MSHA’s proposed penalty changes could increase citation costs

Therese Dunphy

August 1, 2014

MSHA_graphicOn July 31, the Mine Safety and Health Administration (MSHA) published a proposed rule in the Federal Register that makes significant changes to its existing civil penalty regulations. Aggregates operators should familiarize themselves with the proposed changes and consider the potential impact on their operations. Comments may be made within 60 days of the proposed rule’s publication.

Joseph A. Main, assistant secretary of labor for mine safety and health, says the proposed rule would, among other things, “facilitate improved compliance and early resolution of enforcement issues.”

The proposed rule would apply to regular formula assessments only, not special assessments, the agency notes. Last year, MSHA proposed regular formula assessment penalties for 121,100 violations. Of those, one in five were contested.

According to MSHA, its proposal would amend § 100.3 according to four principles:

  • Improvement in consistency, objectivity and efficiency in how inspectors write citations and orders by reducing the number of decisions needed;

  • Simplification of the penalty criteria;

  • Greater emphasis on the more serious safety and health conditions; and

  • Openness and transparency in the application of the regular formula penalty criteria.

The proposed rule would reduce the penalty point range from 208 to 100 maximum points. In general, it places less emphasis on mine size and greater emphasis on negligence, violation history and the severity factor of gravity.

MSHA says it evaluated the impact of the proposed changes using 2013 violation data as a baseline. When taken as a percentage of penalty points for criterion, the following shifts were seen:

  • Mine size criterion reduced from 20.1% to 13.2%;

  • Violation history criterion increased from 11.6% to 15.5%;

  • Negligence criterion increased from 30.1% to 39.3%; and

  • Gravity criterion decreased from 38.2% to 32.0% (severity category increased from 12.2% to 17.0%).

Let’s take a look at each of those changes in more depth.

Mine size

Under the existing rule, three tables are used to assign penalty points for aggregates producers based on size. They include one for metal/non-metal mines (up to 15 points), one for controlling entities of metal/non-metal mines (up to 10 points) and one for contractors (up to 25 points). The size is measured by the number of hours worked. To illustrate the consolidation in this category, here’s how penalty points would be assigned at a mine, based on thousands of annual hours worked:

  • 0 to 5 = 0 points

  • >5 to 200 = 1 point

  • >200 to 1,500 = 2 points

  • >1,500 to 3,000 = 3 points

  • >3,000 = 4 points

For controlling entities, penalty points would be assigned, based on thousands of annual hour worked, as follows:

  • 0 to 50 = 0 points

  • >50 to 300 = 1 point

  • >300 to 2,000 = 2 points

  • >2,000 to 5,000 = 3 points

  • >5,000 = 4 points

For a breakdown of penalty points for the size of an independent contractor, see the proposed rule.

Violation history

The proposed changes would increase the weight for the History of Violations criterion penalty points from 11.6% of total penalty points to 15.5% and would increase the weight for overall violations penalty points from 9.7% to 13.5% “in recognition of the importance of the need for operators to prevent violations from occurring.”

§ 100.3 (c) of the existing rule bases the operator’s violation history on the total number of violations and the number of repeat violations of the same citable provision of a standard during a 15-month period prior to the date a current violation is being assessed.

MSHA says the proposed rule would be more equitable for small mines. Currently, zero points are assigned to a site that has fewer than 10 violations that become final orders over the 15-month time period. The new proposal would assign zero points when a mine has either fewer than 10 violations or 10 or fewer inspection days over the 15-month period preceding the data a new violation occurs.

“It looks like there is less emphasis on VPID (violation per inspection day),” says Kristin R.B. White, a member of Jackson and Kelly’s Occupational Safety and Health Practice Group. “I can see where that VPID could help smaller operators. Because they don’t have that many inspection days, if you end up having just a handful of violations, it could drive up that number. I don’t know if that will be offset by what I see as increases in other parts of the rule, but that particular part of the rule would be a positive change for smaller operators.”

In terms of repeat violations, the proposed rule would kick in after a mine operator has had the following (during the 15-month timeframe):

  • A minimum of 10 violations, which became final orders;

  • More than 10 inspection days; and

  • Six repeat violations of the same citable provision of a standard, which became final orders.

For contractors, the numbers change to a minimum of six violations at all mines (that became final orders) and six repeat violations of the same provision.

It’s important to note that the proposed rule would assess the maximum penalty points for repeat violations per inspection day at a value of >0.5, rather than the current >1.0 “because a history of repeat violations demonstrates a lack of concern for the safety and health of miners.”


While the current rule include five categories of negligence, the proposed rule reduces that number to three: Not negligent, negligent and reckless disregard. The new definition of negligent would be, “The operator knew or should have known about the violative condition or practice.” Penalty points would be 0, 15, and 30, respectively.

In the proposed rule, MSHA notes that it “believes that this proposed change would result in assessments that appropriately reflect actions under the control of operators that have a direct impact on miner safety and health.”

While MSHA says its goal is to improve consistency and objectivity of citations, the reduction in categories here may have a detrimental effect on operators.

“We very rarely see a violation written as ‘no negligence,’ even when, I believe, there is no negligence,” White says. “To me, that means that you’re always starting at negligent. Now, most inspectors come in with moderate or high negligence and then they look at whether there are mitigating circumstances to lower it or aggravating circumstances to raise it. Here, it looks like you’re coming in at one (negligent) and then have a jump up (to reckless). I worry that that is not a favorable change for operators.”


The proposed rule maintains the three current factors used to measure the gravity of a violation, including the following:

  • The likelihood of the occurrence of an event against which a standard is directed;

  • The severity of injury or illness if the event occurred or were to occur; and

  • The number of persons potentially affected if the event occurred or were to occur.

However, MSHA reduced the number of subcategories for each. Likelihood would have three subcategories: unlikely, reasonably likely and occurred. Persons affected would be reduced from 11 subcategories to two: no persons are affected and one or more persons are affected.

The severity criteria contain what may be the most significant changes. The proposal calls for three categories: no lost workdays, lost workdays or restricted duty and fatal. While the lost workdays or restricted duty category calls for five penalty points under both the existing and proposed rule, the impact – from a percentage basis – is more than double in the proposed rule.

‘Good faith’ discount

The proposed rule would, like the current rule, offer a 10% reduction in the penalty amount of a regular assessment when an operator abates the violation within the time set by the inspector.

As previously noted, approximately one in five citations were challenged during 2013, so MSHA is considering an incentive for operators who do not contest the penalty or the violation and pay the penalty before it becomes a final order – an  additional 20% reduction in the penalty amount.

MSHA says that operators who promptly abate hazards and pay the penalties “could be eligible for up to a 30% overall Good-Faith reduction in the amount of the penalties.”

“To me, the ability to contest is part of the system of checks and balances on agency power,” White says. While the short-term savings maybe attractive, operators should consider the long-term implications as well.

“You could have operators who think, ‘I can save a little bit here and there,’” White says. “But if you’re not watching how many violations or S&S violations you have, that could add up quickly.

“You see that sometimes in the OSHA world,” she adds. “People will get $5,000 penalties, and they just want to pay them and move on because, obviously, it is more expensive than $5,000 to contest and litigate, but what happens is two years later, you engage in the same violation and OSHA hits you with a repeat for $50,000.”

In the MSHA regulatory environment, the balance between a Good-Faith reduction and the more severe consequences of a  potential Pattern of Violations designation is one operators need to weigh, should the proposed rule go through with that language intact.

Proposed penalty structure

The existing minimum/maximum penalties of $112 and $70,000 for non-flagrant violations are retained in the new rule. Penalty points of 31 or fewer would call for the minimum proposed penalty, while penalty points of 73 or more would trigger the maximum penalty.

MSHA used a two-part methodology to convert points to a dollar amount. The lower section of the proposed table (32 to 62 points) uses an exponential curve while the upper section (>62 points) uses a linear curve. The proposed penalty value of 62 points is $15,000 with an increase of $5,000 per penalty point up to 73 points when the maximum penalty kicks in. (One noteworthy change: if the proposed penalty would impact an operator’s ability to continue in business, the operator will now submit information to the Office of Assessments, Accountability, Special Enforcement, and Investigation rather than the district manager.)

A significant change is being proposed for unwarrantable failure citations and orders. MSHA is proposing a 50% increase in the minimum penalties “to provide greater deterrence for operators who allow these types of violations to occur.” The minimum penalty would increase from $3,000 to $6,000 under the proposed rule.

Expanding its scope of power

Historically,  §§ 100.1 and 100.2 have been limited to proposed civil penalties, but MSHA aims to broaden that scope to include assessed penalties. In 2007,  MSHA notes that the Secretary revised part 100 to institute an “across-the-board increase in penalties to increase the incentives for mine operators to prevent and correct violations.” The agency is “concerned,” however, that “mine operators hold a perception that a lower penalty can be obtained by bringing a penalty contest before the Commission because the Commission is not required to follow MSHA’s penalty regulations.”

Further, it notes that in cases where the Secretary has met his burden to prove penalty-related facts, the Commission has assessed civil penalties that were, on average, 15% lower than those proposed by MSHA. The agency claims that this perception “is exacerbating the number of contested cases under the Mine Act by creating an extra and unnecessary incentive for mine operators to contest MSHA’s proposed penalties.” It also claims that the Commission’s ability to lower penalties undermines the Secretary’s ability “to establish a penalty policy that achieves the deterrent purposes of civil penalties under the Mine Act.”

It is considering several proposals to address these concerns.

  • The first would be to modify the scope and applicability of § 100.3 so that it governed both proposed and assessed fines. This would essentially eliminate the Commission’s ability to modify proposed penalties.

  • The second alternative would be to modify the scope and applicability as before, but would allow the Commission to depart from the penalty formula – either up or down – to take into account “an aggravating or mitigating circumstance of a kind, or to a degree, not adequately taken into consideration by the Secretary when formulating the penalty regulations.” There are several additional stipulations that MSHA wants the Commission to meet in order to deviate from its proposed penalties. See the rule for details on those stipulations.

  • A final option, in MSHA’s view, is to make no changes to the scope or applicability of part 100. However, during litigation, the Secretary “could ask the Commission to establish a presumption of validity in favor of the penalty indicated by part 100 by requiring its ALJs to give an explanation for why the part 100 penalty is inadequate.” In this option, MSHA suggests that “the Secretary could also request that the Commission provide more guidance to Commission ALJs about what an adequate explanation of a penalty assessment involves.”

“The Commission rule for me was probably the most problematic in what they’ve done here,” White says of the proposed rule. “They (MSHA) don’t have unfettered power. The Commission still applies the six criteria; it’s just that they can assess what penalty they think is appropriate. These are sophisticated judges who are weighing a lot of facts and a lot of evidence.

“I think it’s an attempt to undermine the Commission’s independence. They are to be an independent review,” she adds. “To say that they are tied to what MSHA is tied to erodes that independence. I think it usurps the Commission’s role.”

A pass for public operations

While much of the 99-page proposed rule implies that the new structure is intended “to encourage operators to be more proactive in addressing safety and health conditions at their mines,” the proposed penalties don’t seem to apply to government-owned operations.

In the economic analysis of the proposed rule, MSHA says that it “is aware that some state and local governments own or operate mines. MSHA does not propose penalties for violations at these mines; therefore, state and local governments are not directly impacted by this proposal.

“Any increase in proposed MSHA assessments that may occur would be a transfer of resources between government and private industry,” the agency notes.

Economic impact for aggregate producers

While government-owned operations may not be affected by this proposed rule, aggregates operators, as part of the metal/non-metal segment, would likely face higher penalties. The average projected penalty decreases from $876 to $815 for penalties assessed at coal mines, but would increase from $459 to $480 for penalties at metal/non-metal mines (see table below). Total penalties for the coal sector are projected to decline from $3.9 million, while total penalties for metal/non-metal are expected to increase $1.2 million.

Aggregates producers and other interested parties have until Sept. 29 to submit comments on this rule.

Click for PDF of MSHA's proposed penalties.
Click for PDF of MSHA’s proposed penalties.

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