This news story originally provided by The Daily Mail

August 7, 2005

Massey 'trying to play a role' to keep W.Va. government in line

By ERIK SCHELZIG
AP Business Writer

CHARLESTON, W.Va. (AP) -- Massey Energy Co. head Don Blankenship, who last week sued Gov. Joe Manchin in federal court, says his company is "trying to play a role'' to make sure state government doesn't take advantage the coal industry and "burden businesses like Massey as much as they have in the past.''

Blankenship, who is the chairman, president and CEO of West Virginia's largest coal producer, sued Manchin in U.S. District Court for the Southern District of West Virginia on Tuesday, the same day the state Department of Environmental Protection recinded Massey subsidiary Goals Coal Co.'s permit for a new coal silo near a Raleigh County elementary school.

"We do have the issue that has been highly publicized, about the silo at Goals, but it's primarily a quality-control and cost issue, as opposed to a production issue,'' Blankenship said in a conference call with Wall Street analysts on Friday. "So it's not overly significant.''

The permit reversal followed weeks of protests by some area residents, aided by Coal River Mountain Watch and Mountain Justice Summer. They have targeted the proposed silo as well as a large reservoir of coal sludge held back by an earthen dam about 400 yards from the school. DEP renewed the permit for the waste impoundment June 30.

Blankenship alleges Manchin is retaliating against him for waging a successful, $650,000 advertising campaign to defeat the governor's pension bond proposal in a June special election. Manchin and DEP Secretary Stephanie Timmermeyer have said Massey has not been singled out.

But the governor's office has suggested that Blankenship's opposition had less to do with the merits of the pension bond proposal than 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 not link between the severance tax and the bond issues.

Up to 40 million tons of Massey-produced coal will be subject to the new, 56 cent severance tax, Blankenship said in the conference call. 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.''

Investors don't appear to mind Blankenship's vocal stance when it comes to challenging -- or even suing -- the state's governor. Massey shares closed the week at $43.25 on the New York Stock Exchange, near the 52-week high of $46.60 set in March. The low for the Richmond, Va.-based company over that period has been $24.59.

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