CHARLESTON, West Virginia, November 15, 2014 (ENS) – Don Blankenship, former CEO of coal giant Massey Energy, was indicted Thursday on charges of conspiring to violate federal mine safety standards and impeding federal mine safety officials prior to an explosion at Massey’s Upper Big Branch mine at Montcoal, West Virginia that killed 29 miners on April 5, 2010.
It was the worst coal mining disaster in the United States in 40 years.
In a four-count indictment the federal grand jury alleges that Blankenship committed these and other crimes “in order to produce more coal, avoid the costs of following safety laws, and make more money.”
The grand jury alleges that the buck stopped at Blankenship’s desk.
The indictment, filed in U.S. District Court in Charleston, West Virginia, says that as CEO of Massey and chairman of Massey’s Board of Directors during the indictment period, January 1, 2008 through April 9, 2010, Blankenship was “ultimately” responsible for the management of Massey’s business.
Massey’s Class A Common Stock was registered with the Securities and Exchange Commission and was publicly traded on the New York Stock Exchange.
The indictment alleges that after the fatal explosion Blankenship lied to the SEC and committed securities fraud.
If convicted of all charges, he could spend up to 31 years behind bars.
The coal mining process generates highly explosive airborne coal dust and methane gas. Legal minimums of ventilation and water spray are basic safety practices that reduce the possibility that explosive substances in mine air could ignite.
The numbers are important here, and the indictment cites a multitude of numbers.
During the 16 month indictment period, the Upper Big Branch-South (UBB) mine was cited 835 times for violations of mandatory federal mine safety and health standards. At least 319 of these were for “especially serious” safety or health hazards.
Approximately 283 were violations of laws on mine ventilation, “which operate to prevent explosions and fires in coal mines and to minimize deaths and serious injuries in the event an explosion or fire does occur,” states the indictment.
Orders closing all or part of the mine followed 59 of UBB’s safety-law violations, placing UBB among the worst mines in the United States for shutdown orders during the crucial 16 months.
“Blankenship knew that UBB was committing hundreds of safety-law violations every year and that he had the ability to prevent most of the violations that UBB was committing. Yet he fostered and participated in an understanding that perpetuated UBB’s practice of routine safety violations, in order to produce more coal, avoid the costs of following safety laws, and make more money,” the indictment states.
Another set of numbers was important to the grand jury – those relating to Massey’s financial performance.
UBB produced the metallurgical coal used for manufacturing steel. During the indictment period, metallurgical coal sold for more per ton than Massey’s other major product, coal used to generate electricity.
Metallurgical coal from UBB was essential to a blend of metallurgical coal from the most profitable group of Massey mines. For 2010, Massey projected UBB-group revenue of $432 million, about 16 percent of Massey’s projected revenue of $2.7 billion and more than the projected revenue for any other Massey mining group.
The grand jury alleges that the need to meet these revenue projections drove “Blankenship’s imposition and aggressive enforcement of coal-production quotas” that put safety in the back seat at the UBB mine.
Beginning in 2009, UBB employed a technique known as longwall mining. At full productivity, the UBB longwall mining section could produce more than $600,000 worth of coal a day, more than any of Massey’s other mining sections.
Two government and two independent investigations into the fatal incident agreed that the explosion was touched off when the mine’s longwall-machine shearer cut a piece of sandstone.
A federal investigation determined that the longwall shearer was operating with seven of its required water sprays missing and with other sprays clogged.
In November and December 2009, federal mine safety inspectors discovered that required ventilation controls were missing in the longwall mining section, just two of UBB’s safety-law violations.
“Blankenship’s imposition and aggressive enforcement of coal-production quotas” deprived UBB’s coal miners of the time they needed to construct and maintain ventilation control structures, and that forced them to operate even where air quantities were below legal minimums…” the grand jury alleges.
The indictment states that Blankenship directed his employees “not to construct certain ventilation controls that would produce more reliable airflow because constructing them diverted time from coal production…”
During the indictment period, UBB also “routinely violated mandatory mine safety standards concerning accumulations of coal dust, loose coal, and other combustible materials,” according to the indictment.
When these materials did ignite on April 5, 2010, 29 miners died.
Right after the fatal explosion, the indictment alleges that Blankenship made “misleading” and “untrue statements of material fact,” specifically, that Massey does “not condone any violation of Mine Safety and Health Administration (MSHA) regulations,” and Massey strives “to be in compliance with all regulations at all times.”
When those statements were made, Blankenship knew that they were “materially false, fraudulent, fictitious and misleading” and that the statements “would act as a fraud and a deceit upon purchasers and sellers of Massey Class A Common Stock,” the indictment alleges.
In a statement Thursday, Blankenship’s attorney, William W. Taylor III of the Washington, DC law firm Zuckerman Spaeder, said, “Mr. Blankenship is entirely innocent of these charges. He will fight them and he will be acquitted.”
Judge Irene Berger Friday issued a gag order in the case, expressing concern that pretrial publicity might make it impossible to “seat jurors who can be fair and impartial.”
Massey Energy is no longer an independent company. On January 31, 2011 Alpha Natural Resources acquired Massey Energy for US$7.1 billion, creating the second biggest U.S. coal miner by market capitalization.
Alpha settled Massey’s Upper Big Branch Mine disaster liabilities with the U.S. Attorney for $209 million on December 6, 2011, including $41.5 million to the survivors and families of the deceased. The Mine Safety and Health Administration additionally assessed a $10.8 million fine for 369 citations and orders, the largest fine for a mine accident in U.S. history.