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Senators and Unions Call for Obama to Intervene in Patriot Coal Bankruptcy

by Mike Elk

UMWA members rallied in St. Louis on Jan. 29 to protest Patriot Coal's attempt in bankruptcy court to evade its obligations to retirees. (Photo by Mike Elk)CHARLESTON, WV –  “I have been in the union for 40 years and I have never been as scared in my life as I am right now,” says retired miner and United Mine Workers of America (UMWA) member David Bella of Boone County, West Virginia. Depending on a court’s decision in the pending bankruptcy case of Patriot Coal, Bella’s pension and retirement benefits could be wiped out, along with those of 20,000 other beneficiaries.

To the UMWA, that loss is only one piece of the grave threat posed by the Patriot Coal bankruptcy. The miners union has filed suit claiming that Arch Coal and Peabody Energy designed Patriot Coal to fail—then shifted over a billion dollars in pension and retiree health care debts to Patriot as a ploy to get out of those obligations. The UMWA fears if Peabody and Arch get away with spinning off their obligations to a company designed to collapse, more coal companies will take similar measures. (Read WITT’s previous reporting on the Patriot Coal bankrupty.)

"This is as corrupt as can be. No one will have a pension or health care in this country if this is liable to continue.”

I spoke with Bella on April 1 at a rally of over 5,000 UMWA supporters in Charleston. Despite the turnout, he and many other miners remained pessimistic that the rally would convince the bankruptcy judge to turn down Patriot’s request to be relieved of its benefit obligations.

“This is a pep rally,” said Bella. “We had pep rallies before basketball games in high school. What’s it gonna do?”

Should the bankruptcy judge not rule in the miners’ favor, the union is looking for other ways to pressure the company. Since Patriot Coal pays into a multi-employer pension plan administered by the UMWA, miners union President Cecil Roberts hopes that the other employers will be motivated to put legal pressure on Patriot Coal to maintain its contributions so they won’t be stuck paying more. Under the plan proposed by Patriot, federal insurance would cover most—though not all—of Patriot's cuts to its contributions to the multi-employer pension plan, and retirees would continue to receive their full pensions, at least for the time being. However, pensions for all coal miners could take a hit when the multi-employer plan comes up for re-negotiation in 2017.

Indeed, last week in the St. Louis court where the Patriot case is being heard, mining company Murray Energy filed an objection to Patriot’s motion to dump its retiree obligations, stating that this would increase the liability that Murray Energy owes the UMWA plan. Cecil Roberts says that the UMWA is asking other companies to follow Murray’s example.

UMWA faces a separate challenge with regard to health care benefits for Patriot retirees. Unlike the multi-employer pension plan, health care plans are individual to each employer, which means that unless the judge rules in the miners' favor, health care benefits will simply evaporate for all workers who retired after 1992 (under the COAL Act, the federal government covers health care for miners who retired before 1992).

In addition to applying corporate pressure, the UMWA is hoping to enlist some legislative pressure to create a failsafe to protect coal miners from future Patriot-style bankruptcies. Senator Jay Rockefeller (D-W.Va.) and Rep. Nick J. Rahall (D-W.Va.) have introduced the Coalfield Accountability and Retired Employee Act that would save the Patriot Coal retirees’ benefits. The bill would make it tougher for coal companies to get out of obligations to retirees, extend retirement protections from the 1992 COAL Act to miners who retired after 1992, and transferred unused funds from the federal Abandoned Mine Land fund to shore up the insolvency.

But with Republicans controlling the House, the UMWA remains pessimistic that such a bill could pass. Thus, Senator Joe Manchin (D-W.Va.) is calling upon President Obama to get involved in the fight to maintain the pension benefits of Patriot Coal retirees.

“This country wasn’t built on having laws on the books that basically protected those that don’t need protection, by sacrificing those who basically have given their whole life to something,” Senator Joe Manchin (D-W.Va.) told Working In These Times after the Charleston rally. “This is a national issue. The President is a leader. Leadership has got to start at the top.”

The UMWA’s Roberts echoes Manchin’s call. “I think everybody ought to be looking into this, including the president,” Roberts says. “This can’t be right that somebody can enter into contracts for many, many years and then just hand them off to somebody else. This is as corrupt as can be. No one will have a pension or health care in this country if this is liable to continue.”

The White House did not return Working In These Times’ requests for comment. The Obama administration has not intervened when called upon by union leaders to mediate in other recent labor disputes, such as the 2011 Verizon strike and the 2010- 2011 Honeywell lockout.

Bella believes the union may have to take more militant measures to protect Patriot pensions. 

“See what this hat says,” Bella says, pointing to a camouflage UMWA hat that reads, “God, Guns & Guts Built the U.M.W.A.” He continues, “That’s right, that’s what its going to take to win. We gotta shut down the mines.”