(Opinion) — It never fails to amaze me how companies can hand out millions of dollars in bonuses to executives whose bad decisions led to bankruptcy, then either lay off the workers who made them profitable or take away their pensions and benefits.
Because it happens so often, and in so many industries, Americans generally respond with complacency, not outrage. Instead of supporting the workers and condemning the executives and their boards of directors, they accept the situation as a natural result of free enterprise that can’t be fixed.
Last Thursday, 465 Wyoming workers were laid off at the nation’s two largest coal mines — Peabody Energy’s North Antelope Rochelle Mine and Arch Coal’s Black Thunder mine, both in the Powder River Basin. The action wasn’t unexpected, since Peabody lost $2 billion last year and Arch declared bankruptcy in January after losing $2.9 billion in 2015. Industry analysts predict Peabody is headed toward bankruptcy as well.
Three days before it filed for Chapter 11 protection, Arch rushed to pay more than $8 million in bonuses to seven corporate officers. A similar scenario occurred at Alpha Natural Resources’ Wyoming mine when company officials received $12 million in bonuses that were approved by the bankruptcy court.
Last month Wyoming Gov. Matt Mead announced a revised energy strategy that will “double down” on the state’s commitment to coal. There are many things wrong with that plan, especially that it’s going in the opposite direction of reality: We need to stop burning coal while we still have a small window of time to keep our planet from being so polluted it’s no longer livable.
The greed of some coal company managers, and their disdain for workers, should also rank near the top on the list of reasons why the state must stop propping up the failing industry. Alpha executives have asked the bankruptcy court for permission to cut health and life insurance benefits for 4,500 retirees, while making 6,670 current employees ineligible for those benefits in the future.
Clark Williams-Derry, an industry analyst with the Sightline Institute, noted, “Bankruptcy courts often let insolvent companies curtail expenses by shredding labor contracts and slashing retiree benefits. That’s exactly what’s happened in the Alpha bankruptcy.”
Wyoming needs to keep a close watch on what benefits Arch, Peabody and other coal companies may try to take away from employees whose hard work was responsible for much of the industry’s success before the current bust.
Coal industry officials primarily blame President Barack Obama’s so-called “war on coal” for the tanking of their businesses. Wyoming officials have bought into this excuse with a fervor rarely seen on behalf of any other industry. GOP executive and legislative leaders, as well as the state’s all-Republican congressional delegation, march in lockstep and ridiculously rant about getting rid of the Environmental Protection Agency and the Clean Power Plan.
Under Mead’s leadership the state has filed numerous lawsuits against federal environmental laws in a never-ending hysterical reaction to “federal overreach.” If the state had devoted even a fraction of the time, money and energy it has spent mounting legal challenges and used those resources instead to work toward compliance, Wyoming wouldn’t be behind almost every state in the nation in the development of renewable resources and dead last in energy efficiency.
Instead of blaming Obama, state government should look at the real culprit: coal executives who drove their industry into a ditch by making a slew of bad decisions and failing to respond to the market. When coal prices were at their peak, corporate officials built up massive debts by betting the farm on metallurgical coal, which is used in steel production. They failed to recognize they were in a losing battle with cheaper natural gas, and they refused to admit that the feds and other states were serious about not allowing any new coal-burning power plants to be built.
When their finances sank to new lows and caused coal companies to file for bankruptcy protection, these same executives used the associated debt relief as a way to line their pockets while taking away benefits the workers earned. At the same time, several Wyoming coal companies have managed to use loopholes in federal law to keep mining while providing far less than the necessary funds for mine clean-up.
According to Williams-Derry, bankruptcy courts have allowed Arch to continue to set aside only $75 million to cover its $458 million in self-bonded clean-up obligations.
“Without those [guarantees], bankrupt coal companies could leave massive scars on the landscape, saddling states with billions of dollars in mine rehabilitation costs,” he noted. “It’s now anyone’s guess how the bankruptcy court will deal with the cleanup funding shortfalls. Whatever the court decides, there will be huge implications for state fiscal policy, for the financial health of the company that emerges from bankruptcy, and, of course, for landowners near Arch’s mines, who will pay a huge price if the company can’t clean up its messes.”
Arch’s bankruptcy filing has caused huge problems for other companies. It has sought to tear up its shipping contracts with the BNSF Railroad, Kinder Morgan and the Ridley coal terminal in British Columbia. All of these entities were already hurting from the coal slump, but they will lose hundreds of millions more for doing business with Arch.
What can Wyoming do to ease the pain felt by laid-off coal miners? Mead deployed Department of Insurance and Workforce Services workers to help miners with benefit questions and inform them of training and employment opportunities. Unfortunately, the Legislature cut more than $750,000 from Workforce Services’ biennial budget, so its ability to provide help to those seeking these services may be decreased.
The Wyoming Community College Commission will investigate whether community colleges can add or refine their existing vocational programs to help unemployed miners learn new skills.
But Mead can make a more valuable contribution to help out-of-work miners transition from coal to renewable resources such as solar and wind energy. He needs to quit acting like alternative energy will always take a back seat to fossil fuels. As the nation’s top coal-producing state, Wyoming has to come to terms immediately with the fact that demand for its abundant product will continue to drop as the nation focuses on the very real dangers posed by climate change.
When he announced his new energy strategy, Mead stressed that Wyoming can’t abandon coal. He told the Wyoming Tribune Eagle that “there never was a discussion that coal is too tough now and we should move away from coal to renewables.”
Well, there should have been, because it’s happening now in every forward-looking state. When he was asked by reporters if the state has a contingency plan if coal mines are idled, Mead — the chief executive of a state that relies heavily on the fossil fuels industry — made a startling admission: There isn’t a plan.
“We’re anticipating that the [coal] business will slow down, but will continue,” the governor said.
Chapter 11 affords a coal company the ability to keep mining and hopefully dig its way to recovery. That doesn’t mean the state can afford to sit idly by while demand for coal totally dries up, more companies with out-of-state headquarters pack up the money and run, and more workers are left in the lurch.
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