Going Down Noisily: The Rise and Fall of a Coal TycoonBy , , and
Ex-Massey chief Blankenship faces one year in jail after blast
He blames `evil unions,' `hoaxers' and `inept regulators'
To hear Donald L. Blankenship tell it, the U.S. coal industry has been undone by inept regulators, evil unions, the media and “global warming hoaxers.” But for jurors at his criminal trial in Charleston, West Virginia, it’s the king of coal himself who bears responsibility for his fall.
Blankenship, 65, the former chief executive of Massey Energy Co., was found guilty by a federal jury on Thursday of a single misdemeanor charge for orchestrating a conspiracy to violate mine safety rules before the April 2010 deaths of 29 miners.
The verdict marks the first time a CEO of a major company has been convicted of a workplace crime, prosecutors said. They mounted a painstaking case that took years to play out against an influential CEO. The misdemeanor conviction, though, fell short of their goal. Had Blankenship been convicted of all charges, he could have been jailed for a maximum of 30 years. Acquitted of two counts of securities fraud, he now faces a prison term of no more than one year. His lawyer vowed to appeal.
“We’re disappointed but not as disappointed as we could have been,” Blankenship’s attorney William Taylor said after the verdict was read. “We’re pleased the jury found him not guilty on the felony charges.”
Although he didn’t testify at the trial, Blankenship’s own words came back to haunt him as jurors reviewed internal memos and listened again and again over seven weeks to recordings he secretly made of telephone conversations.
Company managers were told by Blankenship to keep quiet about safety issues and instead focus on what “pays the bills,” according to one memo. Their job, he said, was simply to “run coal.”
Then death came to the Upper Big Branch Mine in rural Montcoal, West Virginia, and Blankenship’s tightly run empire crumbled.
To get a conviction, prosecutors argued that Blankenship ran the mine as a “lawless enterprise,” creating a corporate culture that encouraged cutting corners on safety to speed up coal production.
They labeled him the “kingpin” of a criminal plot to violate federal mine safety standards and defraud the government, and a “micromanager” who lied about Massey’s safety practices and misled investors to prop up the company’s stock price.
Yet even as prosecutors built their case against Blankenship from 2010 through this year, he was determined to present another view to the public of himself and events. Conflating his own cause with that of the plight of the coal industry, he became a skilled user of social media, blogging, tweeting and posting frequently on YouTube. As recently as a year ago, he was posting regularly and had about 2,000 followers on Twitter.
To mark the four-year anniversary of the Upper Big Branch explosion last year, he released a documentary absolving himself of blame. In the 51-minute video entitled “Upper Big Branch: Never Again,” Blankenship contends that a massive buildup of natural gas overwhelmed a ventilation system required by regulators, resulting in the fatal blast.
Beyond his own cause, Blankenship liked to fashion himself in his social media posts as as an industry truth seeker, more interested in the future of coal than his own personal gain.
“If you won’t fight for yourself no one will fight for you,” he cautioned coal executives in a July 2014 blog-post, urging them to speak out against the EPA’s “nonsensical” regulations, mine inspections that endanger workers and the government’s cover up of the Upper Big Branch investigation.
Blankenship wasn’t just tweeting into thin air. For decades, he’s been one of West Virginia’s most powerful businessmen, living and working in the nexus of politics and the state’s most important industry.
Born in Kentucky and raised in West Virginia’s rural backcountry, Blankenship has lived and breathed coal all his life. He was one of the industry’s loudest boosters, willing to confront regulators and spend millions of dollars backing state politicians and judges who might be friendly to Big Coal.
Blankenship last blogged in November 2014, the day before he was indicted. He now faces the prospect of a year behind bars, making him a symbol of a fading era. Since 2011, more than three dozen coal companies have filed for bankruptcy or shuttered mines amid competition from cheap natural gas and tougher environmental regulations.
After decades of intense mining, producers must now head ever deeper underground to get at the region’s remaining coal seams. Meanwhile, cheaper surface mining among Appalachia’s hills -- commonly referred to as mountaintop removal -- has become an environmental flashpoint and the target of tighter regulation.
In West Virginia, where one in 10 households make less than $10,000 a year but the average annual salary of a miner was $84,959 in 2013, coal industry jobs have fallen 13 percent over the past three years.
At the height of his career in 2009, Blankenship made more than $18 million in salary and bonuses. In December 2010, he stepped down as Massey’s top executive with a $12 million retirement package.
Until recently Blankenship’s life story read like the archetypal American dream. He’s often called attention to his modest upbringing, writing on his blog that he was unaware of his family’s poverty growing up, with “an outhouse that was nicer than the one most of our neighbors had.” He spent his early years attending a grade school with a “pot belly coal stove” and later pumped gas into coal miners’ cars at his family’s gas station, Blankenship wrote.
Working coal mines during the summers to pay tuition for Marshall University, Blankenship came to Massey in 1982, armed with an accounting degree and a decade’s worth of experience in the food industry.
Two years into his tenure there, Blankenship gained attention when he led a successful anti-union campaign marked by violence on both sides. The conflict contributed to the erosion of the union’s influence throughout Appalachia.
Blankenship isn’t the first Massey executive to know controversy, though he is the highest-ranking to face charges over the company’s business practices and its handling of the Upper Big Branch mine.
David Hughart, another Massey executive, was convicted in 2013 of conspiring to violate mine safety laws and sentenced to 3 1/2 years in prison. Hughie Elbert Stover, the mine’s former security chief, was convicted of lying to investigators about alerting miners to safety inspections. He was sentenced to three years in prison.
For Tony Oppegard, a Lexington, Kentucky-based attorney who represents coal miners and their families, Blankenship’s conviction came too late.
“It’s a shame that the Blankenship prosecution didn’t happen earlier, because now the coal industry is a dying industry,” said Oppegard. “Had this prosecution of Blankenship happened 15 years ago, it would have a lot more impact.”
Alpha Natural Resources Inc., which spent about $7 billion to acquire Massey Energy in 2011, filed for bankruptcy in August, unable to service its debt. Massey is now Alpha Appalachia Holdings. Arch Coal Inc., the country’s second-largest coal miner, may be next, the company said in a recent filing.
The latest industry bad news might have been just more ammunition for Blankenship’s unique blend of coal industry evangelism and self-defense. Blogging and tweeting from behind prison bars, though, may not be an option.
“I have been shot at, had urine thrown on me, been lied about, been pursued for decades by law enforcement,” he wrote in one of his last blog posts. “But it’s all made for an interesting and, I believe, a meaningful, life.”
— With assistance by Jef Feeley, and Paul Barrett
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.