This is *TOO* funny!

Massey Energy fine sets record

Richmond-based firm to pay $20 million to settle pollution claims

Friday, Jan 18, 2008 - 12:09 AM Updated: 01:24 AM

By GREG EDWARDS AND REX SPRINGSTON
TIMES-DISPATCH STAFF WRITERS

Richmond's Massey Energy Co. set a record yesterday for a corporate water-polluter.
Massey Energy settled a lawsuit with the U.S. Environmental Protection Agency, agreeing to pay a $20 million civil penalty, the largest ever for a water-pollution case.

The violations occurred in West Virginia and Kentucky.

The nation's fourth-largest coal producer also agreed to invest about $10 million at mining operations in Kentucky, West Virginia and Virginia to ensure that the pollution never happens again, according to the U.S. Justice Department.

"This is a landmark case," said Robert Klepp, the EPA's lead attorney in the case.

"Because of the penalty, there is a strong signal to Massey and everyone else . . . that it doesn't pay to pollute," Klepp said in a phone interview.

The Massey Energy case gives Virginia the dubious distinction of having a connection to the EPA's two top civil penalties involving wastewater permits.

The second-largest penalty is the $12.4 million ($15.9 million in today's dollars) that a federal judge imposed on Smithfield Foods in 1997 for polluting a tributary of the James River in Isle of Wight County.

Even as technology improves to allow the cleaner burning of coal, the Massey Energy case shows that lots of pollution can occur before that coal is burned, said Cale Jaffe, an attorney for the Southern Environmental Law Center, an environmental group.

"We need to be looking at the extraction side as well," Jaffe said.

Massey Energy's stock closed at $28.86 yesterday, down $3.46 or 10.7 percent, on news of the EPA settlement.

However, by removing the uncertainty that had surrounded the lawsuit, the settlement is positive for the company, said Steven F. Marascia, a securities analyst with Anderson & Strudwick in Richmond. The cost of the settlement should be something that Massey Energy can absorb, he said.

The fine is much higher than the $5 million the company had initially estimated and had set aside, but lower than some analysts had predicted. The additional $15 million will be charged against Massey Energy's earnings in the fourth quarter of 2007 and will not be deductible for income-tax purposes, the company said.

Massey Energy will not report fourth-quarter earnings until the end of January. For the first nine months of last year, ending Sept. 30, the company reported profits of $89 million on sales of $1.56 billion.

The settlement "will benefit the environment as well as our shareholders," Baxter Phillips Jr., a member of Massey Energy's board of directors, said in a statement.

"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 best be served by a timely settlement," Phillips said.

In a complaint filed last year, the government alleged that Massey violated the Clean Water Act's permit rules more than 4,500 times between January 2000 and December 2006. The violations resulted in the discharge of excess amounts of metals, sediment and acid mine drainage into hundreds of rivers and streams, the Justice Department said.

Some pollutants were discharged at levels more than 10 times over permit limits, the government said.

The EPA also charged the company with spilling large amounts of slurry -- waste containing metals and sediment -- numerous times into local waterways. Sediment can clog streams and kill fish.

The settlement is subject to a 30-day public comment period and approval of a federal judge in West Virginia.

(Now, if only someone would sue them for the second highest fine for scalping all those innocent mountains...)