A recent audit by the Labor Department Inspector General has again targeted systematic problems with one of the federal Mine Safety and Health Administration’s key tools: Collection of monetary fines for safety and health violations by the nation’s coal industry. The audit, available here, concludes:

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 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.

Specifically, IG investigators look at penalty collection activities in 2009 and 2010 — during the Obama administration — and found that MSHA did not always:

–Timely apply payments against the outstanding debt of violators and timely and consistently refer delinquent debt to Treasury;

— Identify potential scofflaw violators; and

– Ensure that penalties were uncollectable before writing off the debt.

It’s important to note these figures from the IG audit:

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.

And the IG report notes:

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.

But the IG found that MSHA had never finalized a May 2009 proposal for how to identify and deal with mine operators who don’t pay their penalties. the IG reported:

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.

One of the most disappointing things in the audit is the somewhat softly stated fact that MSHA “did not have an accurate view of the amount and age of its uncollected civil penalties.” In other words, MSHA doesn’t know for sure how much mine operators owe or for what violations that were cited when. The audit explains:

As of October 2011, $124.8 million (85 percent) of the $147.1 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.

Incredibly, here was MSHA’s solution to this problem:

… In February 2008, MSHA created the Exclusion List. 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.

IG investigators aren’t sure if the figures are accurate, but they said MSHA reported that, as of September 2010, penalty cases worth $8 million associated with 133 different violators were on the Exclusion List. In a footnote, the IG said the list contains a total of 325 mine operators — all of whom would avoid having unpaid penalties sent to the Treasury for potential debt collection activities, all because MSHA doesn’ t know if they’ve paid their fines or not. The IG report includes a chart that shows $4.2 million of that debt is more than 1 year overdue and another $3 million is more than two years overdue.

Now, some folks may recall that back in 2007 and 2009, then-MSHA chief Richard Stickler was forced to announce two somewhat embarrassing policies: One called the “100 Percent Plan,” in which his agency would for the first time ever conduct all 100 percent of its congressionally mandated mine inspections (subscription required)  and another in which MSHA said it would fix a problem that led about 5,000 violations between 1995 and 2006 not be assessed for required civil penalties (subscription required).

In its new audit, the IG updates the situation with those unassessed violations, reporting that MSHA was able to go back and assess fines for only 134 of 4,973 violations from those that went unassessed — and has collected only $61,409 of the $142,558 assessed in those instances.

Now, you can read MSHA chief Joe Main’s response to all of this yourself here.  But do you think Joe’s being a little defensive when he objections to parts of the IG audit, writing things like:

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 or 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.