Massey Found to Be ‘Profoundly Reckless’ in Coal-Mine Blast That Killed 29

Massey Energy Co. (MEE) is to blame for the fatal explosion at its Upper Big Branch mine in West Virginia last year, the deadliest U.S. mining disaster in 40 years, an investigator for the state said.

“A company that was a towering presence in the Appalachian coalfields operated its mines in a profoundly reckless manner, and 29 coal miners paid with their lives for the corporate risk- taking,” according to a report released today. “The company broke faith with its workers by frequently and knowingly violating the law and blatantly disregarding known safety practices.”

The report by former federal mine administrator J. Davitt McAteer, named in 2010 by West Virginia Governor Joe Manchin to examine the blast, is among three government investigations of the disaster. Federal and state mining agencies have yet to issue reports. Massey agreed in January to be acquired by Alpha Natural Resources Inc. (ANR) for $7.1 billion.

Massey fell 84 cents, or 1.4 percent, to $60.97 at 4:15 p.m. in New York Stock Exchange composite trading. Alpha fell 88 cents, or 1.7 percent, to $50.27.

McAteer’s investigation found that the disaster was man- made and preventable had Massey followed “basic, well-tested” safety procedures. The report cited failures to maintain a functioning ventilation system, comply with federal and state rock-dusting standards and properly maintain the safety features on mine machinery.

Gas Inundation

Massey has denied that a buildup of coal dust played a role in the blast, and General Counsel Shane Harvey today repeated that the company believes a massive inundation of natural gas is to blame.

“Our experts continue to study the UBB explosion and our goal is to find answers and technologies that ultimately make mining safer,” Harvey said in an e-mail.

Alpha considered the continuing investment and litigation in acquiring Massey, Ted Pile, a spokesman, said in a phone interview. “In regard to the report today, we haven’t had time to thoroughly review it, but we will,” he said.

The report urges the U.S. Mine Safety and Health Administration and state regulators to coordinate mine-safety investigations more thoroughly. It recommends that every mine superintendent be certified by a state agency in underground mining and in carrying out the safety laws at individual mines.

Investigators found that safety laws let companies use administrative or judicial reviews to avoid or delay penalties. “Mine operators know they can contest violations and tie them up in litigation for years,” according to the report.

Kline, Rockefeller

Representative John Kline, a Minnesota Republican who is chairman of the House committee that oversees mine-safety laws, said the McAteer report is “deeply disturbing.”

Democrats including Senator Jay Rockefeller of West Virginia and Representative George Miller of California, the top Democrat on Kline’s committee, said the recommendations should encourage Congress to tighten mine safety laws.

Kline said overhauling laws won’t protect miners “if the federal enforcement agency fails to do its job and mine operators ignore safety standards.”

The McAteer report shows the mining company violated safety rules and failed to fix compliance problems, said Joseph Main, assistant secretary for MSHA.

“Massey promoted a culture that ‘prized production over safety’ and where ‘wrongdoing became acceptable,’” Main said in a statement.

Miner Intimidation

Massey used tactics to intimidate miners and discourage them from reporting unsafe conditions, he said.

In its findings, the report said inspections at the start of work shifts have become “a meaningless exercise” carried out by mine operators. “Their examinations are characterized by a monotonous routine and reliance on ‘dittos’ and abbreviations,” according to the report.

McAteer’s report recommends requiring a quarterly study certifying compliance with all safety standards, and sanctions for knowingly or negligently falsifying an official document.

The report also calls for provisions similar to those contained in the Sarbanes-Oxley Act to make a company’s board accountable for mine-safety compliance. A criminal penalty should be assessed on board members who certify that a mine is in compliance when it isn’t.

“There is a disconnect where the board of directors have authority, but they do not have responsibility,” McAteer said in a reporters’ briefing.

The report said regulators should require mine operators to maintain and continually update records on the amount of rock dust purchased and used daily. Failure to keep adequate records would result in a citation with a monetary fine.

Manchin, a Democrat, was elected to the U.S. Senate last year to succeed Senator Robert Byrd, who died June 28 at age 92

To contact the reporter on this story: Holly Rosenkrantz in Washington at hrosenkrantz@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net

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