Judge Rules Coal Company Can Eliminate Kemmerer Retirees' Health Care, Union Contract

 

 

By Heather Richards

February 17, 2019 - In Wyoming, retired coal miners from Kemmerer likely lost their company health benefits Friday when a judge decided that Westmoreland Coal Co. could eliminate retirement health care and a union contract in order to sell the Kemmerer coal mine to a Virginia businessman.

Judge David R. Jones of the U.S. Bankruptcy Court in Houston said he would not enter a final order on the matter until Tuesday, giving the United Mine Workers of America and the coal company time to negotiate a deal.

Miners who had gone down to Texas to plead their case were disheartened by the ruling but said they would continue fighting even if it led to a strike.

“I have very mixed emotions about it,” Cullen Pace, a coal miner at Kemmerer, said of the judge’s decision. “We really got our a—— handed to us, but I’m hopeful in the fact that we can get a new contract.”

Westmoreland filed for bankruptcy in October. The Colorado Springs, Colorado-based firm is one of the oldest coal operators in the U.S. It had taken on more than $1 billion in debt when it filed for bankruptcy last year and was struggling to operate under that debt given the well-known headwinds of the coal market, it argued in court filings.

In order to sell the Kemmerer mine to new operators, Westmoreland has argued that it must eliminate union agreements that affect the nearly 300 employees of the western Wyoming mine as well as obligations to retired miners and dependents, many of whom still reside in the region.

United Mine Workers of America had argued that responsibilities to employees and former miners of Kemmerer are protected in binding contracts between the miners and owners of the mine. That argument now becomes one for a Virginia billionaire to hear instead of the judge.

The man trying to buy the Kemmerer mine, Tom Clarke, said in an interview Friday that changes to employee benefits are “painful” but necessary.

Benefits at Issue

 

Clarke is the stalking horse bidder for the Kemmerer mine via an LLC in Virginia. A stalking horse is a qualified buyer named by a bankrupt company ahead of asset auction. A stalking horse is intended to encourage competition and potentially raise bids at auction. Clark is also his own guarantor for the cost of the Kemmerer bid, via an affiliate company.

He said he sympathized with the workers.

“It’s a story of Wall Street versus the average person that fully expected after putting in a lifetime of work at the mine (that) they were going to have a certain pension and a certain health package,” said Clarke, whose business ventures started in health care but have touched on coal, oil, iron ore, parks and hotels.

The long-term toll coal mining takes on the body means long-term health concerns, he said.

“When you are 55, you feel like you are 70,” he said.

But, despite this voiced sympathy with the miners, as a buyer of the Kemmerer assets, Clarke is adamant that he will not pay for legacy liabilities of the Kemmerer mine. Pension and union contracts would be retained — if refashioned — but the health care of retirees and dependents is too much of a cost, he said.

“We can’t afford that, nor could anybody else,” he said.

Mike Dalpiaz, vice president of United Mine Workers of America District 22, which represents the miners in Kemmerer, said that someone was going to have to pay.

“If we get them people taken care of, Tom Clarke doesn’t have to take care of them,” he said. “But, somebody is going to take care of them, or that coal is not going to be mined up there. It’s about that simple.”

There are 1,500 union retirees and dependents affected by Westmoreland’s attempt to pull its health care obligations, including the Kemmerer miners, Dalpiaz said.

“We don’t take that lightly,” he said. “If people want to throw out grandma and grandpa like the court did, they’re going to have a hell of a fight to do it.”

The union was struggling on two fronts, Dalpiaz said. They were fighting with Westmoreland — which would like to cut retiree benefits but freeze current pensions — and with the likely new owner of the Kemmerer mine, who also says the retirees are too big of a cost and has plans to change the union contract.

Now it’s between the union and Clarke, he said.

Clarke said the contractual changes would not be major and would reflect the changing economics for the mine, which just lost a significant buyer of its coal: one of the coal-fired units at the neighboring Naughton power plant.

Dalpiaz was adamant that the Kemmerer contract would remain strong or the miners would refuse to work.

“We are not going to work under slavery conditions,” he said. “We are going to protect our troops.”

Past Ventures

 

Though he would be a newcomer to Wyoming mining, Clarke’s venture in the coal industry started unexpectedly during the coal bust a few years ago when he bought Patriot Coal Corp. Formed as a spinoff of Peabody Energy in 2007, Patriot lightened Peabody’s liabilities by taking on around 40 percent of the coal giant’s retirement and health care costs, not to mention its cleanup obligations in Appalachia. The firm buckled under its own weight five years later. It emerged from bankruptcy only to fall back by 2015.

That’s when Clarke, a newcomer, bought some of Patriot’s idle mines and its working Federal Mine, which was represented by the United Mine Workers of America.

Clarke noted that few have taken on the role he has in buying up distressed coal mines and bringing them back to life.

Some of Clarke’s business dealings have been more successful than others. He ran into trouble after acquiring an iron ore operation from a bankrupt firm in Minnesota a few years ago. The venture crumbled; Clarke was ousted as executive and faced with numerous legal affronts. The experience, he said, was a lesson in choosing like-minded partners and investors. He claims he lost more than $40 million in the iron ore business. He also got into some hot water in Virginia after debt funding the purchase of a park in order to cede it to the public and then coming in late on debt payments, according to reporting in the Roanoke Times.

Nearly 300 miners were employed at the Kemmerer mine as of December. The mine produces coal for PacifiCorp’s Naughton power plant. It also trucks out coal to a nearby trona operation. It’s been in operation for more than 100 years and unionized nearly as long.

 

Westmoreland’s lenders are pledged to pay $6 million in retiree benefits for one year. The retirement benefits slashed Friday were estimated to be $329 million, according to reporting in the Wall Street Journal.