Where is the outrage for Patriot retirees?

August 30, 2012 by Ken Ward Jr.

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?

14 Responses to “Where is the outrage for Patriot retirees?”

  1. Mike H says:

    I think “outrage” for retirees being screwed out of their pension bit the dust when the UAW in collusion with the Obama administration screwed 20,000 non-union Delphi workers out of their pension guarantees. Unlike the UAW members who got the shaft here, the PBGC wont be coming to the rescue of these former Delphi employees and the AFL-CIO hasnt never said a peep about Delphi.

    I suppose that while all outrages are created equally some are equal than others.

  2. Soyedina says:

    I guess if you want to have a collective voice at the bargaining table you have to pay your dues.

  3. Mike H says:

    @ Soyedina

    PBGC, an arm of the federal government, isn’t supposed to discriminate between union and non union pension plans. I guess the “dues you have to pay” in the case of Delphi include campaign endorsements and the like.

  4. Ken Ward Jr. says:

    Mike H,

    I don’t cover the auto industry, so I am not an expert in the Delphi case. But it takes about 5 seconds on google to find out that when you said, “the AFL-CIO hasn’t never said a peep about Delphi” you are incorrect …

    For example, http://www.aflcio.org/Press-Room/Press-Releases/Statement-by-AFL-CIO-President-John-Sweeney-on-Del

    “The attempt by Delphi Corp. to use the bankruptcy process to slash wages and benefits for workers and then award company stock and nearly $90 million in cash bonuses to managers and executives is obscene. It is an insult to the 33,650 Delphi workers from six AFL-CIO unions who made this company the world’s biggest auto parts manufacturer. It is a threat not only to the wages, benefits and job security of every industrial worker in America, but to the company’s shareholders, suppliers and customers. The AFL-CIO stands shoulder-to-shoulder with the Delphi workers and their unions. Not only can they count on the 5.5 million active and retired members of the six unions that formed the Mobilizing@Delphi coalition, they can count on the support of the entire 9 million member AFL-CIO. Together we will fight to force Delphi management to change the company’s anti-working family strategy.”

    That was covered by, among others, The Washington Post, http://www.washingtonpost.com/wp-dyn/content/article/2005/11/08/AR2005110801387.html

    And in the future, let’s watch our language — no need to say anyone was “screwed” … let’s keep in a bit cleaner than that.


  5. Retired Coal Miner's Wife says:

    The war on coal actually has a history that goes back before Obama. Let’s go back a little further to the Bush Admin. when 95,000 Bethlehem (including coal miners) retirees lost their guaranteed health care benefits and when PGBC took over many of them had their monthly pension amounts reduced. Where was the outrage then? When coal miners start believing the coal operators the only “guarantee” is that they are screwing themselves. We were paying $270.00 a mo. for our guaranteed health benefits when we lost them. We got zilch back.
    Bethlehem miner’s took pay cuts, worked overtime for free, and took benefit cuts to get their “guaranteed” health care and pensions.
    George W. Bush could have prevented this massive bankruptcy of steel companies and loss of benefits by signing the order to stop the dumping of foreign steel into this country and he refused.
    The Republicans alsocut the budget to the MSHA and it caused a shortage of mine inspectors.
    And now coal MINERS are supporting the very party threatening take away the only “retirement” and “health care left”…aka Social Security and Medicare they have left. The Republicans have got coal miners screwing themselves again.

  6. Retired Coal Miner's Wife says:

    Sorry, Ken about the “screwed”. Was just trying to find an adjective stronger the”taken, exploited, had. The word outrage isn’t even sufficient. Everything regarding American workers has gone so wrong and so bad and nothing and no one seems to make a difference in spite of their promises and/or guarantees. We just go further into the hole and nothing seems to make a difference.

  7. Mike H says:


    Thanks for the link, and I will certainly keep the potty mouth to a minimum in the future, but the AFL-CIO statement you linked to addressed only the UAW workers whose pensions were being destroyed. The AFL-CIO was silent on the 20,000 salaried Delphi employees whose pension were eliminated at the behest of the Obama administration via Timothy Gietner … probably because the salaried employees were getting the shaft instead of the UAW members.

    This should be a great example of political corruption that reporters love. We have a powerful corporate interest, that donates millions of dollars into political coffers, using its influence within the halls of power to ring money out of the taxpayers for its narrow constituency.

    But, its like I said, I suppose all outrages aren’t equally outrageous.

  8. Ken Ward Jr. says:

    Mike H,

    As I said, I didn’t cover Delphi and my knowledge of it is limited. If you have any suggestions for material that would educate me about the issue, I’d be pleased if you would post links.

    Thanks, Ken.

  9. Mike H says:

    Ken, my main point is that the AFL-CIO is rather disingenuous (surprise surprise) and lost any credibility it may have once had with respect to pensions. Their mission statement, in part, stresses their work to “improve the lives of working families—to bring economic justice to the workplace and social justice to our state and the nation”. As made evident by the Delphi fiasco, some working families are worth fighting over while others but its peachy keen to collaborate with individuals who are sticking knives in the backs of other “working families”.

    Cicero once said that everyone wants to be a slave, they just want to pick their own masters. Looks like we know who the AFL-CIO’s masters are.

  10. MGP says:

    If the AFL-CIO and UMWA choose to adopt the interest of their members rather than non-union shops, so be it. It’s not wrong or disingenuous for them to do so.

    My problem with this discussion is that it’s more political than practical or logical. Pensions are expensive. Health care is expensive. Patriot is broke.

    UMWA can pound the table all they want, and Patriot is still broke. If Patriot contrived or participated in an elaborate conspiracy to go broke to avoid meeting their obligations under their CBA…can we all at least agree how stupid that sounds? There are so many simpler ways to go broke.

    But they are still broke, and their employees may end up the victims of mismanagement. No business goes bankrupt because of the good decisions of upper management.

  11. Steve says:

    I received a letter from Patriot several weeks ago. It stated that if I had any financial ties with them I had a certain window of time to reply. I have never directly worked for Patriot. One page listed at least 50 companies that at one time existed in WV. I had worked for at least 3 of them at one time or another since the 70’s. They have all been either bought out by , taken over by, or went out of business in the last thirty years. My point is, that it is more involved than Roberts and the UMWA are letting on. Every hollow between Charleston and Beckley had a coal company at on time. On both the Coal and Kanawha rivers. Many of these retirees are still living. With only 11% of the remaining working miners union, and coal prices at rock bottom, what in the world does everyone expect. They should have put more in their 401K. It’s been available now to miners since the eighties.

  12. Phil Smith says:

    Mike H, to complain that a union isn’t representing those who don’t pay dues is naive, at best. Dues payers have a legitimate and reasonable expectation that their union will not waste time and resources on those who not only don’t pay dues, but whom in many cases are spending a great deal of their time trashing the union and its members. It is the legal job of a union to represent those who pay dues or, in some cases, are eligible for membership. Those who are not eligible have no right to or expectation of representation.

    Steve, I’m not sure where the 11% of remaining coal miners working union came from. I know that Patriot used that in their court filing, but since they don’t cite any source for that I can only assume they made it up. The only reputable source for union membership in the coal industry (not just the mining industry, which includes metal mines, hard rock mines, gravel and aggregate mines) is the annual Coal Report produced by the Energy Information Agency. The latest numbers from that report can be found here: http://www.eia.gov/coal/annual/pdf/table20.pdf

    They show that 23% of all coal workers are union members, and almost all of those are UMWA members (the union surface miners in Texas are IBEW members). That’s twice the 11% number. It’s important to note that the EIA numbers include all workers at mines, which means that office workers, foremen and supervisory personnel are included. These people are not eligible for membership. When you take those ineligible people out of the mix, the percentage is even greater.

    But all of this is really beside the point and leads us down the road of misdirected attention, which is where Patriot wants us to go. The fact is that this company was created to fail. We find ourselves at the end game of plan hatched several years ago to allow Peabody and Arch to wriggle out of their promised obligations to active and retired miners and their dependents.

    The jobs these people do or did aren’t your average industrial jobs. Every day miners go to work, they put their lives and their health on the line. They are at high risk of contracting respiratory diseases like black lung and silicosis. Their limbs get crushed by machinery. They get musculoskeletal injuries at high rates. Their work environment is vastly different from anyone else’s.

    And they do all of that so that we can turn our lights on, power up our computers, sit down and post comments to this blog, which exists on servers somewhere also likely powered in whole or at least partially by coal-fired electricity.

    Ken asks a good question, where the political leadership is concerned: where is the outrage for these people? The UMWA will be asking them as we move forward: which side are you on?

  13. Steve says:

    The point is this. There are more companies (past) involved than what they are stating or what is being reported. If they were created (as you state as fact) just to fail, then they are prophets who knew ahead of time what the coal market would do. Did the UMWA have it proverbial head in the sand when all this supposedly shell game was going on? Where is the memberships outrage at its leaders on this one? How many reporters will be asking these questions?
    As for the 11%. It’s reported in this article to be 15%. Sorry!

  14. Phil Smith says:

    Steve, I’m not a lawyer but this is what they tell us: you can’t bring legal action against someone or something (like a corporation) until there is a harm. No one was “harmed” (legally) at the time of the initial transaction, meaning the UMWA could not bring legal action. No one lost a job as a result of the spin-off at that time. No one lost benefits at that time. Technically, no one has lost anything even now, though that will change soon enough and we will act accordingly.

    The UMWA and it’s leaders did nothing wrong and welcomes questions from our members and media about the history of what happened here, because it will only serve to reinforce our point that this is a sham. I’m not sure, however, that relying on the World Socialist Web Site as an accurate and unbiased news source helps one get a full perspective of reality.

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