Mine Blast Was No Surprise, Shareholders Say

     WILMINGTON, Del. (CN) – Long before drilling crews began boring into the Upper Big Branch mine in a desperate effort to rescue miners from the nation’s worst mining disaster in four decades, Massey Energy Co. had not simply disregarded mine safety regulations – it treated them with contempt, according to a shareholder’s derivative complaint against company directors. “Given Massey’s chronic unwillingness and failure to adhere to mining safety regulations,” the death of 29 workers on April 5 “did not come as a surprise to many.”




     Massey has racked up nearly $27 million in fines since June 2008, nearly $13 million of them in 2009, according to the Chancery Court complaint from the New Jersey Building Laborers Pension Fund.
     Massey owes “$25.6 million of still unpaid fines since 2005;” 10 of its 23 coal mines “had injury rates that exceeded the national rate;” four of those had injury rates “more than double the national average, and the 10 mines together received 2,400 federal safety violation citations in 2009 alone,” according to the complaint.
     The complaint’s harshest criticism centers on one man: “Massey’s imperious CEO and Chairman, Donald Blankenship.”
     “The Board’s unwillingness or inability to prevent one man’s heedless and misguided views from determining company practice has resulted in needless, tragic destruction of human life, as well as severe damage to the Company’s reputation and finances,” according to the complaint. “It is not in the company’s interest to continue to accrue fines or penalties as a result of this pervasive, and apparently continuing, pattern of flagrant disregard for mine safety laws and regulations.”
     Many of the violations stemmed from dust, ventilation or combustible materials, according to the complaint. The Upper Big Branch mine in Montcoal, Raleigh County, W.Va., “is known as a ‘gassy’ mine because it generated 2 million cubic feet of methane a day, more than most mines. …
     “Any spark will cause a methane explosion in a mine if the gas concentration is between 5 and 15 percent of the atmosphere.”
     The complaint continues: “Massey avoided closure of the mine as a result of the pervasive prior safety regulations, by endlessly appealing the citations and fines. … (F)ederal regulations state that closure action cannot begin unless a mine has a ‘withdrawal order’ forcing miners to be removed from a danger zone. The Raleigh mine had sixteen withdrawal orders, but Massey has disputed all sixteen of them. Instead of complying with regulations designed to maximize the safety of miners, Massey has contested more federal safety fines than any other coal mining company in the nation, according to data and federal officials.”
     Massey, the nation’s fourth-largest coal producer, adopted a “policy of delay through endless appeals,” the complaint states.
     “In violation of their fiduciary duties, defendants permitted and/or caused Massey to repeatedly violate applicable safety laws and regulations, thereby putting lives at risk and causing the company to incur millions of dollars in fines and penalties,” the complaint states.
     The plaintiffs demand punitive damages for breach of fiduciary duties. They also want all the company’s mines inspected and Blankenship removed from office.
     They are represented by Seth Rigrodsky with Rigrodsky & Long of Wilmington.

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