Appalachia Mountains coal company plays State politics

August 2, 2005

Massey Energy Co., the fourth largest coal producer in the U.S., filed a federal lawsuit against the Governor of West Virginia, Joe Manchin.

Massey’s CEO Don Blankenship alleged that Gov. Manchin acted in retaliation against the company’s coal mining operations because the company spent $650,000 in an advertising campaign to defeat the governor sponsored pension bond proposal. The $5.5 billion bond proposal, intended to shore up the state's sagging pension plan, was defeated in a special election held in June.

The Massey lawsuit, filed last Tuesday on July 26 in the U.S. District Court in the W.V. southern district, was referred to by Gov. Manchin as having less to do with the bond proposal than with the newly increased state "severance tax" on coal. Nearly 40 million tons of coal production will be subject to the 56-cent tax.

According to Blankenship, that tax amounts to $22.4 million in additional costs for the company, but he denied the increase has anything to do with the lawsuit.

The company reported profits that almost tripled during the second quarter compared to a year ago. Of the company’s rosy earnings picture, Blankenship urged states to “show some frugality” by not placing tax burdens on coal to solve state budget shortfalls. He said his company is “playing a role” because there was no need for the bond sale and the state can afford to make payments into the pension system.

Blankenship acknowledged during a conference call the now-rescinded June 30 permit by the W.V. Department of Environment Protection (DEP). At issue was the department's permit for mining operations near the Marsh Fork Elementary School, in Sundial, W.V. The school rests at the base of a mountain selected by Massey for "Mountain Top Removal" (MTR) mining techniques. Along with the mining equipment, a coal preparation plant and a sludge pond were established on the mountain. Protest groups, mainly the Coal River Mountain Watch and Mountain Justice Summer, presented a list of demands to Massey officials that included shutting down the preparation plant, ceasing all MTR mining above the Marsh Fork Elementary School, and abandoning plans for a second coal silo near the school. They also ask that the Marsh Fork school be cleaned up or relocated. The state permit for a second coal storage silo was rescinded by the DEP the same day Massey filed the Manchin lawsuit.

Gov. Manchin in June said that Blankenship could expect tougher state scrutiny of his business affairs since the Massey media campaign against the pension bond proposal. "I think that is justified now, since Don has jumped in there with his personal wealth trying to direct public policy," he said at an appearance at an American Electric Power event in Putnam County.