This news story originally provided by The Lexington Herald-Leader

August 2, 2005

Permit for coal silo rescinded

ASSOCIATED PRESS
CHARLESTON, W.Va. - By Erik Schelzig

Massey Energy Co. chief Don Blankenship, who last week filed a federal lawsuit against Gov. Joe Manchin, says his company is trying to play a role to make sure state government doesn't take advantage of the coal industry.

Blankenship, chairman, president and CEO of West Virginia's largest coal producer, alleges in his lawsuit that the governor is retaliating against the company for waging a successful, $650,000 advertising campaign to defeat the governor's pension bond proposal in a June special election. Manchin and state officials have said Massey was not singled out.

The lawsuit came the same day West Virginia's Department of Environmental Protection rescinded Massey subsidiary Goals Coal Co.'s permit for a new coal silo near a Raleigh County elementary school. The reversal followed weeks of protests by area residents, who had also fought a large reservoir of coal sludge about 400 yards from the school. A state permit for the waste impoundment was renewed June 30.

The governor's office has suggested that Blankenship's lawsuit had to do with lingering anger about raising the severance tax on coal to help erase a shortfall in the state's workers' compensation budget. Blankenship has said there is no link. Up to 40 million tons of Massey-produced coal will be subject to the new, 56-cent severance tax, Blankenship said in a conference call with Wall Street analysts Friday. That amounts to about $22.4 million in extra costs.

"In Charleston, I think they are pleased with the large windfall of tax revenue that coal has given them, and that has made them more aware of how important coal can be to solving some of the budget issues there," Blankenship told the analysts. "The key in West Virginia for coal operators -- and particularly in Massey as a big player -- is that the state not waste the windfall and/or the ongoing tax revenue they are enjoying from coal."

Instead, Blankenship urged state leaders to "show some frugality, so that when times are tough, 10 or 15 years down the road, they don't have to encumber coal and the coal industry so much as they have in the past."