Federal prosecutors have confirmed that they are conducting a criminal investigation of Massey Energy’s Upper Big Branch Mine, where 29 workers died in that massive explosion last month.
We’ve got a first cut at a story on the Gazette Web site here.
The story is based on a letter from U.S. Attorney Chuck Miller and Assistant U.S. Attorney Booth Goodwin to lawyers for the Department of Labor’s Mine Safety and Health Administration. You can read the letter here.
Most interesting is that the letter says the criminal probe includes examining violations at Upper Big Branch that date back to at least 2007, according to the Federal Mine Safety and Health Review Commission case numbers included as an attachment to the letter.
Stay tuned …
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But not a friend of coal miners !!!
Mr. Ward, the national press (for example,the Huffington Post)is reporting this as if the investigation is going after Massey itself, but the actual story is that they are investigating the contractor, Performance Coal, usually referred to as “a Massey subsidiary”.
As far as I can tell form the business dictionary, Massey is only a “parent company” and Performance a “subsidiary” because Massey owns a controlling portion of stock. Does this make Massey responsible or accountable in any way?
Can you clarify whether Massey itself is protected from this prosecution because Performance Coal was the actual employer and operator of the mine, and Massey is behind the sacred “corporate veil”? I seem to recall that this is the way things work in the mining business.
Usually it turns out that the contractor has very limited assets and only a few lowly officers to be responsible, criminally or otherwise, and no one can touch Massey or Blankenship.
Pragmatic,
Performance Coal is a wholly-owned subsidiary of Massey Energy. (Just like Aracoma Coal was\is)……I see where you are coming from but think you are referring to independent, third-party “contractors” that work for Massey…..Performance is different….
In the past it has been argued that independent, third party contractors were nothing more than “alter-ego” companies and therefore the corporate veil of protection could be pierced in matters such as these….
Hopefully that helps some….
Vnxq809
The legal process whereby a parent corporation is held liable for its wholly-owned subsidiary’s conduct is a byzantine legal maneuver called “piercing the corporate veil.” Generally speaking, it’s not easily done, which is a significant part of why companies parse themselves out like they do.
The topic is covered extensively in the book “The Buffalo Creek Disaster,” by Gerald M. Stern, which is must-read stuff for an understanding of how coal companies got away with (and largely still do) many of the things they do that would land an ordinary “person” in the pokey.
The wholly-owned subsidiary was used very profitably by mining operations in Montana. The subsidiary funnels profits up to the owner and retains very little in its own accounts. When the mine is tapped out, the subsidiary finds itself with more liabilities than assets and declares bankruptcy leaving the various piles and retention ponds of waste behind to be paid for by someone else. Making them post bonds before they can begin operations helps a little but in too many cases the amount to be posted is lowballed by friendly regulations, friendly regulators, and in some cases the “self-enforcing” industry.
You said it, Don.
West Virginia (and a number of other states, I think) have so-called “alternative bonding systems” for mineland reclamation, where the operator does not have to post a bond that covers the full “reclamation” cost. Rather, a state fund is supposed to pick up the cost above the site-specific bond, if the operator goes belly-up finaincially.
Can you guess what state fund is way underfunded, and will never have the long-term financial capacity to treat toxic drainage from “bond forfeiture” mine sites? Yep, the Special Reclamation Fund.
And remember, these are all mines that were permitted after SMCRA was passed in 1977 — not old “abandoned mine lands.”