The Mine Safety and Health Administration (MSHA) is in the process of reviewing proposed new civil penalty regulations following multiple hearings in which stakeholders offered their comments. Civil penalties for safety violations within the mining industry have generated much consternation and controversy over the years. They were first introduced to the mining industry by the Coal Mine Health and Safety Act of 1969 and were met with great resistance and legal challenges, some of which went all the way to the Supreme Court of the United States.

Civil penalties became applicable to all mines with the advent of the Federal Mine Safety and Health Act of 1977. By that time, the idea of civil penalties had been mostly accepted. However, following a series of major coal accidents starting in 2006, penalty amounts rose dramatically and mine operators found that the amounts proposed against them were strongly affected by check-off findings made by inspectors on citation forms. These check-off findings require inspectors to make multiple determinations regarding the cause or causes of each violation.

Current Criteria for Penalty Calculations

Gravity of the Violation

One determination that an inspector must make when investigating a workplace injury or illness is the gravity of the violation, an evaluation which takes into account three factors: (1) the severity of the injury or illness; (2) the likelihood of the event’s occurrence against which a standard is directed; and (3) the number of people affected.


Citation forms also include multiple choices for assessing negligence. When evaluating the violation, an inspector may assign it one of the following five degrees of negligence:

  • no negligence,
  • low negligence,
  • moderate negligence,
  • high negligence, or
  • reckless disregard.

Pending Changes to Penalty Calculations

To sidestep disputes regarding the accuracy of inspector findings, MSHA has now proposed to eliminate many of the inspector choices. Negligence findings would be reduced to simply there was negligence or there was not. (An inspector could also choose “reckless disregard,” but currently that finding is relatively rare. Some operators, however, are concerned that it could become common under the new regulations. MSHA has issued a clarification to its recently published proposed new penalty regulations asserting that will not happen.)

Regardless of what the new civil penalties require or how they are formulated, they are not likely to eliminate controversy. Operators have many reasons to care about civil penalties and related findings by inspectors. Penalties are a financial burden that is not tax-deductible, and the cost of penalties is directly increased by points assigned to inspector findings. Operators sometimes overlook the cost significance of having too many violations on their record.

Other Findings––Based on MSHA’s Records (No Inspector Input)

History of Violations

An operator’s history of violations is another of the six total criteria considered for every penalty calculation, and is used by MSHA to calculate present penalties. MSHA regulations provide that “overall history is based on the number of assessed violations in a preceding 24-month period. . . . For mine operators, the penalty points will be calculated on the basis of the average number of assessed violations per inspection day.”

History points can greatly inflate penalties. An operator’s current penalties can be increased up to 25 points (assigned for an average of 2.1 violations per inspection day or more). For instance, 77 points convert to a penalty of $436. Add 25 points for a total of 107 and the penalty becomes $4,810; add 25 points to a penalty of $4,810 and it becomes $35,543. Even small operators can be assessed sizeable penalties depending on the totality of findings against them in each citation.

Size of the Operator and Mine

Another criterion for penalty calculations is the size of the operator and mine. A small operation might have inspections lasting only two days, but if a mere five violations are issued in that period, the small operator will reach the maximum history points amount (25), which will disproportionately inflate penalties and can produce a devastating financial impact. Thus, small mines may be hit harder by the application of history points. Proposed new MSHA regulations may provide some relief for this long-standing disparity.

Ability to Continue in Business

MSHA also considers the effect of the penalty on the operator’s “ability to continue in business.” MSHA presumes an operator will not be affected, but regulations provide that “the operator may submit information to the District Manager concerning the business financial status to show that payment of the penalty will affect the operator’s ability to continue in business.” Most often, this procedure is invoked during settlement efforts in penalty contests before the Federal Mine Safety and Health Review Commission.

Good Faith in Correcting Conditions

A final penalty criterion concerns an operator’s good faith in correcting cited conditions. Since all violations are generally corrected in a timely fashion, application of this criterion has been virtually automatic in the form of a 10% discount from overall penalty amounts.

Special Assessments

Regulations allow MSHA “to waive the regular assessment formula” if MSHA determines that conditions surrounding the violation warrant a special assessment. Special assessments are used for fatal accident citations, unwarrantable failure charges, and other serious matters including imminent danger and charges of unlawful discrimination against persons who exercised safety rights. Special assessments invariably amount to thousands of dollars and frequently are issued at the $70,000 level; “flagrant violations” can be assessed up to $242,000. Negligence and gravity of violation are the criteria that most affect the magnitude of any special assessment.

Impact of Penalties

Penalties can become part of a company’s reputation. If an adverse event occurs that attracts attention, the media invariably reports on a company’s compliance history and MSHA penalties—and the greater the penalties, the poorer the company portrait that emerges. Compliance history is also increasingly being considered by major customers, and mine operators consider the MSHA history of independent contractors in connection with their hiring criteria. Also, MSHA reviews violation and penalty records of operators to decide whether additional enforcement is required (such as “impact inspections” and “pattern of violations” orders).

Another critical impact of penalties is the time and expense of using procedures such as litigation to rectify unfair citations and penalties. When total industry penalties skyrocketed from approximately $20,000,000 in 2005 to almost $200,000,000 in 2010, most companies were compelled to challenge penalties, both “regular” point-based assessments and “special assessments.”

What the future holds as new penalty regulations are finalized remains to be seen. Regardless, cost and other adverse implications for operators are not likely to be reduced.