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UMW campaigns to save Patriot pensions

CHARLESTON, W.Va. -- Kelly Elswick mined coal for more than 30 years, finishing his career running a grader at the Hobet 21 mountaintop removal complex along the Boone-Lincoln county line.

After fighting cancer -- going through chemotherapy and a bone marrow transplant -- the 56-year-old Madison resident has been looking forward to his retirement.

But now Elswick is worried he'll lose his pension and his health-care benefits if Patriot Coal manages to use a bankruptcy reorganization to rewrite its contract with the United Mine Workers union and discard such liabilities.

"I gave them 30 years of my sweat and tears," says Elswick. "Had I not had the best health care in the world, I don't know what would have happened."

On Thursday, Elswick was among more than 3,000 miners, retirees and family members who turned out for a UMW briefing that kicked off the union's "Fighting for Fairness at Patriot" campaign. A similar meeting on Tuesday in Evansville, Ind., drew a similar crowd, and union leaders say their campaign is just getting started.

"We are prepared to go to the mat over this," UMW President Cecil Roberts told reporters after the closed-door meeting with union members. "This is an enormous challenge for the union."

In July, Patriot filed for Chapter 11 bankruptcy, seeking to reorganize. Court filings said that what the company calls "unsustainable labor-related legacy liabilities" related to UMW pension and health-care programs are among Patriot's biggest financial problems.

Patriot employs about 2,000 active union members in West Virginia and Kentucky, and the company is currently responsible for more than 10,000 retirees and another 10,000 dependents, most of them in West Virginia, Indiana, Illinois, Kentucky and Ohio.

Patriot has yet to submit its proposed reorganization plan. But UMW officials fear the company will seek a judge's approval to weaken the union's contract for active miners and stop paying into pension and health-care plans for retirees.

In its bankruptcy filing, Patriot complains the company is responsible for benefits to more than three times the number of retirees as its coal operations currently employ as active miners.

"Especially in an era of declining demand and price for coal, there is a mismatch between the cost of [Patriot's] legacy obligations and [its] ongoing ability to generate revenue," the company said. "[Patriot's] return to long-term viability depends on [its] ability to achieve savings with respect to these liabilities."

But UMW officials say Patriot was essentially a "company created to fail," to give Peabody Energy and Arch Coal a way to shed obligations to fund union pensions and health-care benefits in the nation's eastern coalfields, while profiting from their giant, non-union surface mines out west.

Five years ago, Peabody formed Patriot as a spin-off company where Peabody tucked union mines in West Virginia and the Midwest, along with pension and health-care obligations for union retirees. Patriot later bought another company, Magnum Coal, which had been similarly spin-off by Arch Coal when it got rid of most of its Appalachian operations and their related pension and health-care liabilities.

"When Peabody Energy and Arch Coal spun off their union operations into companies that eventually became Patriot Coal Company, they also spun off more than $1.3 billion in promised health care obligations to coal miners who put their lives and health at risk every single day working for Peabody and Arch," the union said in a petition circulated at this week's meetings.

UMW lawyers have gotten involved in Patriot's bankruptcy and are trying to have the case moved from New York City, where the company filed it, to Southern West Virginia. The Obama administration's Justice Department and West Virginia Attorney General Darrell V. McGraw have joined in seeking to have the case moved. McGraw attended Thursday's meeting, and received a standing ovation from miners after giving a short speech.

Roberts said that as the campaign moves forward, the union is going to be expecting other elected officials and political leaders to publicly state whether they believe Patriot should be allowed to use bankruptcy reorganization to jettison its obligations to workers and retirees. Roberts said corporate bankruptcy court rules are not friendly to workers, something labor organizations have been trying to get Congress to change.

"We don't know how strong our legal position is in this, but our moral position is very strong," Roberts said.

Reach Ken Ward Jr. at kward@wvgazette.com or 304-348-1702.

 


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