The indictment period spans January 1, 2008, to April 9, 2010, just after the Upper Big Branch (UBB) explosion killed 29 miners on April 5, 2010. The indictment alleges that Blankenship conspired to commit and cause routine violations of federal mine safety standards at Massey Energy’s UBB mine; and that he himself closely managed the UBB, the coal from which was critical to the company’s financial performance. The UBB was committing hundreds of safety violations a year and the indictment said Blankenship had the ability to prevent most of the violations. It said he fostered and participated in an understanding that perpetuated UBB’s practice of routine safety violations to produce more coal and avoid the costs of following safety laws — all to make more money. He is also accused of impeding the Mine Safety and Health Administration (MSHA) from carrying out its duties at the UBB. He is accused of making false statements to the U.S. Securities and Exchange Commission (SEC).
During the indictment period, the UBB was cited 835 times for safety violations and 283 of those were related to ventilation. The indictment says Blankenship’s imposition and aggressive enforcement of coal production quota deprived the UBB coal miners of the time they needed to construct and maintain ventilation control structures and forced them to operate even where air quantities were below legal minimums. He directed managers not to construct certain structures because it diverted time away from coal production. Because of poor engineering, the roof and ribs of the area of the mine where these ventilation structures were located were collapsing, causing the structures to be crushed almost as quickly as they were being built. Blankenship is quoted as saying, “We will worry about ventilation or other issues at an appropriate time. Now is not the time.”
The UBB was important to Massey Energy. A longwall mine is generally understood to have a high initial capital cost and low operating costs once it’s up and running. Moreover, it was producing metallurgical coal, which was commanding a premium price in 2010. For 2010, projected sales from the UBB represented $432 million or 16% of Massey Energy’s $2.3 billion in revenue, more than any of Massey’s numerous other mining groups.
In April 2010, Blankenship approved a press release saying that Massey Energy does not condone any violation of MSHA regulations and that the company strives to be in compliance at all times. The indictment alleges that the press release and the filing of the UBB Shareholder Statement were materially false, fraudulent, fictitious and misleading.
Blankenship has sparred publicly with many of his detractors over the years, including organized labor, activist shareholders and environmental activists. And, in general, he either won the debate or fought to a draw. He is an intelligent man that hates to lose. This case will argue his priorities related to safety and his level of involvement, and it will be interesting to see how it plays out.
Steve Fiscor, Coal Age Editor-in-Chief
sfiscor@mining-media.com
