A federal judge in West Virginia has given preliminary approval to Alpha Natural Resources Inc.'s proposed $265 million settlement with former Massey Energy investors who say they were deliberately misled about its safety record before the 2010 Upper Big Branch mine disaster, the company said Monday.
The Bristol, Va., coal producer said U.S. District Judge Irene Berger gave preliminary approval last week and set a hearing for June to discuss whether the settlement is "fair, reasonable, and adequate."
The company said it continues to deny all allegations of wrongdoing or liability but is agreeing to settle to "eliminate the burden, expense, uncertainty, and distraction of further litigation," according to the court filings.
The Massachusetts Pension Reserves Investment Management Board, which oversees public pension investments in Massachusetts, was the lead plaintiff in a class-action lawsuit brought by multiple investors against Alpha Appalachia Holdings Inc., formerly known as Massey Energy Co. Its parent company, Alpha Natural Resources, bought Richmond-based Massey for $7.1 billion in 2011.
The plaintiffs alleged that Massey told investors it strongly adhered to proper safety procedures but that the company had a culture of safety violations, leading to the April 2010 explosion at the Upper Big Branch coal mine in West Virginia, which killed 29 people in the worst U.S. coal mining disaster in 40 years. Investigators uncovered hundreds of safety violations, causing the company's stock to plunge.
Multiple investigations found the blast was sparked by worn and broken equipment, fueled by accumulations of methane gas and coal dust, and allowed to spread because of clogged and broken water sprayers.
Investigators also found "systematic, intentional and aggressive efforts" to hide problems and throw off inspectors, including the falsification of safety records, the federal Mine Safety and Health Administration said.
Alpha has mining operations in Virginia, West Virginia, Kentucky, Pennsylvania and Wyoming. It mines thermal coal for power generation and metallurgical coal used to produce steel.
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