In April of this year, District Court Judge Irene C. Berger sentenced Donald Blankenship, the former CEO of Massey Energy Company (Massey) to one year in prison and ordered him to pay a fine of $250,000 for conspiring to violate mine safety standards.  Massey owned Upper Big Branch mine, where six years ago an explosion killed 29 miners, the largest mining disaster in 40 years.  Reports revealed that the explosion occurred when a spark ignited a build up of methane gas causing it to explode, which in turn triggered a coal dust explosion (At trial, Blankenship insisted the explosion was an “act of god.”)  The reports also revealed that the explosion could have been prevented if Massey followed basic mine safety precautions.  Blankenship was not charged with any liability for the mining disaster itself, but the events at UBB were the catalyst for the investigation into the CEO.

Blankenship is thought to be the first CEO of a major U.S. company prosecuted for safety violations in the wake of a workplace disaster. In addition to charging health and safety related violations, the government indicted him for lying to the government and Massey shareholders.  A recent Department of Justice (DOJ) memorandum issued by Sally Quillian Yates, Deputy Attorney General, on “Prosecution for Worker Safety Violations,” directs prosecutors to charge multiple offenses in conjunction with acts prohibited by federal workplace safety statutes.  Although Blankenship’s prosecution began before the DOJ issued the memo, his prosecution used multiple allegations to bring more substantial charges.  The DOJ memo and Blankenship’s prosecution highlights the weak criminal sanctions for workplace safety crimes as compared to other crimes, and in particular, demonstrates the disparate sanctions for executives convicted of white-collar fraud.

The criminal investigation of Upper Big Branch resulted in the prosecution of the company and individuals 

On May 2010, federal prosecutors announced their criminal investigation into the explosion, and on Tuesday December 6, 2011, Alpha Natural Resources, the company that purchased Massey for $7.1 billion, reached a $209 million non-prosecution agreement with the Justice Department, the largest mining-safety-related settlement agreement in history.  The settlement money was earmarked to enhance safety at its mines, compensate victims, pay outstanding MSHA fines, and fund mine-safety research.

Prior to bringing charges against Blankenship, the Justice Department also prosecuted four former Massey employees for lying to federal authorities, destroying evidence, or conspiring to violate MSHA standards in connection with the disaster and the subsequent investigation at UBB.  These employees include Gary May, the mine superintendent at UBB, who received 21 months in prison and a fine of $20,000 after pleading guilty to directing a subordinate to tamper with a methane monitor to prevent automatic safety shutdowns of the mine, and former Massey executive, David Hughart, who was sentenced to 42 months in prison for conspiring to warn miners at Massey about safety inspections.  In his plea hearing, Hughart indicated that Blankenship was a co-conspirator.

Blankenship was sentenced to one year in prison on a misdemeanor charge of conspiracy to violate MSHA standards 

Blankenship was charged with three counts that he 1) willfully conspired to violate mine safety standards and defraud MSHA 2) defrauded the Securities and Exchange Commission (SEC) and 3) lied to shareholders regarding Massey stock.  The jury declined to convict Blankenship on the three felony charges of which he was accused but, in a special verdict, found Blankenship guilty of conspiring to willfully violate mine safety and health standards, a misdemeanor.

While it remains unclear what evidence the jury found compelling, the government alleged at trial that Donald Blankenship was the leader of a massive conspiracy with the goal “to violate the mine health and safety laws in order to run more coal.” The DOJ alleged that miners had code words to warn about MSHA inspections and that UBB was cited roughly 835 times for MSHA violations between January 1, 2008 and April 9, 2010.

The record suggests that Blankenship knew about the large-scale violations at UBB.  He received daily updates regarding safety violations.  Blankenship also received a memo detailing the findings of Bill Ross, previously the Manager of Technical Services at Massey.  Ross warned that continuing to violate safety procedures on a wide scale and maintain a culture of ignoring federal regulations would result in disaster.  On a phone call Blankenship recorded, Blankenship stated, “it would be terrible for this to end up in discovery.”  Ross also warned that the company was “plainly cheating on dust sampling.”  Coal dust is hazardous because built up dust is highly combustible and causes black lung disease in miners.  On a phone call played at trial, Blankenship stated, “black lung is not an issue in this industry that is worth the effort they put into it.” (Autopsies show that 17 of the 29 miners killed at UBB had black lung.)  Foremen also complained to Ross that they did not have enough workers to run their mines and comply with all safety requirements.

Despite knowing about these violations, Blankenship continued to pressure those below him to reduce production costs and run coal or risk losing their jobs. At trial, the government cited one memo from Blankenship saying “you need to get low on UBB… and run some coal.  We’ll worry about ventilation and other issues at some appropriate time.  Now is not the time.  One juror reported that a particularly persuasive incident was Blankenship ordering Chris Blanchard, the former Massey Coal Group President, to resume mining in an area “after knowing it was illegal and telling Blanchard ‘not to let MSHA run his mines.’”  From the evidence that Blankenship knew about the mine violations, but continued to pressure employees to increase production while cutting costs, the jury could have inferred that Blankenship was part of a conspiracy to violate mine safety standards.

Announcing her sentencing decision, Judge Irene C. Berger said that she was persuaded by the circumstantial evidence of Blankenship’s participation in the conspiracy.  She explained that “by putting profitability of the company ahead of the safety of your employees, you, Mr. Blankenship, created a culture of noncompliance at Upper Big Branch, where your subordinates accepted and, in fact, encouraged unsafe working conditions in order to reach profitability and production targets.”

The DOJ memo and Blankenship’s prosecution highlight the light sentences carried by workplace safety violations

The Yates memo, recognizing the low sentences that workplace safety violations carry, directs prosecutors to “make prosecution meaningful” by charging crimes that often occur concurrently “including false statements, obstruction of justice, witness tampering, conspiracy, and environmental and endangerment crimes.”  While the DOJ memo focused on the Occupation Safety and Health Act, MSHA was included in the directive.

The disparity in sentencing between workplace safety violations and other white-collar crimes can be seen in Blankenship’s case.  He was eligible for a six-year sentence under the sentencing guidelines for MSHA related offenses.  If Blankenship had been convicted for securities fraud, then Blankenship could have faced 25 years in jail.  Additionally, Blankenship was only sentenced to pay $250,000.  If Blankenship had been found guilty of misleading shareholders he could have been liable for a fine of up $5 million.  In the year before the explosion at UBB, Blankenship made $18 million and received a compensation package worth $86.2 million when he left Massey mining.

Conclusion

Generally, our legal system punishes bodily harm more harshly than economic crimes, but when these crimes relate to worker health and safety this divergence in sanctions is inconsistent.  In the absence of legislative action, Blankenship’s conviction and the recent DOJ memo suggest that the Justice Department is promulgating a policy of using creative charging practices to make prosecution of these crimes more consequential.