Judge OKs Patriot Coal plan to renege on miners’ pensions

ST. LOUIS – A federal bankruptcy judge in St. Louis has left Patriot Coal’s retirees – whom it inherited from Peabody Energy and Arch Coal – high and dry, and said Patriot could dump its union contracts, too. Her approval of the firm’s reorganization plan forced the Mine Workers to plan an appeal to federal district court and to schedule another anti-Patriot march on June 4 in Henderson, Kentucky.

The May 29 decision by bankruptcy judge Kathy Surratt-States is “wrong, unfair and fails to fully recognize the coming wave of human suffering that will be experienced by thousands of people throughout the coalfields,” union President Cecil Roberts said.

Surratt-States’ ruling means retirees will lose their health care as early as July 1. Eliminating the union contracts will cut wages for each Patriot miner by several dollars an hour, kill paid time off for a third of the Patriot workers, drastically raise their health care costs and abolish retiree health care for current workers, the union said.

“As often happens under American bankruptcy law, the short-term interests of the company are valued more than the dedication and sacrifice of the workers, who actually produce the profits that make a company successful,” Roberts added. The union offered its own reorganization plan to the Surratt-States, who did not accept it.

Peabody, one of the nation’s largest coal companies, set up Patriot in 2007 and transferred its retiree health care obligations – 43 percent of all its liabilities-to Patriot, along with 11percent of Peabody assets. Retirees from Arch Coal were later thrown into the mix at a company, Patriot, that one bankruptcy law expert said was expressly designed to fail.

In court, Patriot offered to set up a Voluntary Employee Beneficial Association (VEBA) to cover current retirees’ health care costs of $7 million per month. Patriot offered $15 million yearly, plus 20 cents per ton of coal production, to fund the VEBA.

Patriot also offered the Mine Workers 35 percent ownership, which the union could then sell to help the VEBA – if it finds a buyer. “Since the current and future value of the company is unknown, there is no way of knowing how much money this could provide for health care benefits or when such funding would be available,” the union pointed out.

Despite the decision, the Mine Workers are pursuing a second track, negotiations, with Patriot, union spokesman Steve Smith said. “The question is the VEBA, what’s the source of the money in it” to pay for retirees’ health care “and how fast they can get it there,” added Smith. But “Peabody and Arch can decide to live up to their obligations” to retirees by paying for health care “and end this problem tomorrow,” Roberts noted. “If they don’t, we will continue our litigation against them and are optimistic about our chances.

Photo: Fairness at Patriot Facebook page



Press Associates
Press Associates

Press Associates Inc. (PAI), is a union news service in Washington D.C. Mark Gruenberg is the editor.