Alpha Bankruptcy: Coal Not Keeping The Lights On For Miners

Alpha bankruptcy endangers Appalachian miners

On May 9, U.S. Bankruptcy Court Judge Kevin R. Huennekens, granted Alpha Natural Resources’ motion to sever its contract with United Mine Workers of America in order to reduce retiree benefits. While coal keeps the lights on for millions of Americans, coal will no longer be keeping the lights on for retired coal miners if Alpha continues to receive approvals for its bankruptcy motions.

Alpha and numerous affiliates filed for Chapter 11 bankruptcy relief in August 2015. In a document filed in November 2015, the company requested “the entry of an order authorizing the Debtors to terminate, effective as of December 31, 2015 certain unvested, non-pension welfare benefits.” Included in these welfare benefits are the Retiree Medical Plan, the Limited Health Reimbursement Arrangement, and the Life and Accident Death and Dismemberment Benefit Plan, which affects retired non-union miners, Disabled Legacy Massey Employees and Disabled Foundation Coal. According to the bankruptcy motion, 4,580 retired miners, spouses, surviving spouses, and disabled miners participate in the affected plans.

In March 2016, Alpha went further when it filed a bankruptcy motion requesting permission to reject obligations set forth in collective bargaining agreements with UMWA, which would allow it to modify healthcare obligations to union retirees. The bankruptcy motion states the requested modifications will affect 610 current employees and 2,600 retirees.

UMWA fights Alpha
Also included in Alpha’s bankruptcy motion are jabs at the UMWA, who Alpha claims “has failed to bargain in good faith… and has continually and without good cause refused to seriously discuss — much less accept” the company’s proposals. To further its argument, Alpha acknowledged the reductions would present hardships to those affected but maintained that “shared sacrifice” was necessary. Alpha also indicated cuts of $60 million were required to keep the company operational. In addition, it complained the sole counteroffer from the UMWA would result in only $2 million in savings.

The bankruptcy motion presented to the court in March came less than two months after Alpha submitted a report to the U.S. Securities and Exchange Commission detailing its plan to pay up to $11.9 million in executive bonuses over the next 12 months. In a Forbes article published shortly after the SEC report’s filing, it was reported the U.S. Department of Justice viewed the payment of millions of dollars in executive bonuses while simultaneously cutting employee and retiree benefits as, in the author’s words, “fundamentally unfair.”

The UMWA did not remain silent in its outrage over the executive bonus proposal filed during bankruptcy proceedings. In a report released on Jan. 20, Cecil E. Roberts, who is the International UMWA president, spoke out against Alpha’s plan.

“This is greed in its most raw and ugly form. The outrageous bonuses Alpha intends to pay will be based on how much executives cut costs, which will provide extra incentives to cut hourly workers’ jobs and eliminate long-term obligations to retirees. These are not bonuses. They are bounties for destroying workers and retirees lives.”

Although the UMWA filed its objections to the proposed bonuses, Judge Huennekens approved the bonus plan on Jan. 23. An article on the judge’s ruling published in the Lexington Herald-Leader reported that the bonuses would be determined “based on how well the company meets goals in areas such as cutting costs.”

The newest ruling by U.S. Bankruptcy Court Judge Huennekens in the Alpha case has served to add insult to injury and resulted in outrage in Appalachia. According to the Bristol Herald Courier, the ruling came as no surprise to UMWA officials, who are reported to be currently examining their options.

With executive bonuses approved and union benefits cut, Alpha’s next bankruptcy court appearance is a May 17 hearing on its request to cut non-union benefits. Reports on this upcoming hearing, such as one in the Billings Gazette, highlight the fact that the consequences of Alpha’s bankruptcy reach far beyond its Appalachian base. In fact, nearly 400 miners in Wyoming will be affected if the proposal, estimated to allow an annual savings of $3 million and the removal of $125 million in liability, is approved.

As the Alpha bankruptcy proceedings continue, a dangerous precedent is being set. As coal prices and demand continue to dwindle, other coal companies may follow Alpha’s lead by filing for bankruptcy protection, leaving thousands more active and retired miners with decreased or terminated benefits. For those already affected by Alpha’s bankruptcy, the loss of health benefits will increase medical costs, making it harder than ever for miners to pay day-to-day living expenses. So much for coal keeping the lights on.

[Photo by Amanda Gardner]