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Coal company's bankruptcy gets pushback from miners over health care benefits

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Naughton Power Plant

Coal is brought into PacifiCorp's Naughton Plant from the adjacent Westmoreland coal mine in 2014 in Kemmerer. The union representing workers at the mine has objected to the company's bankruptcy reorganization plan.

Unionized coal miners are fighting the Westmoreland bankruptcy, arguing that the firm that owns the Kemmerer mine is moving at an unreasonable pace and attempting to undermine its obligations to workers.

The United Mine Workers of America, which represents the miners at the Kemmerer mine, objected to the company’s reorganization plan Thursday in the U.S. Bankruptcy Court in Houston.

Westmoreland filed for bankruptcy Oct. 9 and is rapidly moving through Chapter 11, announcing from the outset a deal with a lender group that would restructure $90 million of debt and sell off its core assets. Like most coal firms in the country, Westmoreland has been affected by the declining demand for thermal coal as natural gas outpaces the black rock in the U.S. power market.

According to the union, Westmoreland’s lender would have significant oversight over bargaining agreements and retiree benefits for workers, under the proposed restructuring.

UMWA argues that Westmoreland is subverting the process laid out by Congress to allow companies going through bankruptcy to make changes to union agreements and retirees’ health care benefits, with the courts having ultimate authority. According to court documents, the union is also objecting to Westmoreland’s “artificially fast timetable” to move through this bankruptcy.

The debate goes back some time. In a Sept. 18 letter from Westmoreland to union legal counsel, the company said it was “disappointed” by the union’s approach to the issue of benefits.

“The unfortunate reality is that Westmoreland Coal Company and its subsidiaries cannot survive as a going concern without material changes to the retiree medical benefits currently offered to union employees and retirees,” the letter states. “We will be filing for Chapter 11 protection shortly and we will have no choice but to address this pressing issue.”

The company did not respond to a call late Friday for comment on this story.

In a separate court filing, the United Mine Workers of America noted that Westmoreland has confused its various obligations to retirees. The company had attempted to negotiate with the union to eliminate “retiree benefits” going forward, lawyers allege in court documents. However, the union has no authority over some of the benefits that Westmoreland is obligated to pay into, lawyers argue.

Congress set up benefit funds for miners that companies involuntarily pay into via taxes. Those obligations, the lawyers say, are non-negotiable.

This disagreement is also noted in letters between the union and Westmoreland prior to bankruptcy.

In a Sept. 14 letter, included in the union’s court documents, the union told the company that if it wanted to attempt to eliminate the benefits under the Coal Act it needed to approach the Congressional Board of Trustees that oversees the 1992 Benefits Plan. The union said any attempt to cut benefits would result in a work stoppage at the Kemmerer mine.

Westmoreland countered that the United Mine Workers of America had traditionally been the representatives for retirees on issues concerning the Coal Act and expressed disappointment that the union would not negotiate ahead of bankruptcy filings.

Miners in Kemmerer are in the midst of bargaining a renewal contract with the bankrupt company, a process that began in early summer.

The firm’s financial troubles have slowed the bargaining process, union reps previously told the Star-Tribune. The mine, a key economic driver in the rural area, employed 286 miners as of June.

Union representatives declined to comment on the bankruptcy filing.

The miners are not the only group objecting to Westmoreland’s pace and plan. The Kemmerer mine is the exclusive coal provider for PacifiCorp’s Naughton coal-fired power plant. The Oregon-based utility – parent company to Rocky Mountain Power – argues that if Kemmerer were to suddenly shut down it would jeopardize the company’s ability to provide electricity to its customers.

The proposed plan from Westmoreland would “advance the interests of private financial creditors over public utilities and their customers” PacifiCorp’s lawyers argued in an objection filed Thursday to some aspects of Westmoreland’s plea for relief.

Follow energy reporter Heather Richards on Twitter @hroxaner


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Energy Reporter

Heather Richards writes about energy and the environment. A native of the Blue Ridge Mountains in Virginia, she moved to Wyoming in 2015 to cover natural resources and government in Buffalo. Heather joined the Star Tribune later that year.

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