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[Federal Register: September 8, 2006 (Volume 71, Number 174)] [Proposed Rules] [Page 53054-53075] ----------------------------------------------------------------------- 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: Proposed rule. ----------------------------------------------------------------------- SUMMARY: The Mine Safety and Health Administration (MSHA) is proposing to amend its civil penalty regulations to increase penalty amounts and to implement new requirements of the Mine Improvement and New Emergency Response (MINER) Act of 2006 amendments to the Mine Safety and Health Act of 1977 (Mine Act). In addition, MSHA is proposing to revise procedures for proposing civil monetary penalties to improve the efficiency and effectiveness of the civil penalty process. These changes are intended to induce greater mine operator compliance with the Mine Act and MSHA's safety and health standards and regulations, thereby improving safety and health for miners. DATES: MSHA must receive comments on or before October 23, 2006. MSHA will hold six public hearings on September 26, 2006, September 28, 2006, October 4, 2006, October 6, 2006, October 17, 2006, and October 19, 2006. Details about the public hearings are in the SUPPLEMENTARY INFORMATION section of this document. ADDRESSES: Comments must be clearly identified with as such and may be sent to MSHA by any of the following methods: (1) Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. (2) Electronic mail: zzMSHA-Comments@dol.gov. Include ``RIN 1219- AB51'' in the subject line of the message. (3) Telefax: (202) 693-9441. Include ``RIN 1219-AB51'' in the subject. (4) Regular Mail: MSHA, Office of Standards, Regulations, and Variances, 1100 Wilson Blvd., Room 2350, Arlington, Virginia 22209- 3939. (5) Hand Delivery or Courier: MSHA, Office of Standards, Regulations, and Variances, 1100 Wilson Blvd., Room 2350, Arlington, Virginia 22209-3939. Stop by the 21st floor and sign in at the receptionist's desk. Docket: Comments can be accessed electronically at http://www.msha.gov under the ``Rules and Regs'' link. MSHA will post all comments on the Internet without change, including any personal information provided. Comments may also be reviewed at the Office of Standards, Regulations, and Variances, 1100 Wilson Blvd., Room 2350, Arlington, Virginia. MSHA maintains a listserv that enables subscribers to receive e- mail notification when rulemaking documents are published in the Federal Register. To subscribe to the listserv, go to http://www.msha.gov/subscriptions/subscribe.aspx. Hearings: Locations of the public hearings are in the SUPPLEMENTARY INFORMATION section of this document. FOR FURTHER INFORMATION CONTACT: Patricia W. Silvey, Acting Director, Office of Standards, Regulations, and Variances, MSHA, 1100 Wilson Blvd, Room 2350, Arlington, Virginia 22209-3939, silvey.patricia@dol.gov (e-mail), (202) 693-9440 (voice), or (202) 693-9441 (telefax). SUPPLEMENTARY INFORMATION: Outline: I. Public Hearings II. Background A. General B. Rulemaking History III. Discussion and Analysis of Proposed Changes to Part 100 A. General Discussion B. Section-by-Section Analysis IV. Executive Order 12866 A. Population at Risk B. Costs C. Benefits V. Feasibility A. Technological Feasibility B. Economic Feasibility VI. Regulatory Flexibility Act and Small Business Regulatory Enforcement Fairness Act (SBREFA) A. Definition of Small Mine B. Factual Basis for Certification VII. Paperwork Reduction Act of 1995 VIII. 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 I. Public Hearings MSHA will hold six public hearings on the proposed rule. The hearings will begin at 9 a.m., and will be held on the following dates and locations:
------------------------------------------------------------------------
Date Location Phone
------------------------------------------------------------------------
September 26, 2006............ Mine Safety and (202) 693-9440
Health
Administration, 1100
Wilson Blvd, 25th
Floor, Conference
Room, Arlington,
Virginia 22209.
September 28, 2006............ Sheraton Birmingham, (205) 324-5000
2101 Richard
Arrington Jr. Blvd.,
North Birmingham,
Alabama 35203.
October 4, 2006............... Hilton Salt Lake City (801) 238-2999
Center, 255 South
West Temple, Salt
Lake City, Utah
84101.
October 6, 2006............... Hilton St. Louis (800) 314-2117
Airport, 10330
Natural Bridge Road,
St. Louis, Missouri
63134.
October 17, 2006.............. Charleston Marriott (304) 345-6500
Town Center, 200 Lee
Street East,
Charleston, West
Virginia 25301.
October 19, 2006.............. Pittsburgh Airport 412) 490-6602
Marriott, 777 Aten
Road, Coraopolis,
Pennsylvania 15108.
------------------------------------------------------------------------
Requests to speak at a hearing should be made at least five days
prior to the hearing dates. Requests to speak may be made by telephone
(202-693-9440), telefax (202) 693-9441, or mail (MSHA, Office of
Standards, Regulations, and Variances, 1100 Wilson Blvd., Rm. 2350,
Arlington, Virginia 22209-3939). Any unallocated time at the hearings
will be made available to persons making same-day requests to speak.
The hearings will begin with an opening statement from MSHA, followed by an opportunity for members of the public to make oral presentations to a hearing panel. Speakers will be assigned in the order in which their requests are received. Speakers and other attendees may present written information or other articles to the MSHA panel for inclusion in the rulemaking record. The hearings will be conducted in an informal manner. The hearing panel may ask questions of speakers. Formal rules of evidence and cross examination will not apply. The presiding official may limit presentations and exclude irrelevant or unduly repetitious material and questions to ensure the orderly progress of the hearings. Transcripts of the hearings will be included in the rulemaking record. Copies of the transcripts will be available to the public, and can be viewed at http://www.msha.gov. MSHA will accept post-hearing written comments and other appropriate data for the record from any interested party, including those not presenting oral statements. Comments must be received at MSHA no later than October 23, 2006. II. Background A. General The Mine Act requires MSHA to issue citations or orders to mine operators for any violations of a mandatory health or safety standard, rule, order, or regulation promulgated under the Mine Act. Upon issuing a citation, the Secretary's authorized representative (inspector) specifies a time for the violation to be abated. If the operator does not abate the condition within the allowed time, the inspector may extend the time to abate or issue an order requiring all persons to be withdrawn from the area affected by the violation until the violation is abated. The Mine Act further requires assessment of civil monetary penalties for violations. Sections 105 and 110 of the Mine Act provide for the assessment of these penalties. The following six criteria in section 110(i) of the Mine Act are used to assess civil monetary penalties: (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; (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 proposes a civil penalty assessment for each violation. Upon receipt of the proposed assessment, the mine operator or other person has 30 days to contest the assessment before the Federal Mine Safety and Health Review Commission (Commission), an independent adjudicatory agency established under the Mine Act. A proposed assessment that is not contested within 30 days becomes a final order of the Commission by operation of law and will not be subject to review by any court or agency. A proposed assessment that is contested before the Commission is reviewed by the Commission de novo. B. Rulemaking History On May 30, 1978, MSHA published its first final rule pertaining to the proposed assessment of civil penalties under the Mine Act for both coal mines and metal and nonmetal mines (47 FR 22286). The maximum civil penalty that MSHA could assess under the Mine Act at that time was $10,000. The 1978 rule consisted of a two-tiered system of assessing proposed penalties under either a regular assessment or a special assessment. Since 1978, MSHA has revised its civil penalty regulations in 30 CFR part 100 essentially to: (1) Add a single penalty assessment provision; (2) change the assessment process to conform to a court order concerning history of violations; (3) increase penalty amounts due to legislative action; and (4) change penalty amounts and processes due to other compelling circumstances. Under the existing regulations, MSHA proposes penalties using a three-tiered process: (1) Regular assessments; (2) single penalty assessments; and (3) special assessments. The maximum civil penalty assessment is $60,000. The single penalty assessment is $60. The maximum daily civil penalty which may be assessed for failure to correct a violation within the time permitted is $6,500 and the maximum penalty for smoking or carrying smoking materials underground is $275. III. Discussion and Analysis of Proposed Changes to Part 100 A. General Discussion MSHA is proposing to revise its procedures for assessing proposed civil penalties to update and increase penalties for violations of the standards and regulations promulgated under the Mine Act and to implement new civil penalty requirements in the MINER Act (Pub. L. 109- 236). These new requirements address civil penalties related to prompt incident notification, and flagrant and unwarrantable violations. In accordance with MINER Act requirements, citations and orders issued on or after June 16, 2006, will be subject to the minimum penalties specified in the Act for violations involving failure to promptly notify MSHA within 15 minutes and unwarrantable failure. The intended purpose of civil penalties under the Mine Act is to ``convince operators to comply with the Act's requirements.'' (S. Rep. No. 181, 95th Cong., 1st Sess. 45 (1977), reprinted in Senate Subcommittee on Labor, Committee on Human Resources, 95th Cong., 2d Sess., Legislative History of the Federal Mine Safety and Health Act of 1977, at 633 (1978)). The Congress intended that the imposition of civil penalties would induce mine operators to be proactive in their approach to mine safety and health, and take necessary action to prevent safety and health hazards before they occur. In this proposal, the Agency is strengthening the civil penalty assessment regulations which will be an important tool in the reduction of fatalities and improvement in miner safety and health. Under MSHA's existing procedures, a civil penalty can be assessed under the single penalty provision, the regular assessment provision, or the special assessment provision. The single penalty provision is applied to most violations that are not reasonably likely to result in a reasonably serious injury or illness (non-Significant and Substantial, or non-S&S) and that are abated in a timely manner, provided the operator does not have an excessive history of violations. The single penalty assessment is currently $60. The regular assessment is used to address most S&S violations, i.e., those that are reasonably likely to result in a reasonably serious injury or illness. Under the regular assessment provision, penalty points are assigned based on five statutory criteria: Operator's size, history, negligence, demonstrated good faith towards abatement, and the gravity of the violation. The total points are then converted into a dollar amount. The resulting amount constitutes the proposed penalty unless, under the sixth statutory criterion, the operator shows that the penalty would adversely affect its ability to continue in business. Currently, the minimum regular assessment is $72 and the maximum regular assessment is $60,000 for each violation. Under the existing rule, MSHA reviews eight categories of violations for special assessment--those associated with fatalities as well as those associated with other aggravating circumstances. These are violations that MSHA believes, because of the particular circumstances surrounding the violation, should not be processed as a single penalty or regular assessment. The maximum special assessment is currently $60,000. MSHA reviewed the history of violations and penalty assessments at mines which have experienced fatal accidents recently. At these mines, MSHA found repeated violations of several standards for which the $60 single penalty was assessed. MSHA also reviewed violations at all mines. The number of citations for violations of MSHA's standards and regulations has been on the rise since 2003. Specifically, the number of all violations assessed increased from 103,404 in 2003 to 116,731 in 2005. The number of violations that received a single penalty assessment increased from 69,078 in 2003 to 75,394 in 2005; the number of violations that received a regular assessment increased from 32,608 in 2003 to 37,968 in 2005; and the number of violations that received a special assessment increased from 1,718 in 2003 to 3,369 in 2005. MSHA is proposing to revise the civil penalty assessment process so that proposed penalties will increase proportionately to increases in operator size, history, and negligence and the gravity or seriousness of the violation. To accomplish this, the proposed rule would: (1) Reformulate the existing process of assigning points under the regular assessment provision; (2) Add a provision in an operator's history addressing repeat violations; (3) Delete the existing single penalty assessment provision; (4) Revise the penalty conversion table by increasing the dollar value of each point assigned under the regular assessment provision; (5) Remove the limit on types of violations that MSHA will review for possible special assessment by removing the list of specific categories; (6) Shorten the time allowed to request a conference; and (7) Implement new requirements of the MINER Act. MSHA is proposing to delete the single penalty assessment provision. MSHA has reevaluated the single penalty provision and believes that the proposed rule reflects a more appropriate and effective approach to achieving the congressional purpose with respect to civil monetary penalties. MSHA is proposing to implement new penalty requirements in the MINER Act for prompt incident notification and flagrant violations in Sec. 100.5. MSHA is proposing a new provision in Sec. 100.4 to implement MINER Act requirements related to unwarrantable failure penalties. This provision sets minimum penalties for any citation or order issued under Sec. 104(d) of the Mine Act. The proposed changes are intended to induce greater mine operator compliance with the Mine Act and MSHA's safety and health standards, thereby improving safety and health for miners. The proposed changes are described in more detail in the following section-by-section analysis. B. Section-by-Section Analysis 1. Scope and Purpose (Sec. 100.1) Existing Sec. 100.1 would not change. 2. Applicability (Sec. 100.2) Existing Sec. 100.2 provides that the criteria and procedures in this part apply to all ``evaluations and proposed assessments of civil penalties.'' The proposed rule would remove the word ``evaluations'' because the process of proposing assessments includes evaluations. This proposed section contains no substantive changes. 3. Determination of Penalty; Regular Assessment (Sec. 100.3) a. General (Sec. 100.3(a)). Existing Sec. 100.3 establishes the formula to apply the statutory criteria to violations that are not processed under the existing single penalty assessment (Sec. 100.4) or special assessment (Sec. 100.5) provisions. This formula is an administrative mechanism used by MSHA to determine the appropriate penalty by applying the statutory criteria to particular facts surrounding a violation. Existing Sec. 100.3(a) lists the criteria described in Sec. Sec. 105(b)(1)(B) and 110(i) of the Mine Act. The proposed rule makes several editorial changes for clarification and ease of reading, but makes no substantive changes to this section. b. Appropriateness of the penalty to the size of the operator's business (Sec. 100.3(b)). Existing Sec. 100.3(b) contains five tables assigning penalty points for size of coal mines, controlling entities of coal mines, metal and nonmetal mines, controlling entities of metal and nonmetal mines, and independent contractors. The size of coal mines and their controlling entities is measured by the amount of coal production. The size of metal and nonmetal mines and their controlling entities is measured by the number of hours worked. The size of independent contractors is measured by the total number of hours worked by the independent contractors at all mines regardless of the commodity being mined. Existing Sec. 100.3(b) assigns up to 10 penalty points for the size of mines or independent contractors based on a scale which consists of 11 levels. In addition, up to 5 penalty points are assigned for the size of the controlling entity of a coal mine or a metal or nonmetal mine. MSHA is proposing editorial changes to Sec. 100.3(b) to make the provision easier to read. MSHA is also proposing to clarify the existing provision by adding a statement concerning the way size of coal mines and metal and nonmetal mines is determined. The existing provision only states how the size of an independent contractor is determined. There are no proposed changes to the point table addressing the size of controlling entities. MSHA is proposing to increase the number of penalty points based on the operator's size. Tables III-1, III-2, and III-3 show both the existing and proposed point schedules. The maximum number of penalty points for size would increase from 10 to 20 to assure that the amount of the penalty is an appropriate economic inducement of future compliance by the operator. The proposed point increase is based on MSHA's analysis of existing size data for coal operators, metal and nonmetal operators, and independent contractors. According to the 2005 data, nearly half of the existing coal mines had annual tonnage of up to 15,000 tons. Slightly more than half of the existing metal and nonmetal mines had fewer than 10,000 annual hours worked. About half of independent contractors had fewer than 10,000 annual hours worked at all mines. Consistent with existing Sec. 100.3(b), MSHA proposes that coal mines with an annual tonnage of up to 15,000 tons, metal and nonmetal mines with fewer than 10,000 hours worked, and independent contractors with fewer than 10,000 hours worked at all mines would all receive 0 penalty points for this criterion. Under the proposal, the remaining coal mines, i.e., those with annual tonnage levels above 15,000 tons; the remaining metal and nonmetal mines, i.e., those with annual hours worked above 10,000; and the remaining independent contractors, i.e., those with annual hours worked at all mines above 10,000, would receive twice as many penalty points as under the existing rule, up to a maximum of 20. The proposed size schedule would result in penalties that are, on average, more than twice as high at the smallest (one to five employees) coal mines than at metal and nonmetal mines of similar size and over four times higher at coal mines in the five to 19 employee size range than similar sized metal and non-metal mines. The proposed point structure in paragraph (b) is designed so that higher penalties would be computed for larger operations. This proposal is consistent with the Mine Act's requirement to consider the size of the operation when assessing penalties. MSHA believes penalties assessed under the existing regulations are often too low to be an effective deterrent for noncompliance at some of the largest operations. The proposal, like the existing rule, places greater emphasis on size of the mine than on size of the controlling entity in assigning penalty points. The Agency solicits comments on whether, in considering the size of the operator, greater weight should be placed on the size of the controlling entity.
Table III-1.--Size of Coal Mine: Annual Tonnage of Mine
------------------------------------------------------------------------
Existing Proposed
Annual tonnage of mine penalty penalty
points points
------------------------------------------------------------------------
0 to 15,000................................... 0 0
Over 15,000 to 30,000......................... 1 2
Over 30,000 to 50,000......................... 2 4
Over 50,000 to 100,000........................ 3 6
Over 100,000 to 200,000....................... 4 8
Over 200,000 to 300,000....................... 5 10
Over 300,000 to 500,000....................... 6 12
Over 500,000 to 800,000....................... 7 14
Over 800,000 to 1.1 million................... 8 16
Over 1.1 million to 2 million................. 9 18
Over 2 million................................ 10 20
------------------------------------------------------------------------
Table III-2.--Size of Metal and Nonmetal Mine: Annual Hours Worked at
Mine
------------------------------------------------------------------------
Existing Proposed
Annual hours worked at mine penalty penalty
points points
------------------------------------------------------------------------
0 to 10,000................................... 0 0
Over 10,000 to 20,000......................... 1 2
Over 20,000 to 30,000......................... 2 4
Over 30,000 to 60,000......................... 3 6
Over 60,000 to 100,000........................ 4 8
Over 100,000 to 200,000....................... 5 10
Over 200,000 to 300,000....................... 6 12
Over 300,000 to 500,000....................... 7 14
Over 500,000 to 700,000....................... 8 16
Over 700,000 to 1 million..................... 9 18
Over 1 million................................ 10 20
------------------------------------------------------------------------
Table III-3.--Size of Independent Contractor: Annual Hours Worked at All
Mines
------------------------------------------------------------------------
Existing Proposed
Annual hours worked at all mines penalty penalty
points points
------------------------------------------------------------------------
0 to 10,000................................... 0 0
Over 10,000 to 20,000......................... 1 2
Over 20,000 to 30,000......................... 2 4
Over 30,000 to 60,000......................... 3 6
Over 60,000 to 100,000........................ 4 8
Over 100,000 to 200,000....................... 5 10
Over 200,000 to 300,000....................... 6 12
Over 300,000 to 500,000....................... 7 14
Over 500,000 to 700,000....................... 8 16
Over 700,000 to 1 million..................... 9 18
Over 1 million................................ 10 20
------------------------------------------------------------------------
c. History of previous violations (Sec. 100.3(c)). Existing Sec.
100.3(c) bases the operator's violation history on the number of
violations received in a preceding 24-month period for which a civil
penalty has been paid or finally adjudicated. For production operators,
penalty points are calculated using the average number of violations
per inspection day (VPID). For independent contractors, penalty points
are calculated using the annual average number of violations at all
mines in a preceding 24-month period. The proposal would add the phrase
``or have become final orders of the Commission'' in the second
sentence of this paragraph. The proposal would retain MSHA's intent
that only violations which have become final be included in an
operator's history.
MSHA is proposing three several substantive changes to existing Sec. 100.3(c). First, MSHA is proposing that violation history include two components: (1) Paragraph (c)(1) would address the total number of violations; and (2) paragraph (c)(2) would address the number of repeat violations of the same standard. Second, an operator's or independent contractor's history of violations would be based on a preceding 15- month period rather than a 24-month period. This change would apply to both components--overall history and repeat violations--of history. Third, MSHA is proposing to change the point tables for overall history and to add a new point table addressing repeat violations of the same standard. Finally, MSHA is proposing to revise the calculation that addresses the overall history of an independent contractor. MSHA is proposing to reduce the 24-month review period to a 15- month review period because the agency believes that a period of 15 months would more accurately reflect an operator's current state of compliance. This change would provide MSHA with sufficient data to appropriately determine an operator's compliance record, including any trend, even for mining operations that are inspected on a less frequent basis. This change would provide an incentive for improving safety and health to an operator that has a deteriorating safety and health record in the recent past. Proposed Sec. 100.3(c)(1) addresses the overall history of production operators and independent contractors. MSHA would continue to assign penalty points for production operators based on the number of assessed violations per inspection day. MSHA is proposing to increase the points assigned to the five highest levels of the VPID table. The highest level would be assigned the maximum of 25 points. MSHA is proposing to increase penalty points starting from the ``over 1.3 to 1.5'' level or mid-level of the VPID table because MSHA believes that operators of mines with a VPID in the mid- and upper levels show the least concern for compliance with the Mine Act and MSHA safety and health standards and regulations. Higher penalties for such operators may encourage them to comply with the Mine Act's requirements. Under proposed Sec. 100.3(c)(1), production operators with fewer than 10 assessed violations in a preceding 15-month period would not receive points. This proposed provision is similar to existing Sec. 100.4(b) pertaining to excessive history. The proposed provision takes into consideration small mines that may receive a low number of inspection days in a preceding 15-month period. In such small operations, even though the total number of violations may be low, the VPID could easily be greater than the highest 2.1 VPID level. These small operations, however, are not necessarily the ones which MSHA is targeting in this aspect of the history criterion, since such a record may not reflect systemic problems of noncompliance. MSHA believes that these small operators should not receive points under this aspect of this criterion. Under proposed Sec. 100.3(c)(1), the number of violations for independent contractors would no longer be based on the average number of assessed violations per year at all mines as it is under existing Sec. 100.3(c). The number of violations for independent contractors would be based on the total number of assessed violations at all mines during a preceding 15-month period. Since the Agency proposes to reduce the history time period from 24 to 15 months, this eliminates the need for an annual average. MSHA estimates that this change may result in a de minimis increase in the average assessment issued to independent contractors. The proposed point table reflects this change. MSHA solicits comments on this proposed approach to determining violation history for independent contractors, i.e., whether an annualized average should continue to be used. For independent contractors, MSHA is proposing to increase the number of penalty points for the levels starting with ``over 30 to 35'' and above and to increase the maximum number of points for this aspect of the history criterion from 20 to 25. MSHA believes that independent contractors with a greater number of violations in the preceding 15-month period show the least concern for compliance with the Mine Act and MSHA safety and health standards and regulations. MSHA intends that this aspect of the history criterion would serve as greater inducement for such operators to comply with the Mine Act and MSHA's safety and health standards and regulations. MSHA therefore proposes to increase the points for the upper five levels of the number of violations. See tables III-4 and III-5 for a comparison of the existing and proposed penalty point scales for production operators and independent contractors, respectively.
Table III-4.--Production Operator's Overall History of Violations:
Average Number of Violations per Inspection Day
------------------------------------------------------------------------
Existing Proposed
Violations per inspection day penalty penalty
points points
------------------------------------------------------------------------
0 to 0.3...................................... 0 0
Over 0.3 to 0.5............................... 2 2
Over 0.5 to 0.7............................... 4 4
Over 0.7 to 0.9............................... 6 6
Over 0.9 to 1.1............................... 8 8
Over 1.1 to 1.3............................... 10 10
Over 1.3 to 1.5............................... 12 13
Over 1.5 to 1.7............................... 14 16
Over 1.7 to 1.9............................... 16 19
Over 1.9 to 2.1............................... 18 22
Over 2.1...................................... 20 25
------------------------------------------------------------------------
Table III-5.--Independent Contractor's Overall History of Violations
------------------------------------------------------------------------
Existing Proposed
Number of violations penalty penalty
points points
------------------------------------------------------------------------
0 to 5........................................ 0 0
Over 5 to 10.................................. 2 2
Over 10 to 15................................. 4 4
Over 15 to 20................................. 6 6
Over 20 to 25................................. 8 8
Over 25 to 30................................. 10 10
Over 30 to 35................................. 12 13
Over 35 to 40................................. 14 16
Over 40 to 45................................. 16 19
Over 45 to 50................................. 18 22
Over 50....................................... 20 25
------------------------------------------------------------------------
Proposed Sec. 100.3(c)(2) would add a new component to the history
criterion: Repeat violations of the same standard. The number of repeat
violations of the same standard in a preceding 15-month period would be
part of the operator's history of violations. For the purpose of
determining repeat violations, each citable standard would be
considered a separate ``standard.'' Repeat violations of the same
standard would include only assessed violations of the relevant
standard that are paid or finally adjudicated, or became final orders
of the Commission. For example, previous assessments for violations of
Sec. 75.202(a) would not be included in the repeat history for a
violation of Sec. 75.202(b). Similarly, previous assessments for
violations of Sec. 56.14101(a)(1) would not be included in the repeat
history for a violation of Sec. 56.14101(a)(2). MSHA requests comments
on this approach to determining repeat violations. In addition, MSHA
solicits comments on whether, in determining penalty points for repeat
violations of the same standard, the Agency should factor in the number
of inspection days during which the repeat violations were cited. MSHA
also solicits comments on whether only S&S violations should be
considered in determining repeat violations of the same standard.
A maximum of 20 penalty points could be assigned using this new component of the history criterion. MSHA is proposing this new provision because the Agency believes that operators who repeatedly violate the same standard may indicate an attitude which has little regard for getting to the root cause of violations of safe and healthful working conditions. The Agency believes that these operators show a lack of commitment to good mine safety and health practices by letting cited and corrected hazardous conditions recur. The analysis of assessments for the 15-month period from January 1, 2005, through March 31, 2006 reveals that 698 of the 10,227 mines with violations each had at least six violations of the same standard. Furthermore, 99 of the 698 mines had more than twenty violations of the same standard during the 15 month period. MSHA believes that the Agency needs to adjust its civil penalty structure so that the penalties can more appropriately serve as a deterrent to this type of behavior, thereby resulting in greater compliance and more effective mine safety and health. Under proposed Sec. 100.3(c)(2), an operator with five or fewer repeat violations of the same standard in a preceding 15-month period would not receive penalty points. MSHA believes that that this new component of the history criterion should be applied to those operators who violate the same standard with a certain degree of repetition. Under the proposal, operators could receive a maximum of 20 penalty points for this aspect of the history criterion. MSHA believes that this new proposal will encourage greater operator compliance with the Mine Act and MSHA's safety and health standards and regulations, which is consistent with Congress' intent. Penalty points proposed to be assigned to the number of repeat violations of the same standard are presented in Table III-6.
Table III-6.--New Table Addressing Repeat Violations of the Same
Standard
------------------------------------------------------------------------
Penalty
Number of violations points
------------------------------------------------------------------------
5 or fewer................................................... 0
6............................................................ 1
7............................................................ 2
8............................................................ 3
9............................................................ 4
10........................................................... 5
11........................................................... 6
12........................................................... 7
13........................................................... 8
14........................................................... 9
15........................................................... 10
16........................................................... 11
17........................................................... 12
18........................................................... 14
19........................................................... 16
20........................................................... 18
More than 20................................................. 20
------------------------------------------------------------------------
d. Negligence (Sec. 100.3(d)). Existing Sec. 100.3(d) provides
for evaluating the degree of negligence involved in a violation under 5
categories: No negligence, which means that the operator exercised
diligence and could not have known of the violative condition or
practice; low negligence, which means that the operator knew or should
have known of the violative condition or practice, but there are
considerable mitigating circumstances; moderate negligence, which means
that the operator knew or should have known of the violative condition
or practice, but there are mitigating circumstances; high negligence,
which means the operator knew or should have known of the violative
condition or practice, and there are no mitigating circumstances; and
reckless disregard, which means the operator displayed conduct which
exhibits the absence of the slightest degree of care. An increased
number of penalty points is assigned to the higher levels of
negligence. The maximum number of points for negligence is 25 under
existing Sec. 100.3(d).
Proposed Sec. 100.3(d) would retain the existing five levels of negligence, but would increase the maximum number of penalty points from 25 to 50 so that more penalty points 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. Under the proposed table, points for no negligence and low negligence would not change. Penalty points assigned under the three highest levels of negligence would increase more rapidly than under the existing regulation. Moderate negligence would add 20 points rather than 15 points as under the existing regulation; high negligence would add 35 points rather than the 20 points under the existing regulation; and reckless disregard would add 50 points rather than 25 points as under the existing regulation.
Table III-7 compares penalty points in existing and proposed Sec.
100.3(d).
Table III-7.--Negligence
------------------------------------------------------------------------
Existing Proposed
Categories penalty penalty
points points
------------------------------------------------------------------------
No negligence................................. 0 0
(The operator exercised diligence and could
not have known of the violative condition or
practice.)
Low negligence................................ 10 10
(The operator knew or should have known of the
violative condition or practice, but there
are considerable mitigating circumstances.)
Moderate negligence........................... 15 20
(The operator knew or should have known of the
violative condition or practice, but there
are mitigating circumstances.)
High negligence............................... 20 35
(The operator knew or should have known of the
violative condition or practice, but there
are mitigating circumstances.)
Reckless disregard............................ 25 50
(The operator displayed conduct which exhibits
the absence of the slightest degree of care.)
------------------------------------------------------------------------
e. Gravity (Sec. 100.3(e)). Existing Sec. 100.3(e) uses three
factors to measure the gravity of a violation:(1) Likelihood of
occurrence of an event, (2) severity of injury or illness if the event
occurred or were to occur, and (3) the number of persons potentially
affected if the event occurred or were to occur. A maximum of 10
penalty points may be assigned from each of the three factors, for a
maximum of 30 points for the gravity criterion.
Proposed Sec. 100.3(e) would retain the three measures of gravity, but would change the number of penalty points assigned for each. The maximum number of points assigned for likelihood of occurrence of an event would increase from 10 to 50, the maximum number of points assigned for severity of injury or illness would increase from 10 to 20, and the maximum number of points assigned for the number of persons potentially affected would increase from 10 to 18. In addition, the number of categories in the Persons Potentially Affected Table would increase from 7 to 11. The total points that could be assigned for the gravity criterion would increase from 30 to 88. MSHA is proposing to adjust the number of penalty points that may be assigned under the gravity criterion to focus attention on the more serious mine safety and health hazards. MSHA believes that the penalty points in the proposed gravity tables will result in mine operators placing greater emphasis on correcting the more serious violations because they pose the greatest safety and health risk to miners. The proposal distinguishes the less serious violations so that they would receive an appropriate penalty under the regular assessment formula. Existing Sec. 100.3(e) has also been reworded for easier reading. Tables III-8 through III-10 show both the existing and the proposed penalty points for likelihood, gravity, and persons potentially affected.
Table III-8.--Likelihood
------------------------------------------------------------------------
Existing Proposed
Likelihood of occurrence penalty penalty
points points
------------------------------------------------------------------------
No likelihood................................. 0 0
Unlikely...................................... 2 10
Reasonably likely............................. 5 30
Highly likely................................. 7 40
Occurred...................................... 10 50
------------------------------------------------------------------------
Table III-9.--Severity
------------------------------------------------------------------------
Existing Proposed
Severity of injury or illness if the event penalty penalty
occurred or were to occur points points
------------------------------------------------------------------------
No lost work days............................. 0 0
(All occupational injuries and illnesses as
defined in 30 CFR part 50 except those listed
below.)
Lost work days or restricted duty............. 3 5
(Any injury or illness which would cause the
injured or ill person to lose one full day of
work or more after the day of the injury or
illness, or which would cause one full day or
more of restricted duty.)
Permanently disabling......................... 7 10
(Any injury or illness which would be likely
to result in the total or partial loss of the
use of any member or function of the body.)
Fatal......................................... 10 20
(Any work-related injury or illness resulting
in death, or which has a reasonable potential
to cause death.)
------------------------------------------------------------------------
Table III-10.--Persons Potentially Affected
------------------------------------------------------------------------
Number of persons potentially affected if the event occurred or were to
occur
-------------------------------------------------------------------------
Existing Proposed
Existing scale points Proposed scale points
------------------------------------------------------------------------
0............................ 0 0.............. 0
1............................ 1 1.............. 1
2............................ 2 2.............. 2
3............................ 4 3.............. 4
4 to 5....................... 6 4.............. 6
6 to 9....................... 8 5.............. 8
More than 9.................. 10 6.............. 10
........... 7.............. 12
........... 8.............. 14
........... 9.............. 16
........... 10 or more..... 18
------------------------------------------------------------------------
f. Demonstrated good faith of the operator in abating the violation
(Sec. 100.3(f)). Existing Sec. 100.3(f) allows for a 30% reduction in
the amount of a regular assessment where the operator abates the
violation within the time set by the inspector. When the operator does
not abate the violation within the time set by the inspector, 10
penalty points are assigned.
Proposed Sec. 100.3(f) would decrease the amount of the reduction from 30% to 10% where an operator abates a violation within the time set by the inspector. MSHA believes this is a more appropriate reduction because operators are required by law to timely abate violations. MSHA is also proposing to delete the existing provision which assigns ten additional penalty points where an operator does not abate the violation within the specified time period. The Mine Act provides two sanctions for failure to correct violations within the time set by the inspector: Sec. 104(b) requires a withdrawal order, which effectively shuts down production in the area affected, and Sec. 110(b) allows assessment of a daily penalty. MSHA has reviewed the civil penalty assessment data for the last several years and believes that the proposed 10% good faith reduction is a more appropriate credit for mine operators who promptly correct hazardous conditions. g. Penalty conversion table (Sec. 100.3(g)). Existing Sec. 100.3(g) provides the penalty conversion table used to convert total penalty points to a dollar amount. The existing dollar amounts range from $72 to $60,000, and correspond to penalty points ranging from 20 or fewer to 100. Under the proposed penalty conversion table, MSHA would retain the statutory maximum penalty of $60,000, but would establish a new minimum penalty of $112. The proposed dollar amounts would correspond to penalty points ranging from 60 or fewer to 140. The proposed penalty conversion table is derived by combining two methods of converting points to dollars. There is a lower section (from 60 or fewer to 133 points) and an upper section (above 133 points) of the proposed conversion table. The proposed table starts at $112 when the number of points is 60 or fewer. Each additional point above 60 up to 133 causes the dollar value to increase by a fixed 8.33%. The dollar value assigned for 133 points is $38,387. Above 133 points the dollar value increases by approximately $3,070 for each penalty point. The maximum number of points is 140 and the maximum dollar value is $60,000. When applied to MSHA's 2005 assessment data, the penalty amounts under the proposed conversion table increase generally as severity of the violation and violation history increase. Section III of this preamble provides data showing the increased penalty amounts under the proposal. Table III-12 shows the existing and the proposed penalty conversion tables.
Table III-12.--Existing and Proposed Penalty Point Conversion Tables
------------------------------------------------------------------------
Current Proposed
Current points penalties Proposed points penalties
------------------------------------------------------------------------
20 or fewer.................. $72 60 or fewer.... $112
21........................... 80 61............. 121
22........................... 87 62............. 131
23........................... 94 63............. 142
24........................... 101 64............. 154
25........................... 109 65............. 167
26........................... 120 66............. 181
27........................... 131 67............. 196
28........................... 142 68............. 212
29........................... 153 69............. 230
30........................... 164 70............. 249
31........................... 178 71............. 270
32........................... 193 72............. 293
33........................... 207 73............. 317
34........................... 221 74............. 343
35........................... 237 75............. 372
36........................... 254 76............. 403
37........................... 273 77............. 436
38........................... 291 78............. 473
39........................... 310 79............. 512
40........................... 327 80............. 555
41........................... 354 81............. 601
42........................... 383 82............. 651
43........................... 409 83............. 705
44........................... 437 84............. 764
45........................... 463 85............. 828
46........................... 500 86............. 897
47........................... 536 87............. 971
48........................... 629 88............. 1,052
49........................... 749 89............. 1,140
50........................... 878 90............. 1,235
51........................... 1,033 91............. 1,337
52........................... 1,198 92............. 1,449
53........................... 1,376 93............. 1,569
54........................... 1,566 94............. 1,700
55........................... 1,769 95............. 1,842
56........................... 2,003 96............. 1,995
57........................... 2,252 97............. 2,161
58........................... 2,515 98............. 2,341
59........................... 2,793 99............. 2,536
60........................... 3,086 100............ 2,748
61........................... 3,419 101............ 2,976
62........................... 3,770 102............ 3,224
63........................... 4,137 103............ 3,493
64........................... 4,521 104............ 3,784
65........................... 4,856 105............ 4,099
66........................... 5,099 106............ 4,440
67........................... 5,342 107............ 4,810
68........................... 5,585 108............ 5,211
69........................... 5,828 109............ 5,645
70........................... 6,071 110............ 6,115
71........................... 6,374 111............ 6,624
72........................... 6,678 112............ 7,176
73........................... 6,981 113............ 7,774
74........................... 7,285 114............ 8,421
75........................... 7,588 115............ 9,122
76........................... 7,892 116............ 9,882
77........................... 8,499 117............ 10,705
78........................... 9,106 118............ 11,597
79........................... 9,713 119............ 12,563
80........................... 10,321 120............ 13,609
81........................... 11,535 121............ 14,743
82........................... 12,749 122............ 15,971
83........................... 13,963 123............ 17,301
84........................... 15,177 124............ 18,742
85........................... 16,392 125............ 20,302
86........................... 18,213 126............ 21,993
87........................... 20,642 127............ 23,825
88........................... 23,070 128............ 25,810
89........................... 25,498 129............ 27,959
90........................... 27,927 130............ 30,288
91........................... 30,355 131............ 32,810
92........................... 33,391 132............ 35,543
93........................... 36,427 133............ 38,503
94........................... 39,462 134............ 41,574
95........................... 42,498 135............ 44,645
96........................... 45,533 136............ 47,716
97........................... 48,569 137............ 50,787
98........................... 51,605 138............ 53,858
99........................... 54,640 139............ 56,929
100.......................... 60,000 140 or more.... 60,000
------------------------------------------------------------------------
The range of points in the proposed conversion table to reflects
proposed changes in the individual criteria tables in proposed Sec.
100.3. The minimum penalty in the proposed conversion table would be
changed from $72 to $112. MSHA believes that this would represent a
reasonable adjustment for many of the violations processed under the
existing regulations as single penalty assessments. Typically, single
penalty assessments address non-S&S and paperwork type violations. The
maximum penalty would remain at $60,000 per violation.
h. Effect on operator's ability to remain in business (Sec. 100.3(h)). Existing Sec. 100.3(h) 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, it provides that MSHA may adjust the penalty if the operator submits information to MSHA concerning the business financial status which shows that payment of the penalty will adversely affect the operator's ability to continue in business. MSHA is proposing several editorial changes for easier reading and clarity, but there would be no substantive change to existing Sec. 100.3(h). 4. Determination of Penalty; Single Penalty Assessment (Sec. 100.4) Existing Sec. 100.4 provides for a $60 penalty for non-S&S violations, i.e., those that are not reasonably likely to result in reasonably serious injury or illness. The single penalty assessment is available only if the violation is abated within the time set by the inspector and the operator does not have an excessive history of violations. The existing provision defines excessive violation history. MSHA is proposing to delete the single penalty assessment provision in Sec. 100.4 based on an evaluation of agency data and a review of experience gained under the provision. The primary focus of the Mine Act, as reiterated in the MINER Act, is on the prevention and correction of violative conditions before they occur and the improvement of the safety and health of miners. MSHA believes that deletion of the single penalty provision will have a positive impact on miner safety and health. MSHA believes that deleting the single penalty provision will provide a greater incentive for mine operators to abate hazards. The Agency believes that deleting the single penalty provision will cause mine operators to focus their attention on preventing all hazardous conditions before they occur and promptly correct those violations that do occur. Therefore, MSHA is proposing to delete the single penalty provision. 5. Unwarrantable Failure (Sec. 100.4) Proposed Sec. 100.4 would implement the MINER Act requirements related to minimum unwarrantable failure penalties. Section 8(a)(1)(B) of the MINER Act amends the Mine Act by setting a minimum penalty of $2,000 for any citation or order issued under section 104(d)(1) and a minimum penalty of $4,000 for any order issued under section 104(d)(2). 6. Determination of Penalty; Special Assessment (Sec. 100.5) Existing Sec. 100.5 provides for a special assessment for those violations which MSHA believes should not be processed under the provision for a single penalty assessment or under the regular assessment provision. Consistent with the proposal to delete the single penalty provision, MSHA is proposing to revise the first sentence in paragraph (a) of this section. The revision would remove the reference to the single assessment provision. MSHA proposes to remove the second sentence in existing paragraph (a) of Sec. 100.5 that provides a general explanation stating when a special assessment would be applied. This sentence is ``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.'' This sentence is unnecessary because the first sentence specifies that it is within MSHA's discretion to waive the regular assessment depending upon the conditions surrounding the violation. MSHA proposes to remove the list of eight categories of violations that will be reviewed for possible special assessment under existing Sec. 100.5(b). As stated in existing and proposed Sec. 100.5(a), MSHA has the discretion to waive the regular assessment formula if it determines that conditions warrant a special assessment for any type of violation. The existing list of eight categories of violations that MSHA would review, although not intended to be exclusive, resulted in a time-consuming and resource-intensive process. Under the proposed rule, MSHA would retain its discretion to determine which types of violations would be reviewed for a special assessment, without being limited to a specific list. MSHA anticipates that, under the proposal, the regular assessment provision would generally provide an appropriate penalty in most cases. This change will allow MSHA to focus its enforcement resources on more field enforcement activities, as opposed to administrative review activities. There would be circumstances, however, in which the regular assessment would not provide an appropriate penalty and thus the special assessment provision would be applied. Changes in proposed Sec. 100.5(b) would provide for easier reading and clarity and would be revised to include references to sections 105(b) and 110(i) of the Mine Act. The reference to Sec. 100.4(b) would be removed as the single penalty provision would be deleted. Paragraphs (c) and (d) would remain unchanged. Proposed paragraphs (e) and (f) would implement new civil penalty provisions of the MINER Act. New paragraph (e) addresses penalties for flagrant violations. Under the MINER Act amendments to the Mine Act, violations that are deemed to be flagrant may be assessed a civil penalty of not more than $220,000. A ``flagrant'' violation is defined 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. Under the proposal these violations would be processed as a special assessment. New paragraph (f) addresses penalties related to prompt incident notification. Under the MINER Act amendments to the Mine Act, an operator who fails to provide timely notification to the Secretary 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. Violations under this new paragraph would be processed as a special assessment. 7. Procedures for Review of Citations and Orders; Procedures for Assessment of Civil Penalties and Conferences (Sec. 100.6) Existing Sec. 100.6 contains requirements and administrative procedures for review of citations and orders. Proposed Sec. 100.6 remains substantively the same as existing Sec. 100.6. MSHA believes that safety and health is improved when mine operators and miners or their representatives are afforded an opportunity to discuss safety and health issues after an inspection with the MSHA District Manager or designee. Like existing Sec. 100.6, initial review of the citation or order would be conducted during the inspection closeout conference or at a time reasonably convenient to operators and miners or their representatives. In addition, the proposal, like the existing rule, allows the operator and miners or their representative to submit additional facts or to request a safety and health conference. Any of these parties may request to be notified of, and participate in, a safety and health conference initiated by one of the other parties. Safety and health conference requests would continue to be made with the MSHA District Office. When a request is granted, conferences will be promptly conducted. Proposed paragraph 100.6(a) contains editorial changes which incorporate concepts from existing paragraphs 100.6(a) and (c). Under proposed Sec. 100.6(a), the review process would continue to provide any operator, and miners or their representatives, with an opportunity to (1) review the citation or order with MSHA, (2) submit additional information to MSHA, and (3) request a safety and health conference with the District Manager or designee. In addition, the provision in existing Sec. 100.6(c), which provides that a request for a conference is within MSHA's discretion, would be moved to this paragraph. Proposed Sec. 100.6(b) would reduce the time, from ten days to five days, to submit additional information or request a safety and health conference. MSHA believes that the proposed reduction would result in a more effective civil penalty system because penalties would be assessed closer in time to the issuance of the citation. MSHA believes that all parties would be able to request a health and safety conference within this timeframe. As stated above, the provision in existing Sec. 100.6(c), which provides that a request for a conference is within MSHA's discretion, would be moved to proposed Sec. 100.6(a). Existing 100.6(d) would be renumbered as Sec. 100.6(c) and otherwise remain unchanged. Existing Sec. Sec. 100.6(e), (f), and (g) would be combined and incorporated into proposed Sec. 100.6(d). The wording in paragraphs (e) and (g) would be unchanged. Paragraph (f) would be clarified to specify when the MSHA District managers are to refer citations and orders to MSHA's Office of Assessments but would remain substantively unchanged. 8. Notice of Proposed Penalty; Notice of Contest (Sec. 100.7) Existing Sec. 100.7 provides for procedures applicable to a notice of proposed penalty and notice of penalty contest. Existing paragraph (a) sets out the circumstances under which a notice of proposed penalty will be served on the parties, paragraph (b) sets out the procedures for contesting a notice of proposed penalty, and paragraph (c) sets out when a proposed penalty becomes a final order of the Commission. Proposed Sec. 100.7(a), (b), and (c) include editorial changes for ease of reading, but remain substantively unchanged from the existing provision. Proposed Sec. 100.7(b) would remove from the regulatory text: (1) The reference to a return mailing card that is used to request a hearing before the Federal Mine Safety and Health Review Commission, (2) the reference to 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 is proposing these deletions because it is no longer using a return mailing card. Instead, MSHA currently provides a form 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. MSHA would continue to advise the Office of the Solicitor and the Commission of the notice of penalty contest. 9. Service (Sec. 100.8) Existing Sec. 100.8 remains substantively unchanged. This section 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. Specific references to part 40 (Representative of Miners) and part 41 (Notification of Legal Identity) would be changed to indicate they are parts contained in Chapter I of Title 30 CFR. IV. Executive Order 12866 Executive Order (E.O.) 12866 as amended by E.O. 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 E.O. 12866, MSHA has prepared a Preliminary Regulatory Economic Analysis (PREA) for the proposed rule. The PREA contains supporting data and explanation for the summary materials presented in sections IV-VII of this preamble, including the covered mining industry, costs and benefits, feasibility, small business impacts, and paperwork. The PREA is located on MSHA's Web site at http://www.msha.gov/REGSINFO.HTM. A printed copy of the PREA can be obtained from MSHA's Office of Standards, Regulations, and Variances. Based on the PREA, MSHA has determined that the proposed rule would not have an annual effect of $100 million or more on the economy and that, therefore, it is not an economically ``significant regulatory action'' pursuant to Section 3, paragraph (f) of E.O. 12866. A. Population at Risk Based on 2004 data, the proposed rule would apply to the entire mining industry, covering all 14,480 mine operators and 6,693 independent contractors in the United States, as well as the 214,450 miners and 72,739 contract workers they employ. B. Costs In order to derive and explain the cost impact of the proposed 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, the year prior to the proposed rule; (2) the impact of the proposed rule on civil penalty assessments under the assumption that mine operators and independent contractors take no actions, in response to higher proposed penalty assessments, to increase compliance with MSHA standards and regulations; and (3) the impact of the proposed 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 would otherwise receive. Before proceeding, it is important to note the nature of the impacts associated with the proposed rule. For most MSHA rules, the estimated impact reflects the cost to the mining industry of achieving compliance with the rule. For this proposed rule, the estimated impact consists of two parts: (1) Higher payments for penalties received 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. Although the former impact is not a traditional compliance cost, but rather a cost specifically due to non-compliance, for the purposes of this analysis, MSHA has shown these costs. The latter costs are compliance costs, but for existing MSHA standards and regulations. These costs were included in economic assumptions made when those standards and regulations were promulgated. At that time, MSHA generally assumed full industry compliance. Therefore, compliance efforts made in response to higher penalties are not a cost attributable to the proposed rule. However, for illustrative purposes only, this analysis reflects additional expenditures associated with improved compliance. 1. Baseline The first step in estimating the impact of the proposed rule is to establish a baseline: The number and monetary amount of civil penalty assessments in the absence of the proposed rule. For this purpose, MSHA chose all civil penalty assessments for 2005, the last full calendar year of data prior to the proposed rule. Table IV-1 shows the number of civil penalty assessments issued in 2005, disaggregated by mine employment size, by coal and MNM, and by operators and independent contractors.
Table IV-1.--Baseline Number of Civil Penalty Assessments for 2005
----------------------------------------------------------------------------------------------------------------
Coal-M/NM, operator/contractor
---------------------------------------------------------------------
Contractor/mine employment size Coal Coal M/NM M/NM All
contractor operator contractor operator violations
----------------------------------------------------------------------------------------------------------------
1-5....................................... 2,856 2,741 1,609 12,528 19,734
6-19...................................... 757 9,063 1,048 16,125 26,993
20-500.................................... 1,479 43,428 1,183 17,685 63,775
501+...................................... 1 4,432 66 1,672 6,171
All Mine Sizes............................ 5,093 59,664 3,906 48,010 116,673
----------------------------------------------------------------------------------------------------------------
The mine size and independent contractor 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 impacts in
section VI of this preamble, to determine whether small mines, as
defined by the Small Business Administration (SBA) and MSHA, would be
significantly impacted by the proposed rule. Mines with 500 or fewer
employees meet SBA's definition of a small mine. Mines with fewer than
20 employees meet MSHA's traditional definition of a small mine.
Mine violation data have been broken out by coal and metal/nonmetal (MNM) and by operator and independent contractor. The employment sizes shown are contractor size for independent contractors and mine size for mine operators. Of the 116,673 civil penalty assessments issued in 2005, 113,484, or about 97.3%, were single penalty or regular assessments. The remaining 3,189, or 2.7%, were special assessments. As can be calculated from Table IV-1, there were about 25% more coal violations than MNM violations in 2005, even though there were more than 3\1/2\ times as many MNM 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 about 3 times as many underground coal mines as underground MNM 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 is that coal mines are, on average, larger operations than MNM mines, and larger mines tend to receive more violations, on average, than smaller mines. The average coal mine operator employed about 3 times as many miners as the average MNM operator in 2004. The 2005 civil penalty monetary amount used as a baseline was the penalty proposed by MSHA. Table IV-2 shows, by contractor/mine employment size and coal-MNM, operator-independent contractor, the total baseline dollar amount of civil penalties proposed by MSHA in 2005.
Table IV-2.--Baseline Total of Proposed Civil Penalty Assessments for 2005
----------------------------------------------------------------------------------------------------------------
Coal-M/NM, operator/contractor
---------------------------------------------------------------------
Contractor/mine employment size Coal Coal M/NM M/NM All
contractor operator contractor operator violations
----------------------------------------------------------------------------------------------------------------
1-5....................................... $308,649 $463,277 $200,947 $1,887,443 $2,860,316
6-19...................................... 86,319 1,492,545 109,837 2,535,563 4,224,264
20-500.................................... 314,195 11,010,009 192,151 3,890,799 15,407,154
501+...................................... 2,000 1,706,750 14,876 634,888 2,358,514
All Mine Sizes............................ 711,163 14,672,581 517,811 8,948,693 24,850,248
----------------------------------------------------------------------------------------------------------------
Of the $24.9 million in civil penalties proposed by MSHA in 2005,
$16.6 million, or about 67%, were from single penalty and regular
assessments. The remaining $8.2 million were from special assessments.
Of this amount, about $0.3 million were issued to agents of mine
operators and another $1.5 million were issued for violations involving
a fatality.
Table IV-3 displays the baseline average dollar amount of a proposed civil penalty in 2005 disaggregated by mine size and coal-MNM, operator-independent contractor. The average penalty assessment for a violation in 2005 was $213. For a regular or single penalty assessment, the average penalty was $147. For a special assessment, the average penalty was $2,385. For special assessments issued to agents of the mine operator, the average assessment was $582, and for special assessments involving a fatality, the average penalty was $27,181.
Table IV-3.--Baseline Average Proposed Civil Penalty Assessment per Violation in 2005
----------------------------------------------------------------------------------------------------------------
Coal-M/NM, operator contractor
---------------------------------------------------------------------
Contractor/mine employment size Average for
Coal Coal M/NM M/NM all
contractor operator contractor operator violations
----------------------------------------------------------------------------------------------------------------
1-5....................................... $108 $169 $125 $151 $145
6-19...................................... 114 165 105 157 156
20-500.................................... 212 254 162 220 242
501+...................................... 2,000 385 225 380 382
All Mine Sizes............................ 140 246 133 186 213
----------------------------------------------------------------------------------------------------------------
Consistent with the formulas used to calculate regular assessments
under the existing regulations, Table IV-3 shows that the average
proposed penalty assessment in 2005 tended to increase as mine size
increased. This effect is consistent, particularly for mine operators
with 20 or more employees.
Table IV-3 also indicates that the difference in average penalties between coal and MNM mines and independent contractors of a given employment size is generally small. Table IV-2 reveals that total civil penalty assessments in 2005 were substantially larger, more than 50% larger, for coal mines than for MNM mines. The larger aggregate penalty assessment for coal mines is due to the larger number of violations issued to coal mines and the higher average penalty per violation. Coal violations tend to be more serious, on average, than MNM violations (e.g., 40% of coal violations are Significant and Substantial, or S&S, versus 23% for MNM violations). 2. Impacts If No Compliance Response to Higher Penalties With the baseline established, the next task in the cost analysis is to determine the impact of the proposed rule on civil penalty assessments under the assumption that mine operators and independent contractors take no actions, in response to higher 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 proposed rule, as MSHA's assumption in IV.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 proposed rule. They would remain the same as presented in Table IV-1 for the baseline. However, the type of the violations would change under the proposed rule. In the analysis, all 2005 regular and single penalty assessments would be issued as regular assessments under the proposed rule. MSHA assumed that most unwarrantable failure citations and orders would be processed as regular assessments under the minimum penalty requirements of the MINER Act. MSHA further assumed that the 2005 special assessments issued to agents, those involving a fatality, those involving failure to promptly notify MSHA, and those involving flagrant violations would be assessed as special assessments under the proposed rule. MSHA assumed that all other 2005 special assessments would be processed as regular assessments. Thus, under the proposed rule, MSHA estimates that the number of special assessments would decline by 85%, from 3,189 to 491. MSHA anticipates that, under the proposal, the regular assessment provision would generally provide an appropriate penalty in most cases. Equally significant, this will allow MSHA to focus its enforcement resources on more field enforcement activities, as opposed to administrative review activities. Tables IV-4 and IV-5 show the estimated total dollar amount and average dollar amount, respectively, of civil penalties under the proposed rule, assuming no compliance response by mine operators and independent contractors. Table IV-6 shows, relative to the baseline, the estimated percentage increase of civil penalties (both total and average) under the proposed rule, assuming no compliance response by mine operators and independent contractors. All of these tables are disaggregated by contractor/mine employment size, coal-MNM, and operator/contractor.
Table IV-4.--Total Proposed Civil Penalty Assessments Under Proposed Rule, Assuming No Compliance Response
----------------------------------------------------------------------------------------------------------------
Coal-M/NM, operator/contractor
---------------------------------------------------------------------
Contractor/mine employment size Coal Coal M/NM M/NM All
contractor operator contractor operator violations
----------------------------------------------------------------------------------------------------------------
1-5....................................... $414,826 $684,448 $410,544 $3,207,759 $4,717,577
6-19...................................... 133,074 2,287,667 187,432 4,744,450 7,352,623
20-500.................................... 415,811 37,598,722 340,542 8,365,383 46,720,458
501+...................................... 807 7,394,118 43,973 2,288,395 9,727,293
All Mine Sizes............................ 964,518 47,964,955 982,491 18,605,987 68,517,951
----------------------------------------------------------------------------------------------------------------
Table IV-5.--Average of Proposed Civil Penalty Assessments Under Proposed Rule, Assuming No Compliance Response
----------------------------------------------------------------------------------------------------------------
Coal-M/NM, operator/contractor
---------------------------------------------------------------------
Contractor/mine employment size Average for
Coal Coal M/NM M/NM all
contractor operator contractor operator violations
----------------------------------------------------------------------------------------------------------------
1-5....................................... $145 $250 $255 $256 $239
6-19...................................... 176 252 179 294 272
20-500.................................... 281 866 288 473 733
501+...................................... 807 1,668 666 1,369 1,576
All Mine Sizes............................ 189 804 252 388 587
----------------------------------------------------------------------------------------------------------------
Table IV-6.--Percentage Increase in Total and Average Proposed Civil Penalty Assessments Under Proposed Rule,
Assuming No Compliance Response
----------------------------------------------------------------------------------------------------------------
Coal-M/NM, operator/contractor
---------------------------------------------------------------------
Average
Contractor/mine employment size percentage
Coal Coal M/NM M/NM increase for
contractor operator contractor operator all
violations
----------------------------------------------------------------------------------------------------------------
1-5....................................... 34 48 104 70 65
6-19...................................... 54 53 71 87 74
20-500.................................... 32 241 77 115 203
501+...................................... -60 333 196 260 312
All Mine Sizes............................ 36 227 90 108 176
----------------------------------------------------------------------------------------------------------------/pre>
As indicated in these tables, MSHA estimates that total civil
penalty assessments would increase under the proposed rule, assuming no
compliance response, from $24.9 million in the baseline to $68.5
million, an increase of $43.7 million, or 176%. Approximately $2.5
million, or about 4% of the $68.5 million, would come from special
assessments. Of the $43.7 million increase, approximately $1.9 million
would result from the minimum penalty provisions for unwarrantable
violations in the MINER Act. In its analysis of 2005 data, MSHA found
one violation which met the failure to provide timely notification
provisions in the MINER Act. For this category of violations, the MINER
Act imposes a penalty of $5,000 to $60,000. However, the particular
violation 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.
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