A federal judge on Monday rejected a request from Alpha Natural Resources that former Massey Energy CEO Don Blankenship be forced to pay Alpha nearly $28 million in criminal restitution as part of Blankenship's sentence for conspiring to violate mandatory mine safety and health standards.
U.S. District Judge Irene C. Berger ruled that Alpha was not a "victim" of Blankenship's crime for purposes of federal victim rights' or restitution laws.
The ruling, two days before Blankenship is scheduled to be sentenced, was a significant victory for him, and could assure that the financial hit for Blankenship from his criminal conviction will be no more than $250,000 - the maximum fine Berger is permitted to order him to pay.
Alpha had sought the restitution to recoup its expenses in cooperating with federal investigators by, among other things, paying for defense lawyers for one-time Massey officials who helped government agents or testified against Blankenship.
But the judge noted that the conspiracy Blankenship was convicted of took place from Jan. 1, 2008, through April 9, 2010, while Alpha did not buy Massey until June 2011 and did not reach its agreement to assist in the federal criminal probe until December 2011.
"The conspiracy for which the defendant now stands convicted ended without "directly and proximately" injuring Alpha," Berger wrote in a 13-page opinion. "Alpha incurred its now claimed financial "injury" at least a year later, and only after it voluntarily acquired Massey and voluntarily entered into the non-prosecution agreement with the government."
Berger is scheduled to sentence Blankenship during a hearing that is scheduled for 10 a.m. Wednesday in U.S. District Court in Charleston.
Blankenship, 66, faces up to a year in prison and a $250,000 fine after a jury found him guilty of conspiring to willfully violate federal mine safety and health standards over a more than two-year period at Massey's Upper Big Branch Mine, where 29 workers died in an April 2010 explosion.
Jurors acquitted Blankenship of two stock-related charges that carried longer jail sentences.
Berger has not yet ruled on a motion filed Friday by Blankenship's defense team that she reject nearly 100 restitution requests from former Massey miners and family members.
Assistant U.S. Attorney Steve Ruby said Monday the government was still reviewing several of those restitution claims and would not yet comment on whether prosecutors would support the requests.
Ruby said, though, that prosecutors have been informed that "several victims and representatives of victims" have asked to speak at Blankenship's sentencing, and that the government would support those requests.
Restitution is the term the criminal justice system uses for payment by an offender to the victim for the harm caused by the offender's wrongful acts. Generally, restitution is allowed for actual losses - things like medical expenses, lost wages and lost or damaged property - but courts have found that the law generally does not allow restitution for psychological and mental suffering.
Under the law, Berger can order Blankenship to pay restitution to any victim or, if the victim is deceased, to their estate. The law defines a victim as anyone who is "directly and proximately harmed as a result of the offense of conviction."
Blankenship was not charged with or convicted of causing the Upper Big Branch explosion.
Alpha's request for restitution included $13.5 million for cooperation with the investigation, $4.3 million in legal costs for former Massey officials, and more than $10 million in fines for violations at Upper Big Branch. Alpha had agreed to cooperate with the probe - and to pay the Upper Big Branch fines - as part of a December 2011 deal in which then-U.S. Attorney Booth Goodwin agreed not to bring criminal charges against the company.
In her ruling Monday, Berger noted that restitution is limited to losses "caused by the specific conduct that is the basis of the offense of conviction." Even in conspiracy cases, the judge noted, restitution is appropriate only if the act that harmed the victim "is either conduct underlying an element of the offense of conviction, or an act taken in furtherance of a scheme, conspiracy, or pattern of criminal activity that is specifically included as an element of a conviction."
Berger said, to order restitution payments to Alpha, she would have to find that the alleged harm, including expenses associated with Alpha's cooperation with the federal investigation and fines paid for violations at Upper Big Branch "were the direct and proximate result" of Blankenship's conduct.
"Such a finding has no basis in law or fact," the judge wrote. "It is clear to the Court that Alpha (1) acquired Massey over one year after the UBB explosion or the end of the indictment period; (2) calculated a value for Massey which incorporated potential losses arising from the investigation; (3) voluntarily agreed to cooperate with the United States in order to reduce the potential for criminal and/or civil penalties arising from Massey's conduct; (4) entered into a non-prosecution agreement as a result of this cooperation, through which it undertook to pay certain sums for violations at UBB, as well as produce documents to the United States; and (5) adhered to this agreement by producing documents that were introduced by the United States in this case, and indemnifying the legal expenses of former Massey employees who testified for the United States in this case."
Reach Ken Ward Jr. at kward@wvgazettemail.com, 304-348-1702 or follow @kenwardjr on Twitter.