Criteria and Procedures for Proposed Assessment of Civil Penalties

SUMMARY: This final rule revises the Mine Safety and Health

Administration's (MSHA's) existing civil penalty assessment amounts

under part 100. The rule also adds a new provision which codifies the

civil penalty amounts that may be assessed under Secs. 110(a), 110(b),

and 110(g) of the Federal Mine Safety and Health Act of 1977 (Mine

Act). These changes are made as a result of a mandate by Congress in

the Debt Collection Improvement Act of 1996, which requires that all

civil penalties be increased by up to 10 percent, and that they be

adjusted at least once every 4 years thereafter according to the

formula specified in the Federal Civil Penalties Inflation Adjustment

Act of 1990 (Inflation Adjustment Act).

EFFECTIVE DATE: This final rule is effective June 22, 1998.

FOR FURTHER INFORMATION CONTACT: Patricia W. Silvey, Director; Office

of Standards, Regulations, and Variances, MSHA; 703-235-1910.

SUPPLEMENTARY INFORMATION:

I. Rulemaking Background

Under Secs. 105(a) and 110 of the Mine Act, MSHA is required to

assess a civil penalty for each violation of the Mine Act and the

mandatory safety and health standards promulgated by the Agency. The

Mine Act originally provided in 1977 that the penalty for each

violation would not exceed $10,000, and that the maximum penalty for

failure to correct a violation cited under Sec. 104(a) within the

period permitted for its correction would not exceed $1,000 for each

day that the violation continued to exist. Miners who willfully

violated the mandatory safety standards relating to smoking or the

carrying of smoking materials would be assessed a civil penalty of not

more than $250 for each occurrence of such violation.

MSHA promulgated its first regulations relating to civil penalty

assessments under the Mine Act on May 30, 1978 (43 FR 23514). This rule

included a penalty conversion table for regular assessments based on

the six criteria enumerated in 30 CFR 100.3(a). On May 21, 1982 (47 FR

22286), MSHA promulgated a rule that revised its regular assessment

civil penalty table, further defined the criteria for issuing special

assessments, and created a $20 single penalty assessment for those

violations that were not reasonably likely to result in reasonably

serious injury or illness and which were abated in a timely manner.

There was no provision in either rule relating to civil penalties

assessed for failing to abate violations of the Mine Act or for smoking

or carrying smoking materials, as these penalty amounts were set by the

Mine Act.

On November 5, 1990, the Omnibus Budget Reconciliation Act of 1990

(Budget Act), Pub. L. 101-508, was signed into law. Section 3102 of the

Budget Act amended the Mine Act and raised the maximum MSHA civil

penalty per violation from $10,000 to $50,000. The $1,000 per day civil

penalty for failure to correct a violation under Sec. 104(a) was raised

to $5,000 per day. The miner smoking penalty remained at $250.

Following the passage of the Budget Act, MSHA published a final rule on

January 24, 1992 (57 FR 2968), as amended December 21, 1992 (57 FR

60690), which implemented the penalty increases prescribed by the

Budget Act and accounted for inflation since 1982. A new civil penalty

conversion table was published and the $20 single penalty assessment

was also raised to $50.

Also in 1990, Congress passed Pub. L. 101-410, the Inflation

Adjustment Act. On April 26, 1996, the Omnibus Consolidated Rescissions

and Appropriations Act of 1996 (OCRAA), Pub. L. 104-131, was passed.

Chapter 10 of the OCRAA, titled as the ``Debt Collection Improvement

Act of 1996'' (DCIA), modifies the Inflation Adjustment Act and

requires that the head of each agency adjust by regulation each civil

monetary penalty provided for by law within its jurisdiction pursuant

to the inflation adjustment described under Sec. 5 of the DCIA. The

first adjustment of a civil penalty may not exceed 10 percent of the

existing penalty. The revised civil penalties will apply only to those

violations occurring after the date the final rule takes effect.

On September 8, 1997, MSHA published a proposed rule in the Federal

Register (62 FR 47330) notifying the public of the Agency's mandate to

increase civil penalties by an amount not to exceed 10 percent of the

existing penalty amounts. The rulemaking record closed on November 7,

1997. No requests for public hearings were received. This final rule is

based on consideration of the entire rulemaking record, including all

written comments received.

II. Discussion and Summary of the Final Rule

A. General Discussion

In passing the DCIA, Congress demonstrated its concern that civil

penalties be adjusted to produce desired results. MSHA is increasing

its civil penalties in order to comply with Congress' mandate that

agencies make inflation adjustments in their civil penalties.

Under Sec. 5 of the Inflation Adjustment Act, civil penalties are

to be increased by a cost-of-living adjustment. The statute defines

``cost-of-living adjustment'' as the percentage by which the Consumer

Price Index for the month of June of the calendar year preceding the

adjustment exceeds the Consumer Price Index for the month of June of

the calendar year in which the amount of such civil monetary penalties

was last set or adjusted. The term ``Consumer Price Index'' (CPI) means

the Consumer Price Index for all-urban consumers published by the

Department of Labor.

In order to determine the current cost-of-living adjustment for

MSHA's civil penalties, MSHA made the following calculations:

480.2 (the CPI for the month of June 1997, the calendar year preceding

the current adjustment)

419.9 (the CPI for the month of June 1992, the calendar year in which

the MSHA civil penalties were last adjusted)

480.2/419.9 = 1.14 (inflation adjustment factor)

1.14 * $100 (a hypothetical penalty assessment) = $114 (new assessment

amount with full inflation adjustment)

But using the maximum inflation adjustment (10%) permitted by the

DCIA, this hypothetical penalty assessment would be $110 (1.10 * $100)

In order to determine the current cost-of-living adjustment for the

miner smoking penalty, MSHA made the following calculations:

480.2 (the CPI for the month of June 1997, the calendar year preceding

the current adjustment)

195.3 (the CPI for the month of June 1978, the calendar year in which

the civil penalty was last adjusted)

480.2/195.3 = 2.5 (inflation adjustment factor)

2.50 * $250 (the smoking penalty assessment) = $625 (new assessment

amount with full inflation adjustment)

But using the maximum inflation adjustment (10%) permitted by the

[[Page 20033]]

DCIA, penalty assessment would be $275 (1.10 * $250)

One commenter generally agreed with the provisions of the proposed

rule and supported the increase of monetary penalties. The commenter

also suggested that the Agency quickly and efficiently implement the

provisions of the proposed rule.

Another commenter stated that the proposed rule and the resulting

increase in monetary penalties are excessive, especially for small

companies. The adjustments contained in the final rule are

Congressionally mandated and, therefore, agencies have no discretion to

consider lower increases in penalties for small businesses. However,

one criterion considered by MSHA when assessing civil penalties by the

regular formula under 30 CFR 100.3(a)(1) is the size of the mine and

the size of the controlling entity. A second criterion considered by

MSHA is the mine operator's ability to continue in business. MSHA

begins with the assumption that the civil penalty will not affect a

mine operator's ability to continue in business. The burden is on the

mine operator to demonstrate financial hardship. MSHA then reviews any

financial documentation submitted by the mine operator and makes a

determination as to whether the proposed penalty should be adjusted.

Two commenters suggested that MSHA modify part 100 to allow for

penalty offsets or credits for those coal companies that maintain mine

rescue teams. The commenters added that companies which continue to

maintain mine rescue teams are at a competitive disadvantage with other

coal companies. These commenters suggested that the Agency is presently

considering crediting mining companies with mine rescue teams by

automatically reducing their assessed civil penalties. Therefore, these

commenters requested that MSHA extend the comment period or leave the

rulemaking record open while this issue is being considered. One of the

commenters also added that civil penalties could, and should, be used

in part to fund some state agency mine rescue teams. While the Agency

recognizes the importance of mine rescue teams and the significant role

they play in ensuring miners' health and safety, the issue is beyond

the scope of this rulemaking. Moreover, MSHA is presently not

considering reducing civil penalties assessed to mining companies with

mine rescue teams. MSHA does, however, plan to continue to provide

funding through its State Grants program. Portions of this MSHA funding

program are used by some states for maintaining mine rescue teams.

B. Section-by-Section Analysis

The following section-by-section analysis explains the final rule

and its effect on existing standards.

Section 100.3 Determination of Penalty Amount; Regular Assessment

Paragraph (a) of this section is amended to codify Sec. 110(a) of

the Mine Act. This revision also reflects the increase of the maximum

civil penalty from $50,000 to $55,000 per violation. Existing paragraph

(g) of this standard includes a revised penalty conversion table in

which points assigned for each criterion enumerated in this section are

totaled and a correlating civil penalty is determined. Current

penalties range from $60 to $50,000. New paragraph (g) reflects the 10

percent maximum penalty increase prescribed by the DCIA, and civil

penalties have been adjusted accordingly. Civil penalties in the final

table range from $66 to $55,000.

Section 100.4 Determination of Penalty; Single Penalty Assessment

The single penalty assessment under the final rule is increased

from the existing $50 to $55, which reflects a 10 percent maximum

increase.

Section 100.5 Determination of Penalty; Special Assessment

This section pertains to violations which are of such a nature or

seriousness that MSHA cannot determine an appropriate penalty using the

regular assessment formula or the single assessment provision. The

special assessment penalty is determined by experienced Agency mine

safety and health specialists, based on the facts and circumstances of

each case. Prior to a special assessment, Agency field personnel review

certain categories of violations for special assessment.

This section also addresses penalties which may be assessed daily

to an operator for failure to correct a violation within the period

permitted for its correction. The existing maximum daily civil penalty

is increased from $5,000 to $5,500.

Finally, this section addresses penalties which MSHA may assess

miners who willfully violate mandatory safety standards relating to the

use or carrying of smoking materials underground. This current penalty

of $250 is increased in the final rule to $275.

III. Executive Order 12866

In accordance with Executive Order 12866, MSHA has prepared a

Regulatory Impact Analysis (RIA) of the estimated costs and benefits

associated with the revisions of the criteria and procedures for

proposed assessment of civil penalties.

The RIA containing this analysis is available from MSHA. The Agency

estimates that the final rule will result in increased costs to the

mining industry of about $2.6 million annually.

Based upon the RIA, MSHA has determined that this rule is not an

economically significant regulatory action pursuant to Sec. 3(f)(1) of

Executive Order 12866.

IV. Paperwork Reduction Act

This final rule contains no information collections which are

subject to review by the Office of Management and Budget (OMB) under

the Paperwork Reduction Act of 1995.

V. Regulatory Flexibility Act

In accordance with Sec. 605 of the Regulatory Flexibility Act

(RFA), MSHA certifies that the civil penalty rule does not have a

significant economic impact on a substantial number of small entities.

This final regulation does no more than codify existing law and

mechanically increase certain civil money penalties to account for

inflation, pursuant to specific directions set forth in the Federal

Civil Penalties Inflation Adjustment Act, as amended. The statute

specifies the procedure for calculating the adjusted civil money

penalties and does not allow the Department to vary the calculation to

minimize the effect on small entities. Moreover, the actual amount of

the increase in penalties would not meet the threshold set forth in the

Regulatory Flexibility Act. MSHA discusses its quantitative analysis

warranting this conclusion below.

In the past, MSHA considered small mines to be mines with fewer

than 20 employees. However, for the purposes of the RFA and this

certification, MSHA has also evaluated the impact of the final rule on

mines with 500 employees or fewer. About 350 small governmental

jurisdictions may be affected. Under the Small Business Regulatory

Enforcement Fairness Act (SBREFA) amendments to the RFA, MSHA must

include in the final rule a factual basis for this certification. The

Agency is publishing the regulatory flexibility certification statement

in the Federal Register, along with the factual basis. The Agency has

provided the Small Business Administration (SBA) Office of

[[Page 20034]]

Advocacy a copy of the certification statement.

MSHA will also mail a copy of the final rule, including the

preamble and certification statement, to mine operators and miners'

representatives. The final rule will also be available on MSHA's

Website.

Factual basis for certification. MSHA explains below the Agency's

quantitative approach in reaching its conclusion on the impact of the

statutory provisions, as implemented by the rule. The Agency performed

its analysis separately for two groups of mines: coal mines and metal/

nonmetal mining operations.

Under the SBREFA amendments to the RFA, MSHA must use the SBA

definition for a small mine of 500 employees or fewer 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. The alternative definition

could be the Agency's traditional definition of ``fewer than 20

miners,'' or some other definition. As reflected in the certification,

MSHA analyzed the costs of this final rule for small and large mines

using both the traditional Agency definition and SBA's definition, as

required by RFA. The Agency compared the costs of the final rule for

small mines in each sector to the revenues for each sector for every

size category analyzed. In each case, the results indicated that the

costs as a percent of revenue are less than 1 percent.

One commenter stated that the SBA defines the small business entity

for Standard Industrial Code (SIC) 3241 as those employing 750 persons

or less. SIC code 3241 includes establishments primarily engaged in

manufacturing hydraulic cement, including portland cement. The

commenter stated that of the 45 manufacturers of portland cement, nine

qualified as small entities under this SBA definition. The commenter

also requested that MSHA use this definition in all proposed rules.

MSHA recognizes this SBA definition for businesses engaged in this type

of mining. In this instance, however, the mandate by Congress in the

DCIA to increase civil penalties applies across the board to all mine

operators. Therefore, although some manufacturers of portland cement

would be considered small mines under the SBA definition, they are

still covered by the final rule.

The following table summarizes the results of the analysis.

Mines: Costs Compared to Revenues

----------------------------------------------------------------------------------------------------------------

Estimated Estimated

Number of Estimated cost revenue cost per Cost as % of

mines of final rule (millions) mine revenue

----------------------------------------------------------------------------------------------------------------

COAL MINES:

Small =20............................. 1044 742,459 18,672 711 0.004

Small= 500............................. 11 7,823 819 711 0.001

All Mines.............................. 2661 1,892,416 19,508 711 .01

M/NM MINES:

Small =20............................. 1543 97,558 26,071 63 0.000

Small= 500............................. 29 1,835 5,866 63 0.000

All Mines.............................. 10,780 682,020 38,000 63 0.002

----------------------------------------------------------------------------------------------------------------

In determining revenues for coal mines, MSHA multiplied coal

production data (in tons) for mines in specific size categories

(reported to MSHA quarterly) by the average price per ton for coal as

determined in the Coal Industry Annual 1996. (Published by the

Department of Energy's Energy Information Administration.) MSHA

obtained revenue data for metal and nonmetal mines from the Mineral

Commodities Summaries 1996. (Published by the U.S. Department of the

Interior.)

VI. Unfunded Mandates

The Unfunded Mandates Reform Act was enacted in 1995. While much of

the Act is designed to assist the Congress in determining whether its

actions will impose costly new mandates on State, local, and tribal

governments, the Act also includes requirements to assist Federal

agencies to make this same determination with respect to regulatory

actions.

MSHA has determined that, for purposes of Sec. 202 of the Unfunded

Mandates Reform Act of 1995, this final rule does not include any

Federal mandate that may result in increased expenditures by State,

local, or tribal governments in the aggregate of more than $100

million, or increased expenditures by the private sector of more than

$100 million. Moreover, the Agency has determined that for purposes of

Sec. 203 of that Act, this final rule does not significantly or

uniquely affect these entities.

Analysis. Based on the analysis in the Agency's Final Regulatory

Impact Statement, the cost of this final rule is estimated to be about

$2.6 million. Accordingly, there is no need for further analysis under

Sec. 202 of the Unfunded Mandates Reform Act.

MSHA has concluded that small governmental entities are not

significantly or uniquely impacted by the final rule. The final rule

will impact about 2,700 coal operations and 10,800 metal and nonmetal

mining operations of which approximately 350 sand and gravel or crushed

stone operations are run by state, local, or tribal governments for the

construction and repair of highways and roads. Of these entities, only

those which are assessed a civil penalty will incur additional costs

related to this final rule. These costs, however, would be minimal.

Notwithstanding this conclusion, MSHA will mail a copy of the final

rule to these 350 entities.

VII. Executive Order 13045

In accordance with Executive Order 13045, MSHA has evaluated the

environmental health or safety effects of the rule on children. The

Agency has determined that the final rule will have no effects on

children.

List of Subjects in 30 CFR Part 100

Mine safety and health, Penalties.

[[Page 20035]]

Dated: April 15, 1998.

J. Davitt McAteer,

Assistant Secretary for Mine Safety and Health.

Part 100, subchapter P, chapter I, title 30 of the Code of Federal

Regulations is amended as follows:

PART 100--CRITERIA AND PROCEDURES FOR PROPOSED ASSESSMENT OF CIVIL

PENALTIES

1. The authority citation for part 100 continues to read as

follows:

Authority: 30 U.S.C. 815, 820, 957.

2. Section 100.3 is amended by revising the introductory text of

paragraph (a) and revising paragraph (g) to read as follows:

Sec. 100.3 Determination of penalty amount; regular assessment.

(a) General. 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, shall be assessed a civil penalty of not

more than $55,000. Each occurrence of a violation of a mandatory safety

or health standard may constitute a separate offense. The amount of the

civil penalty proposed shall be based upon the formula set forth in

this section. The formula is based on the general criteria described in

sections 105(b) and 110(i) of the Mine Act. These criteria are:

* * * * *

(g) Penalty conversion table. The following penalty conversion

table shall be used to convert the accumulation of penalty points to

the appropriate proposed monetary assessment.

Penalty Conversion Table

------------------------------------------------------------------------

Points Penalty ($)

------------------------------------------------------------------------

20 or fewer............................................. 66

21...................................................... 73

22...................................................... 79

23...................................................... 86

24...................................................... 92

25...................................................... 99

26...................................................... 109

27...................................................... 119

28...................................................... 129

29...................................................... 139

30...................................................... 149

31...................................................... 162

32...................................................... 175

33...................................................... 188

34...................................................... 201

35...................................................... 215

36...................................................... 231

37...................................................... 248

38...................................................... 264

39...................................................... 281

40...................................................... 297

41...................................................... 321

42...................................................... 347

43...................................................... 371

44...................................................... 396

45...................................................... 420

46...................................................... 453

47...................................................... 486

48...................................................... 570

49...................................................... 679

50...................................................... 796

51...................................................... 936

52...................................................... 1,086

53...................................................... 1,247

54...................................................... 1,419

55...................................................... 1,603

56...................................................... 1,815

57...................................................... 2,041

58...................................................... 2,279

59...................................................... 2,531

60...................................................... 2,796

61...................................................... 3,098

62...................................................... 3,416

63...................................................... 3,748

64...................................................... 4,096

65...................................................... 4,400

66...................................................... 4,620

67...................................................... 4,840

68...................................................... 5,060

69...................................................... 5,280

70...................................................... 5,500

71...................................................... 5,775

72...................................................... 6,050

73...................................................... 6,325

74...................................................... 6,600

75...................................................... 6,875

76...................................................... 7,150

77...................................................... 7,700

78...................................................... 8,250

79...................................................... 8,800

80...................................................... 9,350

81...................................................... 10,450

82...................................................... 11,550

83...................................................... 12,650

84...................................................... 13,750

85...................................................... 14,850

86...................................................... 16,500

87...................................................... 18,700

88...................................................... 20,900

89...................................................... 23,100

90...................................................... 25,300

91...................................................... 27,500

92...................................................... 30,250

93...................................................... 33,000

94...................................................... 35,750

95...................................................... 38,500

96...................................................... 41,250

97...................................................... 44,000

98...................................................... 46,750

99...................................................... 49,500

100..................................................... 55,000

------------------------------------------------------------------------

* * * * *

3. Section 100.4 is amended by revising paragraph (a) to read as

follows:

Sec. 100.4 Determination of penalty; single penalty assessment.

(a) An assessment of $55 may be imposed as the civil penalty where

the violation is not reasonably likely to result in a reasonably

serious injury or illness (non-S&S) and is abated within the time set

by the inspector.

(1) If the violation is not abated within the time set by the

inspector, the violation will not be eligible for the $55 single

penalty and will be processed through either the regular assessment

provision (Sec. 100.3) or special assessment provision (Sec. 100.5).

(2) If the violation meets the criteria for excessive history under

Sec. 100.4(b), the violation will not be eligible for the $55 single

penalty and will be processed through the regular assessment provision

(Sec. 100.3).

* * * * *

4. Section 100.5 is amended by redesignating paragraphs (a) through

(h) as paragraphs (a)(1) through (8); redesignating the introductory

text as paragraph (a) and the concluding text as paragraph (b); and by

adding new paragraphs (c) and (d) to read as follows:

Sec. 100.5 Determination of penalty; special assessment.

* * * * *

(c) Any operator who fails to correct a violation for which a

citation has been issued under Sec. 104(a) of the Act within the period

permitted for its correction may be assessed a civil penalty of not

more than $5,500 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.

[FR Doc. 98-10688 Filed 4-21-98; 8:45 am]

BILLING CODE 4510-43-P