It isn’t often that prominent environmental leaders and coal miners find themselves on the same side of an argument. But that’s exactly what happened in the case of now-bankrupt Patriot Coal Company.
A U.S. bankruptcy court in St. Louis ruled yesterday in favor of Patriot, allowing it to terminate its contracts with the United Mine Workers of America (UMWA) and significantly reduce benefits from its retiree health benefits plan. Charleston Gazette reporter Ken Ward Jr. has covered the story extensively over the past year on his blog and briefly summarizes the ruling.
The UMWA released a statement calling the ruling “wrong, unfair and fails to fully recognize the coming wave of human suffering that will be experienced by thousands of people throughout the coalfields.” Senator Jay Rockefeller responded to the ruling in a statement, saying,
“I join the thousands of miners in our state who are deeply disappointed with today’s ruling. Once again we are seeing how the bankruptcy system is stacked against the American worker. I will continue fighting to put workers and employers on a level playing field by closing the legal loopholes that allow companies to pad their profits while abusing the legal system to escape from the promises they made. It’s tragic to watch how some industries treat their workers after they’ve given much of their lives to these companies.”
Patriot Coal Company was formed in 2007 as a spinoff of Peabody Energy, the largest coal company in the United States. Along with 10 unionized mines in West Virginia and Kentucky, Patriot took on large amounts of legacy debt, including about $557 million in healthcare obligations for UMWA retirees. Patriot later acquired another spinoff company created from Arch Coal, adding another $500 million in obligations to retired miners. All told, Patriot is (was) responsible for health care benefits for more than 10,000 retired coal miners, most of whom never worked for the company.
When the company became unprofitable, it filed for Chapter 11 bankruptcy in July 2012 and asked to be relieved of its debts. In a statement, Patriot said:
“The coal industry is undergoing a major transformation and Patriot’s existing capital structure prevents it from making the necessary adjustments to achieve long-term success,” said Patriot Chairman and Chief Executive Officer Irl F. Engelhardt. “Our objective is to use the reorganization process to address important issues in an orderly way and make the Company stronger and more competitive.”
The UMWA promptly sued and organized a series of rallies, claiming that Patriot was “created to fail” and that Peabody used the spinoff company as a way to get out of its responsibilities to union miners. Even Patriot’s current CEO described the deal as “suspicious.”
The ruling has potentially far-reaching implications for workers. The UMWA has filed a parallel lawsuit against Peabody, claiming the company deliberately created Patriot as a way to avoid liabilities to workers. Although difficult to prove, such an action would be illegal under federal law. The UMWA is asking the court to hold Peabody (and Arch) liable for the worker benefits, even if Patriot cannot afford them.
The issue boils down to one of fairness. The workers affected by this ruling are the very ones who have for many years risked their lives in one of the country’s most dangerous occupations to help keep the lights on for all of us. At UCS, we work toward a cleaner, healthier energy future, and as members of the Blue Green Alliance, we support the creation of good jobs as part of that energy transition. But we must not forget the workers that got us here in the first place.