On Monday, United Mine Workers of America (UMW) President Cecil Roberts and 15 others were arrested in a demonstration against Patriot Coal’s plan to eliminate not only the retiree health care plan, but the health care plan for its current employees — a move that would affect 23,000 families. More than 6,000 people from several states participated in the rally and march — the largest such event ever organized by the union.
An overflow crowd heard Roberts, U.S. Sen. Joe Manchin (D-W. Va.), Gov. Earl Ray Tomblin (D-W. Va.) and American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) President Richard Trumka speak at the Charleston (W. Va.) Civic Center. The crowd marched to an office building a few blocks away afterward for more speeches.
“I hope Patriot takes a good look at this crowd and these faces because you’re going to get real familiar with us,” Trumka said. “We’re here to tell you a real simple message: Do what’s right, or you won’t have any peace. We’ll be here until our brothers and sisters get the benefits that they earned.”
Patriot wishes to change its collective bargaining agreement (CBA) so that health care benefits for retirees will be handled by a trust fund, which — the company stated — would save 4,000 existing jobs.
The war on health care
The issue with Patriot can actually be traced to Patriot’s mother company, Peabody Energy. In 2007, Peabody spun off 13 percent of its coal reserves, but 40 percent of future health care liabilities into a new company, Patriot. These were obligations based on past union contracts and negotiations. By unloading them on Patriot, Peabody was free of such obligations. Patriot went on to acquire a subsidiary of Arch Coal called Magnum Coal, leaving Patriot with more than 10,700 health obligations and little means to pay for them.
Conventional wisdom suggest that Peabody and Arch wanted to create a holding company for these policies with the intention that the company will go bankrupt, gain permission to shed the policies and free the two companies of its health care obligation without needing to go into bankruptcy.
This is not the first time mining companies have used ingenious ways to skirt responsibility. A.T. Massey Company, now part of Alpha Natural Resources, once dodged its debt by mining only the most lucrative coal mining seams (a stratum of ore or coal thick enough to be mined with profit), giving lesser coal mining seams to subsidiaries and the worst coal mining seams to contractors. According to a 1993 series by the Charleston Gazette’s Paul Nyden, the Massey contract operations “left behind more than $200 million in debts in Southern West Virginia and Eastern Kentucky alone.”
Many see through this blatantly trickery and are challenging Peabody.
David Miller, former president of an UMW local chapter, emailed the Huffington Post about his recent experience with Peabody: “Myself and other retired and active miners got on a bus at the Ohio Valley Mall and went to St. Louis to protest at Peabody coal,” Miller wrote. “Some of the retirees were in their 70s. I sat listening while they spoke of their medical conditions to each other. Some had cancer, some problems breathing and many did not get around very well. These men took a bus trip that was about 11 hours each way to protest. The protest was on 2-13-13. Ten men were arrested.”
UMW has filed suit on Peabody and Arch. In addition, the West Virginia’s House of Delegates and State Senate have adopted resolutions calling on Patriot Coal to honor its commitments. Peabody and Arch both argue that they had no clue that Patriot would fail and have iterated that as Patriot is a separate company, the failure is none of their business.
Many would beg to differ. “Do you think area newspapers print labor issues so people will know what is going on?” Miller asks. “Or do they just print stories that favor the radical right? What side is West Virginia Congressman David McKinley, Congresswoman Shelley Moore Capito, West Virginia attorney general Patrick Morrisey and Governor Earl Ray Tomblin on?”
The coal industry has used underhanded tactics for other purposes as well. The Pepper Pike Company, a supporter of former Republican presidential candidate Mitt Romney, mandated that all employees attended a Romney rally at no pay. As reported by the Washington Monthly, “A group of employees who feared they’d be fired if they didn’t attend the campaign rally in Beallsville, Ohio, complained about it to WWVA radio station talk show host David Blomquist. Blomquist discussed their beefs on the air Monday with Murray Energy Chief Financial Officer Rob Moore.”
“Moore told Blomquist that managers ‘communicated to our workforce that the attendance at the Romney event was mandatory, but no one was forced to attend,’” the Washington Monthly continued. “He said the company did not penalize no-shows. Because the company’s mine had to be shut down for ‘safety and security’ reasons during Romney’s visit, Moore confirmed workers were not paid that day.”
West Ridge Mine, two days after President Obama won re-election, announced the layoff of 102 miners. A statement from the company read, “The layoffs are necessary because of the president’s ‘war on coal.’”
The death of “Old Man Coal”
The natural gas boom that was triggered by the hydraulic fracturing (hydrofracking or fracking) craze and the low prices caused by the increased supply has created a crisis among the other fuel markets, particularly coal. Over the last 18 months, coal prices bottomed out as industry and utilities switched from coal to natural gas to power their equipment. AEP announced its intent to eliminate 5,000 megawatts of coal-powered capacity and reduce its electricity-generation by coal to 50 percent of its total yield by 2020, from the 68 percent of 2011.
Southern, for the first time in its history, burned more natural gas than it did coal, with the share of coal used for power generation dropping from 70 percent to 30 percent. Nationwide, coal usage for power generation dropped five points from 2011 to 37 percent, while natural gas rose five points to 30 percent.
This caused many coal producers to face serious financial difficulties. Patriot — the third largest coal producer in the eastern United States and a major mining operator in Appalachia (the culturally-integral region of the Appalachian Mountains reaching from northeast Mississippi to New York’s southern tier) and the Illinois Basin — declared Chapter 11 bankruptcy in the Bankruptcy Court for the Southern District of New York in 2012.
New air quality regulations from the Environmental Protection Agency (EPA) will force many coal operations to invest in new equipment that reduce carbon emissions. Many producers feel that the increase in coal prices to meet these shifts to their infrastructure will price long-existing mines out of business.
Patriot voluntarily entered Chapter 11 protection to reorganize its business to address the financial challenges facing the company and the make the company stronger and more competitive. One of the goals of restructuring, however, was the reduction or elimination of the company’s obligation to the retiree health care plan, which had a total value of $1.3 billion.