Bankruptcy judge leaves Patriot Coal retirees high and dry
Judge rules coal company can dump its union
contracts and cut off retiree health care
ST. LOUIS — A federal bankruptcy
judge in St. Louis has ruled in favor of
Patriot Coal in its effort to eliminate its
collective bargaining agreements and
get out of commitments made to re-
tirees who worked for Patriot, Peabody
Energy, and Arch Coal. More than
20,000 workers and retirees will be im-
pacted by the decision.
The workers are members of United
Mine Workers of America (UMWA).
The union has filed a lawsuit claiming
that Arch Coal and Peabody Energy de-
signed 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.
In These Times magazine reported:
“In 2007, Peabody Energy spun off a
new company, Patriot Coal, which in-
herited 10 unionized mines in Kentucky
and West Virginia. Along with the
mines, Patriot took on $557 million in
health care obligations to UMWA re-
tirees. In 2008, Patriot bought Magnum,
which had been similarly spun off from
Arch Coal three years earlier. From
Magnum, Patriot inherited another
IBEW Local 48 business managers past and present
Present and past business managers of IBEW Local 48 dating back to 1980 pose for a picture at the 100th anniversary
gala dinner held May 17 at the Oregon Convention Center. From left to right are current Business Manager Gary
Young, and former business managers Clif Davis (2007-13), Barry Mitchell (2004-07), Grant Zadow (2003-04), Keith
Edwards (2000-03), Jerry Bruce (1996-2000), Greg Teeple (1995-96), Ed Barnes (1983-1995), and Bob Hall (1980-83).
The event drew nearly 1,000 guests, including Gov. John Kitzhaber and IBEW International President Ed Hill and
Secretary-Treasurer Salvatore Chilia. Drew Carney of KGW Newschannel 8 was the master of ceremonies. Local 48
is the amalgamation of IBEW Local 317, chartered in 1904, and Local 480, chartered in 1912 with 14 members.
Membership in Local 48 peaked at 21,000 (a high percentage of them women working at the Portland shipyard) from
1942 to 1944, and was the largest electrical local in the United States. Union electricians have wired Bonneville Dam,
The Dalles Dam, Timberline Lodge, Multnomah Falls bridges and walkways, and the Trojan nuclear power plant, to
name a few. Today, membership stands at 4,200. An exhibit of the union’s history is on display at the Oregon Historical
Society, 1200 SW Park Ave., Portland. “NECA/IBEW Local 48: 100 Years of a Powerful Partnership” features artifacts,
local historic photos, and some interactive displays. The exhibit is open to the public through Aug. 4.
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$500 million in obligations to retired
miners, according to the UMWA.
“Oddly, for a 5-year-old company,
Patriot wound up with nearly three
times as many retirees as active em-
ployees, more than 90 percent of whom
never worked for the company. Over-
burdened by its debts, in July of 2012
Patriot declared bankruptcy.
“In bankruptcy court, Patriot is seek-
ing to be released from its pension and
retirement obligations to some 10,000
UMWA retirees, covering more than
20,000 beneficiaries which total more
than $1.3 billion.”
Patriot Coal is headquartered in
Charleston, West Virginia, and Peabody
Energy, one of the nation’s largest coal
companies, is based in St. Louis. Patriot
filed for bankruptcy protection in New
York in July of 2012. The case was
transferred to St. Louis at the request of
UMWA.
Under the May 29 ruling by Judge
Kathy Surratt-States of the U.S. Bank-
ruptcy Court for the Eastern District of
Missouri, Patriot will be allowed to
cease paying for retiree health care ben-
efits as early as July 1. Responsibility
for paying benefits would be handed
over to a Voluntary Employee Benefi-
cial Association (VEBA), which will
only have guaranteed funding of $15
million, plus a royalty payment of 20
cents per ton of coal the company pro-
duces, which may add approximately
$5 million to the VEBA per year. Cur-
rent health care costs for these retirees
average nearly $7 million per month,
the union said in a press release.
The company offered UMWA a 35
percent stake in the company, which
could be sold to help fund the VEBA,
in the event there is a willing 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 press release further stated.
The bankruptcy judge’s ruling also
creates a path for Patriot to throw out its
current collective bargaining agree-
ments with the UMWA, which will cut
wages by several dollars per hour, elim-
inate paid time off by about one-third,
and drastically increasing out-of-pocket
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health care costs.
Mine Workers Union President Cecil
Roberts said the ruling was “wrong, un-
fair and fails to fully recognize the com-
ing wave of human suffering that will
be experienced by thousands of peo-
ple.”
Roberts said the union offered its
own reorganization plan, but it was not
accepted.
“(We) presented a very clear picture
in court of what Patriot actually needed
to come out of bankruptcy,” he said.
“Patriot can survive as a viable and
profitable company well into the future
without inflicting the level of pain on
active and retired miners and their fam-
ilies it seeks. Patriot is using a tempo-
rary liquidity problem to achieve per-
manent changes that will significantly
reduce the living standards of thousands
of active and retired miners and their
families.
“We intend to appeal the ruling to
the Federal District Court,” Roberts
said.
The union is also pursuing a second
track — negotiating with Patriot.
“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,” said union spokesman
Steve Smith.
“We will continue to meet with the
company to see if there is a way for-
ward,” Roberts said. “We have long ac-
knowledged that Patriot is in trouble,
because it can no longer pay Peabody
and Arch’s bills. We remain willing to
take painful steps to help Patriot get
through the rough period it faces over
the next couple of years.
“But if we’re going to share in that
pain, then we have every right to share
in the company’s gain when it becomes
profitable again,” Roberts said. “That
only makes sense, and we will continue
to try to get this management team to
understand that.”
Union officials said public protests
will continue. Since the bankruptcy fil-
ing last year numerous peaceful rallies
have taken place in several states.
Dozens of mine workers, retirees, and
union officials, including President
Roberts, have been arrested. The most
recent was May 21 when a dozen pro-
testers were arrested for sitting in the
street near the federal courthouse in St.
Louis. At press time June 4, mine
workers and retirees were preparing to
rally at the Henderson County court-
house in Henderson, Kentucky.
1638 NE Broadway, Portland
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