Bankruptcies Fuel Uncertainty In Coal Communities

Peabody Coal, one of the largest coal producers in the world, is teetering on the edge of bankruptcy. It would be the latest in a string of major coal companies going under. But drive through Wyoming's Powder River Basin, where 40 percent of U.S. coal is mined, and it's as if nothing has changed, even at sites owned by bankrupt companies.

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Peabody Energy is one of the world's largest coal companies. And recently, its leaders recommended that the company file for bankruptcy. If the coal giant does go under, it would be the latest in a string of major coal producers to file for Chapter 11. But many mines owned by bankrupt companies are still blasting dynamite and scooping up coal. Inside Energy's Leigh Paterson reports on what bankruptcy really means in the coal business.

LEIGH PATERSON, BYLINE: At the end of last year, more than one-third of the coal produced in Wyoming was mined by a company in bankruptcy.

JEAN WAGNER: I'm very worried about what's going to happen.

PATERSON: That's Jean Wagner, a former miner who lives in Gillette, Wyo.

WAGNER: Because coal mining has done a lot for the communities, and it's done a lot for the people that work at them.

PATERSON: But bankruptcy does not mean that a business just shuts down. And it's not all that uncommon. Last year around 6,000 companies filed for Chapter 11 bankruptcy. Under that scenario, a company comes up with a reorganization plan that allows it to stay alive and pay back some of its debts over time. One thing companies often do is cut jobs.

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED MAN: It's common story here in eastern Kentucky. The coal industry continues to see round after round of layoffs.

PATERSON: TV news station WYMT reported on potential cuts at Alpha Natural Resources in July, just weeks before the coal producer declared bankruptcy. According to data from S&P Global Market Intelligence, central Appalachia lost around 19 percent of its coal mining jobs last year. In Wyoming, the drop was a lot smaller, just 1.5 percent. But coal production in Wyoming has fallen by 14 percent since 2011. State revenues from that production are down too. And then, there's another impact to worry about - cuts to retiree benefits, like medical and life insurance. Cecil Roberts is the union president of the United Mine Workers of America.

CECIL ROBERTS: When it comes to bankruptcy, the ones that lose the most are the workers and the retirees.

(SOUNDBITE OF PROTEST)

UNIDENTIFIED PROTESTERS: (Chanting, unintelligible).

PATERSON: Roberts was arrested a few years ago at protest in West Virginia. Crowds gathered to demonstrate against Patriot Coal, a spinoff of Peabody Energy, because the company was trying to reduce benefits for thousands of unionized workers. Bankrupt, Alpha Natural Resources recently asked for permission to cut medical and life insurance for nearly 5,000 nonunion retirees. In court documents, the company refers to this $125 million liability as a, quote, "financial burden." And the uncertainty for coal communities doesn't end there.

SALLY JEWELL: I think there's a very significant potential problem and risk to the taxpayer with the pretty high-profile bankruptcies that have taken place recently with coal companies.

PATERSON: That was Sally Jewell, the interior secretary, at a recent Senate hearing, answering questions about another concern, recovering coal mine reclamation costs. That's the funding to put the land back the way it was before mining began. Across the country, major bankrupt coal companies have hundreds of millions of dollars in cleanup liabilities. These are among the many debts being dealt with in bankruptcy court. And here's the thing. Although bankruptcy can mean serious short-term pain in coal communities, many are rooting for companies to work through it because shutting down completely could be even worse. That's the outcome Pat Sweeney is hoping for. He's advocated for western land issues for over 40 years.

PAT SWEENEY: From our point of view, we want coal companies to continue to operate because a viable coal company is the one whose the best at reclaiming the land.

PATERSON: Negotiations are ongoing between bankrupt coal companies and their creditors over all kinds of debts. But, at least in one recent case, there's a bill that will likely be paid. In January, a bankruptcy judge approved up to $12 million in bonuses for executives at Alpha Natural Resources. For NPR News, I'm Leigh Paterson.

GREENE: And that story comes from Inside Energy, a public media collaboration that focuses on America's energy issues.

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