By: Nicholas W. Scala

On July 1, 2016, the U.S. Department of Labor issued an interim final rule, changing civil penalties as required by the 2015 amendment to the Federal Civil Penalties Adjustment Act of 1990. Now, agencies of the Department of Labor, MSHA, OSHA and the Wage and Hour Division can adjust the various levels of monetary civil penalties, based on inflation this year and each year moving forward. The Department of Labor is required to calculate the annual adjustments based on the Consumer Price Index.

The new penalty levels will go into effect no later than August 1, 2016, resulting in increased monetary civil penalties for most citations and orders issued to mine operators. The penalty schedule under Regular Assessments (30 C.F.R. §100.3) will be amended to accommodate the inflation adjustment since 2007, when the penalties were last enacted by regulation.

Under the new Inflation Adjustment Act, the Department of Labor will create an initial catch-up adjustment that excludes prior adjustments made based upon inflation and a cap of 150 percent of the current penalty amount, as of November 2015. This cap is barely a consideration for the MSHA adjustments, as penalty increases average around 13.6 percent (in comparison the OSHA penalty increases will be closer to 80 percent). The adjusted penalty figures are only applicable to civil penalties assessed after August 1, 2016 with associated violations occurring after November 2, 2015.

Since MSHA penalties were last set by regulation in 2007, this rule will use the year’s figures as the base in adjusting the civil penalties – including penalties MSHA increased after 2007. For example, since the maximum civil penalty under regular assessment (§100.3) was increased to account for inflation after the 2007 regulations, totaling $70,000, MSHA must refer to $60,000 maximum set in 2007 when calculating the new maximum adjusted for inflation. For a 104(a) citation, the maximum penalty under regular assessment will actually decrease from the current figure of $70,000 to $68,300 for inflation.

The penalty point system will also change. The current penalty point range is from 60 or fewer points to 144 or more points. For the current adjustment, MSHA’s point range will revert back to the 2007 maximum of 140 points or more. The minimum civil penalty for a 104(a) citation will increase from $112 to $127. Unwarrantable failure minimum penalties will also surge with the 104(d)(1) minimum civil penalty increasing to $2,277 and the minimum civil penalty for a 104(d)(2) going from $4,000 to $4,553.

The minimum civil penalty for the failure to provide timely notification of death or entrapment under §100.4(c) will increase from the minimum civil penalty of $5,000 to $5,692, and the maximum civil penalty for the notification issuance will increase from $60,000 to $68,300. For reasons similar to the decrease in the statutory maximum under §100.3, the maximum allowable violation for a 104(b), failure to abate, violation will decrease to $7,399 from $7,500. The only standard issuable to miners, related to smoking in underground facilities, will also decrease from $375 to $313. Finally, the maximum civil penalty for a flagrant violation under Special Assessments (30 C.F.R 100.5(e)) will increase from $242,000 to $250,433.

While some maximum penalties have decreased, the interim rule will allow for yearly inflation adjustment, therefore mine operators should expect increases in MSHA penalties each year.

The interim final rule will go into effect without prior notice and comment, however, stakeholders should still exercise their right to comment on the rule’s potential effect on continued operations. Stakeholders have 45 days to submit comments after the date of publication in the Federal Register, the deadline to submit comments is August 15, 2016.

The MSHA Practice Group at Conn Maciel Carey PLLC will closely follow this rule and the effects of its implementation. Operators and other stakeholders interested in submitting comments on the topic can contact Nick Scala (nscala@connmaciel.com), Chairs of the national MSHA Practice Group at Conn Maciel Carey PLLC, for further information and assistance.