Massey solves water problem and develops new technology

Massey Energy has settled a Clean Water Act lawsuit filed in May 2007 on behalf of the Environmental Protection Agency (EPA).  The $20 million settlement avoids expensive litigation, resolves questions about the company’s potential liability and enhances Massey’s environmental protection efforts, the company reports. “We believe this agreement will benefit the environment as well as our shareholders,” said Baxter F. Phillips, the company’s Executive Vice President and Chief Administrative Officer.

The company worked with the EPA to make technology a key component of the company’s future environmental compliance efforts. The company has developed an innovative computer tracking system that will provide accelerated notification of potential water quality problems, automated leak detection systems for the company’s coal preparation plants, and an enhanced environmental auditing program that will also use computer technology. “We will be setting a new standard for environmental compliance in the coal industry,” said Phillips.

Massey Energy also agreed to perform 20 water quality improvement projects on the Little Coal River in West Virginia and will set aside 81 ha of riverfront property, protecting the land from future development through conservation easements.

Commenting on the settlement, the Company’s chairman and CEO Don Blankenship said, “It was important to us that the agreement have local environmental benefits.” Massey Energy has asked the West Virginia-based Coal River Group for assistance in monitoring the conservation easement properties to ensure that the 81 ha are appropriately protected.  The Coal River Group is an award-winning watershed group that was formed to preserve history and develop tourism and recreation on the Coal River. In recent years, the Coal River Group has developed a canoe trail on the Coal River known as the Walhonde Water Trail and has conducted a program to monitor the health of the river. “We are excited about the opportunity to increase the amount of land protected by conservation easements as part of our efforts,” said Bill Currey, President of the Coal River Group.

Phillips noted that the $20 million dollar settlement is higher than the company’s initial estimate, but far lower than the published estimates of some equity analysts and media sources unfamiliar with the manner in which Clean
Water Act penalties are calculated. “When we factored in the costs and uncertainties of litigation and the absorption of management time on the matter, we concluded that our shareholders would be best served by a timely settlement that eliminated any continuing concern caused by the estimates of some sources regarding our potential exposure,” he said.

The EPA said in the settlement agreement that it considered the outcome “fair, reasonable, and in the public interest.” The agreement was filed with the US District Court for the Southern District of West Virginia and must be
approved by the Court before it becomes final.