Massey Energy Settles Case for $20 Million
Massey Energy Co.,
based in Richmond, Va., on Jan. 17 announced that it has settled a
Clean Water Act lawsuit filed in May 2007 on behalf of the U.S.
Environmental Protection Agency. The $20-million settlement avoids
expensive litigation, resolves questions about the company's potential
liability and enhances Massey's environmental protection efforts.
"We believe this agreement will benefit the environment as well as
our shareholders," said Baxter F. Phillips, Jr., a member of Massey
Energy's board of directors and the company's executive vice president
and chief administrative officer. The company is the fourth largest
coal company in the United States based on produced coal revenue.
The company worked with EPA to make technology a key component of
future environmental compliance efforts. It developed a computer
tracking system that will provide accelerated notification of potential
water quality problems, automated leak detection systems for coal
preparation plants, and an enhanced environmental auditing program.
Massey Energy also agreed to perform 20 water quality improvement
projects on the Little Coal River in West Virginia and will set aside
200 acres of riverfront property, protecting the land from future
development through conservation easements.
In addition, the company asked the West Virginia-based Coal River
Group for assistance in monitoring the conservation easement properties
to ensure that the 200 acres are appropriately protected. The Coal
River Group is a watershed group that was formed to preserve history
and develop tourism and recreation on the Coal 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 analysts. "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," said
Phillips.
The company had previously established a $5-million reserve for the
lawsuit. An additional $15 million will be reflected in the company's
fourth-quarter results.
EPA said in the settlement agreement that it considered the outcome
"fair, reasonable, and in the public interest." The agreement was filed
with the U.S. District Court for the Southern District of West Virginia
and must be approved by the court before it becomes final.