Tuesday, October 24, 2006

Some Fines Could Drop Under MSHA Proposal

By now, everyone knows that Prs. Bush went ahead and appointed Richard Stickler to head MSHA after the Senate told him "no" twice. Here's the AP story. Word is that as a consultant, he had been approving all the significant MSHA decisions anyway for some time.

Footnote to prior posting in memory of [Lance] Corporal Ayron C. Kull (September 4). This is the young man who survived two tours in Iraq only to die in a gruesome conveyor belt accident after just a month in his new civilian job. Update: MSHA assessed a civil penalty of $6,900 for the single cited violation. (Maximum penalty by law is $60,000.) The company promptly paid it. End of story. [Correction, 1/19/06 -- his final rank was Corporal.]

The comment period just closed on MSHA's recent proposal to revise its formula for assessing most fines.

"We anticipate that these stronger penalties will induce mine operators to improve their safety and health programs, which prevent hazards from endangering the safety of America's miners in the first place," said David G. Dye, then acting assistant secretary for MSHA, annoucing the proposal in a news release, "MSHA Publishes Proposed Rule to Raise Mine Safety Penalties."

Total assessed penalties will rise, according to the agency's analysis.

But a walk-through of hypothetical violations indicates that some individual penalties may actually come out lower under the proposed system.

The penalty assessment formula already is complex, and would be more complex under the proposal. But take a hypothetical example that -- in a switcheroo not quite worthy of "The Illusionist" perhaps -- would yield a 44 percent lower penalty under the proposal, if my math is right.

Let's imagine a violation at a small sand and gravel mine -- say with 6 full-time workers, working about 12,000 employee-hours a year. (The example would also work for a coal mine producing 15,000 to 30,000 tons).

Under the current system, the mine gets 1 penalty point for mine size; under the proposed system, 2 points.

The mine may belong to a large company. In the sand and gravel industry, many small operations actually belong to multinationals. The largest category of controlling companies gets 5 penalty points under the current system. Under the proposed system, that's unchanged: 5 points.

Suppose the mine's history shows 1.2 violations per inspection-day on the average. That could happen if the mine had 5 inspection days in 2 years(a little over the statutory minimum of 2 inspections per year at every surface mine), and had a total of 6 citations that were "paid or finally adjudicated." (Maybe they actually had more, but any violations that are under contest don't count.) That 6 violations in 5 inspection days translates to 10 penalty points. Under the proposed system, however, with less than 10 violations in a 15-month period, penalty points for a similar history would be 0.

The new system contains a new category of penalty points for repeat violations. Perhaps we can imagine this mine had as many as 5 violations out of the 10 that were repeat violations of the same standard -- say, the guarding standard, which is a common one for this type of operation. Even so, additional penalty points for repeat violations would not apply under the propsal because the number of repeat violations was less than 6. Penalty points in this proposed new category therefore would be 0.

Let's suppose that the violation involves moderate negligence, 15 points under the existing system, 20 under the proposed one. Let's suppose it was S&S -- reasonably likely to cause an accident -- 5 points under the existing system, a whopping 30 under the proposal. Let's suppose the accident, if it occurred, would probably mean lost workdays -- 3 points under the existing system, 5 under the proposal.

And let's suppose the danger involved only one employee -- 1 point under each system.

OK, add up. Total penalty points under the current system come to 40. Under the proposed system the points add up to 63. Now you're saying -- how can the new penalty be less?

Because the scales are different.

A total of 40 penalty points under the existing system translates to $327. But 63 points under the proposal gives only $142.

To refine that further: There's also a deduction for "good faith" efforts in correcting the violation. Most violations are promptly corrected and get the deduction, which is 30 percent under the current system and would be only 10 percent under the proposed one. If the mine operator fixes the problem in a timely way, therefore, the penalty under the current system would be $229. Under the proposal, it would be $128. That's still a 44 percent decrease from the current system to the proposed one.

It is also true that minimum penalties would rise under the proposal, and so would many others. As far as I can figure it out, somewhat more violations would get the current $60,000 maximum (and under new law, egregious violations can result in fines up to $220,000).

But the proposal also could be a gift to mine operators in some cases, particularly small operators who do not see MSHA inspectors very often and -- perhaps only for that reason -- show a small numer of "paid or finally adjudicated" violations in a 15-month period.

If I've made a mistake, MSHA, you have my e-mail address and phone number!


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