According to a May 11, 2005, filing with the Securities and Exchange Commission, the United States Department of Justice has closed a grand jury investigation concerning the spillage of more than 300 million gallons of coal slurry. The spill, having occurred on October 11, 2000, was the result of the break in the basin of a coal refuse impoundment at Martin County Coal Company’s Big Branch Refuse Impoundment near Inez, Kentucky. Martin County Coal Company is a wholly owned subsidiary of Massey Energy Company.

According to past MSHA reports, intense pressure within the Big Branch Refuse Impoundment ruptured a barrier wall in the basin, opening a pathway for more than 300 million gallons of slurry to escape into the underground mine workings of Martin County Coal Company’s 1-C mine. In the hours that followed, the dense mixture of black water and coal tailings breached two sealed areas within the 1-C Mine and ultimately exited at two drift areas into Coldwater Fork and Wolf Creek, tributaries to the Tug Fork and Big Sandy Rivers, respectively. Within ten days, a black plume of slurry appeared in the Ohio River. Although the slurry took no human lives on its 75-mile path, the sludge destroyed fish and wildlife, ruined property, washed away roads and bridges, and contaminated the water systems of many surrounding residents. The United States Environmental Protection Agency declared the spill the largest environmental catastrophe in the history of the southeastern United States.

According to Massey’s May 11 filing, as of March 31, 2005, the Company had incurred a total of approximately $77.9 million of cleanup and other spill related costs, including claims, fines and other items, of which $74.3 million has been paid or reimbursed by insurance companies.

Eight civil lawsuits against Massey remain (including one seeking class certification), asserting claims for personal injury, property damage, and seeking unquantified compensatory and punitive damages. Also, Massey faces citations and penalties issued by the Federal Mine Safety and Health Administration. Initially, the fines were set at $110,000, the maximum amount. When appealed by Massey, Federal Mine Safety and Health Review Commission Administrative Law Judge Irwin Schroeder dismissed a number of violations and reduced the fines to $5,500, stating as part of his holding that the violation was not an “unwarrantable failure in the sense of wanton or reckless disregard for the risks to life and property” and that the proposed maximum penalty was “excessive under the circumstances.” MSHA has since appealed ALJ Schroeder’s decision. As reported to the SEC, Massey believes it has insurance coverage applicable to the fines and that they will be resolved without a material impact on Massey’s cash flows, results of operations, or financial condition.