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Environmental Settlements Under Intense IRS Scrutiny—No Good Deed Goes Unpunished

Federal and state agencies often threaten companies with lawsuits or penalties for alleged violations of environmental laws and regulations. Companies frequently settle with the agencies in the form of various types of payments and penalties, often including Supplemental Environmental Projects (SEPs), which reduce the monetary payment or penalty. SEPs are environmentally beneficial projects that a company is not otherwise required to perform, but agrees to undertake in order to settle an enforcement action. Companies can often benefit from implementing an SEP, thereby reducing the total actual cost to the company. One benefit that many SEP participants expect is either an immediate tax deduction for expenses associated with the SEP or the ability to capitalize the cost of the expense and claim tax deductions over a period of time. These deductions are receiving increased scrutiny from the Internal Revenue Service (IRS). 

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Coal Dust on the Horizon

Coal mine operators following MSHA’s regulatory agenda are keeping their eyes on coal dust rulemaking these days. MSHA is paving the way for new sampling technology and methods, with the agency feeling the ever-present pressure to adopt a more stringent coal dust exposure limit. 

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The Time Trap

As you know by now, the Mine Safety and Health Administration (MSHA) has changed the way in which it conferences citations. MSHA still wants you to tell them if you want an informal conference within 10 days after you receive the citation in question, however, MSHA has decided that it will not hold the informal conference until after 1) the penalty has been proposed and 2) you have filed a timely formal contest of the penalty by checking the boxes on the Proposed Assessment form and returned the form to MSHA. While this system theoretically may put both parties (MSHA and the mine) in a better position to resolve those aspects of many citations that would otherwise take time and money, the new procedure can easily put the mine operator in a difficult position when it comes to abatement of an unjustified citation.  

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The Settlement Shuffle

How time flies. Just over a year ago, my colleague, Mark Savit, appeared on these pages to inform the mining public of new changes to conference procedures at the Mine Safety and Health Administration (MSHA). Conference procedures afford operators a chance to sit down at the same table with MSHA to discuss citations and orders early in the process. The goal is to avoid litigation—which is costly for both sides—so that both MSHA and the operators can get back to focusing on safety.

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Hazard Complaint Investigations

The Mine Safety and Health Administration (MSHA) is likely to receive and investigate more Hazard Complaints this year than in the recent past. Times are tough. Lay-offs and reduced work schedules tend to spawn hazard complaints, meaning mine operators should be prepared to deal with complaints and complaint investigations. The first steps are to understand a mine operator’s rights during a complaint investigation and to understand MSHA’s Hazard Complaint investigation policy and procedures.

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