Criteria and Procedures for Proposed Assessment of Civil Penalties, 13592-13646 [07-1402]
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Federal Register / Vol. 72, No. 55 / Thursday, March 22, 2007 / Rules and Regulations
DEPARTMENT OF LABOR
Mine Safety and Health Administration
30 CFR Part 100
RIN 1219–AB51
Criteria and Procedures for Proposed
Assessment of Civil Penalties
Mine Safety and Health
Administration (MSHA), Labor.
ACTION: Final rule.
AGENCY:
I. Background
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).
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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
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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
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 acrossthe-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
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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
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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
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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 noncoal 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.
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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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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’’ § 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 § 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.
MSHA’s analysis shows that under
the existing rule, the total average points
for all non-S&S § 75.400 violations was
43, resulting in an average proposed
penalty of $68. MSHA’s analysis
revealed total average points for all S&S
§ 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 § 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 § 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 § 75.400 violations was 82,
resulting in an average proposed penalty
of $586. MSHA’s analysis revealed total
average points for all S&S § 75.400
violations of 102, resulting in an average
proposed penalty of $2,902, which
includes the ‘‘good faith’’ reduction.
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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
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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
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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
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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 (§ 100.1)
Final § 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 § 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
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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 onesize-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,
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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
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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
§ 100.1 were made in the final rule.
Final § 100.1 adopts the language in the
proposed rule.
Applicability (§ 100.2)
Final § 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 § 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 § 100.2.
Final § 100.2 adopts the language in the
proposed rule.
Determination of Penalty; Regular
Assessment (§ 100.3)
(a) General
This section of the final rule
addresses the determination of a penalty
amount under the regular assessment
provision. Final § 100.3(a)(1) is derived
from existing § 100.3(a), and provides
the criteria for determining penalty
assessments. The final rule, like the
proposal, makes several nonsubstantive, clarifying changes. It
divides existing § 100.3(a) into two
paragraphs designated as § 100.3(a)(1)
and (a)(2).
Final § 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;
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(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 § 100.3(a)(1) and final
§ 100.3(a)(1) adopts the language in the
proposed rule.
Final § 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 § 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 § 100.3(b) is derived from
existing § 100.3(b). Like the existing
rule, final § 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
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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 § 100.3(b) adopts the additional
statement as proposed.
Although final § 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 § 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
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13597
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 § 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 § 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.
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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 § 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
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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 miningrelated. 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
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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 § 100.3(b) modifies the points
for size from the proposed rule. Relative
to the existing rule, final § 100.3(b)
increases the points for the size
according to the following tables.
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(c) History of Previous Violations
Final § 100.3(c) is derived from
existing § 100.3(c). Final § 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 § 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
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be included in determining an
operator’s history.
Proposed § 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
§ 100.3(c). An operator’s history of
violations under existing § 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
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13603
repeat violations in that 15-month
period.
MSHA received numerous comments
with respect to these proposed changes.
Several commenters opposed the 15month period. These commenters
expressed concern that the proposed 15month 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
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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 24month 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 24month 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
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16:16 Mar 21, 2007
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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 § 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
§ 100.3(c) includes clarifying language.
Final § 100.3(c)(1) is a new paragraph
derived from existing § 100.3(c). Final
§ 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 § 100.3(c)(1), like the proposed
rule, provides that penalty points are
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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
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projects that this new provision would
work similar to existing § 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 15month 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
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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 15month 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
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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 scales
for coal and metal and nonmetal
operators and independent contractors.
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In the proposal, the Agency added a
new component to the history criterion
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to target operators who allowed the
same violations to recur, without
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correcting the underlying root cause.
The new § 100.3(c)(2), like the proposal,
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adds repeat violations of the same
citable provision of a standard to an
operator’s history of violations and
could account for a maximum of 20
penalty points. Under the final rule, an
operator would not receive repeat
penalty points until that operator had a
minimum of 6 repeat violations in a
preceding 15-month period.
In response to MSHA’s request for
comments on this proposal, many
commenters opposed it because they
believed that it counted some violations
twice, once in the overall violation
history and again in the repeat violation
category, merely for the purpose of
increasing penalties. In addition, some
of these commenters stated that MSHA’s
many broad performance-oriented
standards are sometimes applied to
multiple conditions that are in reality,
quite different and that, in these
circumstances, operators would be
unfairly penalized for repeat violations
which were intended to cover only the
same or similar conditions. Also, some
commenters expressed concern that
increased penalties for repeat violations
would be unfair in situations in which
an MSHA inspector issues multiple
citations for multiple violations of the
same hazard.
Although some commenters opposed
the repeat violation provision as being
unfair and redundant, other commenters
supported it. MSHA believes that this
new provision is consistent with and
responsive to Congress’s desire to curb
repeat violations. Reporting on the bill
that became the Mine Act, the Senate
Committee on Human Resources stated:
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In evaluating the history of the operator’s
violations in assessing penalties, it is the
intent of the Committee that repeated
violations of the same standard, particularly
within a matter of a few inspections, should
result in the substantial increase in the
amount of the penalty to be assessed. Seven
or eight violations of the same standard
within a period of only a few months should
result, under the statutory criteria, in an
assessment of a penalty several times greater
than the penalty assessed for the first such
violation.
S. Rep. No. 95–181, at 43.
MSHA analyzed violation data for the
15-month period from January 1, 2005,
through March 31, 2006. These data
showed that often inspectors issued
citations for the same safety and health
hazards at the same operation within a
specified period of time. From these
data, the Agency concludes that once a
condition is identified, these operators
are correcting that particular condition
without addressing the root cause of the
problem. This new provision is aimed at
preventing these types of occurrences
and thereby providing a systematic
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improvement to miner safety and
health.
Some of the commenters who
supported the proposed repeat violation
provision expressed concern that it was
too narrowly construed because it only
counted violations of the same
subsection of an MSHA standard. One
commenter provided the example that
violations for combustible materials
under 30 CFR 75.400 should not be
dissected into the specific nature of the
combustible material, i.e., paper, coal
dust, wood, etc., when considering
repeat status. Another commenter
suggested, as an alternative, that MSHA
retain its discretion to use broader
categories of violations of standards in
determining whether a company is a
repeat violator.
MSHA does not agree that the repeat
provision should include broader
categories of violations. MSHA analyzed
violation data for the 15-month period
from January 1, 2005, through March 31,
2006. MSHA’s analysis, interpreting
‘‘same standard’’ to mean ‘‘same citable
provision,’’ showed that 698 of the
10,227 mines with violations had at
least 6 violations of the same citable
provision of a standard. Further, 99 of
the 698 mines had more than 20
violations of the same citable provision
during the 15-month period. Limiting
repeat violations to the same citable
provision targets those operators who
show a repeated lack of commitment to
miner safety and health; this is precisely
the type of behavior that the Agency
seeks to change.
MSHA specifically requested
comments on whether, in determining
penalty points for repeat violations, the
Agency should factor in the number of
inspection days during which the repeat
violations were cited.
Several commenters opposed
factoring in the number of inspection
days when counting violations under
this provision. Most commenters,
however, supported using repeat
violations per inspection day (RPID) to
calculate repeat violations. These
commenters expressed concern that
operators of large mines generally
receive more violations than smaller
mines solely because larger mines have
a greater number of inspections and,
therefore, calculating repeat violations
using RPID would provide a level of
fairness missing from the proposed rule.
The application of RPID to the new
repeat provision would account for
increased inspector presence in large
mines and would place all mines on a
more equitable basis. Therefore, this
final rule incorporates a new repeat
violations table which applies RPID to
the calculation for coal and metal and
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nonmetal operations. Under this table,
repeat points apply only where there
have been a minimum of 6 repeat
violations. In addition, for the same
reasons as stated previously, MSHA will
not apply the repeat criterion until a
coal and metal and nonmetal operator
has received a minimum of 10
violations within a preceding 15-month
period.
RPID cannot be used to calculate
repeat violations for independent
contractors because MSHA does not
record inspection time for contractors.
Therefore, the final rule, like the
proposed rule, uses the total number of
violations in a 15-month period for
establishing repeat violation history for
independent contractors. Although
MSHA received some comments critical
of the proposal with respect to
independent contractors, the Agency’s
historical method of calculating history
for independent contractors has proved
to be both successful and practical.
The final rule revises the proposed
table for repeat violations for
independent contractors by raising the
penalty points for contractors with 6 to
20 repeat violations during the previous
15-month period. Under the final rule,
an independent contractor will receive
the maximum 20 points for 15 or more
repeat violations during the previous
15-month period. These revisions reflect
MSHA’s desire to increase points for
independent contractors, so as to reduce
the discrepancy in penalties between
operators and independent contractors.
The final rule, therefore, retains the
proposed provision for repeat violations
for independent contractors.
MSHA requested comments on
whether all violations should be used to
calculate repeat violations, or whether
only S&S violations should be used.
Many commenters stated it is unfair to
count non-S&S violations in the repeat
violations provision because it would
subject operators to significantly higher
penalties for repeated violations that
have little or nothing to do with miner
safety and health, such as repeated
violations of paperwork standards or
merely technical violations.
Other commenters, however, stated
that MSHA should look at all violations,
including non-S&S citations, in
calculating penalties for repeat
violations because even non-S&S
violations can adversely affect miner
safety and health. MSHA agrees. The
final rule includes all violations, both
S&S and non-S&S, in the calculation of
repeat violation history. Even though
the violations that were assessed in
2005 show that two-thirds of all
violations were non-S&S violations,
non-S&S violations of technical
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standards and low-gravity violations
have the potential to pose a health or
safety danger to miners. By excluding
non-S&S violations from this provision,
MSHA would not be taking a proactive
approach to advancing miner safety and
health; non-S&S violations can lead to
S&S violations and even greater hazards
to miners. In addition, including nonS&S violations would be consistent with
Congress’s intent that penalties must
provide an effective deterrent against all
offenders, and particularly against
offenders with records of past
violations, regardless of whether they
are S&S or non-S&S.
Some commenters who opposed the
proposed repeat violation provision
stated that, if the provision is adopted,
MSHA should avoid retroactive
application of the provision by not
including violations that occurred
before promulgation of the final rule.
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These commenters stated that, had they
known that violations that occurred
prior to the final rule could be used to
trigger significantly higher penalties,
they would have contested those
violations to avoid inclusion under the
repeat violations provision. Final
paragraph (c)(2) does not apply the
repeat violation provision retroactively.
The repeat violation provision under
paragraph (c)(2), like the total number of
violations provision under paragraph
(c)(1), imposes higher penalties for
violations that occur after publication of
this final rule. MSHA, however, has the
authority to consider violations which
occurred before promulgation of this
final rule as part of an operator’s history
of violations, when determining
penalties for violations that occur after
issuance of the final rule. In taking this
action, MSHA would not be impairing
operator rights, increasing an operator’s
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13609
liability for past violations, or imposing
new duties with respect to violations
that have already occurred. Rather,
MSHA would be taking past violations
into consideration in determining a
penalty for a violation that occurred
after promulgation of this final rule.
MSHA, however, plans to pay particular
attention to any circumstances resulting
in an unfair penalty increase. Under
such circumstances, MSHA may process
the violation under the special
assessment provision to determine a
more appropriate penalty.
Penalty points for the number of
repeat violations for coal and metal and
nonmetal operations are presented in
Table II–8. Penalty points for the
number of repeat violations for
independent contractors are presented
in Table II–9.
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(d) Negligence
Final § 100.3(d), derived from the
existing rule, provides for evaluating the
degree of negligence involved in a
violation under five categories: No
negligence, low negligence, moderate
negligence, high negligence, and
reckless disregard. Under the final rule,
like the proposal, no negligence receives
0 points, low negligence receives 10
points, moderate negligence receives 20
points, high negligence receives 35
points, and reckless disregard receives
50 points. Moderate negligence, high
negligence, and reckless disregard
receive increasingly higher penalty
points under the final rule. Penalty
points for these latter categories also are
higher than those in the existing rule,
reflecting MSHA’s intent to target
operators who exhibit an increasing lack
of commitment to and disregard for
miner safety and health.
Several commenters agreed with the
proposed points increase for the three
highest levels of negligence. Several
commenters opposed the proposed
increases as being excessive and stated
that the degrees of negligence are
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subjective and are often evaluated
inconsistently by MSHA inspectors.
MSHA expanded the levels of
negligence from three to five in 1982, in
response to comments recommending
more definite criteria for the assignment
of penalty points to an operator’s
negligence. 47 FR 22286, 22289–90
(May 21, 1982). In so doing, MSHA
intended that five levels of negligence
would allow inspectors to more
appropriately consider all of the facts
and circumstances surrounding a
violative condition or practice.
Although negligence evaluations can be
subjective, the five levels of negligence
permit MSHA inspectors to exercise
independent judgment based on the
circumstances surrounding the violation
and to make appropriate decisions with
respect to the nature or existence of
mitigating circumstances. Negligence is
defined in the rule and in the negligence
section of the ‘‘Citation and Order
Writing Handbook for Coal Mines and
Metal and Nonmetal Mines’’ at https://
www.MSHA.gov. The Handbook
provides guidance to MSHA compliance
personnel when issuing or reviewing
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13611
citations and orders, and is intended to
achieve consistent enforcement.
MSHA disagrees with the comments
that the increase in penalty points for
negligence is excessive. The increase in
penalty points included in the final rule
is in accord with the Mine Act’s
requirement to consider an operator’s
negligence when assessing penalties.
This aspect of the final rule was
designed so that higher penalties would
be assigned to operators who exhibit
increasingly higher levels of negligence,
i.e., a lack of care towards protection of
miners from safety and health hazards.
MSHA intends that the final rule’s
increase in penalty points for the
negligence criterion will result in
increased compliance with the Mine Act
and MSHA’s safety and health standards
and regulations and a greater
commitment to safety and health on the
part of mine operators. No changes were
made to the proposal; the final rule
adopts the proposed language.
Table II–10 shows the penalty points
for negligence under the existing and
final rule.
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(e) Gravity
Final § 100.3(e) is derived from the
existing provision and, like the
proposal, provides that the gravity or
seriousness of a violation is determined
by three factors: (1) The likelihood of
occurrence of an event, (2) the severity
of injury or illness if the event has
occurred or were to occur, and (3) the
number of persons potentially affected.
The final rule, like the proposal,
increases penalty points assigned under
this provision for each of the three
gravity factors as follows: (1) Points for
likelihood of occurrence increase from
10 to 50; (2) points for severity of injury
or illness increase from 10 to 20; and (3)
points for the number of persons
potentially affected increase from 10 to
18. The total maximum points is
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increased from 30 to 88 under the final
gravity criterion.
Several commenters supported the
proposed increased points for gravity.
One commenter suggested that the
proposed points for the severity and
persons potentially affected should have
increased at the same rate as the
likelihood factor. Another commenter,
who supported increased points for
gravity in general, expressed concern
that the factor pertaining to persons
potentially affected is routinely
understated by MSHA inspectors, and
results in fewer penalty points and thus
a lower penalty than what should be
assessed.
Other commenters opposed the
increase in points for gravity. These
commenters expressed concern that
MSHA essentially eliminated the
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distinction between S&S and non-S&S
violations from a penalty perspective.
These commenters gave the example
that a non-S&S violation with an
unlikely likelihood and a fatal severity
would receive 30 gravity points whereas
an S&S violation with a reasonably
likely likelihood and a lost workdays
severity would receive 35 gravity points.
MSHA disagrees with comments
stating that proposed increased points
for gravity are excessively high.
Increased points for gravity are directed
at operators whose mines experience the
more serious mine safety and health
hazards. Increased points, which result
in increased penalties, should
encourage these operators to place
greater emphasis on immediately
correcting the more serious violations
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because they pose the greatest safety
and health risk to miners.
The Agency does not believe that this
aspect of the final rule results in a
blurred distinction between S&S and
non-S&S violations. MSHA reviewed
violations that were assessed in 2005
and projects that S&S violations would
receive an average penalty of $1,385
under the final rule and non-S&S
violations would receive an average
penalty of $207.
Moreover, MSHA’s intent is to place
much more emphasis on the overall
gravity of a violation. To achieve this
goal, each of the three gravity point
tables is revised to increase the points
for likelihood, severity, and persons
potentially affected. In doing so, the
Agency allocated twice as many points
for a permanently disabling injury than
an injury that resulted only in lost work
days. MSHA also doubled the number of
points for a fatal injury, as compared
with a permanently disabling injury.
This approach to increasing gravity
points for severity is reasonable and
necessary because MSHA believes that,
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while all three components of the
gravity determination are important in
determining risk, the likelihood or
probability of an injury occurring
should carry more weight in the overall
penalty determination.
For likelihood, MSHA made the
increase in gravity points between levels
more pronounced as the likelihood of an
injury increased. An unlikely situation
has some potential to result in an injury,
and a reasonably likely situation has a
higher potential for an injury to occur.
MSHA’s position is that those violations
with any degree of likelihood should
receive more points and, as the
likelihood increases, the number of
associated points should increase
significantly. The Agency considers a
situation that resulted in a ‘‘highly
likely’’ or ‘‘occurred’’ likelihood as a
worst-case scenario deserving
significantly higher points.
Regarding MSHA inspectors’
evaluation of the number of persons
potentially affected, MSHA continues to
evaluate inspector citations to
determine where improvements can be
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made. The ‘‘number of persons
potentially affected’’ is a topic covered
in the gravity section of the ‘‘Citation
and Order Writing Handbook for Coal
Mines and Metal and Nonmetal Mines’’
at https://www.MSHA.gov. The
Handbook provides guidance to MSHA
compliance personnel when issuing or
reviewing citations and orders, and is
intended to achieve consistent
enforcement. MSHA has identified the
‘‘number of persons potentially
affected’’ as an area that needs to be
emphasized in both new and refresher
inspector training. In an effort to
improve inspector performance and
consistency in this area, the Agency has
undertaken a number of initiatives. It is
emphasizing this area in inspector
training, placing greater emphasis on
this issue in staff meetings at all levels—
headquarters and field, and improving
enforcement oversight.
Final § 100.3(e) adopts the language in
the proposed rule.
Tables II–11, II–12, and II–13 show
the existing and final penalty points for
gravity.
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(f) Demonstrated Good Faith of the
Operator in Abating the Violation
Final § 100.3(f), like the proposal,
decreases the amount of the reduction of
the penalty, where the operator abates
the violation within the time set by the
inspector, from 30% under the existing
rule to 10% under this final rule. In
addition, the final rule, like the
proposal, eliminates the existing
provision which adds 10 points where
an operator does not abate the violation
within the specified time period.
As stated throughout this rulemaking,
MSHA takes the demonstrated good
faith of the operator in abating the
violation into consideration because it is
one of the statutory criteria to be used
in determining civil penalties under the
Mine Act. Several commenters
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supported the proposed decrease in the
‘‘good faith’’ reduction from 30% to
10%, but others opposed the decrease,
stating that MSHA should retain the
existing 30% reduction because any
smaller amount would be a disincentive
for operators to promptly abate
violations.
MSHA does not anticipate that
changing the good faith reduction from
30% to 10% would adversely affect
miner health and safety or the prompt
abatement of violations. Based on 2005
assessed violation data, mine operators
realized a $5.7 million decrease in
proposed civil penalty assessments due
to the 30% good faith reduction. MSHA
projects that the 10% good faith
reduction in the final rule will result in
a $4.7 million decrease in proposed
penalty assessments, although the
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Agency acknowledges that total
penalties increase significantly under
the final rule. MSHA believes that the
$4.7 million decrease under the final
rule provides an incentive equivalent to
that in the existing rule for mine
operators to abate violations in a timely
manner.
The strongest incentive for abatement
under the final rule is a withdrawal
order issued under section 104(b) of the
Mine Act. The Mine Act requires that
the inspector set a ‘‘reasonable time’’ for
abatement for all violations, regardless
of severity. The inspector sets the
abatement time based on the nature of
the hazard and the corrective actions
needed. Should the mine operator fail to
abate the hazard within the prescribed
time, the inspector will issue a
withdrawal order closing the affected
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area of the mine. In 2006, MSHA used
this regulatory tool and issued 1,200
withdrawal orders that resulted in
closure of the area of the mine affected
by the violation.
All mine operators should take their
responsibilities for mine safety and
health seriously and promptly abate all
violations of the Mine Act and MSHA’s
safety and health standards and
regulations. The Agency also takes
seriously its responsibility to administer
the civil penalty provisions in the Mine
Act in accordance with the statutory
criteria. Congress intended that MSHA
provide some consideration to mine
operators who, when issued a citation
for a violation of a safety and health
standard, correct that violation within
the time set by the inspector. In
recognition of the statutory intent, the
final rule includes an appropriate ‘‘good
faith’’ reduction. MSHA continues to
believe that operators should take
prompt corrective action, regardless of
the amount of the monetary incentive,
in order to avoid the prolonged
existence of a violative or dangerous
condition in the mine. In the event,
however, that an operator does not abate
a violation within the time set by the
inspector, MSHA believes that the Mine
Act’s provisions for withdrawal orders
and daily penalties, discussed below,
provide an adequate compliance
incentive. For these reasons, and in
response to comments, the final rule
retains the 10% ‘‘good faith’’ reduction,
as proposed.
Some commenters opposed
eliminating the 10 additional points
under the existing rule where an
operator does not abate the violation
within the time specified, while others
supported the proposed elimination of
10 additional points. In retaining this
aspect of the proposal, the Agency
intends that the Mine Act’s following
two sanctions for an operator’s failure to
correct violations within the time set by
the inspector be applied: (1) issuance of
a withdrawal order under § 104(b) of the
Mine Act,; and (2) application of the
daily penalty under § 110(b) of the Act.
MSHA believes that these two sanctions
are adequate tools for the Agency to use
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to address the circumstances in which
an operator does not abate the violation
within the time specified by the MSHA
inspector.
Final § 100.3(f) adopts the language in
the proposed rule.
(g) Penalty Conversion Table
Final § 100.3(g), like the proposal,
provides the penalty conversion table
used to convert total penalty points to
a dollar amount. The final rule, like the
proposal, retains the statutory maximum
penalty of $60,000. In addition, it
establishes a new minimum penalty of
$112, up from $72 in the existing rule.
The proposed rule converted points to
dollars as follows: for 60 points or
fewer, the minimum dollar amount was
$112. Each additional point above 60 up
to 133 caused the dollar value to
increase by a fixed 8.33%. The dollar
value assigned for 133 points was
$38,387. At 133 points, the dollar value
increased by approximately $3,070 for
each additional penalty point. The
maximum number of points was 140
and the maximum dollar value was
$60,000.
MSHA received some comments
stating that the $112 minimum penalty
was too low. The final rule retains the
$112 minimum penalty, which is a 56%
increase from the minimum penalty
under the existing rule, and which
MSHA believes represents a reasonable
adjustment upward from the $60
minimum penalty under the existing
penalty regulations.
Several commenters stated that
penalties under the proposed rule could
result in lower penalties than under the
existing regulations. One commenter
provided the example that under the
existing regulations 89 points are
required before MSHA imposes a fine of
more than $25,000, while under the
proposed regulations, 128 points would
be required before MSHA would impose
a fine of more than $25,000. As stated
earlier in this preamble, to accurately
determine a penalty under the proposed
rule one cannot do a side-by-side
comparison of existing to proposed
penalties without also considering how
the point tables have changed.
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Although MSHA projects that the vast
majority of violations will receive an
increase in penalties under this final
rule, MSHA’s analysis of violations that
were assessed in 2005 shows that a
small percentage of violations—5%, or
5,858 of the 116,673 total violations—
would receive a lower penalty under the
final rule than under the existing
regulations. Of the violations that would
receive a lower penalty, approximately
3,485 result from use of the 15-month
period and the 10-violation threshold
for assigning penalty points under
violation history. MSHA believes that
the penalty reductions in these cases are
appropriate in that they generally reflect
an improvement in the most recent
violation history or a small number of
safety and health hazards.
The remaining 2%, approximately
2,400 violations, involve a reduction in
the penalty for other reasons. Of these,
945 are violations which were assessed
under the special assessment provision
of the existing rule, but would receive
a regular assessment under the final
rule. As mentioned, however, in any
circumstance in which MSHA’s regular
assessment may result in anomalies or
inequitable results, MSHA may choose
to apply the special assessment
provision of this final rule to assure that
the penalty is appropriate. Another 671
are violations which, under the final
rule, would not receive the 10-point
penalty for failure to abate under the
existing rule. As stated previously,
MSHA believes that the Mine Act’s two
sanctions for an operator’s failure to
correct violations within the time set by
the inspector—the issuance of a
withdrawal order under § 104(b) of the
Mine Act and the daily penalty under
§ 110(b) of the Act—are adequate tools
for the Agency to use to address the
circumstances in which an operator
does not abate the violation within the
time specified by the MSHA inspector.
The final 757 violations involve a
lowering of the penalty by a negligible
amount.
Final § 100.3(g) adopts the language in
the proposed rule.
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(h) Effect on Operator’s Ability To
Remain in Business
Final § 100.3(h), like the proposal,
provides that MSHA presumes that the
operator’s ability to continue in
business will not be affected by
payment of a civil penalty. In addition,
like the proposal, it provides that MSHA
may adjust the penalty if the operator
submits information to MSHA
concerning the operation’s financial
status which shows that payment of the
penalty will adversely affect the
operator’s ability to continue in
business.
In the proposal, MSHA made several
non-substantive editorial changes for
clarity.
Several commenters expressed
concern that the proposed increase in
penalties would put small operations
out of business. Many of these
commenters requested a variance from
the penalty regulations. In addition, one
commenter stated that MSHA should
not take an operator’s ability to continue
in business into consideration when
determining a penalty. This commenter
expressed concern that an operator that
cannot afford to pay its penalties should
not operate at all.
MSHA takes an operator’s ability to
continue in business into consideration
because it is one of the statutory criteria
to be used in determining civil penalties
under the Mine Act. Under this final
rule, as in the existing rule, MSHA may
adjust the penalty if the operator
demonstrates that the amount of the
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penalty will adversely affect the
operator’s ability to continue in
business. A variance cannot be granted,
however, because under the Mine Act,
MSHA may modify only the application
of a safety standard.
Final § 100.3(h) adopts the language
in the proposed rule.
Unwarrantable Failure (§ 100.4)
Final § 100.4, like the proposal,
deletes the single penalty assessment
provision in existing § 100.4. The
existing single penalty assessment
provided for a $60 penalty for certain
non-S&S violations, i.e., those violations
that were not reasonably likely to result
in reasonably serious injury or illness,
that were abated within the time set by
the inspector, and that did not involve
an operator with an excessive history of
violations.
MSHA received numerous comments
on the proposed deletion of the single
penalty assessment provision. Some
commenters supported deleting the
single penalty assessment because they
stated that these violations were often
perceived as insignificant and accepted
as the cost of doing business. Some of
these commenters provided examples of
operators receiving $60 single penalties
for violations pertaining to
accumulations of combustible material,
roof control problems, and ventilation
problems, where it was cheaper to pay
the $60 penalty than to correct the
underlying violative condition.
Other commenters opposed deleting
the single penalty assessment. Those
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commenters stated that the single
penalty is generally reserved for nonS&S violations that have little or no
safety consequences and, therefore,
these violations should receive minimal
penalties. Most of the commenters
opposed to deleting the single penalty
assessment expressed concern that
operators would be required to spend
disproportionate amounts of time and
resources on violations having minimal
impact on safety and health. In addition,
some commenters expressed concern
that deleting the single penalty
assessment will result in increased
contests and litigation. After careful
review of all comments, an examination
of Agency data, and based upon Agency
experience, MSHA has decided that the
single penalty assessment should not be
included in the final rule.
As mentioned earlier, the agency has
structured a civil penalty regulation
which focuses on reducing all mine
safety and health hazards—both nonS&S and S&S. MSHA believes that every
violation has the potential to contribute
to hazardous or unhealthful conditions
and should be individually assessed a
civil penalty that is commensurate with
the severity of the violation. Also,
MSHA’s experience and data reveal that
often non-S&S violations, if left
uncorrected, will lead to more
hazardous situations. For this reason,
MSHA is deleting the single penalty
assessment provision in an effort to
prompt the mining community to pay
attention to, and promptly abate, all
violations.
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Non-S&S violations are not always
trivial violations deserving nominal
penalties. Accurate recordkeeping, good
housekeeping, and meaningful training
are essential elements of an effective
safety and health program in the
workplace. For example, an operator’s
failure to properly train a miner in first
aid is often classified as a non-S&S
violation; however, such a violation
sometimes can result in fatal
consequences.
Moreover, a violation that is not
reasonably likely to result in a
reasonably serious injury or illness may
eventually result in a serious injury or
illness if it is not corrected. By deleting
the single penalty assessment provision,
the Agency believes that mine operators
will focus more attention on identifying
and correcting the root causes of mine
safety and health hazards. These nonS&S violations should not be viewed as
an insignificant part of the cost of doing
business. Rather, they should be
evaluated under the regular assessment
provision so that the operator’s size,
history, negligence, and the gravity of
the violation can be taken into
consideration in determining the
amount of the penalty assessment.
Operators with a low history of
violations, violations that truly involve
minor or technical violations, that pose
less serious threats to health and safety,
that involve low or no negligence, and
that are abated within the time set by
the inspector, likely will receive a total
of 60 points or fewer and a penalty of
only $100 (including application of the
‘‘good faith’’ reduction) under the
regular assessment provision of this
final rule.
Some commenters requested that
MSHA include empirical data and
projections pertaining to deleting the
single penalty assessment provision.
MSHA, using violations that were
assessed in 2005, converted penalties
assessed under the single penalty
provision of the existing rule to
penalties under the regular assessment
provision of this final rule. MSHA
found that the $60 penalties assessed
under the single penalty provision
would range from $100 (assuming
application of the ‘‘good faith’’
reduction) to $14,343 for metal and
nonmetal mines and from $112 to
$21,442 for coal mines. The Agency is
providing this information for
illustrative purposes only. The highest
ranges of penalties occurred for one coal
violation and for one metal/nonmetal
violation and are anomalies. MSHA
does not expect non-S&S violations to
result in penalties of this level under the
final rule; however, in the event that a
regular assessment produces an
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inappropriate result, the penalty would
be processed under the special
assessment provision. Under the final
rule, MSHA estimates the average nonS&S penalty would be $192.
In addition, under the final rule,
MSHA projects that 44% of violations
(32% for coal and 59% for metal and
nonmetal mines) would receive the
minimum penalty (including
application of the ‘‘good faith’’
reduction). This compares with 64% of
violations (58% for coal and 72% for
metal and nonmetal mines) that
received the single penalty under the
existing rule.
Based on the Agency’s evaluation of
the violations that were assessed in
2005 and the Agency’s experience
gained under the existing single penalty
provision, MSHA believes that deleting
the single penalty assessment will
encourage compliance with the Mine
Act and MSHA’s safety and health
standards and regulations and prompt
abatement of violations.
For the foregoing reasons, the single
penalty assessment provision is deleted
from this final rule.
Final § 100.4 is a new provision
which replaces existing § 100.4
pertaining to the single penalty
assessment. Final § 100.4, like the
proposal, implements Section 8(a)(1)(B)
of the MINER Act related to minimum
unwarrantable failure penalties. It
establishes a minimum penalty of
$2,000 for any citation or order issued
under section 104(d)(1) of the Mine Act,
and establishes a minimum penalty of
$4,000 for any order issued under
section 104(d)(2) of the Mine Act.
Commenters generally were in
agreement with the proposed provision.
Some commenters, however, expressed
concern that the statutory minimum
penalties of $2,000 and $4,000 would
become default penalties. They stated
that these penalties should either be the
statutory minimum amount or the
amount assessed under the regular
assessment formula, whichever is
greater. MSHA agrees. Under the final
rule, penalties for unwarrantable failure
violations processed through the regular
assessment provision will receive at
least the minimum amount as specified
in the MINER Act. Unwarrantable
failure violations processed as regular
assessments which generate a penalty
greater than the statutory minimum will
receive that penalty. As appropriate,
unwarrantable failure violations also
may continue to be processed under the
special assessment provision.
Final § 100.4 adopts the language of
the proposed rule.
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Determination of Penalty; Special
Assessment (§ 100.5)
Final § 100.5, like the proposed rule,
is derived from existing § 100.5, and,
like the proposal, provides for a special
assessment for those violations which
MSHA believes should not be processed
under the regular assessment provision.
It also removes the second sentence in
existing § 100.5(a) which states that:
Although an effective penalty can generally
be derived by using the regular assessment
formula and the single assessment provision,
some types of violations may be of such a
nature or seriousness that it is not possible
to determine an appropriate penalty under
these provisions.
In addition, this provision, like the
proposal, removes the existing list of
eight categories of violations that MSHA
reviews for possible special assessment.
MSHA received numerous comments
on the Agency’s proposal to delete the
eight categories of violations which are
reviewed for special assessment in the
existing rule. Some commenters
supported processing most violations
under the regular assessment provision,
stating that the existing special
assessment process sometimes results in
extended periods between the issuance
of a citation or order and the issuance
of the penalty. These commenters
indicated that MSHA has sometimes
taken over one year to issue a penalty
under the special assessment provision,
and stated that penalties would be
processed in a timelier manner under
the proposal. Other commenters
supported the proposal, stating that it
would remove arbitrary penalties from
being issued under the special
assessment provision.
Some commenters opposed the
proposal. They expressed concern that
processing violations that fall in the
eight categories in the existing rule as
regular assessments would result in
lower penalties. Some of these
commenters stated that the final rule
should levy heavy penalties on blatant
violations and operators who flout the
law, and that eliminating the eight
categories of violations that receive
consideration for special assessments
under the existing rule will create
confusion for companies by eliminating
certainty about when they will be
subject to special assessments. Other
commenters who opposed the proposal
expressed concern that MSHA would
exercise unfettered discretion in
assessing any violation under the
special assessment provision.
MSHA agrees with the commenters
who stated that processing most
violations under the regular assessment
provision will enhance the consistency
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and timeliness of the assessment
process. One of MSHA’s goals for this
rulemaking is to improve the
effectiveness and efficiency of the civil
penalty process. As stated in the
preamble to the proposed rule, the
existing special assessment provision
has resulted in a time-consuming and
resource-intensive process. For
violations specially assessed in 2005, it
took an average of 168 days from the
date a violation was terminated to the
date the assessment was mailed. Under
the regular assessment, such violations
generally are assessed within 70 days of
the termination date. MSHA strongly
believes that penalties issued closer to
the issuance of the citation or order will
have a more meaningful, behaviorchanging effect on mine operators.
In addition, because MSHA is
retaining its discretion to determine
which types of violations would be
reviewed for special assessment,
removal of the eight categories of
violations will not limit the Agency’s
authority to waive the regular
assessment if the Agency determines
that a special assessment is appropriate
for any type of violation. Indeed, as
stated in the preamble to the proposed
rule, MSHA never intended the existing
eight categories to be an exhaustive list
of the types of violations that could be
assessed under the special assessment
provision. This final rule clarifies the
Agency’s intent. Further, as stated
throughout this rulemaking, by
removing the specific list of violations,
MSHA will be able to focus its
enforcement resources on more field
enforcement activities, as opposed to
administrative review activities.
MSHA projects that the regular
assessment provision will provide an
appropriate penalty for most violations.
By way of illustration, using data for
violations that were assessed in 2005,
MSHA compared the penalty for 2,698
of the 3,189 violations assessed under
the special assessment provision to the
penalty that would have been assessed
under the regular assessment provision
of this final rule. The Agency excluded
violations that involved a fatality and
those issued to agents of the mine
operator from this comparison because
those violations would continue to be
processed as special assessments under
the final rule. MSHA found that the
penalty for these 2,698 violations would
have increased by approximately 98%
under the regular assessment provision
of this final rule. Nevertheless, MSHA
expects that there will be circumstances
in which the regular assessment
provision of this final rule will not
provide an appropriate penalty for
particular violations. The Agency found,
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in reviewing violations that were
assessed in 2005, approximately 35% of
all violations issued under the special
assessment provision of the existing rule
would have received a lower penalty
under the regular assessment provision
of this final rule. MSHA intends to
apply the special assessment provision
of this final rule for those violations
where the regular assessment does not
provide an appropriate penalty.
Consistent with a commenter’s request,
MSHA intends to review the special
assessment provision in the future to
determine whether it is achieving its
purpose or whether changes are needed.
MSHA monitors, on a monthly basis,
the number of assessments under the
existing special assessment provision.
MSHA intends to continue this
monitoring and to analyze the
monitoring results. In addition, as stated
previously, MSHA intends to continue
to process violations involving a fatality
and those issued to agents of the mine
operator as special assessments. MSHA
will also process flagrant violations,
violations for failure to timely notify
MSHA, and timely abate violations, and
smoking violations, as listed under
sections 100.5(c) through (f) as special
assessments.
Final § 100.5(a) adopts the language of
the proposed rule.
Final § 100.5(b), like the proposal,
contains non-substantive changes for
clarity. It removes the reference to
existing § 100.4(b) because the single
penalty provision is deleted in this final
rule. MSHA received no comments on
this proposal and made no changes to it.
Therefore, final § 100.5(b) adopts the
language of the proposed rule.
Final § 100.5(c), like the proposal,
remains unchanged from existing
§ 100.5(c). It provides that any operator
who fails to correct a violation for
which a citation has been issued under
section 104(a) of the Mine Act within
the period permitted for its correction
may be assessed a civil penalty of not
more than $6,500 for each day during
which such failure or violation
continues.
One commenter stated that MSHA
should apply the maximum daily
penalty of $6,500 while abatement work
is being performed and it should
continue to be applied every day until
all such work is completed. MSHA will
continue to enforce the daily penalty in
accordance with the Mine Act, which
provides for a ‘‘reasonable time’’ for
abatement. The final rule adopts the
language used in the proposal.
Final § 100.5(d), like the proposed
rule, remains unchanged from existing
§ 100.5(d). This provision pertains to
penalties for miners who violate
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standards related to smoking and
smoking materials. MSHA received a
few comments on this proposal. They
suggested that MSHA increase the
maximum penalty that could be
assessed against a miner for a smoking
violation. One commenter suggested an
increase from $275 to $500 and another
commenter suggested an increase to
$220,000, similar to the maximum
penalty for flagrant violations. The
maximum penalty for miners who
violate standards related to smoking or
smoking materials, however, is
established by statute, and can be
adjusted only for inflation unless
specifically adjusted by Congress.
Therefore, the final rule retains the
language of existing paragraph (d) as
proposed.
Final § 100.5(e), like the proposal,
implements the provision of the MINER
Act pertaining to penalties for flagrant
violations. Under the MINER Act,
violations that are deemed to be flagrant
may be assessed a civil penalty of not
more than $220,000. The proposal,
which adopted the definition in the
MINER Act, defined a ‘‘flagrant’’
violation as a reckless or repeated
failure to make reasonable efforts to
eliminate a known violation of a
mandatory health or safety standard that
substantially and proximately caused, or
reasonably could have been expected to
cause, death or serious bodily injury.
Several commenters stated that the
proposed language with respect to
flagrant violations was too vague. They
suggested that flagrant violations be
limited to repeated violations of the
same standard that were issued under
Section 104(d) of the Mine Act,
characterized as involving reckless
disregard. They further suggested that
flagrant violations be limited to
violations that have been finally
adjudicated. MSHA considered these
suggestions in developing this final rule
and has determined that it would be
most beneficial to miner’s safety and
health to retain the proposed language.
In addition, the proposed language
mirrors the MINER Act. Violations that
are deemed to be flagrant would be
subject to a penalty of up to $220,000
under the special assessment provision
of this final rule.
Several commenters expressed
concern that proposed § 100.5(e)
wrongly applied the penalty for flagrant
violations to violations under section
110(a) of the Mine Act. They stated that
Congress adopted penalties for flagrant
violations by amending section 110(b) of
the Mine Act, which pertains to
penalties assessed to operators who
have failed to correct a violation. They
asserted that Congress intended the
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penalty for flagrant violations to apply
only to failures to correct a violation
under section 110(b).
Section 1301 of the Pension
Protection Act contains technical
amendments to the MINER Act. Public
Law No. 109–280 (Aug. 17, 2006). The
provision for criminal penalties was
moved from section 110(a)(2) of the
Mine Act and is now the new section
110(d). Section 110(b) of the Mine Act
now has two sub-subsections. Section
110(b)(1) provides for assessment of a
daily civil penalty for violations that
have not been corrected. Section
110(b)(2) provides for assessment of a
civil penalty of not more than $220,000
for violations that are deemed to be
flagrant.
For a number of reasons, MSHA
believes that a flagrant violation under
section 110(b)(2) is not limited to a
violation that an operator has failed to
correct under section 110(b)(1). First,
section 110(b)(1) specifically applies to
failure to correct a ‘‘violation for which
a citation has been issued.’’ In contrast,
section 110(b)(2) applies to failure to
eliminate a ‘‘known violation,’’ and
does not specify that a ‘‘known
violation’’ must be a violation which
has been cited.
Second, the Senate Report
accompanying the MINER Act discusses
flagrant violations without any reference
to section 110(b) and without any
indication that a flagrant violation must
be a violation which has been cited. S.
Rep. No. 109–365 (Dec. 6, 2006).
Third, section 110(b)(2) applies to
failure to eliminate violations ‘‘under
this section’’ (emphasis added) that are
deemed to be flagrant. Section 110(b)(2)
cannot be read as applying only to
violations under section 110(b) because
section 110(b) is a subsection, not a
section. Instead, Section 110(b)(2) must
be read as applying to violations under
the section in which it appears—i.e.,
section 110—including section 110(a).
Fourth, section 110(b)(2) is, by virtue
of its designation as a sub-subsection
separate and distinct from section
110(b)(1), a provision distinct and
independent from section 110(b)(1).
That designation suggests that section
110(b)(2) is not limited to violations
encompassed by section 110(b)(1).
Finally, it would be illogical to limit
flagrant violations to violations which
have been cited. Plainly, failure to
eliminate a violation which is known to
the operator but which has not been
cited by MSHA—perhaps because
MSHA has not conducted an inspection
since the violation arose—can be just as
dangerous, and just as deserving of an
enhanced penalty, as a violation which
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is known to the operator and which has
been cited.
Accordingly, the proposal has been
modified. Final § 100.5(e) includes a
reference to section 110(b)(2) of the
Mine Act.
Final § 100.5(f), like the proposal,
implements the penalty provisions of
the MINER Act pertaining to prompt
incident notification. Under the MINER
Act, an operator who fails to provide
timely notification to the Secretary, in
the event of a death, or an injury or
entrapment with reasonable potential to
cause death, under section 103(j)
(relating to the 15-minute requirement)
shall be assessed a civil penalty of not
less than $5,000 and not more than
$60,000.
One commenter expressed concern
that proposed § 100.5(f) would be
applied to all violations under part
50.10, stating that for example,
violations for failure to report a fire or
hoist problems would be included.
Final § 100.5(f), like the proposed rule,
implements the penalty provisions of
the MINER Act pertaining to prompt
incident notification. In this regard,
final § 100.5(f) is applicable only to the
following events: the failure to notify
MSHA of a death, or an injury or
entrapment which has a reasonable
potential to cause death.
Several commenters stated that this
proposed provision is
counterproductive and could inhibit
first responders from time-critical
stabilization of a victim. They suggested
adding language, for example, that in a
case in which delay has the potential to
cause additional injuries, or the victim
of an accident requires first aid, the 15
minutes shall begin upon stabilization
of the site and the victim. This same
issue was raised during the rulemaking
concerning MSHA’s Emergency Mine
Evacuation Final Rule published on
December 8, 2006. In the preamble to
that rule, MSHA addressed the issue in
the following manner:
If a situation were to arise involving
extenuating circumstances, such as an
operator having to choose between saving
someone’s life and notifying MSHA,
enforcement discretion would take those
circumstances into account. MSHA does not
expect that an operator who has to make a
decision between rendering life-saving
assistance and calling MSHA would be
penalized for providing that assistance.
71 FR 71430 (Dec. 8, 2006). MSHA
supports the foregoing conclusion.
No changes were made to proposed
§ 100.5(f) and the final rule adopts the
proposed language.
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13623
Procedures for Review of Citations and
Orders; Procedures for Assessment of
Civil Penalties and Conferences
(§ 100.6)
Final § 100.6, like the proposed rule,
contains requirements and
administrative procedures for review of
citations and orders.
Final § 100.6(a), like the proposal,
contains the provision in existing
100.6(a) that all parties, i.e., the operator
and miners or their representatives,
shall have the opportunity to review
each citation and order with MSHA. In
addition, it incorporates existing
§ 100.6(c), which provides that the
decision to grant a request for a
conference is within MSHA’s discretion.
MSHA received no comments on the
proposed reorganization of § 100.6(a).
Therefore, the final rule adopts the
language in the proposal.
Final § 100.6(b), like the proposal, is
derived from existing § 100.6(b). MSHA
proposed modifying the existing
provision by reducing the period, from
10 days to five days, within which an
operator could submit additional
information or request a safety and
health conference with the District
Manager or designee.
In addition, at the last two public
hearings during this rulemaking, the
Agency stated in its opening statement
that it intended to include a
requirement that a request for a safety
and health conference be in writing and
include a brief statement as to why each
citation or order should be conferenced.
The Agency requested comment on this
issue. To allow all parties an
opportunity to comment on this issue,
MSHA reopened the comment period to
this rulemaking and specifically
requested comments as to whether a
request for a safety and health
conference should be in writing and
whether such a request should include
a brief statement of the reason why each
citation or order should be conferenced.
A few commenters supported the
proposed reduction of the period within
which an operator could submit
additional information or request a
safety and health conference. One
commenter stated that the proposal
would result in a more effective civil
penalty system because penalties would
be assessed closer in time to the
issuance of the citation.
Almost all commenters, however,
opposed the proposed reduction in the
time period for requesting a safety and
health conference. They stated that they
would not have sufficient time to
evaluate a citation or order and
determine the appropriate course of
action to take. In addition, they stated
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that delays in scheduling conferences
often cause delays in the issuance of
penalties. Several commenters noted
that conferences sometimes are not held
until several months after a request has
been made because MSHA’s Conference
and Litigation Representatives (CLRs)
have a backlog of conferences.
After receiving comments, MSHA
decided not to reduce the 10-day period
within which a party may submit
additional information or request a
safety and health conference. In making
this decision, the Agency believes that
the safety and health of miners is
improved when, after an inspection,
operators and miners or their
representatives are afforded an ample
opportunity to discuss safety and health
issues with the MSHA District Manager
or designee.
MSHA received one comment in
support of and several comments
opposed to the proposed requirement
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.
Commenters opposed to the proposal
stated that a requirement that
conference requests be in writing would
cause extreme difficulties for the
operator and ultimately result in
discouraging the conference process.
Specifically, these commenters stated
that the proposed requirement places an
unnecessary burden on operators who
have limited administrative resources to
thoroughly investigate citations and
orders and gather documentation within
a limited amount of time pertaining to
each citation and order.
One commenter generally agreed with
the proposal that the request for a safety
and health conference be in writing and
include a brief statement as to why each
citation or order should be conferenced,
but stated that the requirement should
not be mandatory. Several commenters
stated that some MSHA districts
currently require safety and health
conference requests to be in writing.
One commenter mistakenly believed
that the existing regulations require that
safety and health conference requests be
in writing.
After reviewing all comments, MSHA
has decided to include in the final rule
the proposed requirement that the
request for a safety and health
conference be in writing and include a
brief statement as to why each citation
should be conferenced. In making this
decision, MSHA anticipates that this
provision will assist parties requesting a
conference to focus on the issues to be
discussed at the conference. It is not
MSHA’s intent under this proposal to
require operators and/or miners’
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representatives to provide a large
amount of documentation. Rather, it is
MSHA’s intent that operators and/or
miners’ representatives provide a
concise statement concerning the reason
the requesting parties wish to discuss
each violation. MSHA notes that the
Agency does not intend to limit
discussion at the safety and health
conference to the specific points raised
in the written statement.
MSHA projects that this proposed
provision will lead to a more
meaningful and effective conference for
all parties. Also, it will help expedite
the conference process by providing the
District Manager with necessary
information prior to conducting the
conference, including information that
may assist the District Manager in
deciding whether to grant a conference.
Therefore, the final rule includes the
requirement that a request for a safety
and health conference be in writing and
include a brief statement as to why each
citation should be conferenced.
Final 100.6(c), like the proposal, is
derived from and remains unchanged
from existing § 100.6(d). MSHA received
no comments on this proposal.
Final 100.6(d), like the proposal, is
derived from existing §§ 100.6(e), (f),
and (g). The final rule remains
substantively unchanged from the
proposed rule. MSHA received no
comments on the proposal.
Notice of Proposed Penalty; Notice of
Contest (§ 100.7)
Final § 100.7, like the proposal, is
derived from existing 100.7, and
provides for procedures applicable to a
notice of proposed penalty and notice of
penalty contest. Final paragraph (a) sets
out the circumstances under which a
notice of proposed penalty will be
served on the parties, and final
paragraph (b) sets out the procedures for
contesting a notice of proposed penalty,
and final order of the Commission.
The final rule, like the proposal,
includes editorial changes for clarity,
but remains substantively unchanged
from the existing provision. Proposed
paragraph (a) stated that a notice of
proposed penalty will be issued and
served by certified mail. MSHA is
interpreting ‘‘certified mail’’ to include
delivery methods such as Federal
Express that offer proof of delivery. The
existing provision is therefore amended
to include the equivalent of certified
mail as a means of service of the notice
of proposed penalty.
Proposed § 100.7(b) deleted from the
regulatory text the following: (1) The
reference to a return mailing card that
is used to request a hearing before the
Commission, (2) the reference to
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providing instructions for returning the
card to MSHA, and (3) the provision
that MSHA will immediately advise the
Commission of the contest and also
advise the Office of the Solicitor of the
contest. MSHA proposed these deletions
because the Agency is no longer using
a return mailing card. Instead, MSHA
currently provides a statement that lists
violations being assessed, instructions
for paying or contesting assessments,
and MSHA contact information to
facilitate an operator’s request for a
hearing. MSHA intends to continue this
practice. In addition, MSHA intends to
continue to advise the Office of the
Solicitor and the Commission of the
notices of penalty contest. MSHA has
determined that this manner of operator
notification of contested assessments
does not constitute an Information
collection activity by MSHA.
Several commenters stated that
MSHA should include in this rule a
provision to force operators to pay
assessed penalties. They expressed
concern that uncollected fines send a
message to all operators that MSHA is
not serious about Mine Act
enforcement. One commenter stated that
it is within the Secretary’s authority to
pursue such operators aggressively, that
MSHA should do so, and that if MSHA
believes that it has insufficient authority
to do this, MSHA should submit
legislative proposals to strengthen its
ability to enforce the law.
MSHA vigorously collects penalties
and takes its collection activities
seriously. In fact, for the 10-year period
from 1997 through 2006, MSHA issued
over $239 million in civil penalties and
has collected nearly $175 million of
that. In addition, MSHA notes that each
agency that collects civil monetary
penalties must have a policy to send
delinquency letters to employers who
have not made payments on the
assessed penalties. According to the
Debt Collection Improvement Act of
1996, once the debt has been delinquent
for 180 days, the debt should be sent to
the U.S. Department of Treasury for
collection. MSHA has the authority to
refer delinquent civil penalty debt to
Treasury and, on a weekly basis, refers
unpaid debt to Treasury. Furthermore,
MSHA has explored innovative ways to
legally force operators to pay penalties
and to deal aggressively with those who
do not. Further suggestions related to
collection activities, however, are
beyond the scope of this rulemaking.
No changes were made to proposed
§ 100.7 and the final rule adopts the
proposed language.
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Service (§ 100.8)
Final § 100.8, like the proposal, is
substantively unchanged from the
existing rule. It provides that service of
proposed civil penalties will be made at
the mailing address of record for an
operator and miners’ representative, that
penalty assessments may be mailed to a
different address if MSHA is notified in
writing of the new address, and that
operators who fail to file a notification
of legal identity under 30 CFR part 41
will be served at their last known
business address. Like the proposed
rule, specific references to part 40
(Representative of Miners) and part 41
(Notification of Legal Identity) have
been changed from existing § 100.8 to
indicate that they are parts contained in
Chapter I of Title 30 CFR. MSHA
received no comments on this proposal.
No changes were made to proposed
§ 100.8 and the final rule adopts the
proposed language.
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III. Executive Order 12866
Executive Order 12866 as amended by
Executive Order 13258 (Amending
Executive Order 12866 on Regulatory
Planning and Review) requires that
regulatory agencies assess both the costs
and benefits of regulations. To comply
with Executive Order 12866, MSHA has
prepared a Regulatory Economic
Analysis (REA) for the final rule. The
REA contains supporting data and
explanation for the summary materials
presented in sections III–VI of this
preamble, including the covered mining
industry, costs and benefits, feasibility,
small business impact, and paperwork.
The REA is located on MSHA’s Web site
at https://www.msha.gov/regsinfo.htm. A
copy of the REA can be obtained from
MSHA’s Office of Standards,
Regulations, and Variances.
Executive Order 12866 classifies a
rule as a significant regulatory action
requiring review by the Office of
Management and Budget if it meets any
one of a number of specified conditions,
including: Having an annual effect on
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the economy of $100 million or more,
creating a serious inconsistency or
interfering with an action of another
agency, materially altering the
budgetary impact of entitlements or the
rights of entitlement recipients, or
raising novel legal or policy issues.
MSHA has determined that, based on
the REA, the final rule would not have
an annual effect of $100 million or more
on the economy and, therefore, would
not be an economically significant
regulatory action under Section 3,
paragraph (f) of Executive Order 12866.
MSHA, however, has concluded that the
final rule is otherwise significant under
Executive Order 12866 because it raises
novel legal or policy issues.
A. Population at Risk
Based on 2005 data, the final rule will
apply to the entire mining industry,
covering all 14,666 mine operators and
6,585 independent contractors in the
United States, as well as the 261,449
miners and 83,267 contract workers
they employ.
B. Costs
In order to derive and explain the cost
impact of the final rule on the mining
industry, MSHA has divided its analysis
into three sections: (1) The baseline—
the total number and monetary amount
of civil penalty assessments proposed
by MSHA in 2005; (2) the impact of the
final rule on civil penalty assessments
under the assumption that mine
operators and independent contractors
take no actions, in response to increased
proposed penalty assessments, to
improve compliance with MSHA
standards and regulations; and (3) the
impact of the final rule on the number
and amount of civil penalty assessments
taking into account the anticipated
response of mine operators and
independent contractors to increase
compliance with MSHA standards and
regulations and thereby reduce the
number of civil penalty assessments
they otherwise would receive. There is
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13625
an additional cost in the final rule
associated with a new requirement that
mine operators request a safety and
health conference in writing and
include a brief statement of the reason
why each citation or order should be
conferenced.
It is important to note the nature of
the increase in civil penalties as it
impacts the mining industry. For most
MSHA rules, the estimated impact
reflects the cost to the mining industry
of achieving compliance with the rule.
For this final rule, the estimated impact
consists of two parts: (1) Increased
payments for penalties and (2) expenses
incurred to increase compliance with
MSHA standards and regulations so as
to reduce the number and amount of
civil penalties otherwise received. This
analysis assumes, in the baseline against
which the impacts of the rulemaking
will be compared, a certain amount of
non-compliance with current MSHA
standards and regulations. Therefore,
compliance efforts made in response to
increased penalties are a cost shown in
the final rule. This analysis reflects
additional expenditures associated with
improved compliance.
1. Baseline
The first step in estimating the impact
of the final rule is to establish a
baseline: the number and monetary
amount of civil penalty assessments in
the absence of the final rule. For this
purpose, MSHA chose all violations that
were assessed in 2005. Table III–1
shows the number of civil penalty
assessments issued in 2005,
disaggregated by employment size for
coal and metal and nonmetal (M/NM)
operations, and independent contractors
at coal and metal and nonmetal
operations.1
1 The total number of violations for 2005 is the
same as was presented in the analysis in support
of the proposed rule. A few dozen independent
contractor violations, however, were misclassified
by employment size in that analysis. These have
been corrected in MSHA’s analysis of the final rule.
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Federal Register / Vol. 72, No. 55 / Thursday, March 22, 2007 / Rules and Regulations
is that coal mines are, on average, larger
operations than metal and nonmetal
mines, and larger mines tend to receive
more violations, on average, than
smaller mines. The average coal mine
operator employed approximately three
times as many miners as the average
metal and nonmetal operator in 2005.
The amount used for each 2005 civil
penalty assessment in the baseline was
the penalty proposed by MSHA. Table
III–2 shows, by employment size, the
total baseline dollar amount of civil
penalties proposed by MSHA in 2005
for coal and metal and nonmetal mining
operations and for independent
contractors at coal and metal and
nonmetal mines.
Table III–2 reveals that total civil
penalty assessments in 2005 were
substantially larger—more than 50%
larger—for coal mines than for metal
and nonmetal mines. The larger
aggregate penalty assessment for coal
mines is due to the larger number of
violations issued to coal mines and the
increased average penalty per violation.
Coal violations tend to be more serious,
on average, than metal and nonmetal
violations (e.g., 40% of coal violations
are S&S, versus 23% for metal and
nonmetal violations).
Of the $24.9 million in civil penalties
proposed by MSHA in 2005, $16.6
million, or approximately 67%, were
from single penalty and regular
assessments. The remaining $8.2
million were from special assessments.
Of this amount, approximately $0.3
million were issued to agents of mine
operators and another $1.5 million were
issued for violations involving a fatality.
Table III–3 displays the baseline
average dollar amount of a proposed
civil penalty in 2005 disaggregated by
employment size for coal and metal and
nonmetal mining operations and for
independent contractors at coal and
metal and nonmetal mines. The average
penalty assessment for a violation in
2005 was $213. For a single penalty
assessment, the average penalty was
$60. For a regular penalty assessment,
the average penalty was $316. For a
special assessment, the average penalty
was $2,574. For special assessments
issued to agents of the mine operator,
the average assessment was $582; for
special assessments involving a fatality,
the average penalty was $27,181; and for
all other special assessments, the
average penalty was $2,385.
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ER22MR07.017
violations in 2005, even though there
were more than 31⁄2 times as many metal
and nonmetal operators and
independent contractors as there were
coal operators and independent
contractors. One reason for the larger
number of coal violations is that there
are approximately three times as many
underground coal mines as
underground metal and nonmetal
mines. There are a number of
circumstances surrounding
underground mines which tend to result
in a greater number of violations. They
are required to be inspected more often,
and conditions are generally more
dangerous and subject to change.
Another reason for more coal violations
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The employment size categories being
used are 1–5 employees, 6–19
employees, 20–500 employees, and
more than 500 employees. These
categories are relevant for the analysis of
impact in Section V of this preamble, to
determine whether small mines, as
defined by the SBA and MSHA, will be
significantly impacted by the final rule.
Of the 116,673 civil penalty
assessments issued in 2005, 113,484, or
approximately 97.3%, were single
penalty or regular assessments. The
remaining 3,189, or 2.7%, were special
assessments.
As can be calculated from Table III–
1, there were approximately 25% more
coal violations than metal and nonmetal
Federal Register / Vol. 72, No. 55 / Thursday, March 22, 2007 / Rules and Regulations
13627
under the final rule, MSHA estimates
that the number of special assessments
will decline by 85%, from 3,189 to 491.
MSHA anticipates that, under the final
rule, the regular assessment provision
will generally provide an appropriate
penalty for most violations previously
processed as special assessments.
Equally significant, this will allow
MSHA to focus its enforcement
resources on more field enforcement
activities, as opposed to administrative
review activities.
Tables III–4 and III–5 show the
estimated total dollar amount and
average dollar amount, respectively, of
civil penalties under the final rule,
assuming no compliance response by
mine operators and independent
contractors.2 Table III–6 shows, relative
to the baseline, the estimated percentage
increase of civil penalties (both total
and average) under the final rule,
assuming no compliance response by
mine operators and independent
contractors. All of these tables are
disaggregated by employment size, coal
and metal and nonmetal mining
operations, and independent contractors
at coal and metal and nonmetal mines.
2 The analysis in support of the proposed rule had
a minor error in the formula for calculating history
for repeat violations of the same standard, the effect
of which was to slightly underestimate the impact
of the proposed rule. The analysis also improperly
assigned history points to operators with fewer than
10 violations over a previous 15-month period, the
effect of which was to slightly overestimate the
impact of the proposed rule. These errors have been
corrected in MSHA’s analysis of the final rule. The
corrected estimate of total civil penalties under the
proposed rule, assuming no compliance response
by industry, is $70.0 million (rather than $68.5
million); the average civil penalty is $600 (rather
than $587); and the percentage increase of civil
penalties is 182% (rather than 176%).
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2. Impact If No Compliance Response to
Increased Penalties
With the baseline established, the
next task in the cost analysis is to
determine the impact of the final rule on
civil penalty assessments under the
assumption that mine operators and
independent contractors take no actions,
in response to increased proposed
penalty assessments, to increase
compliance with MSHA standards and
regulations. This task is an intermediate
step in determining the total cost impact
of the final rule, as MSHA’s assumption
in III.B.3 of this preamble is that mine
operators and independent contractors
will change their compliance behavior
in response to increased penalties.
Given the assumption of no
compliance response by mine operators
and independent contractors, the
number of violations would not change
in response to the final rule. They
would remain the same as presented in
Table III–1 for the baseline. The type of
the violations, however, will change
under the final rule. In the analysis, all
2005 regular and single penalty
assessments will be issued as regular
assessments under the final rule. MSHA
assumed that most unwarrantable
failure violations would be processed as
regular assessments, but would receive
at least the minimum penalty amounts
required in the MINER Act. MSHA also
assumed that violations issued to
agents, those involving a fatality and
processed as a special assessment in
2005, those involving failure to
promptly notify MSHA, and those
determined to be flagrant will be
processed as special assessments under
the final rule. For purposes of this
analysis, MSHA further assumed that all
other 2005 special assessments will be
processed as regular assessments. Thus,
Table III–3 shows that the average
proposed penalty assessment in 2005
generally tended to increase as mine
size increased. The result is consistent,
particularly for mine operators with 20
or more employees.
Table III–3 also indicates that the
difference in average penalties between
coal and metal and nonmetal mining
operations of a given employment size
and between independent contractors
for a given employment size at coal and
metal and nonmetal mines is generally
small.
Federal Register / Vol. 72, No. 55 / Thursday, March 22, 2007 / Rules and Regulations
As indicated in these tables, MSHA
estimates that total civil penalty
assessments will increase under the
final rule, assuming no compliance
response, from $24.9 million to $69.3
million, an increase of $44.5 million, or
179%. Approximately $2.5 million, or
4%, will come from special
assessments. Of the $44.5 million
increase, approximately $1.9 million
will result from the minimum penalty
provisions for unwarrantable violations
in the MINER Act. In its analysis of
2005 data, MSHA found one violation
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which met the failure to provide timely
notification provision in the MINER
Act. For this category of violations, the
MINER Act imposes a penalty of $5,000
to $60,000. The particular violation,
however, had already received a special
assessment in excess of $5,000. Thus,
MSHA did not adjust penalty totals to
account for this provision of the MINER
Act.
MSHA has determined that flagrant
violations will be processed under the
special assessment provision. As stated
in the final rule, MSHA will use the
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definition for flagrant violation in the
MINER Act, but the Agency cannot
estimate, at this point in the rulemaking
process, the specific impact of this new
requirement in the MINER Act. The
Agency does, however, anticipate that
penalties will increase due to this
provision.
MSHA estimates that the average
penalty assessment will increase under
the final rule, assuming no compliance
response, from $213 (shown in Table
III–3) to $594 (shown in Table III–5), an
increase of 179% (shown in Table III–
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6). Consistent with Congressional intent,
the average penalty generally increases
as mine size or contractor size increases
(shown in Table III–5).
For purposes of the analysis, special
assessments that would be processed as
special assessments under the final rule
were assumed to receive the same
penalty, unless they would be impacted
by the minimum penalty provisions of
the MINER Act. The average penalty for
special assessments issued to agents of
the mine operator is estimated to
increase by 367% under the final rule.
All of this increase is due to the
application of the minimum penalty
provisions for unwarrantable violations
in the MINER Act.
For purposes of analysis, MSHA
assumes that all specially assessed
violations, except those involving
fatalities, agents, failure to timely notify
MSHA, and flagrant violations, would
be processed as regular assessments
under the final rule. In the analysis, the
average penalty increased by 98% for
those 2005 special assessments that
would be processed as regular
assessments under the final rule.
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3. Impact With Improved Compliance
Response to Increased Penalties
MSHA intends and expects that
increased penalty assessments will lead
to efforts by mine operators and
independent contractors to increase
compliance with MSHA standards and
regulations and ultimately to fewer
violations and improved mine safety
and health. MSHA assumes that each
violation is associated with a probability
of occurrence that declines as penalty
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assessments rise. To estimate this
impact, MSHA assumes that, at the
margin, each 10% increase in penalty
for a violation is associated with a 3%
decrease in its probability of
occurrence.3
In economic terms, this is equivalent
to assuming an elasticity of –0.3
between the number of violations and
the dollar size of penalties. This
elasticity of –0.3 was assumed by MSHA
in its regulatory economic analysis for
the 2003 direct final rule to adjust civil
penalties for inflation.
MSHA has applied this assumption to
each assessed violation in the 2005
database. For most violations, the final
rule will result in a penalty increase.
Accordingly, MSHA has computed a
reduction (or in rare cases, an increase)
in the probability of the violation’s
occurrence. The reduction is larger as
the penalty increases.
Tables III–7 and III–8 estimate the
improved compliance response of the
3 MSHA included this sentence in the preamble
and PREA for the proposed rule without the
qualifying phrase ‘‘at the margin.’’ The phrase was
added to address one commenter’s erroneous
conclusion that the sentence implied [according to
MSHA’s model] that a 99% decrease in the
probability of a violation could be achieved by a
330% increase in penalties. As MSHA indicated in
both the PREA for the proposed rule and the REA
for this final rule, MSHA’s constant elasticity
formula, P = AQ(1/e) (where P = the penalty
amount, Q = the number of violations, A is an
arbitrary parameter, and e = elasticity = –0.3) can
be used to derive (Q2/Q1) = (P2/P1)(¥0.3). Thus,
for example, an increase in a penalty from $60 to
$100 would be associated with a reduction in the
frequency of that violation from 1.0 to 0.86 (a 14%
reduction). And a 330% increase in a penalty
would be associated with a reduction in the
frequency of that violation, not of 99%, but of 35%.
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13629
industry to increased penalty
assessments.4 Table III–7 provides
estimates for mine operators and Table
III–8 provides estimates for independent
contractors. Tables III–7 and III–8 show,
by employment size, by coal and metal
and nonmetal mining operations, and by
independent contractors at coal and
metal and nonmetal mines, the number
of violations and the dollar amount of
penalties in the 2005 database under the
existing rule. Further, using the
assumption that the elasticity of
response is –0.3 for each violation,
Tables III–7 and III–8 estimate the new
reduced number of violations and the
increased penalties associated with
these violations under the final rule.
Taking into account the mining
industry’s improved compliance
response, MSHA estimates that, were
the final rule in effect in 2005, total
violations would have declined from
116,673 to 93,422, or a reduction of
approximately 20%.
4 The analysis in support of the proposed rule had
a minor error in the formula for calculating history
for repeat violations of the same standard, the effect
of which was to slightly underestimate the impact
of the proposed rule. The analysis also improperly
assigned history points to operators with fewer than
10 violations over a previous 15-month period, the
effect of which was to slightly overestimate the
impact of the proposed rule. These errors have been
corrected in MSHA’s analysis of the final rule. The
corrected estimate of total civil penalties under the
proposed rule, after improved compliance response
by industry, is $46.3 million (rather than $45.8
million in the proposal); the additional
expenditures to improve compliance are $9.2
million (rather than $9.0 million); and the
percentage increase after improved compliance
response, is 86% (rather than 84%).
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The ‘‘Increase in Penalties’’ column
represents the increase in penalties,
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relative to the baseline, for remaining
violations. The increase in proposed
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penalty assessments is approximately
$17.1 million for coal mine operators,
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assessments, MSHA assumes that mines
will increase expenditures to improve
compliance with MSHA safety and
health standards. (The REA for the final
rule provides an explanation of how
expenditures are calculated.) The
column, ‘‘Additional Expenditures to
Improve Compliance,’’ represents
MSHA’s estimate of these expenditures.
These estimates are based on the same
assumption that the elasticity of
response is ¥0.3 and the additional
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assumption that the increased
compliance activities will be
undertaken by the mining industry to
avoid increased penalties.
Table III–9 summarizes the impact of
the final rule by mining sector and
indicates that the combined impact of
additional expenditures to improve
compliance and the increase in
penalties, given improved compliance is
$31.5 million a year.
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$0.4 million for coal independent
contractors, $4.2 million for metal and
nonmetal mine operators, and $0.4
million for metal and nonmetal
independent contractors. The increase
for all operators, $22.1 million, reflects
the total increase in penalties for the
final rule, taking into account mine
operators’ improved compliance
behavior.
To reduce the number of violations in
response to the increased penalty
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Federal Register / Vol. 72, No. 55 / Thursday, March 22, 2007 / Rules and Regulations
request for each safety and health
conference. The hourly wage rate for a
coal supervisor is $63.39; the hourly
wage rate for a metal and nonmetal
supervisor is $47.10.6 MSHA estimates
that it will cost, on average,
approximately $1 to submit each written
request (by mail, fax, or e-mail). Based
on this information, each written
request for a conference would cost
approximately $10.51 for a coal operator
or contractor and $8.06 for a metal and
nonmetal operator or contractor. Table
III–11 provides MSHA’s estimate of the
annual costs for coal and metal and
nonmetal mine contactors and operators
to make written requests for
conferences.
5 Typically, multiple violations are combined into
a single safety and health conference request. In
2005, the 4,567 coal violations were reviewed in
1,585 safety and health conferences, and the 4,720
M/NM violations were reviewed in 1,123 safety and
health conferences. In the text, the costs for a safety
and health conference are estimated per violation,
not per conference.
6 Data from pp. 6, B3 of U.S. Coal Mines Salaries,
Wages, and Benefits—2005 Survey Results, Western
Mine Engineering Inc.; pp. 8, B2 of U.S. Metal and
Industrial Mineral Mine Salaries, Wages, and
Benefits—2005 Survey Results, Western Mine
Engineering Inc.; and MSHA calculations.
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compliance offset by the additional
incentive, due to increased penalties, to
request a safety and health conference).
Table III–10 shows the estimated
number of written requests for a safety
and health conference to review a
violation, disaggregated by employment
size, coal and metal and nonmetal
operations, and independent contractors
at coal and metal and nonmetal mines.
ER22MR07.021
MSHA data indicate that 9,287
violations were conferenced in 2005–
4,567 by coal operators and contractors,
and 4,720 by metal and nonmetal
operators and contractors.5 For purposes
of estimating costs, MSHA assumes that
the annual number of safety and health
conference requests will be the same,
after the final rule takes effect (the
reduced number of violations due to
increased penalties and improved
MSHA estimates that it would take
approximately 9 minutes per violation
for a mine supervisor to prepare a
written request for a safety and health
conference. Because each request for a
safety and health conference bundles
together an average of between three
and four violations, the 9 minutes per
violation is equivalent to between 27
and 36 minutes to prepare a written
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4. Impact of Increased Cost of Safety and
Health Conferences
Section 100.6 of 30 CFR allows all
parties to request a safety and health
conference with the district manager
and designee. The final rule includes a
new requirement in § 100.6(b) that the
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.
Federal Register / Vol. 72, No. 55 / Thursday, March 22, 2007 / Rules and Regulations
C. Benefits
The benefits of the final rule are the
reduced number of injuries and
fatalities that would result from
improved compliance with MSHA’s
health and safety standards and
regulations in response to increased
penalty assessments. MSHA projects
that increased penalties will induce
mine operators to reduce all safety and
health violations. The reduction in all
violations, and particularly S&S
violations, or those reasonably likely to
result in reasonably serious injury or
illness, will reduce the number and
severity of injuries and illnesses.
IV. Feasibility
MSHA has concluded that the
requirements of the final rule are
technologically and economically
feasible.
A. Technological Feasibility
The final rule is a regulation, not a
standard. It does not involve activities
on the frontiers of scientific knowledge.
The mining industry has been
complying with the adjudication and
payment of civil penalties for decades.
MSHA concludes, therefore, that the
final rule is technologically feasible.
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B. Economic Feasibility
MSHA estimates that the yearly
increased compliance costs and penalty
assessments for coal mines as a result of
the final rule will be $25.1 million
dollars, which is equal to approximately
0.09 percent of coal mine sector
revenues of $26.7 billion in 2005.
MSHA estimates that the yearly
increased compliance costs and penalty
assessments for metal and nonmetal
mines as a result of the final rule will
be $6.5 million dollars, which is equal
to approximately 0.01 percent of metal
and nonmetal mine sector revenues of
$51.5 billion in 2005. Penalty
assessment estimates for both coal and
metal and nonmetal include MSHA’s
assumption that mine operators will
change their behavior and improve
compliance as a result of increased
penalties, and thereby receive fewer
violations. Since the total estimated
increased penalty assessments for both
the coal and metal and nonmetal mine
operators are well below one percent of
their estimated revenue, MSHA
concludes that the final rule is
economically feasible for the mining
industry.
V. Regulatory Flexibility Act and Small
Business Regulatory Enforcement
Fairness Act (SBREFA)
Pursuant to the Regulatory Flexibility
Act (RFA) of 1980, as amended by the
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Small Business Regulatory Enforcement
Fairness Act (SBREFA), MSHA has
analyzed the impact of the final rule on
small entities. Based on that analysis,
MSHA certifies that the final rule will
not have a significant economic impact
on a substantial number of small
entities. The factual basis for this
certification is presented below.
A. Definition of a Small Mine
Under the RFA, in analyzing the
impact of a final rule on small entities,
MSHA must use the Small Business
Administration’s (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 an
alternate 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 (13 CFR 121.201).
MSHA has also examined the impact
of agency rules on a subset of mines
with 500 or fewer employees—mines
with fewer than 20 employees, which
MSHA and the mining community have
traditionally 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. Therefore,
their costs of complying with MSHA’s
rules and the impact of the agency’s
rules on them will also tend to be
different. It is for this reason that ‘‘small
mines,’’ as 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 this subset of mines is not
significantly and adversely impacted by
the final rule.
This analysis complies with the legal
requirements of the RFA for an analysis
of the impact on ‘‘small entities’’ while
continuing MSHA’s traditional
definition of ‘‘small mines.’’ Both the
final rule and this analysis also reflect
MSHA’s concern for mines with five or
fewer employees. MSHA concludes that
it can certify that the final rule will not
have a significant economic impact on
a substantial number of small entities.
MSHA has determined that this is the
case for mines with fewer than 20
employees and mines with 500 or fewer
employees. In its detailed factual basis
below, MSHA will also show the impact
of the final rule on mines with five or
fewer employees.
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B. Factual Basis for Certification
MSHA’s analysis of the economic
impact on ‘‘small entities’’ begins with
a ‘‘screening’’ analysis. The screening
compares the estimated costs of a rule
for small entities to the estimated
revenue. When estimated costs are less
than one percent of estimated revenue
(for the size categories considered),
MSHA believes it is generally
appropriate to conclude that there is no
significant economic impact on a
substantial number of small entities. If
estimated costs are equal to or exceed
one percent of revenue, it tends to
indicate that further analysis may be
warranted.
Normally, the analysis of the costs or
economic impact of a rule assumes that
mine operators are in 100% compliance
with a rule. Under the assumption that
mine operators are in 100% compliance
with all of MSHA’s rules, there would
be no cost of compliance with the final
rule, since no mine operator would be
liable for civil penalties. For purposes of
analyzing the effects on small mines,
MSHA reverses this usual assumption
and instead analyzes the increased
penalty assessments for mines not in
compliance with the agency’s safety and
health standards and regulations.
Total underground and surface coal
production was 368 million tons and
765 million tons, respectively. The 2005
price of underground and surface coal
was $36.42 and $17.37 per ton,
respectively.7 Thus, total estimated coal
revenue in 2005 was $26.7 billion ($13.4
billion for underground and $13.3
billion for surface production). Using
the same approach, the estimated 2005
coal revenue by employment size
category is estimated to be
approximately $75 million for mines
with 1–5 employees, $657 million for
mines with 1–19 employees, and $20.5
billion for mines with 1–500 employees.
For metal and nonmetal mines, the
total 2005 estimated revenue generated
by the metal and nonmetal industry
($51.5 billion)8 was divided by the total
number of employee hours to arrive at
the average revenue per hour of
employee production ($165.19). The
$165.19 was multiplied by employee
hours in specific mine size categories to
arrive at estimated revenue for these
categories. This approach was used to
determine the estimated revenue for the
metal and nonmetal mining industry
7 The average price for underground and surface
coal of $36.42 and $17.37 per ton, respectively,
comes from the U.S. Department of Energy, Energy
Information Administration, ‘‘Annual Coal Report
2005,’’ Table 28, October 2006.
8 U.S. Department of the Interior, U.S. Geological
Survey, ‘‘Mineral Commodity Summaries 2006,’’ p.
8, January 2006
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revenue for mines with 1–500
employees. Table V–1 also shows the
penalty and cost increase as a
percentage of revenue for all coal mines
to be 0.09%.
Table V–1 also shows that when
dividing the increase in penalties and
safety and health conference costs by
the revenue in each mine size category,
the cost of the rule for metal and
nonmetal mines is 0.03% of revenue for
mines with 1–5 employees, 0.01% of
revenue for mines with 1–19 employees,
and 0.01% of revenue for mines with 1–
500 employees. Table V–1 shows the
penalty and cost increase as a
percentage of revenue for all metal and
nonmetal mines to be 0.01%.
For coal mines, Table V–1 further
shows that the final rule will result in
an average increase in costs and
penalties per mine of: $619 for mines
with 1–5 employees; $1,405 for mines
with 1–19 employees; and $10,821 for
mines with 500 or fewer employees. For
metal and nonmetal mines, Table V–1
shows that the final rule will result in
an average increase in costs and
penalties per mine of: $149 for mines
with 1–5 employees; $213 for mines
with 1–19 employees; and $457 for
mines with 500 or fewer employees.
As shown in Table V–1, when
applying MSHA’s and SBA’s definitions
of small mines, yearly costs of the final
rule are substantially less than one
percent of estimated yearly revenue,
well below the level suggesting that the
rule might have a significant economic
impact on a substantial number of small
entities. Accordingly, MSHA has
certified that the final rule will not have
a significant economic impact on a
substantial number of small entities that
are covered by the rule.
VII. Other Regulatory Considerations
(5 U.S.C. 601 note) requires no further
agency action, analysis, or assessment.
VI. Paperwork Reduction Act of 1995
This final rule contains no
information collection requirements
subject to review by the Office of
Management and Budget (OMB) under
the Paperwork Reduction Act (PRA).
Revised paragraph (b) in § 100.6
requires that a request for a safety and
health conference be in writing and
include a brief statement of the reason
that each citation or order should be
conferenced. MSHA views this new
provision as an administrative action
that is not subject to the PRA.
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A. Unfunded Mandates Reform Act of
1995
The final rule does not include any
Federal mandate that may result in
increased expenditures by State, local,
or tribal governments; nor does it
increase private sector expenditures by
more than $100 million annually; nor
does it significantly or uniquely affect
small governments. Accordingly, the
Unfunded Mandates Reform Act of 1995
(2 U.S.C. 1501 et seq.) requires no
further agency action or analysis.
B. Treasury and General Government
Appropriations Act of 1999: Assessment
of Federal Regulations and Policies on
Families
The final rule will have no effect on
family well-being or stability, marital
commitment, parental rights or
authority, or income or poverty of
families and children. Accordingly,
§ 654 of the Treasury and General
Government Appropriations Act of 1999
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C. Executive Order 12630: Government
Actions and Interference With
Constitutionally Protected Property
Rights
The final rule will not implement a
policy with takings implications.
Accordingly, Executive Order 12630,
Governmental Actions and Interference
with Constitutionally Protected Property
Rights, requires no further agency action
or analysis.
D. Executive Order 12988: Civil Justice
Reform
The final rule was drafted and
reviewed in accordance with Executive
Order 12988, Civil Justice Reform. The
final rule was written to provide a clear
legal standard for affected conduct and
was carefully reviewed to eliminate
drafting errors and ambiguities, so as to
minimize litigation and undue burden
on the Federal court system. MSHA has
determined that the final rule meets the
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because MSHA does not collect data on
metal and nonmetal production. The
2005 metal and nonmetal revenue is
estimated to be approximately $3.4
billion for mines with 1–5 employees,
$15.6 billion for mines with 1–19
employees, and $46.5 billion for mines
with 1–500 employees.
Table V–1 below shows that when
dividing the increase in penalties and
safety and health conference costs by
the revenue in each mine size category,
the cost of the rule for coal mines is
0.46% of revenue for mines with 1–5
employees, 0.25% of revenue for mines
with 1–19 employees, and 0.11% of
Federal Register / Vol. 72, No. 55 / Thursday, March 22, 2007 / Rules and Regulations
applicable standards provided in § 3 of
Executive Order 12988.
E. Executive Order 13045: Protection of
Children From Environmental Health
Risks and Safety Risks
The final rule will have no adverse
impact on children. Accordingly,
Executive Order 13045, Protection of
Children from Environmental Health
Risks and Safety Risks, as amended by
Executive Orders 13229 and 13296,
requires no further agency action or
analysis.
F. Executive Order 13132: Federalism
The final rule does not have
‘‘federalism implications’’ because it
does not ‘‘have substantial direct effects
on the States, on the relationship
between the national government and
the States, or on the distribution of
power and responsibilities among the
various levels of government.’’
Accordingly, Executive Order 13132,
Federalism, requires no further agency
action or analysis.
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G. Executive Order 13175: Consultation
and Coordination With Indian
Governments
The final rule does not have ‘‘tribal
implications’’ because it does not ‘‘have
substantial direct effects on one or more
Indian tribes, on the relationship
between the Federal government and
Indian tribes, or on the distribution of
power and responsibilities between the
Federal government and Indian tribes.’’
Accordingly, Executive Order 13175,
Consultation and Coordination with
Indian Tribal Governments, requires no
further agency action or analysis.
H. Executive Order 13211: Actions
Concerning Regulations That
Significantly Affect Energy Supply,
Distribution, or Use
The final rule has been reviewed for
its impact on the supply, distribution,
and use of energy because it applies to
the coal mining industry. Insofar as the
final rule will result in added yearly
compliance costs and civil penalty
assessments of approximately $25.1
million to the coal mining industry,
relative to annual revenue of $26.7
billion in 2005, it is not a ‘‘significant
energy action’’ because it is not ‘‘likely
to have a significant adverse effect on
the supply, distribution, or use of
energy * * * (including a shortfall in
supply, price increases, and increased
use of foreign supplies).’’ Accordingly,
Executive Order 13211, Actions
Concerning Regulations That
Significantly Affect Energy Supply,
Distribution, or Use, requires no further
Agency action or analysis.
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I. Executive Order 13272: Proper
Consideration of Small Entities in
Agency Rulemaking
MSHA has thoroughly reviewed the
final rule to assess and take appropriate
account of its potential impact on small
businesses, small governmental
jurisdictions, and small organizations.
MSHA has determined and certified that
the final rule will not have a significant
economic impact on a substantial
number of small entities.
List of Subjects in 30 CFR Part 100
Mine safety and health, Penalties.
Dated: March 15, 2007.
Richard E. Stickler,
Assistant Secretary for Mine Safety and
Health.
For the reasons set out in the
preamble and under the authority of the
Mine Safety and Health Act of 1977, as
amended, Chapter I of Title 30, Code of
Federal Regulations, part 100 is revised
to read as follows:
I
PART 100—CRITERIA AND
PROCEDURES FOR PROPOSED
ASSESSMENT OF CIVIL PENALTIES
Sec.
100.1 Scope and purpose.
100.2 Applicability.
100.3 Determination of penalty amount;
regular assessment.
100.4 Unwarrantable failure.
100.5 Determination of penalty amount;
special assessment.
100.6 Procedures for review of citations and
orders; procedures for assessment of civil
penalties and conferences.
100.7 Notice of proposed penalty; notice of
contest.
100.8 Service.
Authority: 30 U.S.C. 815, 820, 957.
§ 100.1
Scope and purpose.
This part provides the criteria and
procedures for proposing civil penalties
under sections 105 and 110 of the
Federal Mine Safety and Health Act of
1977 (Mine Act). The purpose of this
part is to provide a fair and equitable
procedure for the application of the
statutory criteria in determining
proposed penalties for violations, to
maximize the incentives for mine
operators to prevent and correct
hazardous conditions, and to assure the
prompt and efficient processing and
collection of penalties.
§ 100.2
Applicability.
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.
MSHA shall review each citation and
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order and shall make proposed
assessments of civil penalties.
§ 100.3 Determination of penalty amount;
regular assessment.
(a) General. (1) Except as provided in
§ 100.5(e), the operator of any mine in
which a violation occurs of a mandatory
health or safety standard or who violates
any other provision of the Mine Act, as
amended, shall be assessed a civil
penalty of not more than $60,000. Each
occurrence of a violation of a mandatory
safety or health standard may constitute
a separate offense. 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:
(i) The appropriateness of the penalty
to the size of the business of the
operator charged;
(ii) The operator’s history of previous
violations;
(iii) Whether the operator was
negligent;
(iv) The gravity of the violation;
(v) The demonstrated good faith of the
operator charged in attempting to
achieve rapid compliance after
notification of a violation; and
(vi) The effect of the penalty on the
operator’s ability to continue in
business.
(2) A regular assessment is
determined by first assigning the
appropriate number of penalty points to
the violation by using the appropriate
criteria and tables set forth in this
section. The total number of penalty
points will then be converted into a
dollar amount under the penalty
conversion table in paragraph (g) of this
section. The penalty amount will be
adjusted for demonstrated good faith in
accordance with paragraph (f) of this
section.
(b) The appropriateness of the penalty
to the size of the business of the
operator charged. The appropriateness
of the penalty to the size of the mine
operator’s business is calculated by
using both the size of the mine cited and
the size of the mine’s controlling entity.
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.
The size of independent contractors is
measured by the total hours worked at
all mines. Penalty points for size are
assigned based on Tables I to V. As used
in these tables, the terms ‘‘annual
tonnage’’ and ‘‘annual hours worked’’
mean coal produced and hours worked
in the previous calendar year. In cases
where a full year of data is not available,
the coal produced or hours worked is
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prorated to an annual basis. This
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criterion accounts for a maximum of 25
penalty points.
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(c) History of previous violations. 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. Only assessed violations that
have been paid or finally adjudicated, or
have become final orders of the
Commission will be included in
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determining an operator’s history. The
repeat aspect of the history criterion in
paragraph (c)(2) of this section applies
only after an operator has received 10
violations or an independent contractor
operator has received 6 violations.
(1) Total number of violations. For
mine operators, penalty points are
assigned on the basis of the number of
violations per inspection day
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(VPID)(Table VI). Penalty points are not
assigned for mines with fewer than 10
violations in the specified history
period. For independent contractors,
penalty points are assigned on the basis
of the total number of violations at all
mines (Table VII). This aspect of the
history criterion accounts for a
maximum of 25 penalty points.
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(2) Repeat violations of the same
standard. Repeat violation history is
based on the number of violations of the
same citable provision of a standard in
a preceding 15-month period. For coal
and metal and nonmetal mine operators
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with a minimum of six repeat
violations, penalty points are assigned
on the basis of the number of repeat
violations per inspection day (RPID)
(Table VIII). For independent
contractors, penalty points are assigned
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on the basis of the number of violations
at all mines (Table IX). This aspect of
the history criterion accounts for a
maximum of 20 penalty points (Table
VIII).
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13641
that affect the safety or health of miners
and to take steps necessary to correct or
prevent hazardous conditions or
practices. The failure to exercise a high
standard of care constitutes negligence.
The negligence criterion assigns penalty
points based on the degree to which the
operator failed to exercise a high
standard of care. When applying this
criterion, MSHA considers mitigating
circumstances which may include, but
are not limited to, actions taken by the
operator to prevent or correct hazardous
conditions or practices. This criterion
accounts for a maximum of 50 penalty
points, based on conduct evaluated
according to Table X.
(e) Gravity. Gravity is an evaluation of
the seriousness of the violation. This
criterion accounts for a maximum of 88
penalty points, as derived from the
Tables XI through XIII. Gravity is
determined by the likelihood of the
occurrence of the event against which a
standard is directed; the severity of the
illness or injury if the event has
occurred or was to occur; and the
number of persons potentially affected if
the event has occurred or were to occur.
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(d) Negligence. Negligence is conduct,
either by commission or omission,
which falls below a standard of care
established under the Mine Act to
protect miners against the risks of harm.
Under the Mine Act, an operator is held
to a high standard of care. A mine
operator is required to be on the alert for
conditions and practices in the mine
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assessment where the operator abates
the violation within the time set by the
inspector.
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(g) Penalty conversion table. The
penalty conversion table is used to
convert the total penalty points to a
dollar amount.
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(f) Demonstrated good faith of the
operator in abating the violation. This
criterion provides a 10% reduction in
the penalty amount of a regular
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(h) The effect of the penalty on the
operator’s ability to continue in
business. MSHA presumes that the
operator’s ability to continue in
business will not be affected by the
assessment of a civil penalty. The
operator may, however, submit
information to the District Manager
concerning the financial status of the
business. If the information provided by
the operator indicates that the penalty
will adversely affect the operator’s
ability to continue in business, the
penalty may be reduced.
§ 100.4
Unwarrantable failure.
(a) The minimum penalty for any
citation or order issued under section
104(d)(1) of the Mine Act shall be
$2,000.
(b) The minimum penalty for any
order issued under section 104(d)(2) of
the Mine Act shall be $4,000.
§ 100.5 Determination of penalty amount;
special assessment.
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(a) MSHA may elect to waive the
regular assessment under § 100.3 if it
determines that conditions warrant a
special assessment.
(b) When MSHA determines that a
special assessment is appropriate, the
proposed penalty will be based on the
six criteria set forth in § 100.3(a). All
findings shall be in narrative form.
(c) Any operator who fails to correct
a violation for which a citation has been
issued under section 104(a) of the Mine
Act within the period permitted for its
correction may be assessed a civil
penalty of not more than $6,500 for each
day during which such failure or
violation continues.
(d) Any miner who willfully violates
the mandatory safety standards relating
to smoking or the carrying of smoking
materials, matches, or lighters shall be
subject to a civil penalty which shall not
be more than $275 for each occurrence
of such violation.
(e) Violations that are deemed to be
flagrant under section 110(b)(2) of the
Mine Act may be assessed a civil
penalty of not more than $220,000. For
purposes of this section, a flagrant
violation means ‘‘a reckless or repeated
failure to make reasonable efforts to
eliminate a known violation of a
mandatory health or safety standard that
substantially and proximately caused, or
reasonably could have been expected to
cause, death or serious bodily injury.’’
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(f) The penalty for failure to provide
timely notification to the Secretary
under section 103(j) of the Mine Act
will be not less than $5,000 and not
more than $60,000 for the following
accidents:
(1) The death of an individual at the
mine, or
(2) An injury or entrapment of an
individual at the mine which has a
reasonable potential to cause death.
§ 100.6 Procedures for review of citations
and orders; procedures for assessment of
civil penalties and conferences.
(a) All parties shall be afforded the
opportunity to review with MSHA each
citation and order issued during an
inspection. It is within the sole
discretion of MSHA to grant a request
for a conference and to determine the
nature of the conference.
(b) Upon notice by MSHA, all parties
will have 10 days within which to
submit additional information or
request a safety and health conference
with the District Manager or designee. A
conference request may include a
request to be notified of, and to
participate in, a conference initiated by
another party. A conference request
must be in writing and must include a
brief statement of the reason why each
citation or order should be conferenced.
(c) When a conference is conducted,
the parties may submit any additional
relevant information relating to the
violation, either prior to or at the
conference. To expedite the conference,
the official assigned to the case may
contact the parties to discuss the issues
involved prior to the conference.
(d) MSHA will consider all relevant
information submitted in a timely
manner by the parties with respect to
the violation. When the facts warrant a
finding that no violation occurred, the
citation or order will be vacated. Upon
conclusion of the conference, or
expiration of the conference request
period, all citations that are abated and
all orders will be promptly referred to
MSHA’s Office of Assessments. The
Office of Assessments will use the
citations, orders, and inspector’s
evaluation as the basis for determining
the appropriate amount of a proposed
penalty.
§ 100.7 Notice of proposed penalty; notice
of contest.
(a) A notice of proposed penalty will
be issued and served by certified mail,
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or the equivalent, upon the party to be
charged and by regular mail to the
representative of miners at the mine
after the time permitted to request a
conference under § 100.6 expires, or
upon the completion of a conference, or
upon review by MSHA of additional
information submitted in a timely
manner.
(b) Upon receipt of the notice of
proposed penalty, the party charged
shall have 30 days to either:
(1) Pay the proposed assessment.
Acceptance by MSHA of payment
tendered by the party charged will close
the case.
(2) Notify MSHA in writing of the
intention to contest the proposed
penalty. When MSHA receives the
notice of contest, it advises the Federal
Mine Safety and Health Review
Commission (Commission) of such
notice. No proposed penalty which has
been contested before the Commission
shall be compromised, mitigated or
settled except with the approval of the
Commission.
(c) If the proposed penalty is not paid
or contested within 30 days of receipt,
the proposed penalty becomes a final
order of the Commission and is not
subject to review by any court or
agency.
§ 100.8
Service.
(a) All operators are required by part
41 (Notification of Legal Identity) of this
chapter to file with MSHA the name and
address of record of the operator. All
representatives of miners are required
by part 40 (Representative of Miners) of
this chapter to file with MSHA the
mailing address of the person or
organization acting in a representative
capacity. Proposed penalty assessments
delivered to those addresses shall
constitute service.
(b) If any of the parties choose to have
proposed penalty assessments mailed to
a different address, the Office of
Assessments must be notified in writing
of the new address. Delivery to this
address shall also constitute service.
(c) Service for operators who fail to
file under part 41 of this chapter will be
upon the last known business address
recorded with MSHA.
[FR Doc. 07–1402 Filed 3–21–07; 8:45 am]
BILLING CODE 4510–43–P
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[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]
[[Page 13591]]
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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
[[Page 13592]]
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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.
-----------------------------------------------------------------------
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.
[[Page 13594]]
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.
[[Page 13595]]
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
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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