Getting the Shaft: The Plight of the Local Coal Miner

By Wes York

It’s no secret that the coal industry in the Tri-State, operating in what’s known as the Illinois Basin, has been hit hard in recent years by a culmination of factors, ranging from the competition of natural gas in energy production, to tougher environmental regulations enacted in Washington.

Almost everyone in the region has been impacted, either directly or indirectly, by coal production cuts and/or mine worker layoffs, which have been increasing at a steady rate since market conditions began to deteriorate. To reference one such situation affecting the industry in the region, on January 19, 2016 the Vigo Coal Company of Evansville, Indiana announced that it would be laying off 66 workers from its mines in Mt. Carmel, Illinois and Boonville, Indiana, and from its corporate office in Evansville, Indiana. In another case, as recently as February 6th, 2016 Alliance Resource Partners LP stated that it planned on laying off around 200 employees from its mine in Hamilton County, Illinois and another 75 workers from its mines in White County, Illinois. In addition, Alliance plans to cease production at the Elk Creek Mine in Kentucky in the first quarter of 2016, and lay off more miners in other locations throughout Kentucky. The layoffs continue across the heartland. Prolonged abysmal market conditions have resulted in substantial cuts in operating expenses on the part of coal producers, and the result has left many dedicated, hard working local coal miners searching for a new way to support their families.

The human toll is high, and while economically devastating, the recent layoffs are understood and accepted as one of the unfortunate ways producers weather downturns in the market and ensure that they will survive to provide the prospect of future employment to individuals and communities. What is less understood and accepted is the manner in which these miners, who have selflessly dedicated their health, and in many cases, their lives, to the coal industry have been betrayed by producers looking to protect corporate financial interests in the face of uncertainty.

The previously mentioned, Alliance Resource Partners LP has been the focus of allegations of misconduct as of late. In early March of 2016 a federal class action lawsuit was filed on behalf of former employee of Hamilton County Mine No. 1, Carl Leeper of Ziegler, Illinois, alleging that Alliance had failed to provide adequate notice to employees of the their termination, which became effective February 6, 2016. The plaintiff contends that the sudden “mass layoff” was a violation of the federal Worker Adjustment and Retraining Notification Act (WARN Act) by Alliance. Under the provisions of the WARN Act, the terminating employer must give employees a 60 day advance notice of their unemployment to allow the workers being terminated time to seek out new employment and determine eligibility for alternative health insurance programs. In fact, the class action filed on Leeper’s behalf states that Alliance officials, while aware the layoffs were imminent at the mine, knowingly denounced rumors of the layoffs when questioned by mine employees on February 2, 2016 in an effort to appease the concerns of the miners. The class action alleges that the nearly 200 plaintiffs in the lawsuit were ultimately given less than 24 hours notice of their layoff.

Furthermore, the details surrounding the terms of the layoffs are rather opaque. In Leeper’s termination notice, which was submitted with the lawsuit, the nature of the layoff was stated as temporary, however the notice also indicated that Leeper was no longer employed at the mine and that many of his benefits ended the date of his termination on February 6. The termination notice goes on further to state that Leeper could return to work at the mine on August 1, 2016 as an “at-will” employee, however the lawsuit alleges that he and other employees were told by a company manager that they would be required to reapply, undergo interviews, and that there was no guarantee of reassuming their former job, and no guarantee of employment at all. In a press release announcing the lawsuit, Leeper references an oppressive and vindictive corporate environment as his reason for filing the class action on the behalf of his fellow coworkers. “A lot of people can’t stand up to Alliance Coal because it’s no secret they would blackball us out of any future mining jobs,” he is quoted as stating in the release issued by the plaintiffs’ counsel, law firm Goldenberg, Heller, and Antognoli of Edwardsville, Illinois. “When I saw the fear in my co-worker’s eye wondering how he was going to get his young son the medical treatment he needed and what it means if he can’t, I stopped caring how big Alliance Coal is and decided I would stand up to them on behalf of Southern Illinois.”

The next case of systemic corporate misconduct we will examine is that involving the former Squaw Creek Mine in Warrick County, Indiana, located just 7.5 miles west of Boonville, Indiana, and the Patriot Coal Corporation. Presently known as the Liberty Coal Mine and under the operations of the aforementioned Vigo Coal Company, the Squaw Creek Mine was once a joint venture owned by the Peabody Energy Company and Alcoa Inc. up until 2007 when, thanks to some creative financial engineering on the part of Peabody and Alcoa, Patriot Coal was created. Under the auspices of their union contract with Peabody Energy, miners who had worked at Squaw Creek for a period of 20 years or more were entitled to a pension and to lifetime health benefits once they reached the age of 55. The health insurance benefits extended to the miners were of extreme importance due to the extensive healthcare costs some of the miners have incurred in retirement due to respiratory problems, and in some cases, rare forms of cancer thought to be caused by exposure the toxic materials miners were subjected to while working there. However, with the creation of Patriot Coal in 2007, the 208 miners formerly employed by the joint venture would soon realize that those lifelong healthcare benefits that they had been promised by Peabody and Alcoa were in jeopardy.

In the 2007 agreement between Peabody and Alcoa, Alcoa agreed to assume the healthcare obligation of the former miners of Squaw Creek, while Peabody transferred what remained of its joint venture with Alcoa to Heritage Coal, a subsidiary of the entity founded by Peabody in October of 2007, Patriot Coal. Over the course of the next five years, Peabody would begin the process of burdening Patriot Coal with a slew of massive liabilities, including about 40 percent of its total overall healthcare liabilities owed to miners throughout the company, until in 2013 Patriot collapsed under massive debt and filed for Chapter 11 bankruptcy. In the process of restructuring Patriot’s debt, it reached an agreement with the mine workers union to reassume the prior healthcare obligations it owed to Peabody’s 11,000 retirees, with Patriot committing $310 million to that cause (keep in mind the Squaw Creek obligations were still being paid by Alcoa). Patriot also received an undisclosed investment stake from a New York based hedge fund known as Knighthead Capital Management during the 2013 Chapter 11 proceedings.

Ultimately, the efforts to keep Patriot solvent proved futile, and again in May of 2015 it filed for bankruptcy. This time, however, Patriot had no interest in renegotiating the healthcare benefits it had promised to the Squaw Creek retirees. During the 2015 bankruptcy proceedings, Patriot reached an agreement with Alcoa to receive a $22 million payment from the former Squaw Creek partner, of which the majority would be allocated to paying the legal fees incurred during its second bankruptcy. Of the $22 million, only $4 million would be allocated to retiree benefits. Under the agreement reached by the two former partners of the Squaw Creek Mine, the healthcare obligations owed to the former employees of the Squaw Creek Mine would be added to the larger pool of retirees covered under the 2013 agreement between Patriot and the United Mine Workers union.

The former workers in that pool currently receive health insurance from the union supervised Voluntary Employee Beneficiary Association, but the $4 million contributed by Patriot to the fund will only cover about 18 months worth of benefits for the 208 Squaw Creek miners. Furthermore, the already stressed fund is expected to be completely depleted in less than 10 years, offering little reassurance to the former miners that the benefits they were promised by Peabody Energy are safe.

Both of the aforementioned cases exemplify corporate greed and shed light on the exploitation that coal miners have endured since the birth of the coal industry in America. While it can be argued that operating a commodity based business, or any business for that matter, in a free market society sometimes warrants drastic measures to ensure the survival of said business when market conditions deteriorate, the tactics of the corporations in these cases, and the disregard with which they have treated their employees, is void of dignity, and morally reprehensible. Coal miners risk their lives and health on a daily basis to ensure that their families are provided for, and to ensure that America has an affordable source of power. In the tri-state region they are more than just another time card, they are our fathers, mothers, sons, daughters, sisters, and brothers. We cannot allow this inhumane treatment to be accepted in any sector of corporate America, or eventually we will all be subjugated to it.

FOOTNOTE: This letter was posted without opinion, bias or editing.