In Bankruptcy, Patriot Coal Creates its Legacy | Sacrificing a Historic Landmark to Coal

Date: October 19, 2012

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In Bankruptcy, Patriot Coal Creates its Legacy

By Brian Sewell

Concerns over how Patriot Coal will meet its commitments to generations of retirees have rippled throughout Appalachia. When the St. Louis-based spin-off of Peabody Coal filed for bankruptcy in July, it cited “substantial and unsustainable legacy costs” owed to retirees and beneficiaries as factors. Now, with their benefits on the line, many former employees worry that Patriot might have been created to fail.

Retirees and union representatives have said they believe that parent company Peabody planned to saddle Patriot with less-valuable Appalachian coal assets and the “unsustainable legacy costs” in question. United Mine Workers of America President Cecil Roberts called Patriot a “house of cards” created by Peabody to “get out of its obligation to pay for the pensions and health care of thousands of people who spent their lives working for Peabody.”

At the time of its formation, nearly two-thirds of Patriot’s workers were represented by the United Mine Workers of America and many of its mines were union operations. Provisions in the Federal Mine Health and Safety Act include funding of health benefits for UMWA retirees. Under bankruptcy law, commitments to shareholders are paid first; legacy costs to employees come from any remaining assets and often are not paid in full.

While Patriot has attempted to assure that its obligations will be met, the debt-addled company made clear in official bankruptcy documents that a return to long-term viability depends on its “ability to achieve savings with respect to these liabilities.” The UMWA, along with the U.S. Trustee, is asking U.S. Bankruptcy Judge Shelley C. Chapman to move the case from New York to West Virginia, where the majority of Patriot’s mines are located.

In July, during an act of civil disobedience led by the group Radical Action for Mountain People’s Survival, dozens of protesters trespassed onto Patriot’s Hobet Mine Complex in Raleigh County, W.Va. The group focused their efforts on exposing Patriot’s obligations, pointing out that UMWA pensions are funded through a per-ton tax on coal, and “in the middle of a projected six-year, 50 percent decline in production, this funding stream is increasingly unsustainable.”

Lou Martin, a professor at Chatham University, wrote an op-ed for the Charleston Gazette reflecting on the protest and its goals. “The real struggle is not between the tree huggers and the miners. It is between the people and the outside corporations that will exploit the land and the people and leave nothing behind, not even pensions.”

Sacrificing a Historic Landmark to Coal

In 1921, a bloody rebellion led by thousands of miners attempting to unionize played out over a week on Blair Mountain in southern West Virginia. The Spruce Fork Ridge battlefield is one of the most significant historic landmarks in Appalachia, but on Oct. 2, a federal judge dismissed an appeal by a coalition of groups seeking to restore the site’s listing on The National Register of Historic Places to protect it from mountaintop removal. Judge Reggie B. Walton explained his decision to dismiss the case by saying that, even if Blair Mountain’s listing been restored, it would not prevent mining from occurring “should the coal mining companies who own existing permits choose to exercise their rights afforded by the permits.” The battle remains the largest armed American rebellion since the Civil War, and Blair Mountain is treated as an archeological site by researchers and historians. The site became listed as a historic landmark in 2009 before it was removed from the list due to pressure from coal companies eager to conduct surface mining operations on the mountain.

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