Alpha to pay $209 million over coal mine disaster

By Steven Allen Adams | Reuters
CHARLESTON, West Virginia (Reuters) – Coal miner Alpha Natural Resources has agreed to pay $1.5 million to each of the families of 29 miners killed in an explosion at the Upper Big Branch Mine in West Virginia last year.

The payments, part of a $209 million settlement of civil and criminal charges stemming from the April 5, 2010 accident, included a fine of $10.8 million, the biggest ever imposed by U.S. federal mine regulators.

The settlement, announced on Tuesday, did not resolve questions of individual responsibility and left open the possibility of criminal charges against former executives of Massey Energy, which owned the mine at the time of the blast.

It was the worst accident in the U.S. mining industry in four decades.

“I want to emphasize again that the investigation of individuals associated with Massey is still ongoing,” said federal prosecutor Booth Goodwin. “If anything, this resolution allows us to place a greater focus on that critical piece of our investigation.

“We’re still working hard on the investigation,” he told reporters in Charleston, West Virginia.

Later, at a news conference in Beaver, West Virginia, Secretary of Labor Hilda Solis said that she had met with victims’ families to brief them on the report into the accident by the federal Mine Safety and Health Administration (MSHA).

“By issuing the largest fine in MSHA’s history, I hope to send a strong message that the safety of miners must come first,” she said.

Kevin Stricklin, MSHA’s administrator for coal mine safety and health, told reporters the victims’ families were not happy, even with maximum fines imposed on the coal company.

“They (Massey) sent miners underground, knowing they did not comply with regulations,” Stricklin said. “The families were very appreciative, but I don’t think this satisfies them. They want to know what the Department of Justice is going to do.

“I can’t walk in their shoes, but I don’t know if they will ever have closure.”

Stricklin said the $10.8 million in fines imposed by MSHA included the maximum $220,000 each for several flagrant violations of safety rules.

“There was a culture of valuing production over safety at Massey and that is unthinkable in a mine,” he said.

Shares of Alpha, which acquired Massey this year and assumed liabilities from the accident, closed down 1.15 percent at $24.88 on the New York Stock Exchange.

Earlier, MSHA released its official investigation of the accident, concluding it was “entirely preventable.”

It said the blast was caused by a coal dust explosion that started when methane gas was ignited. The agency issued 12 citations for violations of the Mine Act that contributed to the explosion, and another 357 separate violations.

It also said “unlawful policies and practices implemented by Massey were the root cause of the tragedy.

“Massey promoted and enforced a workplace culture that valued production over safety, including practices calculated to allow it to conduct operations in violation of the law,” the report said. It cited intimidation of miners to prevent them reporting safety issues, and two sets of books kept by the company to withhold safety concerns from inspectors.

Alpha said in a statement that under its agreement with the federal prosecutor’s office for the Southern District of West Virginia, the U.S. Department of Justice and MSHA, it would invest $80 million over the next two years in added safety measures at legacy Massey mines and Alpha mines.

It will also establish a $48 million trust to fund research and development projects designed to improve mine health and safety, and pay $46.5 million to families of the dead miners and two other people affected by the explosion. It said $16.5 million of that sum had already been paid in settlements and anticipated settlements.

Alpha also agreed to pay $34.8 million, including Tuesday’s $10.8 million, to settle outstanding safety citations, violations and orders.

Alpha Chief Executive Kevin Crutchfield said the settlement represented “the best path forward for everyone.”

Company spokesman Ted Pile told Reuters that so far, eight families had settled with the company and received restitution of about $1.5 million each. Three more families are in the process of settling, and survivors of the other 18 victims are in litigation.

He said Alpha had already figured in the $46.5 million restitution amount in its financials, along with the $80 million investment in safety measures at its mines. The only new figure was the $48 million for a trust fund to research and develop improved safety measures and technology.

Massey said last year that it had set aside $78 million to pay for expected litigation. Alpha acquired Massey in a $7 billion deal in June.

(Additional reporting by Sakthi Prasad in Bangalore and Steve James in New York; Editing by Gerald E. McCormick, Lisa Von Ahn, John Wallace and Richard Chang)

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