A Promise Made Is a Debt Unpaid

Occasionally I like to publish the writings of Fr. John S. Rausch as a guest blogger. Fr. John is Glenmary priest living in Eastern, KY. 

Coal miners are marching with angry signs to the headquarters of Peabody Energy in St. Louis and chanting shaming slogans before the offices of Patriot Coal in Charleston, WV. In both cities the United Mine Workers of America staged acts of nonviolent civil disobedience to draw attention to over 22,000 retired miners and their dependents in jeopardy of losing their healthcare benefits.  Through corporate and legal maneuvering Peabody and Patriot are attempting to offload the heritage healthcare liabilities that miners had secured over the years through contracts and agreements.  (Full disclosure: I participated in the Charleston demonstration on April 1, 2013 and was arrested for trespassing on private property.)  

            For over sixty years the UMWA negotiated contracts with coal companies that included both terms and conditions of employment for active miners, and defined income and health benefits for retired miners and their dependents.  Coal mining is one of the most dangerous occupations, so historically miners put health and safety first.  They deferred larger wage increases, longer vacations and enhanced fringe benefits in exchange for contracts that gave them greater control over workplace health and safety and the promise of guaranteed lifetime health care.  Now those promises are about to be broken.   

            In 2007 Peabody Energy created Patriot Coal by spinning off some of its assets and a large portion of its UMWA benefit liabilities.  Some economists call this pattern “dumping obligations,” and 90 percent of the retirees covered by this arrangement never worked a day for Patriot.  Arch Coal used a similar process and created Magnum Coal two years before.  In 2008 Patriot Coal bought Magnum and assumed much of the long-term heritage obligations of both Peabody and Arch.  This made Patriot Coal a top heavy company with almost $1.4 billion liability debt wobbling through the marketplace.  With the recession and weakening of coal markets, Patriot declared Chapter 11 bankruptcy in 2012 placing all forms of deferred compensation, such as the health benefits of retirees won by UMWA contracts, at the mercy of the bankruptcy court.  On the surface, Peabody and Arch dumped their heritage liabilities, and with Chapter 11 bankruptcy Patriot can renegotiate all its contracts.  The big losers: the workers.

            Catholic theology has another way of looking at business.  John Paul II tells us that the purpose of business “is not simply to make a profit, but is to be found in its very existence as a community of persons...” (Centesimus Annus, #35).  This is the meaning of the principle of the priority of labor over capital (Laborem Exercens, #12).  From the Catholic perspective, labor is not simply an input to production, but workers become subjects within community.  They cannot be used up and thrown away. 

            Catholic social teachings would still recognize Peabody Energy and Arch Coal as “indirect employers” (cf. Laborem Exercens, #17) whose obligations do not cease with the formation of Patriot, but take up when the first employer, Patriot, can no longer meet its obligations.  Indeed, a promise made is a debt unpaid.

            In general U.S. bankruptcy laws are designed to protect assets, not people.  Still the bankruptcy judge can decide if Patriot Coal was formed intentionally, or recklessly, to dump huge heritage obligations with little chance of Patriot’s success, in which case the judge can hold the former employers responsible.

            Meanwhile, approximately 1,100 retirees have written the judge citing their problems with black lung, back injuries, heart disease, and bulging discs from mining.  These miners made the profits for their companies.  They deserve health care.  Anything less, is injustice.