Bankruptcy Of Major Coal Company Is Terrible For Retired Miners
Retired coal miners got the news Tuesday that they’ve feared for years: Murray Energy has filed for bankruptcy.
The biggest privately owned coal company in the U.S., Murray is the eighth coal company to seek Chapter 11 protection this year alone, according to The Wall Street Journal. Its founder, Bob Murray, has aspired to be the last man standing in an industry suffering a long decline. He is stepping down as chief executive but will serve as chairman of the board for the company’s new incarnation, according to a statement.
Critically for retired miners, Murray Energy is the last large coal operator paying into the pension fund of the United Mine Workers of America. That fact has made strange bedfellows out of Murray and UMWA retirees: He is infamously anti-union as a boss, yet his continued payments into the pension fund have helped keep it afloat for years.
But through bankruptcy proceedings Murray Energy will very likely be able to shed much of its pensions obligation, threatening a fund that is already on the brink of insolvency. This could lead to pensions being cut within a year, according to the UMWA. As the union’s president, Cecil Roberts, put it in a statement, “We have seen this sad act too many times before.” The pension fund covers roughly 86,000 retirees.
Despite the Trump administration’s repeated claims of a coal turnaround, the industry has been getting hammered for years due to cheaper energy alternatives like natural gas. Company bankruptcies and falling employment have hit the pension fund hard. The union says there are around 12 inactive miners drawing pensions from the fund for every current worker whose employer is making contributions ― an unsustainable ratio that the Murray bankruptcy will make even worse.
HuffPost spoke earlier this year with retired miners who had worked decades for the pensions they now collect. The modest monthly checks ― around $1,000 for many ― serve as a lifeline. Roger Merriman, a retiree who put in 28 years at the Federal #2 Mine in West Virginia, told HuffPost that if pensions are cut, the bankruptcy process deserves a significant share of the blame.
“A lot of it falls on the downturn of the coal market. But a lot of it falls on the bankruptcy courts, allowing these companies to walk away from their obligations,” said Merriman, whose old mine is out of operation. “A company files for bankruptcy, we are the last in line to get our money.”
Phil Smith, a UMWA spokesman, said the union has been expecting a bankruptcy filing from Murray Energy for a long time, particularly after the company announced earlier this month that it had missed payments on its debt. The union has projected that the pension fund will become insolvent by 2022 or 2023, leading to deep cuts in once-guaranteed monthly payments, and the latest development does not alter that timeline much.
But the news is no less painful, Smith said. He suspects that the bankruptcy could prompt the pension fund’s trustees to cut payments for retirees by next September. Meanwhile, Murray will probably escape a large share of its liabilities in the retiree health fund as well, jeopardizing a program that provides health coverage to thousands of former miners.
The union has been lobbying lawmakers to shore up both the pension and health funds using excess money from the federal government’s program for abandoned mine lands, which provides grants to states to rehab polluted former mining sites. Shifting the money would require an act from Congress.
“Now there’s no reason other than anti-union ideology to not pass a specific fix for the mine workers’ pension plan so all these pensioners can stay out of this trouble,” Smith said.
The UMWA pension plan is a multiemployer plan that many different companies pay into. When a company ― especially one as large as Murray Energy ― bows out of the plan due to bankruptcy, it squeezes whatever others remain. The more employers leave, the more endangered the plan becomes.
Coal is one of several industries with a looming crisis in multiemployer pensions. The Pension Benefit Guaranty Corporation, the government-run entity that backs up defined-benefit pensions, says roughly 130 such plans are projected to become insolvent within 15 to 20 years. The PBGC says its own insurance program for troubled multiemployer pensions could be emptied out by 2025 without intervention from Congress.
That, in turn, could lead to more than a million retirees getting pennies on the dollar for their pensions.
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