Civil Fines and Penalties Debt: Review of OSM's Management and Collection Processes

In its April 18, 2002 Action Plan, the Office of Surface Mining (OSM) stated that its December 2000 final ownership and control regulations are in litigation, and that OSM is in settlement discussions with the plaintiffs (National Mining Association or NMA). OSM also stated that it will continue to explore all policy, regulatory, and legislative options with the potential to improve its ability to keep applicants responsible for uncorrected violations and unpaid debt from receiving permits to mine coal. In June 2003, OSM further added that settlement discussions concerning litigation on the ownership and control issue are nearly concluded, and that it will not result in upstream permit blocking by OSM. However, OSM stated that it continues to monitor the effects of the court decision and that the three states that process the most permits (KY, PA, and WV) have continued to block permits upstream based on their state programs. In July 2005, OSM stated that it published a proposed ownership and control rule in December 2003 and a proposed transfer, assignment, or sale rule in January 2005. OSM also stated that together the two proposed rules closed the National Mining Association litigation and it conducted an outreach effort with State Regulatory partners. The two rules expand SMCRA by (1) settling on-going litigation and (2) providing regulatory certainty for OSM, State regulatory authorities, the regulated community, and the general public as it continues to monitor new mining applications.

In its April 2002 Action Plan, OSM stated that it reports both internally and externally to Treasury the results of its collection actions, including the age of outstanding cases. OSM also stated that it now monitors the write-off of debts over 2 years old, based on monthly reports by the Division of Financial Management and quarterly reports by the Deputy Chief Financial Officer. These monitoring procedures were incorporated into OSM's quarterly quality assurance review. OSM's monthly and quarterly reports dated December 6, 2001, and June 5, 2002, respectively, indicated that the debts are now being monitored. In a fax received June 20, 2003, OSM provided copies of the monthly and quarterly reports distributed to monitor 2-year old delinquent debt, and a monthly receivable report that showed only one old debt awaiting DOJ approval and two debts that just turned 2-years old that were being reviewed.

In a letter dated June 7, 2002, OSM stated that it issued a memorandum to its financial managers and staff to emphasize the need to fully adhere to the requirement to obtain Department of Justice approval to terminate collection efforts and write-off delinquent CFP debt greater than or equal to $100,000, pursuant to the Federal Claims Collection Standards. OSM also stated that it reviewed all cases where collection action was terminated over the last 5 years, and that DOJ approval was obtained when appropriate, except for the two instances identified in GAO's report. In addition, OSM's Deputy Director issued a memorandum to the Chief of the Division of Financial Management on March 13, 2002 and to collection team staff on March 15, 2002, emphasizing the need to obtain DOJ approval before terminating collection action on debts greater than or equal to $100,000. On June 23, 2003, the OSM Team Leader of Fee Accounting and Collection stated that the two instances were reversed from written off debts to currently not collectible and submitted to DOJ for approval, of which one was approved and the status subsequently changed back to written off.

In its April 2002 Action Plan, OSM stated that its collection manager monitors the debtor's ability to immediately pay CFP debt in full on each installment agreement that is submitted for approval. In a memo dated June 7, 2002, OSM stated that it began monitoring the maintenance of documentation relating to a debtor's inability to pay during the quarterly internal audit of its collection operation on February 28, 2002. On June 23, 2003, the Team Leader of Fee Accounting and Collection stated that these monitoring procedures were incorporated into OSM's quarterly quality assurance review that is used to monitor program performance.