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Office of Inspector General—Office of Audit 

MINE SAFETY AND HEALTH 

ADMINISTRATION 

MSHA NEEDS TO IMPROVE ITS CIVIL PENALTY 

COLLECTION PRACTICES 

Date Issued: November 18, 2011 

Report Number: 05-12-001-06-001 
 

 

U.S. Department of Labor 

Office of Inspector General 

Office of Audit 

BRIEFLY... 

Highlights of Report Number 05-12-001-06-001, 

issued to the Assistant Secretary of Labor for Mine 

Safety and Health. 

WHY READ THE REPORT 

The Federal Mine Safety and Health Act of 1977 

requires Mine Safety and Health Administration (MSHA) 

personnel to inspect mines to determine compliance 

with prescribed health and safety standards. During 

calendar years 2009 and 2010, MSHA inspections 

resulted in the issuance of 174,354 and 172,035 

violations, and it assessed monetary penalties of 

$137.0 million and $146.4 million, respectively. 

The Civil Penalty Compliance Office within MSHA’s 

Office of Assessments is responsible for collecting and 

accounting for delinquent penalties and referring 

delinquent penalties to the U.S. Department of 

Treasury. As of October 2010, for fiscal years 2001 

through 2010, it had reported collecting 86 percent of 

the monetary penalties owed. In 2007, as part of its 

overall enforcement strategy, MSHA and the Solicitor of 

Labor began specific efforts to pursue violators that 

owed large amounts of delinquent civil penalties or 

ignored paying their civil penalties although they were 

financially capable of meeting their legal liabilities (i.e., 

scofflaws). 

WHY OIG CONDUCTED THE AUDIT 

We conducted this audit to determine whether MSHA 

properly collected and accounted for final civil penalties 

from violators. In addition, we obtained current 

information concerning a problem identified in 2008 

related to violations for which civil penalties had not 

been assessed. 

Our audit work covered MSHA’s penalty collection 

activities and write-off of uncollectable debt during fiscal 

years (FY) 2009 and 2010. Additionally, we reviewed 

information provided by MSHA concerning its failure to 

assess civil penalties for several thousand violations 

issued between January 1995 and July 2006. 

READ THE FULL REPORT 

To view the report, including the scope, methodology, 

and full agency response, go to: 

http://www.oig.dol.gov/public/reports/oa/2012/05-12-

001-06-001.pdf

 November 2011 

MSHA NEEDS TO IMPROVE ITS CIVIL 

PENALTY COLLECTION PRACTICES 

WHAT OIG FOUND 

The OIG found that MSHA did not have an accurate 

view of the amount and age of its uncollected civil 

penalties. As of October 2011, MSHA had collected and 

deposited $124.8 million (85 percent) of $147.1 million 

for civil penalties that became final orders in FYs 2009 

and 2010. However, MSHA did not always (a) timely 

apply payments against outstanding debt of violators, 

and timely and consistently refer delinquent debt to 

Treasury; (b) identify potential scofflaw violators; and (c) 

ensure that penalties were uncollectable before writing 

off the debt. 

In January 2008, MSHA reported that it had erroneously 

not assessed a civil penalty for more than 5,000 

violations that it had issued between January 1995 and 

July 2006. MSHA primarily attributed the oversight to 

ineffective monitoring by management but also cited 

other contributing factors. MSHA could not assess a 

civil penalty for 97 percent of the violations because the 

5-year statute of limitations had run out. MSHA reported 

it took corrective actions to ensure it timely assessed all 

penalties. 

WHAT OIG RECOMMENDED 

We recommended the Assistant Secretary for Mine 

Safety and Health require MSHA management to: 

•	 Revise existing procedures to assure timely 

application of civil penalty payments, 

particularly when applying payments to the 

oldest debt if the violator does not identify how 

to apply the payment; 

•	 Revise procedures to assure consistent 

referrals to Treasury; 

•	 Finalize policies and procedures to identify all 

potential scofflaw violators; and 

•	 Implement controls to assure appropriate and 

consistent write-off of uncollectable civil 

penalties. 

The Assistant Secretary agreed with our 

recommendations and believed they would improve the 

Agency’s civil penalty collection practices. However, he 

emphasized that some MSHA policies and procedures 

already exceed statutory requirements. While we agree 

that some MSHA policies and practices exceed 

statutory and government-wide requirements, to be 

effective, policies and procedures must be clearly 

defined and consistently implemented. 
 

U.S. Department of Labor – Office of Inspector General 

 PAGE INTENTIONALLY LEFT BLANK 

Collection of Final Civil Penalties 

Report No. 05-12-001-06-001 
 

U.S. Department of Labor – Office of Inspector General 

Table of Contents 

Assistant Inspector General’s Report ......................................................................... 1
 

RESULTS IN BRIEF ....................................................................................................... 2
 

Objective — Did MSHA properly collect and account for final civil penalties from 

violators?.................................................................................................. 5
 

MSHA did not have an accurate view of the amount and age of its uncollected 

civil penalties. ............................................................................................................ 5
 

Finding 1 — MSHA Did Not Always Apply Penalty Payments Timely .................. 5
 

Finding 2 — MSHA Did Not Identify All Potential Scofflaw Mine Violators ........... 6
 

Finding 3 — MSHA Did Not Consistently Ensure Penalties Were 

Uncollectable Before Write Off........................................................ 7
 

Other Matters................................................................................................................. 9
 

MSHA reported it took corrective actions to ensure it assessed all penalties ............ 9
 

RECOMMENDATIONS................................................................................................. 10
 

Appendices ................................................................................................................. 13
 

Appendix A Background ..................................................................................... 15
 

Appendix B Objective, Scope, Methodology, and Criteria .................................. 17
 

Appendix C Acronyms and Abbreviations .......................................................... 21
 

Appendix D MSHA's Response to Draft Report.................................................. 23
 

Appendix E Acknowledgements ......................................................................... 27
 

Collection of Final Civil Penalties 

Report No. 05-12-001-06-001 
 

U.S. Department of Labor – Office of Inspector General 

 PAGE INTENTIONALLY LEFT BLANK 

Collection of Final Civil Penalties 

Report No. 05-12-001-06-001 
 

 

 

U.S. Department of Labor – Office of Inspector General 

U.S. Department of Labor Office of Inspector General 

Washington, D.C. 20210 

November 18, 2011 

Assistant Inspector General’s Report 

Joseph A. Main 

Assistant Secretary for 

Mine Safety and Health 

U.S. Department of Labor 

1100 Wilson Boulevard 

Arlington, Virginia 22209 

The Federal Mine Safety and Health Act of 1977 (Mine Act) requires Mine Safety and 

Health Administration (MSHA) personnel to inspect mines to determine compliance with 

prescribed health and safety standards. Civil penalties are assessed for identified 

violations.1

 During calendar years (CY) 2009 and 2010, MSHA inspections resulted in 

the issuance of 174,354 and 172,035 violations, and assessed monetary penalties of 

$137.0 million and $146.4 million, respectively. As of October 2010, for fiscal years (FY) 

2001 through 2010, MSHA had collected 86 percent of the monetary penalties owed. 

The Civil Penalty Compliance Office (CPCO) within MSHA’s Office of Assessments 

(OA) is responsible for (a) tracking civil penalty cases; (b) preparing contested cases for 

litigation; (c) processing and accounting for penalty payments; (d) collecting and 

accounting for delinquent penalties; and (e) referring delinquent penalties to the U.S. 

Department of Treasury (Treasury). In 2007, as part of its overall enforcement strategy, 

MSHA and the Solicitor of Labor (SOL) began specific efforts to pursue violators that 

owed large amounts of delinquent civil penalties or ignored paying their civil penalties 

although they were financially capable of meeting their legal liabilities (i.e., scofflaws). 

See Appendix A for more background information. 

The Office of Inspector General (OIG) conducted a performance audit to determine 

whether MSHA properly collected and accounted for civil penalties from violators. 2

 In 

addition, we obtained current information from MSHA concerning its January 2008 

report that it had erroneously not assessed monetary penalties for several thousand 

violations issued in prior years. 

Our audit work covered the penalty collection activities and write-off of uncollectable 

debt during FY 2009 and 2010. We reviewed and analyzed Standard Operating 

Procedures (SOP) and MSHA Standardized Information System (MSIS) business rules; 

interviewed key officials; reviewed case files; analyzed data; and reviewed and obtained 

1

 Violation, as used in this report, refers to a citation or withdrawal order. 

2

 Violator, as used in this report, refers to controllers, operators, or contractors. 

Collection of Final Civil Penalties 

1 Report No. 05-12-001-06-001 
 

 

U.S. Department of Labor – Office of Inspector General 

an understanding of the Exclusion list (list of violators MSHA excluded from referral to 

Treasury for collection) and various other reports. We also reviewed information 

provided by MSHA officials concerning several thousand violations issued between 

January 1995 and July 2006 for which MSHA had not timely proposed civil penalties. 

Our objective, scope, methodology, and criteria are detailed in Appendix B. 

We conducted this performance audit in accordance with generally accepted 

government auditing standards. Those standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that the evidence 

obtained provides a reasonable basis for our findings and conclusions based on our 

audit objectives. 

RESULTS IN BRIEF 

As of October 2011, $124.8 million (85 percent) of the $147.1 million for civil penalties 

that had become final orders3

 in FYs 2009 and 2010 had been collected and deposited 

with the Treasury. However, MSHA did not always (a) timely apply payments against 

the outstanding debt of violators and timely and consistently refer delinquent debt to 

Treasury; (b) identify potential scofflaw violators; and (c) ensure that penalties were 

uncollectable before writing off the debt. In addition, MSHA reported that it had taken 

actions to correct problems that led to several thousand violations not being assessed a 

civil penalty between January 1995 and July 2006. 

MSHA did not always apply all penalty payments against violator debts timely. Some 

payments went unapplied for several months or years. As of September 30, 2010, 

MSHA had a total of $2.9 million in payments received from June 2003 through 

September 2010 that were not applied against debts owed by violators. This occurred 

because MSHA’s policy is to match payments against specific violations. If payments 

did not include sufficient information to determine which penalty the payment was for, 

MSHA delayed payment application until it gathered the needed information. As a 

result, violator debt balances were not up-to-date and MSHA could not be certain of the 

delinquency status of individual violator debts. 

To avoid erroneously identifying violator debts as delinquent and sending them to the 

Treasury for collection when payments had been received but not applied, MSHA 

automatically excluded selected violators from being referred (i.e., Exclusion List). As of 

September 30, 2010, MSHA had not referred more than $8 million in potentially 

delinquent debt associated with 133 violators on the Exclusion List because of 

uncertainty caused by unapplied payments. 

While MSHA’s actions to pursue repeat, long term debtors as part of its overall 

enforcement effort were above the requirements of the Debt Collection Improvement 

3

 Civil penalties become final orders (a) 30 days after the violator receives the proposed penalty 

assessment or (b) if contested by the violator, 30 days after a decision by the Federal Mine Safety and 

Health Review Commission. 

Collection of Final Civil Penalties 

2 Report No. 05-12-001-06-001 
 

 

U.S. Department of Labor – Office of Inspector General 

Act of 1996, its policies and procedures did not assure that all potential scofflaws were 

identified. MSHA did not identify all potential scofflaw violators because it did not finalize 

or follow its draft criteria. The audit sample contained three violators with poor payment 

histories and delinquent balances ranging from $244,415 to $327,739 which MSHA had 

not identified for legal action as potential scofflaw violators. 

MSHA did not consistently ensure that civil penalties were uncollectable before writing 

them off. Contrary to its standard operating procedures, MSHA did not (a) document the 

reason why debt was written off (94 percent), (b) acquire proper supervisor (70 percent) 

or Deputy Director (17 percent) approval, (c) notify Treasury to issue a Cancellation of 

Debt, IRS form 1099-C (42 percent), (d) determine if violators were still in business 

before writing off uncollected debt (6 percent), and (e) prepare supporting worksheets 

(5 percent). 

In January 2008, MSHA determined that it had erroneously not assessed a civil penalty 

for several thousand violations that had been issued between January 1995 and 

July 2006. MSHA primarily attributed the oversight to ineffective monitoring by 

management. Based on criteria established by U.S. Department of Labor’s (DOL) SOL, 

MSHA subsequently determined that it could no longer assess a civil penalty for 

97 percent of these violations, primarily because a 5-year statute of limitations had run 

out. For the remaining violations, MSHA reported proposed civil penalties totaling 

$142,558. As of June 28, 2011, MSHA reported current assessments of $101,5444

 of 

which it had collected $61,409. MSHA reported that it had taken corrective action by 

programming MSIS to mark violations as “assessment ready” no later than 182 days 

after issuance and regularly providing managers with a monitoring report that identifies 

and ages all violations not yet assessed. 

MSHA RESPONSE 

In response to the draft report (Report No. 05-11-003-06-0015), the Assistant Secretary 

stated that the report contains sound recommendations for improving the agency’s civil 

penalty collection practices. However, he believed that additional or updated information 

was needed to understand some of the findings and recommendations in a proper 

context. He pointed out that the report does not cite any instance in which penalty 

payments received from mine operators were missing or not deposited with the 

Treasury. He also emphasized that several MSHA policies or procedures that the OIG 

cites for improvement already exceed what is required by federal law or debt collection 

requirements (e.g., scofflaw efforts, debt write-off restrictions). 

The Assistant Secretary disagrees that MSHA’s debt delinquency information is 

“unreliable;” and states that the Exclusion List has resulted in a significant savings in 

time and administrative costs for Treasury, MSHA and mine operators. MSHA also 

4

 The difference between Proposed Assessments and Current Assessments result from the judicial 

appeal process. 

5

 OIG changed the report number because we issued the final report during FY 2012. 

Collection of Final Civil Penalties 

3 Report No. 05-12-001-06-001 
 

U.S. Department of Labor – Office of Inspector General 

disagrees that scofflaw mine operators have been able to ignore civil penalty obligations 

without consequence. 

Finally, he stated that the citations for which MSHA did not propose civil penalties 

between 1995 and 2006 occurred outside of the period examined in this audit 

(2009-2010) and that the OIG did not find any unassessed penalties during the period of 

our review. 

The Assistant Secretary’s entire response is contained in Appendix D. 

OIG CONCLUSION 

We agree that penalty payments submitted by mine operators are automatically and 

timely deposited with the Treasury. However, accounting for payments involves more 

than assuring that the money gets to the bank. It must include reducing the related 

account receivable by applying the payment against the related debt. We also agree 

that some MSHA policies and practices exceed statutory and government-wide 

requirements for debt collection. However, to be effective, policies and procedures must 

be clearly defined and consistently implemented. 

We continue to view MSHA’s debt delinquency information as unreliable. MSHA 

acknowledged that it implemented the Exclusion List to avoid erroneously referring debt 

to Treasury that appeared delinquent, but was not. Thus, MSHA was not able to rely on 

its own information to make accurate debt referral decisions. While the Exclusion List 

may have saved time and effort by not incorrectly referring debt that was not delinquent, 

it is also possible (and inappropriate) that the Exclusion List prevented the referral of 

debt that was delinquent. We agree that a scofflaw mine operator’s failure to pay civil 

penalties does result in specific actions (i.e., consequences) such as demand letters, 

referral to credit bureaus and collections agencies, and possible litigation by the 

Department of Justice. Therefore, we revised the report to clarify that some mine 

operators were able to avoid the enhanced enforcement actions of MSHA’s scofflaw 

initiative (p. 7). 

Finally, the time period related to the previously reported problem regarding violations 

without a proposed civil penalty is clearly stated in the report. Since this issue received 

considerable attention when it was first reported by MSHA and the topic was closely 

related to assessment collection, we thought it was appropriate to provide updated 

information on the resolution of the problem. We have added a sentence to state that a 

recent MSHA management report shows no violations older than 180 days without a 

proposed assessment (p. 10). 

Collection of Final Civil Penalties 

4 Report No. 05-12-001-06-001 
U.S. Department of Labor – Office of Inspector General 

 

Collection of Final Civil Penalties 

5 Report No. 05-12-001-06-001 

RESULTS AND FINDINGS 

Objective — Did MSHA properly collect and account for final civil penalties from 

violators? 

 MSHA did not have an accurate view of the amount and age of its uncollected 

civil penalties. 

As of October 2010, $83.1 million (80 percent) of the $104.4 million for civil penalties 

that had become final orders in FYs 2009 and 2010 had been collected and deposited 

with the Treasury. However, MSHA did not always (a) timely apply payments against 

the outstanding debt of violators and timely and consistently refer delinquent debt to 

Treasury; (b) identify potential scofflaw violators; and (c) ensure that penalties were 

uncollectable before writing off the debt. 

Finding 1 — MSHA Did Not Always Apply Penalty Payments Timely 

MSHA did not always timely apply penalty payments against violator debts. MSHA’s 

SOPs stated that penalty payments should be applied within three business days of 

receipt. However, MSHA’s policy of matching individual payments against specific 

violations and/or penalty case(s) sometimes resulted in delays in applying a payment. 

This caused MSHA’s uncollected civil penalty debt balances to be overstated by 

$2.9 million of unapplied payments. As a result, MSHA was not certain of the 

delinquency status when identifying individual violator debts for possible referral to the 

Treasury for collection. 

When submitting a penalty payment, if a violator provided instructions that it be applied 

against a specific violation case(s), MSHA complied. However, if no instructions were 

provided, MSHA personnel completed several steps to try to match the payment 

amount against specific violation case(s). These steps sometimes included researching 

all outstanding civil penalty cases for that violator and contacting the violator for 

additional information. Ultimately, if these efforts were unsuccessful, MSHA’s policy was 

to apply the payment to the oldest outstanding violation case(s). 

Violators had submitted 259 payments, totaling $1,443,719, related to our audit sample 

of 269 civil penalties. MSHA did not apply 56 of the 259 payments (21.6 percent), 

totaling $348,976, within its stated 3 business day policy. The actual time to apply the 

payments for these 56 cases ranged from 4 to 777 business days. 

Actual time 

to Apply Payment # of Cases Total $ Amount 

4 to 24 business days 31 $259,720 

25 to 99 business days 12 $75,744 

100 to 299 business days 9 $6,669 

More than 300 business days 4 $6,843 

 Total 56 $348,976
U.S. Department of Labor – Office of Inspector General 

 

Collection of Final Civil Penalties 

6 Report No. 05-12-001-06-001 

From June 2003 through September 2010, MSHA received payments totaling 

approximately $286 million. However, as of September 30, 2010, it had accumulated 

unapplied penalty payments of $2.9 million for this period. These unapplied penalty 

payments resulted in violators’ unpaid debt balances being overstated. Therefore, debts 

appeared to be delinquent, when they were not. This had resulted in MSHA incorrectly 

referring debts to the Treasury for collection activity. To avoid these referral errors and 

the resulting disputes with violators, MSHA inappropriately excluded selected violators 

from referral to Treasury. 

Normally, when payment of a specific penalty became delinquent by more than 150 

days,6 MSHA would refer it for Treasury collection efforts. However, in February 2008, 

MSHA created the Exclusion List.7 To avoid incorrectly referring penalties to Treasury 

caused by possible unapplied payments, MSHA exempted violators it placed on this list 

from referral to Treasury even if their penalties appeared to be delinquent by more than 

150 days. According to MSHA officials, violators on the Exclusion List were those that 

“routinely paid their civil penalties timely.” Therefore, MSHA presumed that delinquent 

balances were the result of unapplied payments. However, since delays in applying 

payments made MSHA’s debt delinquency information unreliable, MSHA could not 

know whether these violators had penalties that should be referred to Treasury. 

Although the accuracy of the information is uncertain, MSHA’s Debt by Age report as of 

September 2010 included penalty cases totaling more than $8 million associated with 

133 violators on the Exclusion List that appeared to be more than 180 days delinquent. 

Delinquency of Debt Amount 

181 - 365 days $1,263,656

1 - 2 years $4,156,263

2 - 6 years $2,627,435

6 - 10 years $40,289 

Total $8,087,643

MSHA’s use of the Exclusion List did nothing to address its problem of not applying 

payments timely. Instead, it created inconsistent and unfair practices by treating 

selected violators differently from other violators. 

Finding 2 — MSHA Did Not Identify All Potential Scofflaw Mine Violators 

MSHA’s pursuit of repeat, long term debtors as part of its overall enforcement effort did 

not identify all potential scofflaw violators. This occurred because MSHA had not 

finalized policies and procedures to categorize violators as potential scofflaws. As a 

 

6

 Although the Debt Collection Improvement Act requires non-tax debt that is more than 180 days 

delinquent to be referred to Treasury, MSHA used a standard of 150 days. 7

 At the time of our audit, the Exclusion List contained 325 violators. 
 

 

U.S. Department of Labor – Office of Inspector General 

result, some violators were able to ignore their civil penalty obligations without being 

subject to MSHA’s scofflaw actions. 

In February 2006, MSHA filed an unprecedented lawsuit in U.S. District Court seeking 

an injunction against a mine company and its controlling owner who had chronically 

failed to pay assessed civil penalties. Since that time MSHA has occasionally, but 

irregularly initiated various actions against scofflaw violators. For example, in August 

2008, MSHA informed three mine operators that failure to pay their delinquent civil 

penalties could result in the issuance of mine closure orders under Section 104(a) of the 

Mine Act. The three mines subsequently paid a total of more than $225,000 in overdue 

fines. Similarly, in March 2008, MSHA issued a withdrawal order to a mine operator for 

failure to pay civil penalties. The mine has been shut down since that time. During FYs 

2009 and 2010, MSHA and SOL pursued 24 scofflaw violators that owed a total of 

$5,616,611 in delinquent civil penalties. MSHA collected over $1.2 million (23 percent) 

from 10 of the 24 scofflaw violators. 

While MSHA’s actions to pursue scofflaw violators went above the requirements of the 

Debt Collection Improvement Act of 1996, its policies and procedures did not assure 

that all potential scofflaws were identified. In January, 2008, MSHA and the SOL 

developed draft procedures for identifying scofflaw violators. These draft procedures 

were revised in May, 2009, but to date have not been finalized or implemented. As a 

result, MSHA had identified only a limited number of potential scofflaw violators. The 

basis for selecting these violators was not clear or documented. 

Using MSHA’s draft criteria, we identified five scofflaw violators based on our audit 

sample of 269 civil penalties for FYs 2009 and 2010. MSHA had not identified three of 

these five as potential scofflaws or referred them to SOL for possible action. As of 

September 30, 2010, these three violators owed civil penalty balances of $244,415, 

$275,937, and $327,739 respectively.8

 Without clearly defined policies and procedures 

to identify all potential scofflaw violators, violators may continue to operate while 

ignoring the financial consequences and the deterrent that civil penalties are intended to 

provide. 

Finding 3 — MSHA Did Not Consistently Ensure Penalties Were Uncollectable 

Before Write Off 

MSHA did not consistently ensure civil penalties were uncollectable before stopping 

collection efforts and writing them off. This occurred because poor management 

oversight did not assure that CPCO personnel followed existing SOPs. As a result, 

MSHA may have written off civil penalties for violators that still had an ability to pay their 

debt. 

8

 Subsequent to our audit fieldwork, MSHA reported that it was recommending legal action against two of 

these violators. 

Collection of Final Civil Penalties 

7 Report No. 05-12-001-06-001 
U.S. Department of Labor – Office of Inspector General 

 

Collection of Final Civil Penalties 

8 Report No. 05-12-001-06-001 

MSHA’s SOP required the justification and supervisory9 approval be documented on the 

Uncollectible Worksheet for every debt written off and that a notice be sent to Treasury 

to issue a Cancellation of Debt (IRS Form 1099-C) for every debt over $600. MSHA’s 

policy also stated that debt should not be written off if the violator was still in business 

and actively producing. A review of a sample of 150 violators for whom MSHA wrote off 

406 cases in 155 separate write offs during FYs 2009 and 2010 disclosed that every 

case file contained one or more instances of non-compliance with MSHA’s SOPs as 

summarized below: 

Non Compliant Debt Write-offs 

2009 2010 Total 

Type of NonCompliance

# of 

Write 

Offs 

% of 

Write 

Offs 

Reviewed

# of 

Write 

Offs 

% of 

Write 

Offs 

Reviewed

# of 

Write 

Offs 

% of 

Write 

Offs 

Reviewed

No Justification 

Documented For Debt 

Write-off 

125 98 20 71 145 94 

No 1st Line Supervisory 

Approval 108 85 1 4 109 70 

No Notice to IRS to 

Issue 1099-C Form 

(Over $600) 

62 49 3 11 65 42 

No Deputy Director 

Approval (Over $5,000) 26 20 0 0 26 17 

Violators Were Still In 

Business10 9 7 0 0 9 6 

No Uncollectable 

Worksheet 4 3 3 11 7 5 

MSHA officials attributed the failure to consistently follow its SOPs to a lack of 

management oversight. MSHA identified this problem in March 2010 and took action to 

address the problem. While the error rates in the preceding table do improve in FY 

2010, problems still occurred. As a result, MSHA lacked assurance that it wrote off only 

debt that was truly uncollectable and that appropriate tax liabilities were recorded for 

forgiven debt. 

In addition, an MSHA official stated that it did not place a high priority on writing off 

debts in FY 2010. As a result, MSHA only wrote off debts totaling $350,441 in FY 2010 

compared to $1,609,125 in FY2009. 

 

9

 MSHA’s debt write-off SOPs complied with legal debt write-off requirements. 

10 As of May 18, 2011. 
 

U.S. Department of Labor – Office of Inspector General 

Other Matters 

 MSHA reported it took corrective actions to ensure it assessed all penalties 

In January 2008, MSHA reported that it had erroneously not assessed a civil penalty for 

more than 5,000 violations that it had issued between January 1995 and July 2006. 

MSHA primarily attributed the oversight to ineffective monitoring by management, but 

also cited the following contributory issues: 

 District personnel not clearly understanding the process or MSHA’s policy, and 

lacking training; and 

 A heavier workload generated by an increasing number of citations and orders, 

conferences, and contested cases 

In essence, under the system in place at that time, individual violations were not 

assessed a civil penalty until MSHA personnel made an entry into MSIS to mark each 

violation as “assessment ready.” If managers did not routinely review the system for 

violations that had not received this designation, they could, and did, go un-assessed 

for months or years. 

Based on criteria established by SOL, MSHA subsequently determined that it could no 

longer assess a civil penalty for 97 percent of these violations, primarily because a 

5-year statute of limitations had run out. Other criteria provided by the SOL and used by 

MSHA in determining whether a penalty could be assessed included: 

 Availability of the inspector that issued the citation and the supporting inspection 

notes and other documents; 

 Perceived negative impact on the violator’s ability to defend themselves due to 

the passage of time; and 

 Seriousness of the violation. 

The following table summarizes the status of assessments for these violations based on 

data provided by MSHA on June 28, 2011. 

Collection of Final Civil Penalties 

9 Report No. 05-12-001-06-001 
U.S. Department of Labor – Office of Inspector General 

 

Collection of Final Civil Penalties 

10 Report No. 05-12-001-06-001 

Summary of Unassessed Violations 

1995 

– 

1999 

2000 2001 2002 2003 2004 2005 2006 Total 

# of un-assessed 

violations 

per MSHA (1)

836 506 473 469 807 1045 684 271 5,091

 - # of violations 

included in error (2) 0 6 42 62 8 0 0 0 118

Corrected # of unassessed violations 836 500 431 407 799 1,045 684 271 4,973

Violations closed 

without assessment 836 500 431 407 793 1,015 637 220 4,839

Violations assessed 0 0 0 0 6 30 47 51 134

Proposed 

assessments --- --- --- --- $36,258 $12,287 $28,615 $65,398 $142,558

Current 

assessment(3) --- --- --- --- $17,198 $10,258 $23,382 $50,706 $101,544

Amount collected --- --- --- --- $16,674 $9,712 $13,708 $21,315 $61,409

Notes: 

(1) The data in this table was compiled from a detailed inventory of un-assessed violations provided by MSHA. 

The un-assessed Violations reported by MSHA in its February 5, 2008 News Release for 2002 and 2005 were 

470 and 685, respectively. A reason for the variance of 1 violation in each of these years could not be 

determined. 

(2) Detail data provided by MSHA showed that assessments for these violations had a “Billing Date” prior to 

February 2008; therefore, they should not have been included in MSHA’s total of un-assessed violations. 

(3) Current assessments reflect reductions in the Proposed assessment resulting from the judicial appeal process. 

MSHA reported that it took corrective action in 2008 by (a) programming MSIS to mark 

violations as “assessment ready” no later than 182 days after issuance; (b) providing 

managers with a weekly monitoring report that identifies and ages all violations not yet 

assessed; (c) implementing new policies and procedures; and (d) providing related 

training. As of June 28, 2011, MSHA’s Unassessed Violation Summary Report did not 

contain violations older than 6 months (180 days) which MSHA had not already 

identified as “assessment ready.” 

RECOMMENDATIONS 

We recommend that the Assistant Secretary for the Mine Safety and Health 

Administration require MSHA management to: 

1. Revise existing procedures to assure timely application of civil penalty payments, 

particularly when applying payments to the oldest debt if the violator does not 

identify how to apply the payment; 

2. Revise procedures to assure consistent referrals to Treasury; 

3. Finalize policies and procedures to identify all potential scofflaw violators; and 

4. Implement controls to assure appropriate and consistent write-off of uncollectable 

civil penalties. 
 

U.S. Department of Labor – Office of Inspector General 

We appreciate the cooperation and courtesies that MSHA personnel extended to the 

Office of Inspector General during this audit. OIG personnel who made major 

contributions to this report are listed in Appendix E. 

Elliot P. Lewis 

Assistant Inspector General for Audit 

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Appendices 

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Appendix A 

Background 

The DOL MSHA’s authority is derived from the Mine Act, as amended by the Mine 

Improvement and New Emergency Response Act of 2006 (MINER Act). The Mine Act 

requires MSHA personnel to inspect mines to determine compliance with prescribed 

health and safety standards. If violations were found, inspectors issue citations/orders to 

the violators. MSHA may assess a civil penalty associated with each violation at a level 

that will encourage compliance and promote safe and healthy workplaces for miners. 

During CY 2009 and 2010, MSHA inspections resulted in the issuance of 174,354 and 

172,035 citations/orders, and assessed civil penalties of $137.0 million and $146.4 

million, respectively. 

Congress passed the Debt Collection Improvement Act of 1996 (DCIA) in response to a 

steady increase in the amount of delinquent non-tax debt owed to the government, and 

concern that appropriate actions were not being taken to collect this delinquent debt. 

This law centralized the government wide collection of delinquent debt and gave the 

Treasury significant new responsibilities in this area. Moreover, Federal agencies are 

required to refer eligible delinquent (over 180 days) non-tax debts to Treasury for debt 

collection action, if they have not been successful at collecting those debts. The 

Financial Management Service within Treasury is responsible for the implementation of 

the debt collection provisions of the DCIA. 

The OA administers the civil penalty provisions of the Mine Act. OA’s CPCO was 

responsible for (a) tracking civil penalty cases; (b) preparing contested cases for 

litigation; (c) processing and accounting for penalty payments; (d) collecting and 

accounting for delinquent penalties: and (e) referring delinquent penalties to the 

Treasury. 

In 2007, MSHA began actions to pursue repeat, long term debtors as part of its overall 

enforcement effort. These actions included pursuing violators that owed large amounts 

of delinquent civil penalties or ignored paying their civil penalties altogether although 

they were financially capable of meeting these legal obligations. OA worked with SOL to 

identify scofflaw violators, determine appropriate action, and attempt to collect 

delinquent civil penalties. During FYs 2009 and 2010, MSHA and SOL pursued 24 

scofflaw violators that owed a total of $5,616,611 in delinquent civil penalties. MSHA 

collected over $1.2 million (23 percent) from 10 of the 24 scofflaw violators. 

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Appendix B 

Objective, Scope, Methodology, and Criteria 

Objective 

The OIG conducted a performance audit to determine whether MSHA properly collected 

and accounted for final civil penalties from violators. 

In addition, the OIG obtained current information from MSHA concerning a problem 

MSHA identified in 2008 concerning violations for which civil penalties had not been 

assessed. 

Scope 

The OIG audited MSHA’s penalty collection activities and write-off of uncollectable debt 

during FYs 2009 and 2010. In addition, we reviewed information provided by MSHA 

officials concerning MSHA’s failure to assess civil penalties for more than 5,000 

violations issued between January 1995 and July 2006. We performed audit work at 

MSHA’s National Office in Arlington, Virginia and MSHA’s Data Center in Denver, 

Colorado. 

We conducted this performance audit in accordance with generally accepted 

government auditing standards. Those standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that the evidence 

obtained provides a reasonable basis for our findings and conclusions based on our 

audit objectives. 

Methodology 

Our audit work covered MSHA’s penalty collection activities and referral of penalties to 

Treasury for collection, scofflaw enforcement strategy, and write-off of uncollectable 

penalties from October 1, 2008 through September 30, 2010 (FYs 2009 and 2010). In 

addition, we obtained current information from MSHA concerning its January 2008 

report that it had erroneously not assessed civil penalties for several thousand violations 

issued between January 1995 and July 2006. 

To gain an understanding of MSHA’s civil penalty collection, scofflaw enforcement 

strategy, and debt write-off processes, we reviewed MSHA’s SOPs and determined if 

they complied with federal laws and regulations, reviewed applicable MSIS business 

rules; interviewed key OA and CPCO officials, and the Deputy Associate Solicitor for 

MSHA; flowcharted the key processes and identified decision points; and reviewed 

written responses to questions we provided to MSHA officials. 

Collection of Final Civil Penalties 

17 Report No. 05-12-001-06-001 
 

 

U.S. Department of Labor – Office of Inspector General 

To determine if MSHA properly performed collection activities, we analyzed data; 

reviewed and obtained an understanding of MSHA’s Top 20 List11, Exclusion List and 

various reports; interviewed officials; and obtained written responses to questions we 

provided. Specifically, using data obtained from MSIS, we reviewed a statistical 

sample12 of 143 Coal civil penalties totaling $1,253,982 from a population of 174,224 

Coal civil penalties totaling $99,700,072 and a sample of 126 Metal Non-Metal civil 

penalties totaling $1,001,234 from a population of 124,366 civil penalties totaling 

$47,632,608 that became final and collectible during FY 2009 and FY 2010. For each 

final civil penalty we calculated the number of days of delinquency and based on a 

penalty’s delinquency we determined whether collection activities were performed by 

MSIS and/or the MSHA employees. We also: 

•	 obtained an understanding of a list of unapplied payments from violators or third 

parties as of September 30, 2010; 

•	 compared the Top 20 List to debt aging data as of September 30, 2010, to 

determine whether the list was current and if violators had paid assessed 

penalties timely; 

•	 compared the Exclusion List to the debt aging data as of September 30, 2010, to 

determine whether the violators had paid assessed penalties timely; and 

•	 compared the Top 20 List to the Exclusion List to determine if the lists were the 

same. 

To determine if MSHA properly pursued collection of assessed civil penalties from 

scofflaw violators as part of its enforcement strategy, we: 

• interviewed MSHA and SOL officials; 

• obtained written responses to questions we provided to MSHA officials; 

•	 reviewed a list of scofflaw violators MSHA and SOL identified; and 

•	 reviewed proposed assessment documentation for potential scofflaw violators. 

In addition, we used the data obtained for the collection activities sample (described 

above) to identify potential scofflaw violators that were delinquent and demonstrated a 

history of poor civil penalty payments and compared the violators we identified to the 

MSHA and SOL list of scofflaw violators to determine if MSHA had identified all scofflaw 

violators. 

To determine if MSHA properly wrote off uncollectable civil penalties, we interviewed 

MSHA and Treasury officials, and reviewed case files. Specifically, we reviewed a 

statistical sample13 of 120 violators with uncollected civil penalties totaling $524,659 

11 MSHA assigned the violators on the Top 20 List to specific Civil Penalty Compliance Specialists who 

were responsible for monitoring payments, resolving issues and ensuring payment of delinquent 

penalties. 

12 We were unable to project the amount of payments MSHA applied late because violators made multiple 

payments for the same case. 

13 We were unable to project the number of debt write-offs MSHA made that were not in compliance with 

its policy because MSHA wrote off debts more than once for the same violator. 

Collection of Final Civil Penalties 

18 Report No. 05-12-001-06-001 
 

U.S. Department of Labor – Office of Inspector General 

from a universe of 791 violators totaling $1,609,125 for FY 2009 and 30 violators with 

uncollected civil penalties totaling $21,576 from a universe of 50 violators with 

uncollected civil penalties totaling $350,441 for FY 2010. We determined if MSHA 

followed its policies and procedures when writing off uncollectable civil penalties. We 

also reviewed internet records contained on various Secretary of State web sites to 

determine whether MSHA wrote off civil penalties for violators still in business and 

analyzed the Debt by Age report as of September 30, 2010. 

To determine if MSHA had taken corrective action to correct a problem it identified in 

2008 with assessing civil penalties timely for all citations between January 1995 and 

July 2006, we reviewed emails, memorandums, MSIS business rules, and Excel 

workbooks. We also reviewed criteria the SOL provided to MSHA for deciding which 

violations could be assessed a civil penalty. In addition, we reviewed a listing of the 133 

that were ultimately assessed from MSHA’s identified violations, the assessed amount, 

the final order amount, and the amount paid. 

Reliability Assessment 

To determine the reliability of MSHA collection activity data, we used an approach 

consistent with the Government Accountability Office’s Assessing the Data Reliability of 

Computer-Processed Data (GAO-09-680G, July 2009, External Version I). MSHA 

provided data for our testing consisting of 312,251 records for civil penalties that 

became final and collectable during FY 2009 and FY 2010, 22,424 records for civil 

penalties written off during FY 2009 and FY 2010, and 308,336 records for check 

deposited during FY 2009 and FY 2010. 

To determine the reliability of the data, we (a) examined and tested MSHA’s controls 

over the collection and processing of critical data elements, (b) tested key data 

elements for anomalies (e.g., values out of normal range, blank values, inappropriate 

relationships, etc.), and (c) traced statistical samples of records back to source 

documents. 

Specifically, we randomly sampled 60 of 58,027 checks to determine if MSHA entered 

payment information correctly. Based on our assessment and tests, we concluded the 

data on check payments were sufficiently reliable to be used in meeting our objectives. 

We also randomly sampled 30 of 19,782 U.S. Postal Service Certified Return Receipts 

(CRR) to determine if MSHA and the Assessment Office entered dates of operator 

penalty notifications correctly in the MSIS. Until May 2008, MSHA entered dates of 

operator penalty notifications in the MSIS. At that time, MSHA switched the 

responsibility to the Assessment Center in Wilkes-Barre, Pennsylvania, to improve the 

timeliness and accuracy of the data entered. Our sample of 30 CRRs included 14 

entered by CPCO and 16 entered by the Assessment Center. All those entered by the 

Assessment Center were accurate. However, of the 14 entered by CPCO, 7 were 

incorrect and CPCO could not locate six CRR documents. 

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U.S. Department of Labor – Office of Inspector General 

The inaccurate dates CPCO entered caused the MSIS to inaccurately calculate the final 

order date and the delinquent date fields for uncontested civil penalties. Both the MSIS 

and CPCO personnel relied on these dates to determine when to perform collection 

activities. Since CPCO relied on these dates, even though they were inaccurate, we 

determined the data was sufficiently reliable to meet our objective of determining if the 

MSIS and CPCO personnel performed collection activities timely. 

Since MSHA recognized the problem and shifted the responsibility to the Assessment 

Center and our data assessment and testing detected no input errors, we did not 

recommend any further action to correct the data entry problems. 

Internal Control 

In planning and performing our audit, we considered the OA’s internal control that was 

relevant to our audit objective by obtaining an understanding of that control, and 

assessing control risk for the purpose of achieving our objective. The objective of our 

audit was not to provide assurance of the internal controls; therefore, we did not 

express an opinion on the OA’s internal control. Our consideration of internal control 

relevant to our audit objective would not necessarily disclose all matters that might be 

significant deficiencies. Because of the inherent limitations on internal control, 

noncompliance may nevertheless occur and not be detected. 

Criteria 

Federal Mine Safety and Health Act of 1977, as amended 

Miner Improvement and New Emergency Response Act of 2006 

Debt Collection Improvement Act of 1996 

4 Code of Federal Regulations (CFR) Parts 101 through 105 

29 CFR - Part 20 

31 CFR Parts 285 & 900 through 904 

OMB Circular A-129 

U.S. Department of Labor Manual Series 6 – Financial Management 

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20 Report No. 05-12-001-06-001 
 

 

U.S. Department of Labor – Office of Inspector General 

Appendix C 

Acronyms and Abbreviations 

CFR Code of Federal Regulations 

CPCO Civil Penalty Compliance Office 

CRR Certified Return Receipts 

CY Calendar Year 

DCIA Debt Collection Improvement Act of 1996 

DOL U.S. Department of Labor 

FY Fiscal Year 

Mine Act Federal Mine Safety and Health Act of 1977 

MINER Act Mine Improvement and New Emergency Response Act of 2006 

MSHA Mine Safety and Health Administration 

MSIS MSHA Standardized Information System 

OA Office of Assessments 

OIG Office of Inspector General 

SOL Solicitor of Labor 

SOP Standard Operating Procedures 

Treasury U.S. Department of Treasury 

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U.S. Department of Labor MLnu l'l. ,y and Hea" Adm" tr, lion 

1100 W,iSC"n Boulev d 

A "{lIon v a "i~ '09·3939 

OCT 112011 

MEMORANDUM FOR ELLIOT P. LEWIS 

FROM: 

SUBJECT: 

Assistant Inspector General for Audit 

Assistant 

JOSEPH 

Secretary 

A. MAIN 

of 

C\ 

la~r for 

~ Mine Safety and Health 

Response to OIG Draft Audit Report No. 05-11-003-06-001 

Thank you for the opportunity to review your draft audit report. The Mine Safety and Health 

Administration (MSHA) believes that the report contains sound recommendations for improving 

the Agency's civil penalty collection practices. However. I am providing additional information 

so that some of the audit findings and recommendations can be put in proper context. I also 

want to report on some relevant activities that occurred after the FY 2009-2010 period that was 

the subject of the OIG review. 

The OIG stated that the objective of the audit was to determine if MSHA properly collected and 

accounted for final civil penalties. Although the OIG found that MSHA does not always apply 

penalty payments timely, I note that the audit report cites no instances where MSHA could not 

account for final civil penalties assessed or payments received. At the entrance conference for 

this audit. MSHA requested that, as a part of its review, OIG provide information on the 

effectiveness of the Agency's civil penalty collections compared to other federal collection 

efforts. The OIG report states that as of October 2010, 80 percent 01 the $104.4 million of civil 

penalties that had become final orders in FYs 2009 and 2010 had been paid. The collections 

have increased since that time. As of October 6, 2011, there was a total of $147.1M in final civil 

penalties for those two fiscal years, and $124.8M (85 percent) had been paid. The OIG review 

team informed me they were unable to obtain statistics for other federal agencies, but I believe 

this is necessary in order to gauge the relative effectiveness of MSHA's civil penalty collection 

practices. 

The report contains reference to citations for which MSHA did not propose civil penalties 

between 1995 and 2006. These are citations that should have been assessed 5-16 years ago. 

Given that the period the OIG reviewed was FY 2009-2010. the reference to unassessed 

citations that occurred some years prior to the review period is outside the scope of this review. 

During the review, the OIG did not find any unassessed citations. 

The report focuses on three areas (a) the timely application of payments against outstanding 

debt and timely and consistent referral of delinquent debt to Treasury; (b) the identification of 

potential ·scofflaws"; and (c) ensurillQ that penalties are uncollectable before writing off the debt. 

I note that the findings associated with these three areas do not identify MSHA noncompliance 

with federal statutes or requirements. Rather, the recommendations refer to modifications of. or 

adherence to. MSHA internal policies and procedures that in some cases exceed federal 

requirements. These and other issues noted below are not described in the proper context in 

the draft report. We would appreciate if you would revise the report to reflect changes in the 

context, as appropriate . 

• ! , M~ iA!o 0' 

U.S. Department of Labor – Office of Inspector General 

Appendix D 

MSHA's Response to Draft Report 

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23 Report No. 05-12-001-06-001 
 

2 

DIG Recommendation No.1: Revise existing procedures to assure timely application of civil 

penalty payments, particularly when applying payments to the oldest debt if the violator does not 

identify how to apply the payment. 

MSHA agrees with this recommendation. Please nole that mine operators send civil penalty 

payments directly to the Treasury Department lockbox bank designated to receive these 

payments and the bank. immediately deposits the payments in the Federal Government's 

general fund. The timeliness standards to which the OIG compared the civil penally payment 

applications are MSHA's internal timeliness standards. MSHA's standard operating procedures 

(SOPs). implemented in 2008, require payments to be applied within three days of notification 

from Treasury that payment has been received; that is the timeliness standard the OIG used as 

a benchmark. However, the SOPs also address how payment processers should handle 

checks that they cannot apply within three days, recognizing that many factors can cause 

delays in applying payments. Nevertheless, MSHA recognizes the need to opply payments as 

quickly as possible and agrees with the OIG recommendation that MSHA apply payments to the 

oldest debt when , for example, the operator does not identify how to apply the payment. 

Specifically, the OIG recommends that when an operator fumishes insufficient information for 

MSHA to identify the specific civil penalties the operator intends to pay, MSHA should apply the 

payment to the oldest debt for that operator. MSHA has been applying payments to the oldest 

debt in cases where there is insufficient information to identify penalties the operator intends to 

pay. However, MSHA cannot do this in every case when information is lacking, for example 

when the mine operator cannot be identified. 

In FY 2009, MSHA initiated a long-term, phased in project to: obtain more information from 

mine operators when they submit their payments; automate the payment application process; 

and ensure payments received for final orders of the Federal Mine Safety and Health Review 

Commission (FMSHRC) are reserved for FMSHRC decisions. MSHA deployed a new 

Proposed Assessment and Statement of Account in December, 2010. This document is sent to 

mine operators to inform them of the proposed assessment for each cited violation and replaced 

the former Notice of Proposed Assessment. The new Proposed Assessment provides a coupon 

for submission with payments. The Treasury Department lockbox bank that receives the civil 

penalty payments and deposits the funds in the Treasury enters the coupon information into its 

system and transmits this information to MSHA. 

This new process resulted in fewer payments for which the penalties could not be identified and 

set the stage for the second phase of the project that was implemented in August, 2011 . In this 

phase, MSHA deployed a computer system enhancement that replaced the manual payment 

application process. The automated process applies all payments for which the lockbox bank 

enters sufficient information (i.e. the coupon is returned). The system was also programmed to 

apply payments to the oldest available debt when the mine and the operator are identifiable and 

the operator does not identify a specific penalty to pay. 

Phase three of this project, scheduled for December, 2011 , is a system enhancement to reserve 

payments for pending FMSHRC decisions. 

U.S. Department of Labor – Office of Inspector General 

Collection of Final Civil Penalties 

24 Report No. 05-12-001-06-001 
 

3 

OIG Recommendation No.2: Revise procedures to assure consistent referrals to Treasury. 

MSHA agrees with this recommendation. As the OIG reports stales, although the Debt 

Collection Improvement Act requires debt that is more than 180 days delinquent to be referred 

to Treasury for collection , MSHA uses a standard of 150 days delinquent. Each week, MSHA's 

system identifies debt that is 150 days delinquent. Office of Assessments staff research this 

debt and, if no payments are in suspense for the debtor, it is mar1<::ed for referral 10 Treasury. 

Since 2006, the fi les have been transferred electronically to the Treasury Department's 

Financial Management Services system every week. 

This recommendation refers to MSHA's current procedure of not referring to Treasury debt Ihal 

appears to be delinquent for certain companies (the Exclusion List) who regularly pay their civil 

penalties. This procedure was implemented in 2008 to prevent non-dellnquent debt from being 

referred to Treasury. MSHA takes issue with referring to its debt delinquency information as 

· unreliable'. The information is reliable for identifying potentially delinquent debt. The Exclusion 

List has served the purpose of not referring debt to Treasury for which payments have been 

received but not yet applied, a significant savings in time and administrative costs for Treasury, 

MSHA, and, most importantly, the companies that have paid civil penalties that are pending 

payment apptication. 

Wrth the deployment of the system enhancements referenced in MSHA's response to OIG 

recommendation 1, MSHA is now able to eliminate companies from the Exclusion List as 

existing payments with balances are applied to the oldest debt for these companies. This will 

result in the systematic removal of companies from the Exclusion List and the elimination of the 

Exclusion List in its entirety during this fiscal year. 

OIG Recommendation 3: Finalize policies and procedures to identify al/ potential scofflaw 

operators. 

The Agency agrees that it should finalize policies and procedures to identify potential scofflaw 

operators. We also agree, as the report states • ... MSHA's actions to pursue scofflaw violators 

went above the requirements of the Debt Collection Improvement Act of 1996 .. ' In fact, I 

assigned staff to work with the Solicitor's Office to develop scofflaw definitions, and these 

criteria are nearing completion. 

It is important to note that the MSHA scofflaw initiative is an enhanced enforcement initiative 

that is an important element in MSHA's enforcement program. It is not a collection effort. This 

is an evolving initiative and one that MSHA has no legal duty to implement. It is important to 

note also that there is no legal requirement for MSHA to collect delinquent debt after referring 

the debt to Treasury for collection. 

MSHA strongly believes that the OIG mischaracterized the current situation when it stated that 

operators were • ... able to ignore their civil penalty obligations without consequence' within the 

context of the scofflaw program. When mine operators ignore their civil penalty obligations, 

MSHA refers the delinquent debt to Treasury for collection as required under the Debt 

Collection Improvement Act. Treasury takes the following actions, as applicable: 

U.S. Department of Labor – Office of Inspector General 

Collection of Final Civil Penalties 

25 Report No. 05-12-001-06-001 
 

4 

1. Treasury sends a demand letter within five business days of MSHA referral; 

2. Debtors and FMS personnel enter repayment negotiations; 

3. Debt is submitted to the Treasury Offset Program (TOP) within 20 days of 

referral; 

4. Debt is referred 10 credit bureaus; 

5. Debt is referred 10 al least one, and in most cases two, private collection 

agencies; 

6. Administrative wage garnishment; 

7. Referral to Justice Department for litigation: and 

8. Unpaid debt is reported to the Internal Revenue Service as potential income to 

the debtor on Form 1099-C. 

M5HA believes thai this initiative is an important enhanced enforcemenl 1001 Ihat will help 10 

improve the safety and health of miners. I instructed staff to start finalizing the policies and 

procedures for the scofflaw initialive in October, 2010. MSHA and the Office of the Solicitor 

have employed several new strategies to pursue ·scofflaw" operators with mixed results. MSHA 

is developing the policies and procedures for the scofflaw program within the context of the 

experience gained using these strategies. 

OIG Recomm endation 4: Implement controls to assure appropriate and consistent write-off of 

uncolfectable civil penalties. 

MSHA concurs with this recommendation. The report states that MSHA may have written off 

civil penalties for companies that still had an ability to pay their debt As a point of clarification, 

MSHA's current procedures, implemented in 2007, prohibit writing off debt of companies still in 

business, although federal requirements do not contain this prohibition, A company's ability to 

pay does not factor inlo Ihe federal write-off requirements. According 10 federal requirements, 

write-offs should occur when the agency determines that the likelihood of collection is less than 

50%. According to federal requirements, wrile-ofts are mandatory (unless documented and 

justified to the Office of Management and Budget in consultation with Treasury) for delinquent 

debt that has no value for accounting purposes or is older than two years. The Office of 

Assessments is currently reviewing and revising the write-off procedures and developing 

stronger internal controls to ensure compliance with the procedures. 

In conclusion, I look forward to providing more specific details on the actions MSHA will take in 

response to each of the DIG recommendations. MSHA will provide the planned actions within 

60 days. 

If you have any questions concerning this response. please contact Jay Mattos, Director of 

Assessments, at 202-693-9702. 

U.S. Department of Labor – Office of Inspector General 

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U.S. Department of Labor – Office of Inspector General 

Appendix E 

Acknowledgements 

Key contributors to this report were Charles Allberry (Audit Director), Robert Swedberg, 

Donald Evans, Richard Bryan, Elizabeth Garcia, Norlean (Renee) Kelly, Wilma Perez, 

Cassie Galang, and Mary Lou Casazza. 

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TO REPORT FRAUD, WASTE OR ABUSE, PLEASE CONTACT: 

Online: http://www.oig.dol.gov/hotlineform.htm 

Email: hotline@oig.dol.gov 

Telephone: 1-800-347-3756 

202-693-6999 

Fax: 202-693-7020 

Address: Office of Inspector General 

U.S. Department of Labor 

200 Constitution Avenue, N.W. 

 Room S-5506 

Washington, D.C. 20210