DEEP TROUBLE

As Demand for Coal Rises, Risky Mines Play Bigger Role
Small Operations Overall Have Higher Fatality Rates; The Dangers of
'Dogholes' Long-Term, a Safer Industry

MCDOWELL, Ky. -- Last September, Timothy D. Hall was drilling holes in
the deepest part of a low-roofed coal mine when an explosion thrust
him from his drill machine and set him on fire.

He crawled 45 feet to a mudhole inside the mine to douse the flames.
The fireball melted the bill of his hard hat, charred his oxygen
canister and burned his jacket, according to government investigators.
After he was carried outside, but before any pain set in, he was
shocked to see the flesh of his fingers had melted together. [Timothy
Hall]

Mr. Hall, 36 years old, survived and has regained limited use of his
hands. His episode is part of an alarming upswing in coal-mining
accidents, at a time when the industry is in the midst of a boom.
Since May 20, seven miners have died, bringing the number of workers
killed in coal-mine accidents in the U.S. this year to 33 -- compared
with 22 for all of last year.

Part of the problem, some say, is a rise in the number of small,
undercapitalized mines that have become economical since coal prices
have surged. Miners refer to them as "dogholes."

In many cases, small operators work as contractors for big coal
companies. The mine where Mr. Hall worked, for instance, was owned by
J. & R. Coal Inc., and employed 23 miners. It provided coal to Consol
Energy Inc., the fourth-largest coal producer in the U.S.

Roger Bentley, J. & R. Coal's owner, declined to comment on the
accident. He said the mine has closed and the company is no longer in
business. Thomas Hoffman, a spokesman for Consol Energy, says it
reviewed the safety records of Mr. Bentley, as it does for all mine
operators it contracts with, and "we thought his safety performance in
the past was pretty good."

Despite the recent rash of fatalities, coal mining has gotten safer
overall, due to improved technology and mining methods. In the early
part of the 20th century, when there were roughly seven times as many
coal miners as today, the annual death toll from accidents often
exceeded 2,000 miners. In 1950, there were 643 fatalities. By 1990,
the number had dropped to 66.

But higher fatality rates at small mines, which many mine-safety
experts define as those employing fewer than 50 miners, have plagued
the industry even in years when the overall number was falling. A
report by the National Institute for Occupational Safety and Health,
which examined data from 1988 to 1997, found the fatality rate at coal
mines with fewer than 50 employees was 4.24 times the rate at mines
with 250 or more workers. According to data from the Labor
Department's Mine Safety and Health Administration, in each of the
past three years, the fatality rate at underground coal mines with
fewer than 50 workers was higher than the rate for all underground
coal mines.

Small mines tend to open when coal prices rise. The average price of
coal from Central Appalachia -- which includes parts of Virginia,
Kentucky and West Virginia -- was $58 per ton last year, up from $29
in 2002. Prices are rising in part because of increased demand for
coal to generate electricity from utilities seeking an alternative to
natural gas as its price has risen. Domestic steelmakers have been
using more metallurgical coal, while China's rapid industrialization
is also creating demand for huge amounts of coal to make steel.

"As long as prices stay high, you're going to get the marginal
producers coming in to capture a share of the market," says R. Larry
Grayson, chairman of the department of mining and nuclear engineering
at the University of Missouri-Rolla. He says the danger of accidents
increases when smaller mines proliferate because they tend to have
less-experienced workers, use older equipment and mine harder-to-reach
coal seams that are passed over by big companies. [Safety in Numbers]

Mines with fewer than 50 employees represent about 25% of all
underground coal-mining jobs, according to MSHA.

Fourteen of last year's 22 deaths at underground mines, surface mines
and coal-preparation plants occurred at operations with fewer than 50
employees, according to MSHA data. Of the 33 deaths this year, 11
occurred at mines with fewer than 50 employees. Five miners were
killed last month following an explosion at an underground mine
operated by Kentucky Darby LLC of Middlesboro, Ky., which employed 34
miners, according to MSHA. Repeated calls to the mine's office went
unanswered.

"All of a sudden we're having a horrendous year in both West Virginia
and Kentucky, and it's unacceptable," says Bill Caylor, president of
the Kentucky Coal Association, which represents mostly big coal
operators, many of which hire small contractors. But he says overall,
"we've made tremendous strides and we're still pushing for safety."

Most fatalities that occur in mines of any size are the result of
"freak accidents," and some are due to human error, says Mr. Caylor.
The term "dogholes" is a sensational one, used by mine-safety
"zealots," he adds. "But there is some legitimacy to this," he says.
"There are some operators that are ruthless that have been the bad
apple in the entire barrel."

More operators have opened mines to "try to make a quick profit
because the coal market is high right now," says Dennis O'Dell,
administrator of occupational health and safety for the United Mine
Workers of America. Small mines are almost entirely nonunion, and
miner advocates say workers at such operations often don't have the
same protections as those at big unionized mines.

Of the 33 coal miners killed this year, three worked at unionized
mines that employed at least 100 miners, according to MSHA. The other
30 worked at nonunion mines.

"More miners are at risk because of undercapitalized mines," says Tony
Oppegard, a former MSHA official during the Clinton administration who
is now a lawyer in Lexington, Ky., representing miners and their
families. "I think the deaths are going to mount with the demand for
coal."

Workers at small mines tend to be less experienced and more
economically desperate than those at big mines, says Mr. Oppegard.
"You've got this permanent base of unemployed people in eastern
Kentucky," he says. "You'll always have people who are willing to work
under whatever conditions that you impose."

Poor conditions in small operations have been linked to deaths. The
13th coal miner killed this year, Cornelius Yates, died Jan. 10 in a
Pikeville, Ky., mine that employed nine. The 44-year-old was operating
a machine used to drive six-foot-long bolts into the mine roof to
secure it when the roof collapsed and killed him.

In that case, federal investigators determined the roof was unstable.
"The condition was widespread and obvious and should have been
detected by a reasonable prudent mine examiner," investigators wrote.
The company was cited for safety violations related to the accident,
but fines haven't been set yet, says MSHA.

James H. Blevins, owner of Maverick Mining Co., in Robinson Creek,
Ky., which operated the mine, declined to comment.

Mr. Caylor, of the Kentucky Coal Association, believes the best way to
improve safety is for state and federal inspectors to observe the
working habits of a miner "and teach him how to work safer, rather
than sitting there as a policeman, writing a ticket."

Others say enforcement needs to be tightened. In February, MSHA
announced plans to toughen penalties for mine operators. One step:
raising the maximum penalty for flagrant violations to $220,000 from
$60,000. The agency said its penalty structure is 25 years old and
needs updating.

Last week, the U.S. Senate passed broad mine-safety legislation that
requires coal mines to store more oxygen underground, sets stricter
fines and mandates use of wireless communications devices in mines
within three years, among other things. The bill is pending in the
House.

MSHA has recognized safety woes of small mines. In 2003, it opened the
Small Mine Office to help mines with five or fewer employees, by
providing safety guides, among other things. Mines of this size "do
not have the resources to have sophisticated health-and-safety
programs," said David Dye, MSHA's acting administrator, in a speech
last fall.

"Technology is one of the factors that has led to improvements in
mining safety, and larger mines are better able to take advantage of
it," says Carol Raulston, spokeswoman for the National Mining
Association, which represents big operators.

Even though coal prices are up, margins can still be tight for small
operators. It often costs more per ton to extract coal from
lower-quality seams. Many small operators don't own the land they
mine; instead they mine on a contract basis, selling the coal at
below-market prices to larger operators who own the mineral rights to
the property.

Ron D. Bowling, who owns a company that plans to start operations this
month at a small surface coal mine in Pike County, Ky., says higher
prices for mining equipment and diesel fuel are also squeezing small
operators. But he says most mine owners are diligent about safety.

"All the people I know in the business, their worst nightmare is
getting someone hurt on the job," says Mr. Bowling, who plans to
employ 12 to 15 people at his mine.

Some experts believe drug use among miners could be contributing to
accidents, and small mines often do less drug-screening than large
ones. But as another recent accident at a small mine shows, there can
be a mix of factors.

In December, David Sherman Morris, Jr., a 29-year-old shuttle-car
operator, was killed at a 31-employee coal mine operated by H&D Mining
Inc., of Cumberland, Ky. He was struck by a loaded coal hauler, used
to transport coal inside the mine. The hauler severed Mr. Morris's
left leg above the ankle and crushed his right leg, according to an
MSHA report.

A toxicology report of Mr. Morris's blood and urine found opiates as
well as cannabinoid metabolites, which are typically generated from
marijuana use. Unlike conventional alcohol testing, which measures
impairment at the time of the test, drug testing measures usage in
recent days or even weeks. A drug test administered on the operator of
the coal hauler shortly after the accident also found opiates and
cannabinoid metabolites.

MSHA investigators didn't speculate on whether any drug-related
impairment contributed to the accident. Instead, they pointed to
errors and negligence of mine management. Investigators said a major
contributing cause was that side boards -- which allow more coal to be
carried -- had been attached to the coal hauler, and coal was loaded
60 inches high, obstructing the view of the person operating it. The
height of the mine where the accident occurred was 67 inches.

Struck From Behind

The company's procedures for operating equipment underground placed
Mr. Morris in a dangerous position when he was struck from behind,
investigators said. They also determined "this injury became a
fatality because basic first-aid was not properly performed" by mine
personnel. No fine has been issued for the accident yet, according to
MSHA.

James H. Hurley, a co-owner of H&D Mining, says the accident wasn't
the company's fault. "It was just an accident," he says. "It was no
fault of equipment." He also says he doesn't think better first aid
would have kept the miner alive.

Mr. Hurley says state and federal inspectors who visited the mine
roughly every two weeks didn't complain about the sideboards before
the accident, adding that the sideboards were put on by the
manufacturer and that other operators are still using them. He has
since removed them.

Drugs could have played a role, Mr. Hurley says. Since the accident,
he says H&D has started drug testing all new employees and randomly
testing current ones.

Mine owners say they are watched closely by federal and state
inspectors who cite operators for numerous minor violations, such as
not having the proper paperwork on hand, as well as more serious ones.

In many cases, however, fines issued by MSHA are appealed by coal
operators, and the agency says 10% to 15% go unpaid. MSHA says it
doesn't have authority to shut down mines if fines aren't paid. In
February, MSHA filed what it called "precedent-setting" lawsuits
against two Kentucky coal operators to force payment of long-overdue
fines.

Multiple Risks

Miners say raising safety concerns at small mines can mean risking
one's job, as well as future employment at other mines. Mr. Hall, who
was burned in the explosion last fall, says he complained several
times to management that the drill he used became dangerously hot
while he was operating it. He says he was rebuffed by the mine's
superintendent.

Sitting in his house in McDowell, Ky., in a room that serves as a
living room and a bedroom for himself, his wife and two children, Mr.
Hall, a miner his entire adult life, worries he won't be able to work
again. To demonstrate the limited use of his hands, he bends his
wrists slightly, and the scarred skin goes taut and white. "I don't
think I could ever go back underground," he says. "I still have
nightmares."

As a drill operator working in a mine that was 35 inches high, on
average, Mr. Hall says he earned $18 an hour. He now receives roughly
$2,200 in workers' compensation payments each month.

In February, Phil Stalnaker, a lawyer in Coal Run, Ky., who is
representing Mr. Hall, filed a suit against J. & R. Coal and Mr.
Bentley in Letcher County Circuit Court, alleging that Mr. Hall's
application for workers' compensation benefits played a significant
role in his termination from the company several weeks after the
accident. Darrell Hall, an attorney in Whitesburg, Ky., who is
representing J. & R. Coal, declined to comment on the case.

In March, MSHA fined J. & R. Coal $139,300, saying the accident
involving Mr. Hall occurred "as a result of the operator's high
negligence." MSHA cited the company for not keeping his drill and
methane meters in proper condition, among other things. The fine
hasn't been paid.

Mr. Bentley, the former owner of J. & R. Coal, didn't return calls
seeking comment on payment of the fine.