Alpha Natural Resources: Corporate Rap Sheet

Alpha Natural Resources

by Philip Mattera

Alpha Natural Resources is the non-descript name of a leading U.S. coal producer put together through a series of acquisitions that included two of the most controversial names in mining: Pittston Coal and Massey Energy, each of which were known for environmental disasters, deadly mine accidents and union-busting. A lesser known acquisition, Foundation Coal, also had its share of controveries.


19th Century Roots

Alpha was formed in 2002 when the private equity firm First Reserve acquired most of the Virginia coal operations of the Pittston Company. Pittston had its roots in Pennsylvania's anthracite mining industry in the 19th century but was officially founded in 1930 by the Alleghany Corporation, a holding company for the Cleveland-based tycoons, the Van Sweringen brothers.   

Pittston survived the collapse of the Van Sweringen empire during the Depression and went on to purchase other mining companies, becoming a leader in the production of metallurgical coal for the steel industry. It also made acquisitions in other sectors, most notably the Brink's armored car business in the 1950s.

Following a bitter labor dispute in the late 1980s (see below) and poor financial results, Pittston decided to get out of the mining business, selling its coal properties to various buyers. After the completion of that process, Pittston changed its name to The Brink's Company.

After the Pittston deal, Alpha proceeded to purchase other coal properties and went public in 2005. A planned merger with Cliffs Natural Resources fell apart in 2008, but the following year Alpha acquired Foundation Coal Holdings, which gave it a presence in western strip mining. The combined company became the third largest U.S. coal producer.

Alpha became even larger after the 2011 acquisition of Massey Energy in the wake of that company's role in the Upper Big Branch mine disaster the year before (see below). Massey began mining coal after the Second World War but remained a minor player until the 1960s. It was acquired by St. Joe Minerals in 1974, but in the 1980s it ended up under the control of engineering giant Fluor, which spun it off in 2000.

Today Alpha operates 60 mines in northern and central Appalachia as well as the Powder River Basin in Wyoming. 

 

Environmental Record

Pittston, some of whose properties helped to create Alpha, was involved in one of the worst environmental disasters linked to the coal industry. In 1972 a dam created with mine waste at a Pittston subsidiary's operation in Logan County, West Virginia collapsed, inundating 16 communities with more than 100 million gallons of black waste water; 125 people were killed. Survivors of the Buffalo Creek catastrophe sued Pittston for $65 million but in 1974 settled out of court with the company for $13.5 million. 

Massey also had a checkered environmental track record before joining Alpha in 2011. In 1996 its subsidiary Performance Coal was fined $30,000 by the West Virginia Division of Environmental Protection for spilling mining waste into the Coal River (Charleston Gazette, April 9, 1996).

In the late 1990s Massey joined other coal operators in pursuing a radical form of strip mining known as mountaintop removal. While critics charged that the practice disfigured terrains, the company in 1998 tried to get around a requirement that land be restored to its approximate original contour, arguing that by flattening hilly areas it was improving them. Massey subsidiary Independence Coal filed suit against the U.S. Office of Surface Mining in an attempt to block oversight of mountaintop removal (Charleston Gazette, September 27, 1998).

In 2000 Massey subsidiaries Elk Run Coal and Goals Coal agreed to pay a total of $25,900 for allowing coal refuse to leak into waterways in West Virginia. That same year, Massey found itself receiving unfavorable national attention in when a subsidiary's coal waste dam in Martin County, Kentucky, collapsed, sending some 250 million gallons of toxic slurry into two streams feeding into the Tug Fork of the Big Sandy River. The torrent of sludge, larger in volume than the Buffalo Creek spill, contaminated the drinking water of various towns, destroyed aquatic life, and prompted the governor of Kentucky to declare a 10-county state of emergency. The company later paid a state fine of $3.25 million.

In June 2001 a Massey facility in Boone County, West Virginia spilled some 30,000 gallons of polluted mine water into a stream (Charleston Gazette, June 20, 2001). Two months later, there was another spill at a Massey mine in Boone County and another in Logan County. At a public hearing in December 2001, an official from the West Virginia Department of Environmental Protection (DEP) said that Massey’s operations in Boone County had the worst compliance record he had ever seen (Charleston Gazette, December 7, 2001).

These spills and numerous others at Massey facilities prompted an unusual period of cooperation between the United Mine Workers and environmental groups, which held joint protests against the company (In These Times, January 21, 2002).

In December 2002 two Massey subsidiaries involved in West Virginia admitted to misdemeanor violations of the federal Clean Water Act and paid fines of $200,000 each (Charleston Gazette, December 17, 2002). They were put on probation for five years (Charleston Gazette, March 13, 2003). To add to the pressure, a federal magistrate later ordered one of the subsidiaries to offer cash bonuses to employees who reported wastewater spills (Charleston Gazette, November 5, 2003).

In January 2006 the West Virginia DEP announced that it had reached an agreement with Massey under which the company would pay $1.4 million to settle a backlog of five lawsuits and 14 other major enforcement actions (Charleston Gazette, January 7, 2006).

In January 2008 Massey had to pay a record $20 million civil penalty to resolve a federal lawsuit brought by the Justice Department and the Environmental Protection Agency charging the company’s operations in West Virginia and Kentucky with more than 4,000 violations of the Clean Water Act.

Later that year, Alpha agreed to pay $750,000 to resolve allegations by West Virginia regulators that the company's subsidiaries in the state had violated the terms of their water discharge permits 300 times.

In December 2011, following the acquisition of Massey, Alpha agreed to spend about $50 million to reduce selenium runoff from three mountaintop removal mines in West Virginia that had been operated by Massey. This settled a citizens' lawsuit brought by the Ohio Valley Environmental Coalition and other organizations. The groups subsequently brought similar suits against other Alpha mines, leading to a 2014 settlement in which the company agreed to install selenium controls.

In March 2014 the Justice Department and the EPA announced that Alpha and 66 of its subsidiaries (including the former Massey operations) would pay a civil penalty of $27.5 million and spend an estimated $200 million to install and operate wastewater treatment systems at their mines in five states to settle thousands of alleged violations of the Clean Water Act, including some that represented a failure by Massey to comply with the 2008 settlement.

Prior to the Alpha acquisition, Massey CEO Don Blankenship made statements questioning the reality of global warming and spoke out against climate legislation being considered by Congress. Alpha executives have been evasive about their position on climate issues, but in 2014 the company cited EPA regulations on carbon emissions as one of the reasons it might have to lay off more than 1,000 workers.


Mine Safety and Health Record

Pittston came to Alpha with a history of safety and health violations. In 1980 its Clinchfield Coal subsidiary pleaded guilty to four counts of willfully violating federal mine safety regulations and was ordered to pay $100,000 in fines, then the largest criminal penalty ever imposed on a mine operator.

In 1983 an explosion at a Clinchfield mine in southwest Virginia killed seven miners in the worst mining accident in the state in 25 years (Washington Post, June 23, 1983). The federal Mine Safety & Health Administration (MSHA) blamed management for the incident and fined the company $47,500 (Washington Post, August 29, 1984).

In 2007, before Foundation Coal joined Alpha, its Wabash Mine subsidiary was fined $440,000 by MSHA for what the agency called "flagrant" safety violations at its operation in Wabash County, Illinois.

Massey also arrived at Alpha with a checkered safety and health record. For example, in 1992 Massey paid $39,185 in fines to settle charges brought by MSHA related to coal dust samples submitted for testing. After abnormalities were found in the samples, federal officials accused the company of tampering with the samples to reduce the amount of airborne coal dust that would be detected. The company claimed the dust dislodgement was accidental (Coal Week, Aug. 3, 1992).

In 1995 a worker at Massey’s Low Gap No. 2 mine in West Virginia was killed in a roof cave-in on the same day the facility had been cited for 14 violations of state safety regulations (Charleston Gazette, Sept. 24, 1995). As incidents such as this continued, UMWA President Cecil Roberts in 2001 charged that Massey had the worst safety record in the industry (Charleston Gazette, July 19, 2001).

That record got even worse in January 2006, when a fire erupted at Massey subsidiary Aracoma Coal’s Alma mine in Logan County, West Virginia, killing two workers. A state investigation later found that uncorrected safety violations were responsible for the deaths. In December 2008 Aracoma agreed to pay a record $4.2 million in criminal penalties and civil fines to resolve federal charges of willful violation of mandatory safety standards.

Massey’s poor safety record became an even bigger matter of controversy in April 2010, after a methane gas explosion at its Upper Big Branch mine in West Virginia caused the deaths of 29 workers -- the worst accident at a U.S. coal mine in 40 years. News reports pointed out that Massey subsidiary Performance Coal had received large numbers of safety violations but blunted the impact of those citations by filing time-consuming appeals. It came to light that the specific mine where the disaster occurred had been cited more than 50 times in the month before the explosion. A dozen of those citations related to problems with ventilating the mine to prevent a buildup of methane. Upper Big Branch had racked up 1,342 violations over the previous five years. And Massey was said to contest more safety fines than any other operator.

When President Obama put primary blame for the disaster on management, Massey put out a press release saying: "We fear that the president has been misinformed about our record and the mining industry in general." However, the Washington Post reported that federal inspectors who visited Upper Big Branch a few months before the accident had written in their notes that senior managers showed "reckless disregard" for worker safety by telling a foreman to ignore a citation the facility had received for faulty ventilation. The head of MSHA then told a Senate panel that managers at the mine appeared to have a "catch me if you can" attitude toward the agency.

A May 2011 report issued by the Governor's Independent Investigation Panel concluded that "the disaster at Upper Big Branch was manmade and could have been prevented had Massey Energy

followed basic, well-tested and historically proven safety procedures." The document harshly criticized both Massey and MSHA for creating the conditions that allowed the disaster to happen.

A few weeks after the release of the report, MSHA told reporters that its investigators had found that Massey misled inspectors before the accident by falsifying safety records. In December 2011 federal prosecutors announced that Massey would pay $209 million to resolve the criminal investigation of the case. The amount, a record for a mine disaster case, included $35 million in MSHA penalties,  $80 million in safety improvements at all of the company's underground mines, $48 million for a mine health and safety trust fund and $47 million in restitution to the families of the dead miners.

Although Massey's settlement included a non-prosecution agreement, some individual company executives faced criminal charges. The most significant of these was former CEO Don Blankenship, who was indicted in November 2014 of conspiring to violate health and safety standards. A revised indictment filed in March 2015 also accuses him of conspiring to falsify dust samples.

 

Labor Relations

Alpha's predecessor companies, Pittston and Massey used to participate in the industry-wide collective bargaining agreements negotiated by the major coal operators and the United Mine Workers of America (UMW). But they each decided to split from the Bituminous Coal Operations Association (BCOA) and challenge the union on their own.

In 1984, at the urging of a young executive named Don Blankenship — who would later rise to the top position at the company — Massey withdrew from the employer association and insisted on negotiating separately at each of its unionized mines.

UMW members found these moves intolerable, and more than 1,000 of them went on strike at several Massey mines in West Virginia. The walkout started peacefully, but after several months the dispute turned volatile as picketers faced off against company guards leading attack dogs behind new chain-link fences topped with barbed wire. Massey brought in strikebreakers to keep production going, and the strikers fought back. The confrontation went on for 15 months, until the company and the UMW announced a settlement in late 1985, though the terms of that agreement were unclear (Washington Post, December 22, 1985).

The two sides continued their dispute in court. Ultimately, in November 1988 the UMW announced that it had achieved an out-of-court settlement under which Massey agreed to pay about $2.4 million in back wages to strikers fired during the strike (Wall Street Journal, November 10, 1988).

Pittston's big confrontation with the UMW began in 1988, when the company refused to sign the contract the union negotiated with the BCOA and adopted a hard-line position in separate talks, taking steps such as suspending the health benefits of retired and disabled miners.

Angered by the company's concessionary demands -- including an end to its participation in the industry-wide pension and health plans -- the 2,000 UMW members at Pittston launched a corporate campaign against the company, though they remained on the job after the contract expired. After more than a year of applying pressure, the UMW decided to call a strike.

The walkout turned out to be unusual in the degree of solidarity the Pittston workers received from local communities, other coal miners (tens of thousands of whom staged wildcat sympathy strikes), and the rest of the labor movement. Thousands of unionists visited the Camp Solidarity encampment that UMW members set up in Virginia, and many of them participated in the campaign of massive civil disobedience used by the Pittston workers to try to thwart company operations being carried out by strikebreakers. In September 1989 Pittston workers swept past guards and occupied a Pittston facility in Carbo, Virginia for several days--an act believed to be the first labor occupation of a workplace since the 1930s. While all this was happening, the National Labor Relations Board ruled that Pittston was guilty of unfair labor practices.

Following reported threats by European dock unions to refuse to handle U.S. coal shipments because of the strike, Labor Secretary Elizabeth Dole appointed a special federal mediator for the dispute, and in January 1990 a settlement was finally reached. Pittston dropped most of its concessionary demands and agreed to remain in the industry health and pension plans, while the UMW agreed to some work rule changes.

Meanwhile, tensions between labor and management at Massey continued as the company phased out most of its unionized mines, and the UMW found it difficult to carry out new organizing efforts at a company that was open about its anti-union stance (its Elk Run complex was run non-union since the 1970s).

When Blankenship was promoted to president of Massey in 1990, the Wall Street Journal, noting his role in pushing a hard line against the UMW six years earlier, headlined its (July 5, 1990) story “Massey Coal Picks Union Opponent as Its President.” While testifying in a federal lawsuit in 1996, Blankenship declared: “No [coal] operator in their right mind would go union” (Charleston Gazette, April 20, 1996).

One of those places where the company exhibited its hard line against unionization was the Upper Big Branch mine, where the UMW launched a high-profile organizing drive after the operation opened in 1995. Although the area was considered a union stronghold, the company put so much pressure on the workers that they narrowly voted against UMW representation twice—in 1995 and in 1997 (Charleston Gazette, May 16, 1997).

When Massey was seeking to purchase bankrupt Lady H Coal Co. in 1996, a company executive testified in a court hearing that Massey would not go ahead with the deal unless it could temporarily shut the operation down and get rid of the unionized workforce (Charleston Gazette, February 6, 1996). By the time the company was spun off from Fluor and issued its first 10-K annual filing as Massey Energy in 2001, it was able to report that only 152 of its 3,610 employees were affiliated with the UMW.

Frustrated at Massey's intransigence, the union launched a broader campaign against the company, emphasizing not only its labor policies but also its abysmal environmental record. In May 2001 UMW President Cecil Roberts and other union officials and members were arrested during a peaceful sit-down protest at Massey's Elk Run mining complex in West Virginia. Roberts told a reporter: "Massey's attitude toward its workers, the environment and Appalachia's economic well-being have not changed much since the UMW engaged in a bitter strike with them in the '80s. In fact, the company's attitude may be worse" (Charleston Gazette, May 24, 2001).

In 2009 the National Labor Relations Board ruled that Massey subsidiary Mammoth Coal violated federal labor law by refusing to hire 85 union members who had worked at a West Virginia mine for the previous owner, and by refusing to recognize and bargain with the UMW after it took over the facility. Shortly thereafter, the company agreed to pay $8.75 million to settle an age discrimination suit that had been brought by the same group of workers.

Prior to its purchase by Alpha, Foundation Coal was also fighting with the UMW. In 2007 the union staged an eight-day strike against the company's mines in Pennsylvania and Illinois to protest unfair labor practices. The day the strike began Foundation said it would close one of the mines permanently.

Alpha reports that at the end of 2014 only 11 percent of its workers were represented by the UMW.


Federal Leasing

Alpha is one of a handful of companies taking advantage of a non-competitive program that allows coal operators to lease federal land at below-market rates. A 2012 report by the Institute for Energy Economics and Financial Analysis estimated that over 30 years the Treasury lost $28.9 billion in revenue from the failure to obtain fair market value for the coal extracted from the Powder River Basin of Wyoming and Montana, the country's largest coal-producing region. A report released by the U.S. Government Accountability Office in 2014 also found a pattern of undervaluing coal leases, as did a 2015 report by Headwater Economics estimating that two reform options would have generated additional revenue ranging from $850 million to $5.5 billion for the 2008-2012 period.

In 2014 the Western Organization of Resource Councils and Friends of the Earth filed a lawsuit asking that the Interior Department's Bureau of Land Management be required to prepare a comprehensive environmental impact review of the federal leasing program. The last time such an assessment was done was in 1979.

 

Political influence 

In November 2007 the West Virginia Supreme Court overturned a $50 million jury verdict against Massey Energy relating to a case in which Harman Mining had accused Massey of forcing it into bankruptcy and interfering with its business. Two months later, however, it was revealed that Chief Justice Elliott Maynard was apparently acquainted with Massey CEO Don Blankenship and had spent time with him socially during a trip to Monte Carlo.

The chief justice belatedly recused him from the case, but then it came out that another justice, Brent Benjamin, had been elected to the court in 2004 with the help of some $3 million in advertisements and other support from Blankenship.

A rehearing of the case was scheduled, with Maynard and another justice recusing themselves, but with Benjamin still on the bench. The court again ruled in favor of Massey. Harman then took the question of Benjamin’s role in the case to the U.S. Supreme Court, which ordered him to recuse himself, too. When the West Virginia court heard the case for a third time in 2009, it ruled yet again in Massey’s favor.


Insider Trading Allegations
 

In 2002 a shareholder lawsuit was filed in West Virginia alleging that Massey CEO Don Blankenship and other company officials had falsified financial reports, and then engaged in insider trading. The case was settled in 2005 with the company agreeing to several corporate governance changes such as an expansion of its board and a lowering of the mandatory retirement age for directors.

 

Other Information Sources

Violation Tracker summary page


Watchdog Groups and Campaigns

Citizens Coal Council

Climate Investigations Center

Coal River Mountain Watch

CoalSwarm

DeSmogBlog Project

Environmental Defense Fund

Greenpeace

iLoveMountains.org

IndustriALL

Institute for Energy Economics and Financial Analysis

Kentuckians for the Commonwealth

Natural Resources Defense Council

Ohio Valley Environmental Coalition

Sierra Club

United Mine Workers of America

West Virginia Highlands Conservancy

Western Organization of Resource Councils

 

Key Books and Reports

A Strike Like No Other Strike: Law and Resistance During the Pittston Coal Strike of 1989-1990 by Richard A. Brisbin Jr. (Johns Hopkins University Press, 2002).

An Assessment of U.S. Federal Coal Royalties (Headwater Economics, January 2015).

Coal Leasing: BLM Could Enhance Appraisal Process, More Explicitly Consider Coal Exports, and Provide More Public Information (U.S. Government Accountability Office, GAO-14-140, February 2014).

Exporting Powder River Basin Coal: Risks and Costs (Western Organization of Resource Councils, January 2011).

Industrial Homicide: A Report on the Upper Big Branch Disaster (United Mine Workers of America, October 2011).

The Great Giveaway: An Analysis of the Costly Failure of Federal Coal Leasing in the Powder River Basin by Tom Sanzillo (Institute for Energy Economics and Financial Analysis, June 2012).

Upper Big Branch--The April 5, 2010 Explosion: A Failure of Basic Coal Mine Safety Practices (Governor's Independent Investigation Panel, May 2011).

Upper Big Branch Mine-South, Performance Coal Company, Montcoal, Raleigh County, West Virginia, ID No. 46-08436 (U.S. Mine Safety and Health Administration, December 2011).

 

Note: This page draws from a corporate profile on Massey Energy prepared by the author for the Crocodyl website in April 2010.

Last updated June 4, 2015