Coal Tattoo

Where are all those friends of coal?

Members of the United Mine Workers of America take part in a protest outside the of headquarters of Peabody Energy, one of the companies the union accuses of orchestrating business deals that bankrupted Patriot Coal, Wednesday, Feb. 13, 2013, in St. Louis. Ten people were arrested during the protest of bankruptcy proceedings that the union says jeopardizes pension and health care benefits for some 20,000 retirees and dependents. (AP Photo/Jeff Roberson)

The United Mine Workers plans to continue its protests of the Patriot Coal bankruptcy situation, with another protest on Tuesday outside the headquarters of Peabody Coal in St. Louis.

And the problems faced by Patriot miners and retirees is getting more attention, first with this story in the Wall Street Journal:

Patriot Coal Corp., which is in bankruptcy-court proceedings, plans to seek to terminate the health benefits of up to 1,000 salaried retirees, according to court filings.

During the Patriot bankruptcy most attention has focused on about 22,000 active union miners, union retirees and their beneficiaries who are fighting to keep health benefits. While smaller in number, the salaried retirees could stand to lose more than unionized counterparts.

Salaried retirees, for example, would be ineligible to participate in a trust Patriot has proposed to cover some health benefits for retired United Mine Workers of America members …

… Many salaried retirees—including foremen, superintendents and other supervisors—worked alongside unionized miners in underground coal mines for decades but don’t have protections guaranteed by collective bargaining agreements.

In December, Patriot sent a letter to salaried retirees saying it intended to terminate all of their retiree health and life-insurance benefits. A hearing is scheduled for Tuesday in U.S. Bankruptcy Court for the Eastern District of Missouri to create a committee to represent salaried retirees’ claims.

“In this case the company is saying we want to terminate 100% of your benefits, and we don’t want you to have any unsecured claim,” said Jon Cohen, a Chicago attorney representing the retirees.

And there was also a piece from The New Republic about the controversy:

There was much talk during the 2012 campaign about corporations breaking faith with workers, courtesy of Team Obama’s highly effective attacks on Mitt Romney’s record at Bain Capital. President Obama’s subsequent victory over Romney was taken by some as a repudiation of the vulture-capitalist vision for America. But the Patriot Coal case now playing out in bankruptcy court in St. Louis and in Charleston, W.V., where the UMWA has brought suit against Peabody and Arch, is a blunt reminder that the election in fact settled nothing: questions of basic fairness in American economic life remain as contested as ever. If anything, the matter of Patriot Coal suggests the stakes have gotten only larger. Veteran observers of employer-labor relations say that Peabody’s Patriot Coal gambit—carving out an entirely new company that seemed designed to fail in order to offload retiree obligations—is as brazen as anything they’ve ever seen.

“It’s rather extraordinary,” said Robert Bruno, director of the University of Illinois-Chicago’s School of Employer-Labor Relations. “It’s just a more elaborate attempt to detach the employer from any kind of legacy obligations for their employees, a further abdication, or departure, from the post-war era’s contract in which employers bore some responsibility…Now that model of providing some level of social insurance has been torn asunder, and the burdens have been handed to the individual worker.”

The Patriot Coal bankruptcy has even become the subject of a paper by Temple University business professor Bruce Rader, who argues that Peabody and Arch’s maneuver is questionable even from the standpoint of a strong believer in free markets. The maneuver, he writes:

ultimately will shift the burden to the general public or in a word socialize the health care benefits since the miner’s ability to pay will not cover this obligation and then the health care burden will be shifted to the government. In essence we will all pay the costs. This is a perfect example of the use of the legal system to socialize the costs and therefore lead to a transfer of costs to the general public from the shareholders of a company.

The question becomes, as a society, do we want to condone this? Should the profitability of these companies be enhanced at the general public’s expense, and what effect will this have on our system of allocating capital? Free-market capitalism is ultimately a system for the allocation of capital in a society and the efficient allocation of capital is the driving force behind the economic growth that this country has experienced. For this system to work, the participants must suffer the consequences and reap the benefits of their actions.

But the most interesting recent piece on all of this was an op-ed in the Sunday Gazette-Mail in which Teamsters official Ken Hall asked, “Where are Friends of Coal Miners?”:

… Those who call themselves friends of coal are silent to the tragedy facing the 22,500 Americans who were made promises.

It’s time for our political leaders to choose a side. If they are truly friends of coal miners and not just coal operators, they must speak out now and condemn the appalling actions of Patriot Coal. The real friends of coal miners will loudly proclaim their support for the hard-working men and women who are the victims of a system heavily stacked in favor of corporate America.

But so far, the only statewide elected officials who have taken a public stand with the miners are Sen. Jay Rockefeller and Rep. Nick Rahall.

Rep. Shelley Moore Capito, who is seeking Rockefeller’s seat, claims to be a great supporter of coal miners. I call on her to show us what kind of friend she is. It is time for her to stand with miners on this issue now. I urge Rep. David McKinley to join her.

My challenge isn’t limited to Republicans. It is time for Sen. Joe Manchin and Gov. Earl Ray Tomblin to pick a side as well.

True friends are worth more than gold, the saying goes. But what about coal?

We’ve written about this issue before on Coal Tattoo, and we’ve also noted that then-West Virginia Attorney General Darrell McGraw intervened in the Patriot bankruptcy and spoke out against the company (see here and here). So far, we haven’t heard new Attorney General Patrick Morrisey speaking up for the Patriot miners and retirees … in fact, during his campaign to unseat McGraw, when I asked about McGraw having filed a brief supporting the UMWA’s efforts to move the bankruptcy case out of New York, Morrisey told me in an email:

With respect to your Patriot inquiries, I have been clear that private contract provisions made between parties who negotiate in good faith should be respected.  I have also been clear that Darrell McGraw is trying to inject himself into this venue question solely because he has been “inactive” on most coal-related issues and has failed coal miners on the biggest issue of all: fighting for their jobs.  The West Virginia Attorney General does not control or will not influence the venue question, so McGraw is simply trying to divert attention away from his unwillingness to challenge a number of EPA regulations that have harmed the industry and coal miners. I am very sympathetic to the notion that legal matters should be handled in places where legal expertise rests.  I think West Virginia courts have a great deal of expertise on coal issues.  But the Attorney General, as broad as his powers may be, does not determine venue.