Guest Editorial: Miners not treated fairly

St. Louis Post-Dispatch
Oct. 8

There’s an old joke in the coal industry, and not a very funny one, that goes: “The company gets the profits; the miners get the shaft.” It persists because it’s true.

Guest Editorial

The latest affirmation comes with the bankruptcy of Patriot Coal Co., a spinoff of St. Louis-based Peabody Energy. Recent filings in the bankruptcy — Patriot’s second in three years — reveal a plan to divert money that had been set aside for health care benefits for 969 retired Indiana coal miners. Instead, the money would pay bankruptcy lawyers and other costs.

Patriot wants court approval of its plan to shed liabilities before selling most of its assets to Blackhawk Mining of Martin, Ky. Last week, Patriot announced plans to lay off 2,000 miners in West Virginia and moved to finalize a deal with other creditors. Blackhawk has no interest in assuming Patriot’s obligation to the Indiana retirees.

Imagine working your entire career doing a dangerous job for a company. All that time, you keep telling yourself that it’s worth it; your retirement will be secure. Then, almost overnight, your retirement is jeopardized thanks to legal and corporate chicanery.

The Patriot bankruptcy, being heard in U.S. District Court in Richmond, Va., is the most recent in a string of coal company troubles. Once-rich Appalachian coal seams have either played out or their coal has been found to be too dirty to meet clean air regulations. Low-sulfur western coal burns cleaner and natural gas has grabbed a larger share of the energy market. Because of its high carbon costs, the long-term future of coal of all kinds is problematic.

Yet Patriot differs from other coal companies in at least one important regard. Officials at the United Mine Workers of America make a convincing case that Patriot was designed to fail from conception. It was created, they argue, so that two of the nation’s largest coal companies, Peabody and St. Louis-based Arch Coal, could shed expensive union pension and health obligations promised to miners.

Peabody spun off Patriot in 2007, loading the company with unionized mines, pension and healthcare obligations. Arch did the same with a company called Magnum, which Patriot purchased in 2008.

As a report by In These Times noted, Patriot wound up with nearly three times as many retirees as active employees — 90 percent of whom never worked for the company.

UMWA President Cecil Roberts called it “a well-conceived plan to shed (Peabody and Arch) of promises and commitments that they made over 60 years.”

This latest effort is particularly egregious as it puts at risk benefits for miners who never even worked directly for Patriot, Peabody or Arch.

It’s a complicated scheme, befitting the labors of the gaggle of lawyers who will be richly compensated for coming up with it. The retired miners at risk worked at the Squaw Creek mine near Evansville, Ind., a joint venture between Peabody and Alcoa, the latter a profitable company with billions in annual revenue. The retirees’ benefits have been paid for by Alcoa.

As part of the bankruptcy plan, Alcoa agreed to pay Patriot $22 million to assume responsibility for those benefits — though actuaries had estimated their cost at $40 million.

But the bankruptcy plan calls for only $4 million to be paid for health care benefits. The rest will be sucked up by bankruptcy proceedings, creditors, shareholders, lawyers, accountants, advisory firms and others picking at Patriot’s bones. The miners should be first in line.

If past is prologue, they won’t be. When Patriot went through Chapter 11 bankruptcy the first time in 2012, a bankruptcy judge allowed it to slash pay and benefits for thousands of miners and retirees by $150 million and shed more than $1 billion in retiree health liabilities.

At the time, the judge addressed the issue of whether Patriot was created to fail, but ultimately deemed it irrelevant to the question before him. Legally perhaps, but morally, it is the paramount question.

These miners were promised health care benefits for life. After decades in unsafe and unhealthy conditions in the mines, many of them depend on those benefits to treat respiratory conditions, chronic injuries and other work-related maladies.

Coal executives will walk away from the ruins of Patriot with pockets stuffed full. During the previous reorganization, executives were paid nearly $7 million in bonuses even as worker pay and benefits were slashed.

But the miners, current and retired? Well, we all know what they’ll get.