UMWA claims two largest coal companies created short-lived spinoffs to avoid paying miners' benefits

"Over the past decade, Peabody Energy and Arch Coal, the nation's largest coal companies, offloaded large amounts of retiree healthcare obligations to new companies that now face bankruptcy. The United Mine Workers of America says that the spin-offs were designed to fail in order to clean the companies' books of their retiree debts," reports Mike Elk of In These Times, a liberal, union-oriented newspaper based in Madison, Wis. (Charleston Gazette photo by Chip Ellis: West Virginia miner Robert Berry at UMWA rally)

Peabody created Patriot Coal in 2007, which inherited more than $500 million in healthcare pensions to UMWA miners in Kentucky and West Virginia. In 2008, Patriot bought Magnum, an Arch spin-off that had another $500 million in pensions and benefits due UMWA miners. Patriot, claiming it was unable to pay these pensions, filed for bankruptcy in 2012. The company has asked to be released from having to pay pensions to about 10,000 miners. In response, the UMWA is suing Peabody and Arch, claiming Patriot was designed to fail in order to release Peabody from retiree obligations. The union cites the Coal Act of 1992, which states that companies are required to pay lifetime benefits to UMWA coal miners. (Read more)

The Charleston Gazette's Ken Ward Jr. reported in August 2012 that miners feared they would lose UMWA benefits because of Patriot's attempts to use bankruptcy reorganization to "rewrite its contract with the UMWA and discard such liabilities." UMWA President Cecil Roberts told Ward that the union was "prepared to go to the mat over this," and that it was "an enormous challenge for the union."