UMWA ratifies new contract with Patriot Coal

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5-year agreement provides significant improvements over bankruptcy judge’s order

DEMANDING FAIRNESS, thousands of mine workers and supporting union members rallied outside the corporate headquarters of Peabody Energy in downtown St. Louis Aug. 13, demanding Peabody and Arch Coal make good on their contractual agreed to promises to provide lifetime healthcare to mine workers. Labor Tribune photo
DEMANDING FAIRNESS, thousands of mine workers and supporting union members rallied outside the corporate headquarters of Peabody Energy in downtown St. Louis Aug. 13, demanding Peabody and Arch Coal make good on their contractual agreed to promises to provide lifetime healthcare to mine workers.
Labor Tribune photo

By TIM ROWDEN

Associate Editor

Members of the United Mine Workers of America (UMWA) ratified a settlement the union reached with Patriot Coal last week that makes significant improvements in terms and conditions of employment over a federal bankruptcy judge's order from last May.

The settlement was voted on by miners who work at Patriot Coal operations in West Virginia and Kentucky. The final tally was 85 percent in favor to 15 percent opposed. Members from 13 local unions participated in the vote.

“The membership has made it clear that they are willing to do their part to keep Patriot operating, keep their jobs and ensure that thousands of retirees continue getting the health care they depend on and deserve,” UMWA International President Cecil E. Roberts said in a statement. “This has been a difficult and uncertain year for our members. But I believe that in the end, they understood that we had done a lot to improve what the judge had ordered. They also understood all that was at stake and resolved to move forward in a positive way.”

NEW PACT

The five-year contract represents significant improvements over what federal Bankruptcy Judge Kathy Surratt-States ordered on May 29, 2013. Those improvements include:

• Restoration of all but $1.00 per hour in wage cuts that were as high as $7.53 per hour for some job classifications;

• Annual wage increases of $0.50 per hour beginning Jan. 1, 2015;

• Keeping Patriot in the UMWA 1974 Pension Fund, meaning there will be no affect on pension benefits for current retirees, and currently active members will continue to earn pension credit;

• Elimination of monthly premiums for health care benefits;

• Reduction of the annual out-of-pocket maximum for health care benefits by 60 percent, from $4,000 to $1,600;

• Restoration of life insurance benefits, vision care benefits, dental insurance and Accidental Death and Dismemberment insurance;

• Establishment of a Voluntary Employee Benefit Association (VEBA) as the mechanism for paying retiree health care benefits going forward. As part of the settlement, Patriot gave the union a 35-38 percent stake in the company. The VEBA will be funded by initial contributions by Patriot, the sale of the union’s stake, and ongoing royalty payments of $0.20 per ton of coal mined by the company.

“We were able to significantly modify and improve upon what the Judge ordered in this settlement,” Roberts said. “I told Patriot management that I could not recommend that our members work under the Judge’s order, and they understood that we would not. That understanding enabled us to work out this settlement over the past months since the order came down.”

Patriot President and CEO Bennett Hatfield said: "Ratification of these agreements provides labor stability and ensures cost savings essential to Patriot's plan of reorganization. These agreements should set Patriot on a path to emerge from bankruptcy by the end of 2013."

The bankruptcy court still must approve the agreements. A hearing is scheduled for Tuesday, Aug. 20.

Created by St. Louis-based Peabody in 2007, Patriot was spun off from the coal giant with 43 percent of Peabody’s liabilities but just 11 percent of its assets.

Arch Coal created Magnum Coal in 2005 and unloaded $560 million in retiree health care liabilities onto the new company. Patriot acquired Magnum and its liabilities in 2008.

NOT LETTING PEABODY OR ARCH OFF THE HOOK

 “As we work to keep Patriot a viable company into the future, we have not forgotten how we got here and who is responsible,” Roberts said.

ROBERTS
ROBERTS

“With this agreement, we have foiled the schemes of Peabody Energy and Arch Coal by continuing to both provide health care for retirees and maintain union jobs at these mines.

Roberts noted that the settlement with Patriot does not provide enough resources to fulfill the promise of lifetime health care benefits that Peabody and Arch agreed to provide to thousands of retirees from those companies.

“We are now able to turn our full attention to securing the lifetime health care benefits Peabody and Arch promised these retirees,” Roberts said. “If those companies thought our public effort to highlight their poor corporate citizenship was over, they will quickly find out otherwise. We’re moving into a new phase of that effort, and soon. We fully intend to hold Peabody and Arch accountable.”

 RALLY IN ST. LOUIS

Toward that end, the miners were in St. Louis again last week, rallying outside Peabody Energy’s headquarters a few days prior to the vote.

UMWA officials, including secretary treasurer Dan Kane, repeated at the rally that Peabody and Arch are still responsible to their former employees.

KANE
KANE

"We might come to some kind of agreement with Patriot, but that doesn’t end anything with Peabody," Kane told the crowd in Kiener Plaza. "We said from the beginning that it’s not over until we say it’s over, and I’m telling you today Peabody it ain’t over."

Joining the miners at the Aug. 13 rally was Randi Weingarten, president of the American Federation of Teachers (AFT).

"We're here because we understand this fight. This is a fight about a promise that is as old as the promise of America," Weingarten said. "America's corporations can't turn their back on those who grew America!"Weingarten 2

Randy Kiser, Midwest field representative for AFL-CIO, told the miners, “The fight you’re leading here today is for the entire labor movement… This is not a fight that we wanted to have, but if these folks in this building want to have this fight then, they’re not only taking on the mine workers, they’re taking on the 13 million members of the AFL-CIO.”

REMEDIES

KISER
KISER

A lawsuit on behalf of UMWA members, filed in federal court in Charleston, West Virginia, charges that Peabody and Arch violated the federal Employment Retirement Income Security Act (ERISA) by scheming to eliminate contractually guaranteed lifetime health care benefits for retirees.

The miners have also reached out to lawmakers, seeking their support for legislation to aid retired miners and their survivors. .

“It is more critical than ever that the bipartisan legislative efforts in Congress to provide help to these retirees move forward,” Roberts said. “This settlement has not solved that problem, it has only bought us time to seek a more permanent solution.

“The clock is now ticking towards a day when the funding we have been able to secure for retiree health care benefits will run out,” Roberts said. “It would be unconscionable to leave these senior citizens hanging, wondering if they will be again thrust into the uncertainty they have endured the last 13 months. I urge our friends in Congress on both sides of the aisle to move as fast as they can to renew the government’s promise to these retirees, their dependents and widows.”

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