Coal companies, not taxpayers, owe miners
“All I could think is, you dirty, low-down rotten scoundrels. How could anyone with a conscience do something like this?”
That was the reaction of Rhonda Leach, the wife of a retired Peabody Energy Corp. coal miner, when she discovered that the company that employed her husband and promised him lifetime health care benefits is trying once more to ditch its responsibility.
Conscience has historically been in short supply in the boardrooms of coal companies like St. Louis-headquartered Peabody. This, after all, is an industry that treated coal miners as disposable commodities until a series of disasters in the 1960s galvanized federal lawmakers and the United Mine Workers of America into demanding reforms.
And, let us not forget, this is hardly the first time coal companies have attempted to shirk their commitments to miners. In fact, as has been mentioned before on these pages, union officials argue that Patriot Coal was created to fail, after being loaded up with billions of dollars in union pensions, health care costs and environmental remediation obligations.
90 percent of the retirees that Patriot is responsible for never worked for Patriot. They all worked for Peabody Coal or Arch Coal, based in Creve Coeur. As Patriot goes through its second bankruptcy in three years, its lawyers continue to create maneuvers designed to shed the company’s obligations to these retirees.
A plan to divert $18 million set aside for health care benefits for nearly 1,000 retired Indiana coal miners (who had never worked directly for Peabody, Arch or Patriot) was withdrawn after it was subjected to public scrutiny and criticism.
But now Peabody is attempting an even more audacious scheme that would allow it to escape $145 million in promised payments to a trust fund set up in the wake of Patriot’s last bankruptcy.
The trust fund was supposed to provide health care benefits for 12,000 retirees -- about 8,500 of them former Peabody miners. Coal companies promised $400 million to the fund, most of it coming from Peabody.
Considering that the companies themselves estimated the benefits due these miners would cost $1.45 billion, that was quite a deal in and of itself.
But not good enough, obviously, for Peabody, which now says that it shouldn’t have to make any more payments because its agreement was with Patriot, and Patriot is going out of business.
If Peabody gets its way, the trust fund will be depleted even earlier than anticipated. With only about a third of the necessary money to begin with, the trust fund — much like Patriot itself — wasn’t designed to last.
Some elected officials suggest that taxpayers should pick up the tab. Bills have been introduced in Congress to do just that. When he introduced a bill to protect retirees’ health care benefits in 2013 during Patriot’s first bankruptcy, U.S. Rep. Ed Whitfield, R-Ky., said it was important to “ensure that the hardworking miners who took to the mines day in and day out don’t lose the health care that they have rightfully earned.”
The miners did earn the benefits promised to them. But it’s also important to remember who made the promise. It wasn’t the taxpayers of the United States, but a coal company that profited handsomely from the labor these miners provided.
Peabody should honor its commitments, in full, to these miners. As Temple University business professor Bruce Rader wrote in a recent article, “This is a perfect example of the use of the legal system to socialize the costs and therefore lead to a transfer of costs to the general public from the shareholders of a company.”
The effort to socialize costs has not hurt the bottom line for Peabody executives. Gregory Boyce, the executive chairman who is set to retire Dec. 31, reportedly was paid a handsome $10.99 million last year.
Coal company boardrooms may be full of “dirty, low-down rotten scoundrels,” but a properly functioning legal and political system would not allow them to get away with abandoning thousands of miners and hundreds of millions of dollars in obligations.
Reprinted from the St. Louis Post-Dispatch
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