Department of Labor

Recommendations and Actions

DOL12: Partially Fund Mine Safety and Health Enforcement Through Service Fees


The Mine Safety and Health Administration (MSHA) administers provisions of the Federal Mine Safety and Health Act of 1977 and enforces mandatory safety and health standards to eliminate fatal accidents, to reduce the frequency and severity of nonfatal accidents, to minimize health hazards, and to promote improved safety and health conditions in the mining industry. To accomplish this mission for the nation's more than 15,000 mines, MSHA has a fiscal year 1993 budget appropriation of $191 million and an employee ceiling of 2,500.

The Act places several requirements on MSHA, mine operators, and individual miners. For example, among other activities, MSHA must inspect each underground mine at least four times a year and each surface mine at least twice, investigate accidents, and develop mandatory safety and health standards. Mine operators must develop and obtain MSHA approval for their mining plans and sample the mine environment for, among other things, compliance with respirable dust exposure limits. The samples are examined by MSHA's laboratory. The Act also requires miners to be qualified and certified to perform certain tasks in the mine environment.

Currently, only a limited number of MSHA activities are funded through service fees. MSHA charges for private sector tuition, training materials and publications, and equipment approvals. These monies are sent to the Department of the Treasury, as are the civil penalties payments that are collected from operators who violate safety and health standards.

MSHA provides other services without charge, including approval of mine operation plans, evaluation of mine respirable dust samples collected by operators, and qualification and certification of miners. Charging for these services could put mining on a comparable footing with other industries, such as banking, which bear the cost of their regulation.

The Department of Interior's Office of Surface Mines requires every mine operator to purchase a permit at a cost of at least $3,000 to operate and post a bond of at least $10,000 to cover potential costs for reclamation and other environmental problems created because of their mining activities.(1) These funds are also sent directly to the Treasury. A similar approach can be used for MSHA, requiring mine operators and independent contractors to obtain a permit to operate and post a bond to cover unpaid civil penalties.

Requiring mine operators and independent contractors to obtain and annually renew mining permits would benefit compliance efforts in addition to raising revenues. For example, operators who have a history of nonpayment of penalty assessments would not be allowed to renew their permits until assessments have been paid.(2)

MSHA collected $16.5 million in fiscal year 1992 from the mining industry through penalties assessed for safety and health violations. This amount could be significantly increased if the agency implemented a bonding requirement. Over the last five years, the average dollar amount written off for noncollection of assessed penalties was $3,339 per coal mine operator and $656 per metal and nonmetal mine operator who went out of business without paying these assessments. This amounted to a total loss of $12.5 million in revenues to the government. A bonding requirement could assist in eliminating or reducing this loss of revenue.

Funding MSHA from service fees is likely to result in costs being passed on to consumers of mined materials. On the other hand, this would mean that the cost of these materials will more accurately reflect the full cost of their production.


1. DOL should develop a legislative proposal for partial self-funding of MSHA.

The legislation should establish an account for fees accruing to MSHA. Three types of activities would generate these fees.

First, mine operators and independent contractors would be required to obtain a permit from MSHA to operate. Second, the legislation should amend the Federal Mine Safety and Health Act of 1977 and Public Law 91-173 (as amended by Public Law 95-164) to allow MSHA to retain fees that would be charged for selected services which MSHA provides to the mining industry. Fees would be imposed for services related to mandatory requirements in the Act for the industry, e.g., mine plan approval, mine respirable dust sample evaluation, and miner certification and qualification. These funds would be considered service fees and also accrue to MSHA. Third, the legislation would establish an account for MSHA to retain the fees currently charged for private sector tuition costs, training materials and publications, and equipment approvals.

2. DOL should develop a legislative proposal that would increase other MSHA-related revenues to the Treasury.

This legislation would require mine operators to post a bond prior to beginning operations. This bond would serve as an enforcement tool to aid in recouping unpaid civil penalties. Unlike the fees described in Action 1, these funds would be deposited to the Treasury.

3. DOL should develop a strategic plan to identify additional activities that would be appropriate for the collection of service fees as a continuing effort to make MSHA self-funded.

Other activities that should be reviewed for funding through future service fees include rescue and recovery operations, training assistance, and policy and procedural guidance. Market analysis could be used to determine the mining industry's potential use of non- mandatory services that MSHA now provides without charge, e.g., in- mine and field investigations and training assistance.


Assessing service fees to the mining industry to partially fund MSHA's budget may be viewed negatively by the affected industry. The concerns that may be raised relate to the impact of the proposal on the safety and health of mine workers. For example, if operators are charged for MSHA approval of mine plans, they may choose not to forward revised plans to MSHA for approval. It is also possible, however, that operators would improve the quality of plans submitted due to the cost being assessed. Assessing a service fee for evaluation of respirable dust samples may prompt some small operators not to submit samples as required, resulting in increased agency litigation. In general, however, the charge should not meet with significant opposition. MSHA should take these concerns into account when developing the legislative proposal and, as necessary, include appropriate penalties for noncompliance with approval requirements.

Less opposition may result from the imposition of fees for miner certification and qualification. This certification is designed to ensure proper conduct of respirable dust sampling, air sampling, gas sampling, training and electrical examinations in the nation's mines. Currently, most miners are eager to be certified and qualified by MSHA to perform these functions.

The requirement for permits and bonding may put some small operators out of business and increase illegal coal mining, with a resulting increase in MSHA costs for investigation of these illegal practices and litigation against the violators.

Civil penalty payments received from mine operators for violations of the Federal Mine Safety and Health Act should continue to be deposited to the Treasury, rather than retained by the agency. MSHA has responsibility to issue citations and orders for violations of the law and then determine the penalty to be assessed. These responsibilities, if coupled with the retention of civil penalty funds that are assessed, might raise serious questions regarding conflict of interest. The history of regulation in the mining industry suggests that MSHA's ability to gain cooperation from mine operators would be seriously hampered if the agency retained the monies collected from penalties.

Fiscal Impact

MSHA estimates that requiring mine operators to purchase a $1,000 permit would generate $21 million in revenue in the first implementation year. This revenue would decrease in subsequent years, however, because only new mine operations would pay the full $1,000; renewal permits would be issued at a lower cost. The chart below reflects only first-year estimates for permits; it does not include projections for renewal permits or new permits in outyears. The first-year estimate is based on permitting 21,000 mine operators and independent contractors.

At present, about $1.2 million accrues to the Treasury annually from funds MSHA collects for private sector tuition, training materials and publications, and equipment approval fees. Under this proposal, MSHA would retain this amount.

MSHA estimates that to cover the cost of mine plan approvals, miner certification, and sample evaluation, mine operators would be charged annual fees totaling approximately $2.7 million. This estimate is based on actual full-time equivalents (FTEs) expended for these three activities in fiscal year 1992. Administration of the funding approaches outlined above would require some increase in administrative staff for the agency. A summary of these fiscal implications is presented in the following table.

 Budget Authority (BA) and Outlays (Dollars in Millions) 
 Fiscal Year
          1994     1995     1996     1997     1998     1999     Total
 BA     -$24.9    -$3.9    -$3.9    -$3.9    -$3.9    -$3.9    -$44.4

Out- lays -$24.9 -$3.9 -$3.9 -$3.9 -$3.9 -$3.9 -$44.4

Change in FTEs 0 0 0 0 0 0 0


1. The maximum cost of the permit and bond depends on the acreage of the operation.

2. Renewal of the permit would not be withheld if a penalty was being contested.

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