The Times West Virginian

September 5, 2012

UMW facing ‘confrontation’ with Patriot that union must win

Times West Virginian

— The United Mine Workers of America is focused on winning in a “real confrontation.”

The issue is Patriot Coal Corp.’s bankruptcy. A key hearing is scheduled Sept. 11 in New York.

“We, the UMWA, are in the midst of a real confrontation here,” UMW President Cecil Roberts said at the 17th annual Labor Day Picnic last Sunday at Mannington’s Hough Park. “Peabody Coal is the largest coal company in the world. Peabody Coal is around the world. Peabody Coal has more money than most nations have.

“But in 2007, five years ago, they said, ‘Hmmm, don’t like being in West Virginia. Don’t like being in Kentucky, because the unions try to challenge us there. Let’s just form a new company.’”

Patriot Coal was formed in St. Louis, Mo., in 2007, and on July 9 of this year, the company filed for Chapter 11 bankruptcy reorganization in the U.S. Bankruptcy Court for the Southern District of New York. Patriot was a spinoff company created by Peabody and also joined with Magnum Coal Co., which Arch Coal had formed. While Patriot created a larger company, it also assumed a much larger obligation to live up to the previous contracts and health-care benefits of those other companies, said Phil Smith, director of communications for the UMW.

UMW officials have expressed concern for the health benefits of 10,000 retirees that affect a total of 22,000 former workers and their dependents. More than 2,000 active UMW members are employed at Patriot’s West Virginia and Kentucky locations. Patriot Coal’s Federal No. 2 mine is located close to Fairview.

From 2007 through most of 2010 and part of 2011, the price of coal was high and the company was able to make enough money to meet its retiree health-care obligations, Smith said. But he believes Patriot was set up to fail and get rid of those Peabody and Arch benefits.

“They used the vehicle of Patriot Coal to accomplish that goal,” he said. “This is in many ways a financial scheme that was planned in board rooms in St. Louis for these companies to just simply walk away from their promises and their obligations to thousands of people.”

Roberts also expressed skepticism in the way Peabody Coal was transformed into Patriot Coal and whether or not the retirees’ health-care benefits will be honored.

“And by and by here’s what you get as far as assets. And by the way here is what you get. They pushed them out the door with a billion dollars with liabilities in pensioners health care. That’s a paper trick. That’s a paper trick!” Roberts said. “They may legally be able to get away with something like that, but morally we’ll fight them from St. Louis to New York to Logan County to Pennsylvania to all 50 states in the union. This cannot stand.”

The UMW, which is being advised by a bankruptcy law firm in New York, has been selected to serve on the creditors committee, which under bankruptcy law is a committee made up of major creditors that are empowered to work with Patriot Coal moving forward, Smith explained.

He said the union has filed a motion to move the case from the U.S. Bankruptcy Court for the Southern District of New York to the Southern District of West Virginia Bankruptcy Court.

Smith explained that the vast majority of the people affected by this case live in the coalfields in either West Virginia or the Midwest. The workers and suppliers are the individuals who will be impacted the most.

The U.S. Department of Justice automatically appoints a trustee to represent the federal government, and that individual has filed a motion to support the UMW’s motion, he said. Also, the union has received support from West Virginia Attorney General Darrell McGraw, the state of Kentucky and other entities.

Mike Caputo, international vice president for District 31 of the UMW, noted that the union fears the benefits will be taken away because of statements made by Patriot Coal officials about legacy costs.

“That’s what coal companies consider those who leave the industry and they continue to provide them health care,” Caputo said.

He added, “I know this union. I’ve been a member of this union for 37 years, and I will promise you that if it’s a fight Patriot Coal wants, it’s a fight they will have. Believe me when I tell you that. We’re going to stand strong.”

This is more than a court case.

“This is a matter of literally life or death for some people,” Smith said.

He said some of these people have black lung or were injured in accidents in the mines, and they all put their lives and their health on the line every day with the promise that Patriot would pay for their retiree health-care benefits.

“Our folks kept up their end of the bargain,” Smith said. “They kept producing coal. They kept making it possible for us to have energy in our homes.”

There’s no clearer reason that this battle is one the UMW must win.