This morning’s Gazette included an editorial about the growing concerns regarding pensions and retiree health-care for miners and their families, given the bankruptcy reorganization efforts of Patriot Coal. To quote the editorial:
The word “scam” once described the tactic of bleeding assets from a corporation, then filing bankruptcy to leave creditors stuck. The United Mine Workers of America alleges that something similar may have occurred in regard to Patriot Coal Corp.
Editorial writers cited my Sunday story on this issue, which was a follow-up to a previous Coal Tattoo post that quoted extensively from the latest issue of the UMW Journal article on the matter. We’ve published several stories on blog posts (see here, here and here) recently that touched on this issue. Perhaps I’ve missed it, but I haven’t seen much about the struggle ahead for Patriot workers and retirees from other West Virginia media outlets that typically spend a lot of time trumpeting the coal industry’s public relations campaigns and proclaiming their concerns for coal miner jobs.
Of course, it’s not like West Virginia political leaders are talking much about what Patriot’s bankruptcy means for 2,000 active union members in West Virginia and Kentucky, and more than 10,000 retirees and another 10,000 dependents, most of them in West Virginia, Indiana, Illinois, Kentucky and Ohio. Where is Sen. Joe Manchin on this issue? Or Gov. Earl Ray Tomblin? Republican challengers John Raese and Bill Maloney talk an awful lot about coal miners, but I haven’t heard them mention this issue. And what about the Republican ticket of Mitt Romney and Paul Ryan? Why aren’t they making this an issue, given that the West Virginia GOP convention delegation professes to care so much about coal miners that they’re wearing miners’ caps on the convention floor?
Maybe this will change a little bit after today’s big meeting in Charleston, where UMWA President Cecil Roberts and others are expected to brief Patriot miners and retirees on the situation. While the meeting is behind closed doors, the media has been invited for a separate briefing/news conference afterward. Earlier this week, a similar meeting with Patriot workers and retirees in Evansville, Ind., got some media coverage, including from the Courier-Press, which reported:
United Mine Workers of America officials told thousands of retired coal miners here Tuesday that the bankruptcy of Patriot Coal Corp. threatens their health insurance and can be blamed on their former employer, Peabody Energy Corp.
Peabody in 2007 spun off its union mines and some other operations into a new company called Patriot Coal — and in doing so, it also saddled Patriot with more than $600 million in health care liabilities for approximately 9,000 Peabody union retirees plus their spouses in the eastern U.S.
Among the operations that Peabody spun into Patriot were four in western Kentucky: the unionized Highland underground mine in Union County and the nonunion Freedom underground and Patriot surface mines in Henderson County and Dodge Hill underground mine in Union County. Patriot shut down the Freedom Mine earlier this summer, laying off some 190 workers.
Burdened by the costs of insuring Peabody Coal retirees, Patriot has been losing money for more than two years. After this year’s sharp downturn in U.S. coal markets, Patriot in early July filed for Chapter 11 bankruptcy reorganization — a move that UMW President Cecil Roberts said Patriot will use to try to stop insuring those aging retirees.
“This was just a paper trick,” Roberts said of the spinoff of Patriot five years ago. ” … Peabody intentionally created this.”
To be fair, some political leaders have paid a little bit of attention recently to the growing concerns about UMWA pensions. Rep. Nick J. Rahall, D-W.Va., held hearings two years ago on his proposal to use money from the federal strip-mine cleanup fund to help the union’s troubled pension plan. As best I can tell, that proposal hasn’t gone anywhere — especially since the Republicans took over the House of Representatives.
But the problem facing Patriot workers and retirees is a little different, and concerns the apparent ease with which companies can use bankruptcy reorganization to shed themselves of “legacy liabilities” — meaning promised pensions and health-care benefits for American workers who spent their lives toiling, in this case, in the mines of Peabody Energy and Arch Coal.
The AFL-CIO lists reform of corporate bankruptcies as one of its legislative priorities, explaining:
As corporate bankruptcy continues to be viewed by businesses and the capital markets as a powerful tool for restructuring a business’s financial obligations, America’s workers increasingly are in need of comprehensive bankruptcy reform to protect their interests. In the last decade, businesses have turned increasingly to bankruptcy restructuring as a strategic tool to target workers’ interests: many businesses have used bankruptcy to eliminate good-paying jobs and drastically reduce workers’ pay, health care and pension benefits. Congress must reform the Bankruptcy Code to protect employees from severe and disproportionate economic sacrifices that threaten their financial security and weaken our economy by undermining workers’ purchasing power. In addition, reforms are needed to halt the use of business bankruptcy as a safe haven for lucrative executive pay schemes designed to insulate management from financial losses even as they use the process to extract deep sacrifices from the workforce.
The AFL-CIO adds:
Bankruptcy has become a strategic tool used to bring about business change that adversely affects workers’ interests. Though Congress originally designed bankruptcy reorganization as a means of preserving jobs, businesses increasingly have turned to bankruptcy restructuring to facilitate the elimination of good-paying jobs and drastic reductions in their labor and benefit obligations. Labor costs, pensions and health care obligations have become prime targets in bankruptcy proceedings, even where the root causes of financial distress stem from adverse industry conditions and failed business models.
I must have missed where Reps. Shelley Moore Capito or David McKinley, both R-W.Va., have urged their GOP leadership to pass legislation that would help with these sorts of problems. But in fact there has been some legislation on the table, introduced by Rep. John Conyers, D-Mich., that was supported by labor unions including the UMWA.
Now, readers may recall Rep. Conyers as the fellow who was blasted by the UMW and by Sen. Manchin and Gov. Tomblin when he dared to point out that West Virginia leaders have done little to diversify West Virginia’s economy to give coalfield residents options beyond one troubled industry. Among other things, the bill would make it harder for companies to use bankruptcy reorganization to dump a union contract and help protect pension and health-care benefits owed to workers. During a congressional hearing on the measure, Rep. Conyers said:
In the last decade, Congress went out of its way to skew the bankruptcy system to favor big business interests over ordinary Americans. It is time that we restore balance to bankruptcy law, to give basic respect to the interests of working families. We must add a measure of fairness to a playing field that is overwhelmingly titled against workers.
Now, one response from the folks who carry the coal industry’s water might be that — well, wait a second, it was all those crazy environmentalists that drove Patriot into bankruptcy, and aren’t they to blame for this problem? Well, it’s true that Patriot has serious liabilities for the pollution caused by the legacy of mountaintop removal by Peabody and Arch operations in Appalachia. But the company appears to have worked out some sort of agreement to deal with that problem. But environmental issues are only one factor in the bankruptcy, and it’s clear to most observers that other factors — declining quality reserves, competition from natural gas, competition from other coal basins — are much more in play here. And in fact, what the UMWA is essentially alleging is that Patriot was created by Peabody and Arch so they could get out of these kinds of liabilities for environmental damage and worker pensions in Appalachia, while continuing to profit from their mines in the Powder River Basin out west.
But all of that aside, the question for political leaders who profess their love and concern for coal miners is: What are you doing today to help protect Patriot retirees?