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Firm Agrees to $200 Million Settlement in Mining Disaster

Source: WSJ - Kris Maher


Posted on 06 Dec 2011

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Alpha Natural Resources Inc. has agreed to pay $200 million to resolve a range of civil and criminal penalties linked to the disaster that killed 29 coal miners last year as well as other liabilities it inherited when it bought Massey Energy in June, according to several people familiar with the settlement.

The settlement is expected to be announced Tuesday morning by Booth Goodwin, the U.S. Attorney in Charleston, W.Va. He has been leading a criminal probe into the accident at the Upper Big Branch mine in Montcoal, W.Va., the worst U.S. mining disaster in 40 years.

The global settlement will resolve civil fines expected to be issued Tuesday by the federal Mine Safety and Health Administration related to the Upper Big Branch accident, along with other cases from former Massey mines that have been pending before the Federal Mine Safety and Health Review Commission, according to several people.

The settlement will also go toward restitution to the families of miners killed at Upper Big Branch, and some money will go toward mine safety research, these people said.

"It really is unprecedented," said Ellen Smith, editor of Mine Safety and Health News. She said she learned of the settlement Monday.

Ted Pile, a spokesman for Abingdon, Va., based Alpha, which acquired Massey in June, declined to comment. A spokesman for the U.S. Attorney's office also declined to comment but confirmed that Mr. Goodwin would make a major announcement regarding the Upper Big Branch investigation on Tuesday.

Several people familiar with the settlement said it would resolve Alpha's corporate criminal liability, but prosecutors still could pursue individual former employees and officers of Massey.

According to families' attorneys, the settlement doesn't affect attempts to mediate 18 wrongful death lawsuits filed by families of deceased miners. A four-day meeting is scheduled for the first week in January, according to a lawyer who represents two families. Most of an additional 11 families that lost a family member in the accident have finalized settlements in which they agreed not to sue, according to attorneys.

Federal mine safety officials are also expected to issue their own report on the Upper Big Branch accident Tuesday and to issue about 360 safety citations, according to two people briefed on the agency's report. The majority are expected to be labeled "contributory" to the accident.

The largest civil mining fine to date was issued against Murray Energy Corp. for $1.85 million for the 2007 accident at its Crandall Canyon mine in Utah that killed six miners and two rescue workers. In that case, the agency issued 20 violations, including nine that were "contributory."

"It's going to be the most ever in the history of the agency," said a person who has been briefed on the safety agency's Upper Big Branch report. A spokeswoman for the agency couldn't immediately be reached for comment.

The agency already has indicated it believed mine management allowed coal dust to build up, fueling a blast and the worst U.S. mining accident in 40 years. Mr. Pile, the spokesman for Alpha, which is responsible for all fines, said, "We haven't seen the final report itself so we're not prepared to comment."

Earlier Monday, some family members had said they hoped Mr. Goodwin would announce more indictments. "There are bigger and more powerful people that need to be indicted," said Clay Mullins, whose brother Rex died in the accident.

In October, the former security chief at the Upper Big Branch mine was convicted in federal court of obstructing a criminal investigation and lying to investigators. He faces a maximum penalty of 25 years in prison.

After Massey was bought by Alpha, Massey's former board chairman released an investigation finding the accident was caused by a surge of natural gas that couldn't have been prevented. Davitt McAteer, an ex-official with the mine-safety agency who was appointed by former West Virginia Gov. Joe Manchin to investigate the accident, said Monday he believed the agency would reaffirm his conclusion that the explosion was mostly fueled by coal dust.

Celeste Monforton, another former agency official, said she also expected the agency to issue a record fine, citing "the magnitude of the disaster." Ms. Monforton said the mine-safety agency has already issued nearly 1,000 violations at the Upper Big Branch mine since the accident—with nearly $1 million in total fines. She said those violations, most of which involve conditions away from the accident, aren't directly related to the accident and not considered contributory.


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