Friday, August 18, 2017

Massey Mining: Beyond Regulations

Massey Energy Co. owned the mine in West Virginia where 29 minors were killed in an explosion in 2010. Faulty water nozzles failed to stop a spark from setting a pocket of methane gas on fire, which in turn led to an explosion of coal dust. Other safety violations, such as not cleaning up extra coal dust, contributed to the accident too.
In their criminal investigation, prosecutors allege that between 2000 and 2010, David Hughart, former president of a Massey operating unit, and other managers ordered workers to violate standards for maintaining airflow through minds and limiting combustible coal dust. Indeed, Hughart may even have told employees to cover up  violations while inspectors were on their way. While it is unfortunately not unusual for managers to cut corners on regulations, the attitude evinced at Massey may point to a deeper problem in how business practitioners view law itself.
Booth Goodwin, the U.S. attorney in Charleston, West Virginia, observed, “Some mine officials, unfortunately, seem to believe health and safety laws are optional.” If true, this statement is extremely important, for it suggests that the business calculus itself views government regulation—and even law—as an obstacle to get around if possible. That is, rather than being a contour of the system, a regulation (or law) is one of many obstacles—costs—that are potentially manipulated in the interest of greater profit. The mentality thinks in terms of how to reduce any impediment to profitability.
Moreover, the political power of large companies (or big companies in a small pond, such as West Virginia) may mean that for practical purposes, government regulations are malleable rather than given. Just as a monopoly or oligopoly is a price-setter rather than taker, a large company with politicians and even judges “up its sleeves” may be a regulation-setter rather than taker. Regulations and even laws would from this standpoint be de facto optional. This political “reality” can reinforce the squalid mentality that “the laws don’t apply to me.” The result, at least respecting (or disrespecting) OSHA regulations, is that people other than the managers could become sick or even die, as was the case in West Virginia in 2010. The very logic as well as mentality of modern management may have been at the root of the accident, and thus of tragedies yet to occur.

Kris Maher, “Mine-Safety Probe Expands," The Wall Street Journal, November 29, 2012.