11/26/2005

By ERIK SCHELZIG  / Associated Press

Don Blankenship says he doesn't like doing things he can't win. Not that he's been doing much losing of late.

By targeting millions of dollars at the traditionally sleepy state Supreme Court race last year, Blankenship has launched himself into the highest-profile critic of West Virginia's political mainstream, and has used his clout to help shape the state's political debate.

To his opponents, Blankenship's political influence is tied to his personal wealth and some argue his views are skewed by his business interests as head of Massey Energy Co., the nation's fourth-largest coal producer.

But Blankenship, who grew up besides the railroad tracks in a tiny border town in the Tug Fork River valley, says he has a perspective that fuels his desire for change in West Virginia.

"I just have my view of what it would take to make the economy better and have more jobs and have a more normal place to live," said Blankenship, who runs the Richmond, Va., company from prefabricated offices along U.S. 119 in rural Kentucky.

"Whoever supports that view, I'm in favor of," he said in an interview with The Associated Press. "Anybody who doesn't have that view, I'm against."

The $3.5 million Blankenship spent during the Supreme Court campaign helped propel political novice Brent Benjamin onto the bench, making him the state's first Republican to win a seat on the high court. In an early boost, Blankenship paid for billboards around the state reading: "Who is Brent Benjamin?"

Later, when the volume of Blankenship's contributions started to become public, it led many in the state ask a question of their own: Just who is Don Blankenship?

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Born in Stopover, Ky., in 1950, Blankenship was raised by his single mother about 10 miles to the north in the West Virginia community of Delorme.

His mother owned a gas station and grocery store, and Blankenship said the store's struggles — and its ultimate closure this year — gave him an early negative view of West Virginia's higher taxes on gasoline and groceries. The store will be demolished after Blankenship's brother sold it to a federal flood control program.

"Not only did the small business that I grew up in get destroyed by state policy, but I've also seen what it's done to a big company like Massey," he said. "And also, it's caused a lot of my friends to leave, so I guess it's where I get some of the passion."

In the year since he helped get Benjamin elected, Blankenship has spent more than $1 million on advertising and phone banks to help defeat Gov. Joe Manchin's $5.5 billion pension bond proposal and to urge the Legislature to eliminate the state's 6 percent tax on groceries.

He's also sued Manchin in federal court for allegedly targeting him and Massey for Blankenship's bond campaign, and he's sued the United Mine Workers of America, The Charleston Gazette and a political advocacy group for alleged defamation.

"Don has decided that he needs to be able to run the state like he runs his coal company and have control over everybody," said UMW President Cecil Roberts, a longtime Blankenship foe. "He's trying to become the king of West Virginia."

But Blankenship says people might be getting the wrong message from his activism. Unlike wealthy politicians who spend their millions to try and get elected, Blankenship says he has no interest in holding political office.

"It confuses people, because I'm not running for office and I'm not politically motivated," he said. "I deal with things in the whole context of my life."

The divorced father of two grew up in a region of southern West Virginia best known for the legendary feud between the Hatfields and McCoys, and later for the bloody struggle to unionize the region's coal mines during the 1920s.

Blankenship had his own role in the state's tumultuous labor history shortly after joining Massey in the early 1980s. He was the man on the ground for Massey during the bitter standoff with the UMW, and he ultimately oversaw the process of making Massey a largely "union free" company. The union now represents less than 3 percent of Massey's 5,571 workers.

Matewan radio station owner George Warren, a staunch Blankenship supporter, remembers seeing protesters smash the windshield and fenders of Blankenship's car during the strike.

"He took it and showed Massey he could handle it," Warren said. "And it set him on his way to move up in the company."

Blankenship keeps an old television set with a bullet embedded near the dial next to his desk — a reminder of the strike, when he never slept in the same bed two nights in a row.

"I've worked hard for my money, I risked my life for my money, I've provided thousands of jobs through the same efforts that garnered the money," he said. "So I don't think I should be denied the opportunity to help improve the state with that money."

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Blankenship became the head of a Massey-subsidiary in 1982, two years before the strike. He was a newcomer to the industry then, an accountant who had started his career 10 years earlier with two baking companies, but had decided to come home.

Amid the labor strife of the 1980s, Blankenship acknowledged he had gone from local-boy-makes-good to probably the most hated man in Mingo County, the strike's epicenter.

Even today, he said, "I don't know anyone who's more hated."

Not everyone agrees with that assessment, even in the town of Matewan where Blankenship went to high school. The town is the site of the legendary 1921 shootout between pro-union forces and a trainload of Baldwin-Felts detectives hired to halt the unionization of the coalfields.

"Don Blankenship is one of the best friends Matewan has ever had," said Matewan Depot Restaurant owner Donna May, 39, citing donations to the school, the town and the times he slips her $20 to pay for meals of less fortunate patrons.

A Blankenship spokesman said Blankenship has given "millions" to the community, but declined to elaborate.

"Everybody talks about this mean ogre and 'Oh, he's so dirty,'" May said. "Well, excuse me, there's a lot of things about Don that people just don't see."

In the end, Blankenship said, "it doesn't matter whether you're hated or not. All that matters is that you do the right thing."

Blankenship has embraced that philosophy in his public dealings and in a series of television and radio ads that espouse the new company motto: "Massey Energy: Doing the Right Thing ... with Energy."

Blankenship recently announced he would campaign to unseat Democrat Supreme Court Justice John Starcher if he seeks re-election in 2008.

"What I'm doing politically is Don Blankenship, as an individual citizen of West Virginia, and it's not Massey doing that," he said.

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Since becoming the first non-Massey family president of the company in 1990, Blankenship has more than doubled the company's Central Appalachian coal reserves to about 2 billion tons, or about one-third of all reserves in the region of West Virginia, Kentucky and Virginia.

Massey is also the region's largest producer with about 44 million tons in annual sales.

The company has angered environmentalists and some coalfields residents for Blankenship's emphasis on surface mines and his defense of mountaintop removal mining. Massey is in the process of ramping up its surface mining operations, projecting that they will represent 51 percent of the company's production next year.

The West Virginia Highlands Conservancy is among several environmental groups challenging the legality of mountaintop removal — a high-efficiency mining method that hinges on an operator being able to dispose of leftover rock and dirt by filling in nearby valleys. Fills have buried about 1,200 miles of streams in Central Appalachia.

Cindy Rank, the mining committee chairwoman for the Highlands Conservancy said she is mystified there hasn't been more backlash against Blankenship.

"I just find it amazing when I even listen to the man that he's even in the same world that I am," she said. "His perspective is so skewed."

Massey this month settled — without admitting any wrongdoing — a shareholder lawsuit alleging that under Blankenship's leadership Massey had become, "a recidivist environmental violator as a result of the knowing and willful conduct of its Board of Directors." The company agreed to pay $2.5 million in plaintiffs' legal fees.

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Blankenship oversaw the company's initial public offering in 2000, and has kept a high profile in Charleston with his opposition to what he sees as unfair regulations on the coal industry.

Industry analyst David Khani, of Friedman Billings Ramsey, agreed that Blankenship is a "lightning rod" in the industry.

"It's kind of interesting that he does much of the political heavy lifting, while most of the eastern (coal) guys are more behind the scenes," Khani said.

For Blankenship, being outspoken about matters in West Virginia is an effect of being from the area he works and continues to live in.

"I'm the only CEO of a major public coal company that was reared in West Virginia and lives here. The rest of them live in St. Louis and Pittsburgh and places like that," he said.

While investors have generally applauded Massey's nonunion stance — and its lower pension liabilities — there has been some recent grousing by activist investors.

After being pressured by two hedge funds that bought up 12.4 percent of Massey shares this summer, Massey agreed this month to buy back up to $500 million worth of its shares and to restructure some of its debt.

During a recent conference call, Daniel Loeb, CEO of one of the funds, Third Point LLC, asked Blankenship to evaluate his performance as an executive. While acknowledging some disappointing quarter-to-quarter results, Blankenship said he had significantly grown the company during his 15-year tenure.

Loeb wasn't impressed.

"It's amazing what the combination of financial leverage and a rising commodity price will do for the value of an equity," he said. "I wouldn't be too quick to take credit for that."

Massey shares, which bottomed out at $4.55 in October 2002, hit an all-time high of $57 on the New York Stock Exchange in September. But shares have since dropped to below $40.

Blankenship's contract runs out at the end of the year, and there have been no company announcements on a renewal.

He shrugs off any suggestion that his job could be in peril.

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Blankenship was not a major Manchin opponent during the 2004 gubernatorial campaign, preferring to take a wait-and-see approach to the first-term governor's "Open for Business" mantra.

The relationship soon soured, and Blankenship has since become a thorn in Manchin's side.

Manchin says he tried to bring Blankenship into the political process, offering him positions on advisory committees and giving him a chance for feedback on administration initiatives. But Blankenship has largely refused.

"I've prepared myself for this job for a long time, as a member of the House of Delegates, the Senate and as secretary of state," said Manchin, a Democrat. "That's a lot harder to do that than to simply be a naysayer."

Lest Republicans get too comfortable with having him in their corner, Blankenship says he's not a blind supporter of any party, citing, for example, his vocal opposition to the war in Iraq.

Blankenship won't say how heavily he'll be in involved in politics in the future, but says he's been happy with the results thus far.

"We're making progress and several improvements have been made," he said. "And the indication is that several more could be made."

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