with the penalty 
conversion table in the proposed rule. Using the commenters' example, 
the 774 violations that received 50 penalty points under the penalty 
tables of the existing regulation received an average penalty of $636 
(including a 30% discount for good faith, where applicable). These same 
violations would receive an average of 93 penalty points under the 
penalty tables in the proposed rule and would receive an average 
penalty of $2,134 (including a 10% discount for good faith, where 
applicable).
    Several commenters stated that the proposed penalty increases were 
too high. These commenters provided MSHA with specific examples 
comparing penalties under the existing rule with projected penalties 
under the proposed rule. MSHA is impressed with the specific examples 
they submitted which included thoughtful analysis and attention to 
detail. MSHA has analyzed these examples using its data for 2005 
assessed violations. MSHA notes that its data is comprised of all 
violations that were assessed in 2005. Some commenters may have 
submitted specific examples that relied on the issuance date rather 
than the assessment date of the violation. MSHA's analysis shows the 
following for some of the specific examples submitted by commenters.

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    1. Jim Walter Resources, Inc., (JWR) submitted summary estimates 
for Mine Number 4 and Mine Number 7. Regarding Mine Number 4, JWR 
stated that total penalties for 2005 were $97,288 and projected that 
penalties under the proposal would be $421,521, an increase of 333%. 
MSHA's analysis shows that total penalties assessed in 2005 for this 
mine were $128,540 and that the amount under the proposed rule would be 
$421,128, an increase of 228%. Under the final rule, the total 
penalties would be $344,423 or an increase of 168%.
    Regarding Mine Number 7, JWR stated that total penalties for 2005 
were $55,131 and projected that penalties under the proposal would be 
$286,389, representing an increase of 419%. MSHA's analysis shows that 
total penalties assessed in 2005 for this mine were $65,775 and that 
the amount under the proposed rule would be $378,907, an increase of 
476%. Under the final rule, the total penalties would be $333,559 which 
is an increase of 407%. MSHA notes that the increase in penalties for 
Mine Number 7 as compared to Mine Number 4 is predominantly 
attributable to the difference in the number of penalty points for 
violations per inspection day. In addition, as stated above, MSHA's 
analysis is based on violations that were assessed in 2005 even though 
the violation may have been issued in a different year.
    2. Peabody Energy (Peabody) provided projections of penalties for 
``typical'' Sec.  75.400 violations stating that if the single penalty 
is eliminated and penalties are solely based on points, large operators 
will be at an extreme disadvantage due to their sheer size and 
production. In each example, the size of the mine is over two million 
tons, the size of controlling entity is over 10 million tons, the 
history consists of a VPID exceeding 2.1 and more than 20 violations of 
the same standard, and the gravity consists of one person potentially 
affected. The first example involves a non-significant and substantial 
(non-S&S) violation: moderate negligence, ``unlikely'' occurrence, and 
``lost work days or restricted duty.'' Peabody projected that under the 
proposed rule this violation would incur 106 penalty points for an 
initial proposed penalty of $4,440, which would be offset by a $444 
reduction for timely abatement, resulting in a total penalty of $3,996.
    The second example involves an S&S violation: moderate negligence, 
``reasonably likely'' to occur, and ``lost work days or restricted 
duty.'' Peabody projected that under the proposed rule this violation 
would incur 126 penalty points for an initial proposed penalty of 
$21,993, which would be offset by a $2,199 reduction for timely 
abatement, resulting in a total penalty of $19,794.
    The third example involves an S&S violation: High negligence, 
``reasonably likely'' to occur, and ``lost work days or restricted 
duty.'' Peabody projected that under the proposed rule this violation 
would incur 141 penalty points for an initial proposed penalty of 
$60,000 which would be offset by a $6,000 reduction for timely 
abatement, resulting in a total penalty of $54,000.
    MSHA reviewed its 2005 assessment violation data for all Sec.  
75.400 violations issued for Peabody's largest mines in 2005. MSHA 
calculated the average total penalty points and average proposed 
penalties under the existing, proposed, and final rules for Peabody 
mines that received maximum points for mine size. The results of MSHA's 
analysis are shown in the following table.
[GRAPHIC] [TIFF OMITTED] TR22MR07.000

    MSHA's analysis shows that under the existing rule, the total 
average points for all non-S&S Sec.  75.400 violations was 43, 
resulting in an average proposed penalty of $68. MSHA's analysis 
revealed total average points for all S&S Sec.  75.400 violations of 
47, resulting in an average proposed penalty of $576.
    Under the proposed rule, MSHA's analysis shows that the total 
average points for all non-S&S Sec.  75.400 violations was 87, 
resulting in an average proposed penalty of $874, which includes the 
``good faith'' reduction. MSHA's analysis revealed total average points 
for all S&S Sec.  75.400 violations of 106, resulting in an average 
proposed penalty was $3,996, which includes the ``good faith'' 
reduction.
    Under the final rule, MSHA's analysis shows that the total average 
points for all non-S&S Sec.  75.400 violations was 82, resulting in an 
average proposed penalty of $586. MSHA's analysis revealed total 
average points for all S&S Sec.  75.400 violations of 102, resulting in 
an average proposed penalty of $2,902, which includes the ``good 
faith'' reduction.

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    Peabody also submitted a fourth example showing the ``cheapest 
typical non-S&S'' violation. In this example, the size of mine is over 
two million tons, the size of controlling entity is over 10 million 
tons, the history consists of a VPID exceeding 2.1 and five or fewer 
repeat violations in the last 15 months, moderate negligence, an 
``unlikely'' occurrence, a severity of ``lost work days or restricted 
duty,'' and one person potentially affected. Peabody projected that, 
under the proposed rule, such a violation would incur 86 penalty points 
for an initial proposed penalty of $897 which would be offset by a $90 
reduction for timely abatement, resulting in a total penalty of $807. 
MSHA's analysis of an average non-S&S violation for Peabody mines with 
maximum points for mine size shows that under the existing rule, the 
average proposed penalty was $68, under the proposed rule, the average 
proposed penalty was $874, and under the final rule, the average 
proposed penalty was $586.
    3. Pennsylvania Coal Association stated that the removal of the 
single penalty assessment will greatly increase penalties for non-S&S 
violations that present no real degree of hazard. Pennsylvania Coal 
gave the example that under the proposal, a section 104(a), non-S&S 
violation with moderate negligence, 1.1 violations per inspection day, 
production over two million tons per year, an unlikely likelihood of 
occurrence, a severity of lost work days, and two persons potentially 
affected would receive a penalty of $512, more than 8 times the $60 
single penalty under the existing rule. Under MSHA's analysis, assuming 
three points for size of the controlling entity, the penalty for this 
violation would be $212 under the proposed rule, or $190 with the 
``good faith'' reduction, an increase of 216%. Under the final rule, 
assuming five points for size of the controlling entity, the penalty 
for this violation would be $196 or $176 with the ``good faith'' 
reduction.
    Pennsylvania Coal further stated that it believed that penalties 
under the proposal would result in an increase of 10 times over the 
existing penalties for commonly cited violations. Pennsylvania Coal 
provided the example that if the severity of the injury in the 
foregoing violation were permanently disabling and there was a 
``repeat'' history of 10 points, the penalty would increase to $1,140. 
Under MSHA's analysis, assuming three points for size of the 
controlling entity, the penalty for this violation would be $473 under 
the proposed rule, or $425 with the ``good faith'' reduction, an 
increase of 7 times over the existing penalty. Under the final rule, 
assuming five points for size of the controlling entity, the penalty 
would be $651 or $586 with the ``good faith'' reduction.
    After analyzing the commenters' projected penalties, MSHA agrees 
that the penalty increases can be substantial under the proposed rule; 
however, in many instances, the increases are not as great as 
commenters projected. This is due to a number of reasons including data 
based on issued rather than assessed violations, and use of 
hypothetical violations with sometimes incomplete data. The Agency 
believes that the penalty increases in the final rule are consistent 
with Congressional intent and are at an appropriate level to increase 
operator compliance with the Mine Act and MSHA's safety and health 
standards and regulations.
    MSHA discussed the regulatory impact analysis in support of the 
proposed rule in Section IV of the preamble to the proposed rule. The 
analysis of costs contained three inadvertent errors: (1) MSHA used the 
wrong employment size for a few independent contractor violations; (2) 
there was a small error in the formula for calculating the history for 
repeat violations; and (3) violation history penalty points were 
improperly assigned to operators with fewer than 10 violations over the 
previous 15-month period. The net effect of these errors was to 
underestimate the impact of costs of the proposal by about 2%. These 
errors have been corrected in MSHA's analysis of the final rule. A more 
detailed explanation is provided later in Section III (Executive Order 
12866) of this preamble, and any data referenced by MSHA in support of 
the proposed rule reflect the corrections.
    Some commenters expressed concern that MSHA does not use the Small 
Business Administration (SBA) definition of small business, creating an 
unfair trade disadvantage for crushed stone, sand, and gravel mines, 
which tend to be smaller mines. In analyzing the impact of a rule on 
small entities, MSHA must use the SBA definition for a small entity or, 
after consultation with the SBA Office of Advocacy, establish an 
alternative definition for the mining industry by publishing that 
definition in the Federal Register for notice and comment. MSHA has not 
established such an alternative definition and hence is required to use 
the SBA definition. The SBA defines a small entity in the mining 
industry as an establishment with 500 or fewer employees.
    MSHA has also examined the impact of agency rules on a subset of 
mines with 500 or fewer employees, i.e., those with fewer than 20 
employees, which MSHA and the mining community traditionally have 
referred to as ``small mines.'' These small mines differ from larger 
mines not only in the number of employees, but also in economies of 
scale in material produced, in the type and amount of production 
equipment, and in supply inventory. Because of these factors, their 
costs of complying with MSHA's rules and the impact of the agency's 
rules on them also will tend to be different. It is for this reason 
that ``small mines,'' traditionally defined by MSHA as those employing 
fewer than 20 workers, are of special concern to MSHA. In addition, for 
this final rule, MSHA has examined the cost on mines with five or fewer 
employees to ensure that they are not significantly and adversely 
impacted by the final rule.
    In the final rule, MSHA has carefully evaluated all of the comments 
and concerns. The Agency has revised some of the proposed provisions to 
reflect many of the commenters' concerns. MSHA's primary objective 
continues to be to develop and issue a final rule which promotes 
operator compliance with the Mine Act and MSHA's standards and 
regulations and thereby reduces violations and injuries, illnesses and 
fatalities in mines. By establishing more serious consequences for 
noncompliance with the Mine Act and MSHA's safety and health standards 
and regulations, the highest penalties under this final rule are 
directed towards those mine operators who continually allow hazardous 
conditions to exist. The final rule aims to direct mine operators who 
violate the Mine Act and MSHA's safety and health standards and 
regulations toward a more proactive approach to miner safety and 
health.

B. Section-by-Section Analysis

Scope and Purpose (Sec.  100.1)
    Final Sec.  100.1, like the existing rule, sets forth the scope and 
purpose of the final rule. It provides the criteria and procedures that 
MSHA uses to propose civil penalties under sections 105 and 110 of the 
Mine Act. Final Sec.  100.1, like the existing rule, provides that the 
purpose of this rule is to: establish a fair and equitable procedure 
for the application of the statutory criteria in determining proposed 
penalties for violations; maximize the incentives for mine operators to 
prevent and correct hazardous conditions; and assure the prompt and 
efficient processing and collection of penalties.
    Some commenters suggested that the final rule should be limited to 
the specific penalties mandated by the

[[Page 13596]]

MINER Act and that MSHA either should withdraw the proposed rule or 
delay promulgating a final rule and appoint an advisory committee to 
evaluate other aspects of the proposed rule before moving forward. In 
addition, some commenters expressed the opinion that Congress's silence 
in the MINER Act with respect to civil penalties other than those 
specifically mentioned indicated that Congress generally was satisfied 
with MSHA's existing penalty regulations. These commenters stated that 
MSHA should follow the clear and unmistakable direction provided by 
Congress and limit the final rule to only those penalty provisions 
included in the MINER Act. Other commenters opposed the appointment of 
an advisory committee to review civil penalties stating that it would 
be only a delay tactic.
    Although Congress mandated only certain penalties under the MINER 
Act, it did so by amending the Mine Act and providing the Secretary 
with additional tools ``to improve the safety of mines and mining.'' PL 
109-236, 120 Stat. 493 (June 15, 2006). MSHA has determined that there 
would be no benefit for miner safety and health by convening an 
advisory committee. The final rule is consistent with both the Mine Act 
and MINER Act's goals to improve miner safety and health through the 
use of effective civil penalties. In response to comments, and 
consistent with the MINER Act, under the final rule, operators who 
exhibit a lack of commitment to miner safety and health will receive 
the greatest increase in penalties.
    Some commenters opposed the proposed rule's across-the-board 
penalty increases, stating that this was a one-size-fits-all approach 
that unfairly penalized operators with good safety records. 
Specifically, a number of sand and gravel operators commented that the 
proposed increases should be limited to coal mines because disasters in 
coal mines generated changes in the MINER Act. These commenters further 
stated that coal mines pose greater health and safety hazards to miners 
and that such mines experience a higher number of violations. Some 
small sand and gravel operations further commented that the proposed 
increases were excessively high and would put them out of business. 
These commenters provided no specific data in support of their 
conclusion. Under the final rule, MSHA estimates that metal and 
nonmetal operators, which include small sand and gravel operators, with 
one to five employees would average a yearly increase of $149 per mine, 
compared to $213 for those with one to 20 employees.
    Under the final rule, like the existing rule, the size of the 
mining operation and the effect of a penalty on an operator's ability 
to continue in business are two of the statutory factors taken into 
consideration in determining penalties. MSHA's goal for this final rule 
is that all mine operators, consistent with the statutory purpose, will 
be in compliance with the Mine Act and Agency safety and health 
standards and regulations. In addition, consistent with the MINER Act, 
the Agency projects that operators who are the worst safety and health 
offenders will experience the largest penalty increases under the final 
rule.
    One commenter expressed concern that the proposed rule did not 
provide equitable procedures for the application of the statutory 
criteria in determining proposed penalties because the proposed rule 
treated small mines differently from large mines and because it treated 
coal mines differently from metal and non-metal mines. MSHA does not 
agree that its application of the mine size penalty criteria is 
inequitable. Under the final rule, like the existing rule, the points 
and the penalties increase as the size of the operator or its parent 
company grows. In doing so, MSHA is assuring optimal consistency in 
accordance with Congressional intent in applying the statutory criteria 
pertaining to the size of the operator's business.
    Historically, MSHA has treated coal mining operations differently 
from metal and nonmetal mining operations when determining size for 
purposes of assigning civil penalty points. This historical distinction 
was based on both Agency experience and mining industry conditions. 
MSHA has found that measuring the size of coal mining operations by 
tonnage produced is a reasonable indicator of the size of the business 
for coal operations. Tonnage produced, however, is not usually a useful 
indicator of size for metal and nonmetal mining operations because of 
the vast differences in commodities mined and methods of mining within 
that segment of the mining industry. In some instances, large volumes 
of material are mined for only a few ounces of a marketable commodity; 
in others, nearly one hundred percent of the mined material is 
marketable. In addition, the costs of production and the market prices 
may vary markedly within the metal and nonmetal industry. Thus, an 
annual tonnage measurement of metal and nonmetal operations would not 
enable MSHA to fairly evaluate the economic impact of the proposed 
penalty on each operator. MSHA's experience is that tonnage produced 
has proven to be effective for measuring the size of coal mining 
operations and annual hours worked has proven to be effective for 
measuring the size of metal and nonmetal operations.
    No substantive changes to proposed Sec.  100.1 were made in the 
final rule. Final Sec.  100.1 adopts the language in the proposed rule.
Applicability (Sec.  100.2)
    Final Sec.  100.2, like the existing rule, sets forth the 
applicability of the final rule and provides that the criteria and 
procedures in this part are applicable to all proposed assessments of 
civil penalties for violations of the Mine Act and the standards and 
regulations promulgated pursuant to the Mine Act, as amended. Final 
Sec.  100.2, like the existing rule, further provides that MSHA shall 
review each citation and order and shall make proposed assessments of 
civil penalties.
    MSHA received no significant comments regarding proposed Sec.  
100.2. Final Sec.  100.2 adopts the language in the proposed rule.
Determination of Penalty; Regular Assessment (Sec.  100.3)
(a) General
    This section of the final rule addresses the determination of a 
penalty amount under the regular assessment provision. Final Sec.  
100.3(a)(1) is derived from existing Sec.  100.3(a), and provides the 
criteria for determining penalty assessments. The final rule, like the 
proposal, makes several non-substantive, clarifying changes. It divides 
existing Sec.  100.3(a) into two paragraphs designated as Sec.  
100.3(a)(1) and (a)(2).
    Final Sec.  100.3(a)(1), like the proposed rule, provides that the 
operator of any mine in which a violation of a mandatory health or 
safety standard occurs or who violates any other provision of the Mine 
Act shall be assessed a civil penalty of not more than $60,000. It 
further provides that each occurrence of a violation of a mandatory 
safety or health standard may constitute a separate offense. In 
addition, it provides that the amount of the proposed civil penalty 
shall be based on the criteria set forth in sections 105(b) and 110(i) 
of the Mine Act. These criteria are:
    (1) The appropriateness of the penalty to the size of the business 
of the operator charged;
    (2) The operator's history of previous violations;
    (3) Whether the operator was negligent;

[[Page 13597]]

    (4) The gravity of the violation;
    (5) The demonstrated good faith of the operator charged in 
attempting to achieve rapid compliance after notification of a 
violation; and
    (6) The effect of the penalty on the operator's ability to continue 
in business.
    MSHA received no comments on proposed Sec.  100.3(a)(1) and final 
Sec.  100.3(a)(1) adopts the language in the proposed rule.
    Final Sec.  100.3(a)(2), substantively unchanged from the existing 
rule, sets forth the process for determining a penalty under the 
regular assessment provision. Under paragraph (a)(2), a regular 
assessment is determined by first assigning the number of penalty 
points to the violation by using the criteria and tables set forth in 
this section. The total number of penalty points is then converted into 
a dollar amount under the penalty conversion table in paragraph (g) of 
this section. If applicable, the amount of the penalty will be adjusted 
for good faith as provided under paragraph (f) of this section, and/or 
the operator's ability to continue in business as provided under 
paragraph (g) of this section.
    Several commenters suggested that MSHA replace the proposed point 
system with alternative methods for computing penalties. For example, 
one commenter suggested that MSHA consider an alternative to the 
regular assessment process in which each violation would have a 
designated baseline penalty. Under this suggested approach, factors 
such as an operator's history and negligence, and the gravity of the 
violation would be used to increase the penalty, but the baseline 
penalty would not be reduced because of an operator's size, good faith 
in abatement, or ability to continue in business. MSHA has evaluated 
this suggested alternative and determined that it is not in accord with 
the intent of the drafters of the Mine Act because it does not 
appropriately consider the statutory factors when determining 
penalties. Therefore, final Sec.  100.3(a)(2) retains the proposed 
regular assessment structure and language.
(b) Appropriateness of the Penalty to the Size of the Operator's 
Business
    Final Sec.  100.3(b) is derived from existing Sec.  100.3(b). Like 
the existing rule, final Sec.  100.3(b) continues to provide that the 
appropriateness of the penalty to the size of the operator's business 
is calculated by using both the size of the mine and the size of the 
controlling entity of the mine. In addition, final paragraph (b) 
continues to provide that the terms ``annual tonnage'' and ``annual 
hours worked'' mean coal produced and hours worked, respectively, in 
the previous calendar year. It also continues to provide that where a 
full year of data is not available, the coal produced or hours worked 
is prorated on an annual basis. Finally, it increases the maximum 
number of points that can be accrued under this criterion, from 15 
points under the existing rule to 25 points.
    MSHA proposed editorial, clarifying changes to this provision. MSHA 
proposed adding the statement that the size of coal mines and their 
controlling entities is measured by coal production, the size of metal 
and nonmetal mines and their controlling entities is measured by hours 
worked, and the size of independent contractors is measured by the 
total hours worked at all mines. No comments were received regarding 
this proposed clarification. Therefore, final Sec.  100.3(b) adopts the 
additional statement as proposed.
    Although final Sec.  100.3(b) retains the proposed 25 maximum 
number of points under the size criterion, allocation of points based 
on the size of coal mines, metal and nonmetal mines, controlling 
entities, and independent contractors is different from the proposed 
rule. Under final Sec.  100.3(b), the maximum number of points based on 
the size of coal mines and metal and nonmetal mines is reduced from the 
proposed 20 points to 15 points, and the maximum number of points for 
controlling entities of coal mines and metal and nonmetal mines is 
increased from the proposed five points to 10 points. Accordingly, the 
total maximum number of points for the size of a coal or metal or 
nonmetal mining operation is 25. In addition, the maximum number of 
points for independent contractors is increased from 20 to 25 points.
    MSHA received numerous comments both in support of and against 
point increases based on mine size. Commenters opposed to giving 
consideration to size expressed concern that, under the proposed rule, 
nearly a quarter of all coal mines and more than half of all metal and 
nonmetal mines were receiving fewer points merely because of size even 
though many health and safety violations are cited at such smaller 
operations. In addition, commenters expressed concern that larger 
operations would receive excessive points under the proposed rule even 
though larger mines typically have more comprehensive safety programs 
than smaller mines. This final rule is responsive to many of these 
concerns.
    With respect to comments pertaining to the proposed increase in 
points for mine size, the Mine Act specifically requires that the size 
of an operator's business be considered in determining the amount of a 
penalty. In response to comments, however, MSHA has made several 
changes to the mine size point tables in the final rule. First, MSHA 
created more categories for the annual tonnage range for smaller coal 
mines and the annual hours worked range for smaller metal and nonmetal 
mines.
    In addition, MSHA raised the penalty points for the smallest coal 
mine size from zero points to one point. This is because coal mines in 
the smallest mine size, according to annual tonnage, include 
preparation plants that report no production, although many employ 20 
or more workers. Therefore, MSHA determined that it would further the 
purpose of this rulemaking to increase points in this size range. As a 
result of these changes, smaller coal mines would tend to receive more 
size penalty points on average under the final rule as compared with 
the proposed rule. For example, a small coal mine with coal production 
between 0 and 7,500 tons will receive one point under the final rule as 
opposed to 0 points under the proposed rule.
    Under final Sec.  100.3(b), MSHA has increased the maximum number 
of points from 10 under the existing rule to 15 for the largest coal 
operations and metal and nonmetal operations. MSHA proposed increased 
points for larger operations because in order to provide an equal 
deterrent, the penalties must be higher for larger mines (with 
potentially higher revenue) in order to provide an equal deterrent. In 
addition, the Agency anticipated that higher penalties would be needed 
to help induce these operations, with more complex management 
structures, to take notice of and correct safety and health violations. 
Accordingly, final Sec.  100.3(b) increases the maximum number of 
points from 10 under the existing rule to 15 (as opposed to the 20 
points in the proposal).
    With respect to independent contractors, MSHA proposed to increase 
the maximum number of penalty points from 10 to 20 to assure that the 
amount of the penalty is an appropriate economic inducement of future 
compliance by the independent contractor. This was accomplished by 
doubling the number of penalty points for any given number of annual 
hours worked. MSHA has reviewed the violations assessed in 2005 
pertaining to independent contractors and determined that the maximum 
number of points for independent contractor size should be raised from 
20 in the proposed rule to 25 in the final rule.

[[Page 13598]]

Under the final rule, all mine operators are subject to a maximum of 25 
points for size. MSHA reviewed the violations that were assessed in 
2005 and found that for most employment sizes, operator penalties were 
at least 50% higher, and in some cases more than 100% higher, than the 
penalties received by independent contractors. MSHA has concluded, from 
its review of penalties under the proposed rule, that some significant 
part of the discrepancy between operator and independent contractor 
penalties was due to the fact that operators received a maximum of 25 
penalty points for size while independent contractors received a 
maximum of 20 penalty points for size. Accordingly, MSHA has increased 
the maximum size penalty points for independent contractors to 25 
points.
    In addition, as was done for operators, MSHA has created more 
categories capturing the annual hours worked range for smaller 
independent contractors. As a result, smaller independent contractors 
would tend to receive more penalty points for size on average under the 
final rule than under the proposed rule. For example, an independent 
contractor with 5,001 to 10,000 annual hours worked would receive two 
penalty points for size under the final rule as compared to zero 
penalty points for size under the proposed rule.
    In reallocating the points for size for independent contractors, 
MSHA evaluated the violations that were assessed in 2005 and compared 
the number of violations per contractor with the given contractor size 
points under the existing rule, proposed rule, and final rule. MSHA's 
primary concern was to ensure that the average penalties per violation 
for independent contractors of any given employment size would be 
similar to the average penalties for coal and metal and nonmetal 
operators of a similar employment size.
    In addition, MSHA received comments both in support of and against 
the Agency's request for comments pertaining to whether greater weight 
should be placed on the size of controlling entities. Proposed Sec.  
100.3(b) retained the existing maximum of five points for controlling 
entities; however, MSHA specifically requested comments on whether, in 
considering the size of the operator, greater weight should be placed 
on the size of the controlling entity. Some commenters supported 
placing greater weight on controlling entities so that smaller 
individual mines that are owned and controlled by larger entities would 
receive higher penalties. Those commenters stated, however, that for 
purposes of assessing a sufficiently high penalty that would get the 
attention of the controlling entity, an accurate measure of the 
controlling entity's size should be revenues, and not annual tonnage or 
hours worked, because many controlling entities could be involved in a 
number of industries and businesses that are not mining-related. Other 
commenters who supported placing greater weight on controlling entities 
questioned whether it would be a workable provision. Those commenters 
were concerned that because the mining industry is so fluid, tracking 
such information may be all but impossible, overly burdensome, and too 
labor intensive, and therefore beyond the agency's ability to 
administer.
    Some commenters opposed placing greater weight on the controlling 
entity. Some of those commenters stated that the Mine Act only 
specifies the size of the operator as a penalty criterion, and such 
specification implies that the size of some other entity in the 
corporate chain should not be a consideration in calculating the size 
of the penalty. Other commenters opposed placing greater weight on the 
controlling entity because it would create a financial disadvantage for 
small operations owned by larger companies and thereby promote an 
adverse competitive environment in local markets.
    MSHA agrees with comments in support of placing greater weight on 
controlling entities and accordingly has increased the maximum 
controller size penalty points from five to 10. Congress specifically 
required that the size not only of the particular mine involved in the 
violation, but the size of the operator's ``business'' is to be taken 
into account. MSHA has historically interpreted this statutory 
provision to include both the size of the mine and the size of the 
entity that controls the mine. Business judgments affecting the health 
and safety of miners are made at various levels of an organization's 
structure. Penalties are intended to encourage management at all levels 
to respond positively to the health and safety concerns affecting 
miners. In addition, Congress expressed its intent to place the 
responsibility for compliance with the Mine Act on those who control or 
supervise the operation of mines as well as on those who operate them. 
S. Rep. No. 95-181, at 40-41. Upper-level management decisions such as 
those affecting capital expenditures, the basic nature and scope of a 
corporate safety and health program, the hiring of top mine management 
officials, and other policy matters have a profound effect upon safety 
and health conditions at individual mines. Thus, penalties should be 
increased for controlling entities in order to influence all levels of 
decisionmaking. Further, the Mine Act specifically requires 
consideration be given to the size of the operator's business. MSHA 
reallocated the points for controlling entities and coal and metal and 
nonmetal mine size to achieve a more equitable distribution of points.
    MSHA does not think that the specific comment that opposed placing 
greater weight on the controlling entity because it would create a 
financial disadvantage for small operations owned by larger companies 
is accurate. The comment assumes that fines assessed against smaller 
operations owned by larger entities are not reflected in the overall 
profit margin of the controlling entity.
    In addition, for the same reasons stated in the above discussion 
concerning measuring the size of coal mines and metal and nonmetal 
mines, MSHA will continue to measure the size of controlling entities 
under this final rule as it does under the existing rule. The size of a 
controlling entity for coal mines is measured by annual tonnage and the 
size of a controlling entity for metal and nonmetal mines is measured 
by annual hours worked. MSHA intends to continue its existing practice 
of considering only the mining operations in which a controlling entity 
is involved in when determining the size of the controlling entity. 
This method has been effective as a proxy for revenue and the data are 
readily available to MSHA through the existing reporting requirements 
under 30 CFR part 50.
    Final Sec.  100.3(b) modifies the points for size from the proposed 
rule. Relative to the existing rule, final Sec.  100.3(b) increases the 
points for the size according to the following tables.

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(c) History of Previous Violations
    Final Sec.  100.3(c) is derived from existing Sec.  100.3(c). Final 
Sec.  100.3(c), like the proposed rule, provides that an operator's 
history of previous violations is based on both the total number of 
violations and the number of repeat violations of the same citable 
provision of a standard in a preceding 15-month period. Final Sec.  
100.3(c) clarifies that the repeat aspect of the history criterion in 
paragraph (c)(2) applies to operators only after an operator has 
received 10 violations, and to independent contractor operators only 
after an independent contractor has received 6 violations. In addition, 
only assessed violations that have been paid or finally adjudicated, or 
have become final orders of the Federal Mine Safety and Health Review 
Commission (Commission), will be included in determining an operator's 
history.
    Proposed Sec.  100.3(c) clarified the existing provision by adding 
the phrase ``or have become final orders of the Commission'' in the 
second sentence of this paragraph to reflect MSHA's intent that only 
violations which have become final be included in an operator's 
history. In addition, the proposal made several substantive changes to 
existing Sec.  100.3(c). An operator's history of violations under 
existing Sec.  100.3(c) was based solely on the overall number of 
violations cited against an operator during a preceding 24-month 
period. Under the proposal, the period of time would be shortened to 15 
months and an operator's history of violations would include two 
components: the total number of violations and the number of repeat 
violations in that 15-month period.
    MSHA received numerous comments with respect to these proposed 
changes. Several commenters opposed the 15-month period. These 
commenters expressed concern that the proposed 15-month period would 
deprive MSHA of critical information about an operator's past safety 
record, particularly for aggregate mining operations that are seasonal 
or intermittent, and could result in lower penalties, particularly for 
repeat violators. One commenter criticized MSHA for not publishing data 
that the Agency used to determine that the effect of the shorter time 
period would have a negligible effect on an independent contractor's 
history. On the other hand, many commenters supported the shorter time 
period because it provided a more current or

[[Page 13604]]

more realistic indication of an operator's compliance.
    MSHA has determined that the proposed 15-month period will provide 
the Agency with sufficient data to accurately evaluate an operator's 
compliance record, including any trend, even for mining operations that 
are inspected on a less-frequent basis, e.g., seasonal or intermittent 
operations. MSHA reviewed violations that were assessed in 2005 and 
determined that because it takes approximately three months for a 
penalty assessment to become a final order of the Commission, the 
proposed 15-month period would provide the Agency with at least one 
full year of data for coal and metal and nonmetal operations, and for 
independent contractors.
    The shortened timeframe of 15 months provides MSHA with a more 
recent compliance history than the 24-month period under the existing 
rule. In addition, MSHA believes that operators who violate the Mine 
Act and MSHA's health and safety standards and regulations should 
receive penalties for those violations as close as practicable to the 
time the violation occurs in order to provide a more appropriate 
incentive for changing compliance behavior.
    For coal and metal and nonmetal operations, the data would be 
normalized by the amount of inspection time resulting in data 
comparable to that of the 24-month period under the existing rule. MSHA 
analyzed the data for operator violations that were assessed in 2005 to 
determine the impact of changing to a 15-month period. For coal and 
metal and nonmetal operator violations that were assigned history 
penalty points in 2005, and had a minimum of 10 violations during the 
15-month period, the average penalty points using a preceding 24-month 
period was 7.5 per violation. Using a preceding 15-month period, the 
average was 7.6 penalty points per violation.
    For independent contractors, there is a negligible difference 
between calculating an independent contractor's history of violations 
under the proposed rule and under the existing rule. This is so because 
it generally takes up to three months for a violation to become a final 
order and, therefore, the 15-month period provides MSHA with at least 
one full year of data from which to calculate violation history. MSHA 
reviewed violations that were assessed in 2005, which show that there 
were 3,844 contractors that were issued at least one citation in the 
24-month period from January 1, 2004 to December 31, 2005. Using the 
same number of months and the annualized calculation that is used to 
determine violation history in the existing rule, these contractors 
were issued an average of 2.3 violations per year with a median of one 
violation per year during this time frame. Using the 15-month period 
without annualizing the number of violations as proposed, these same 
contractors were issued an average of 2.9 violations with a median of 
one violation during the 15-month period between October 1, 2004 and 
December 31, 2005.
    Several commenters expressed concern with the Agency's proposal to 
use violations that have become final orders of the Commission, stating 
that this will encourage operators to increase penalty contests to 
avoid counting the violation in an operator's history. MSHA included 
the insertion of the phrase ``final orders of the Commission'' to 
clarify the Agency's practice, in existence since 1982, to use only 
violations that have become final orders of the Commission in 
determining an operator's history of violations. This practice will 
continue to provide a measure of fairness by not including in an 
operator's history those violations that are in the adjudicatory 
process which may ultimately be dismissed or vacated. As each penalty 
contest becomes final, however, the violation will be included in an 
operator's history as of the date it becomes final.
    In consideration of all comments, final Sec.  100.3(c) retains the 
final order language and shortens the period of time from 24 to 15 
months for determining an operator's history of violations as proposed.
    Several commenters expressed confusion regarding the number of 
violations that would trigger application of the repeat violation 
provision in proposed paragraph (c)(2). MSHA intends that the repeat 
violation provision in final paragraph (c)(2) would only apply to 
contractors after an operator has received 10 violations, and to 
independent contractor operators only after an independent contractor 
has received 6 violations. Therefore, final Sec.  100.3(c) includes 
clarifying language.
    Final Sec.  100.3(c)(1) is a new paragraph derived from existing 
Sec.  100.3(c). Final Sec.  100.3(c)(1), like the proposed rule, 
provides that history penalty points are assigned on the basis of the 
number of violations per inspection day (VPID) for coal operations and 
metal and nonmetal operations. Under final paragraph (c)(1), penalty 
points are not assigned to coal operations and metal and nonmetal 
operations that receive fewer than 10 violations in a preceding 15-
month period. For independent contractors, final Sec.  100.3(c)(1), 
like the proposed rule, provides that penalty points are assigned on 
the basis of the total number of violations at all mines. Penalty 
points are not assigned to independent contractors with fewer than 6 
violations. The maximum number of points that an operator may receive 
for this criterion is 25 points.
    Most commenters supported the proposed continuation of using VPID 
to calculate points for coal and metal and nonmetal operator's history 
of violations, stating that VPID provides the truest measure of an 
operator's compliance. Some of these commenters, however, requested 
that MSHA clarify its definition of an inspection day. These commenters 
stated that MSHA's method of determining inspection days is different 
between coal mines and metal and nonmetal mines, which affects how 
points are computed.
    MSHA's definition of VPID (Violations per Inspection Day) is 
calculated by taking the total number of assessed violations at a mine 
for a specified period that have either been paid or have become a 
final order of the Commission and dividing it by the total number of 
inspection days at the mine during the same specified period. There is 
no functional difference between a violation that an operator pays and 
a final order of the Commission.
    Prior to April 2005, MSHA used different definitions of an 
inspection day for coal and metal and nonmetal mines. For coal mines, 
each mine visit by each Authorized Representative of the Secretary (AR) 
was considered a separate inspection day. For metal and nonmetal mines, 
the total time for each inspection event was divided by five hours to 
determine the number of inspection days for that event. For both coal 
and metal and nonmetal operations, the number of inspection days were 
then summed for the specified period. In April 2005, MSHA began its 
transition to use the per-visit method previously used only for coal 
mines for all types of mines. MSHA currently calculates inspection days 
for assessment purposes by counting one inspection day for each AR that 
spends any on-site inspection time during any calendar day. Supervisory 
and trainee time is excluded from the inspection day calculation as are 
non-inspection activities. The same method is used for all coal, metal, 
and nonmetal mines.
    Some commenters expressed concern that the proposed new provision 
that history penalty points not be assigned to coal operations and 
metal and nonmetal operations with fewer than 10 violations in a 
preceding 15-month period essentially amounted to a free pass for small 
mines and constituted selective enforcement of the Mine Act. MSHA

[[Page 13605]]

projects that this new provision would work similar to existing Sec.  
100.4(b), which excludes from excessive history mines having 10 or 
fewer assessed violations in a preceding 24-month period. In making a 
decision to include the new provision in the proposed rule, MSHA 
considered various factors, such as small, seasonal, and intermittent 
operations, all of which may result in an operation having a low number 
of inspection days during the specified period. For such operations, 
even though the total number of violations may be low, i.e., three 
violations in a preceding 15-month period, the VPID could easily be 
greater than the highest VPID level, or 2.1, and the operator would 
receive the maximum number of 25 points. To avoid the inequitable 
result of subjecting any mining operation with only a few violations in 
a preceding 15-month period to an unrealistically high VPID, MSHA 
concludes that the new provision, under which penalty points are not 
assigned to coal operations and metal and nonmetal operations with 
fewer than ten violations in a preceding 15-month period, is necessary. 
Therefore, the final rule includes the proposed language.
    Several commenters suggested, as an alternative to the proposal, 
that the final rule include a provision that history penalty points not 
be assigned to independent contractors with fewer than 10 violations in 
a preceding 15-month period. In considering this suggestion, MSHA 
reviewed its violation data which showed that between October 1, 2004 
and December 31, 2005, approximately 500 contractors would have 
received history penalty points for 6 or more violations during a 15-
month period. This number would be reduced, however, to approximately 
200 if contractors with fewer than 10 violations were not assessed 
history points. Stated differently, under MSHA's violation data, 11% of 
the independent contractor violations would have received history 
penalty points for six or more violations during a previous 15-month 
period. This percentage would be reduced, however, to approximately 6% 
if contractors with fewer than 10 violations were not assessed history 
points. Although there was strong support for the suggested 
alternative, MSHA has decided that the alternative does not further the 
purpose of this rulemaking and that the Agency will retain the proposed 
language that penalty points not be assigned to independent contractors 
with fewer than 6 violations in a preceding 15-month period.
    MSHA specifically requested comments as to whether the Agency 
should adopt the proposed approach for calculating an independent 
contractor's history of violations by using the total number of 
assessed violations at all mines during a preceding 15-month period, or 
whether the Agency should use an annualized 2-year average as it does 
under the existing rule. Under the existing rule, the number of 
violations for independent contractors is based on an annual average of 
all violations over a two year period at all mines. MSHA received 
several comments expressing skepticism with the Agency's statement that 
only a minimal increase in the average assessment issued to independent 
contractors would result by eliminating the annualized average. In 
addition, some commenters suggested that MSHA use VPIDs when computing 
contractor history. These commenters stated that contractors are 
required to have a single MSHA contractor ID number for nationwide 
operations, and that if working daily at multiple mine sites across the 
country, that contractor is likely to be inspected far more frequently 
than the average mine operator. These commenters concluded that MSHA's 
proposal lacks an adequate foundation and results in unfair treatment 
of independent contractors.
    VPID cannot be used to calculate a contractor's history of 
violations because MSHA does not record inspection time for 
contractors. As explained above, MSHA tracks contractor violations by 
counting total violations within a specified period. Although MSHA 
received some comments critical of the proposed method, it has proved 
to be both successful and practical in calculating a contractor's 
violation history under the existing rule.
    The proposed rule increased the maximum number of points under this 
criterion from 20 under the existing regulation to 25 points. The final 
rule retains the proposed 25 maximum points; however, MSHA raised 
penalty points for independent contractors with 8 to 50 violations 
during the previous 15-month period, relative to what was proposed. The 
additional increase in points reflects MSHA's desire to increase points 
for independent contractors so as to reduce the discrepancy in 
penalties between operators and independent contractors.
    Tables II-6 and II-7 compare the existing and final penalty point 
sca