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Major Appalachian Coal Company Files For Bankruptcy Protection

In what is the latest sign of problems for the U.S. coal industry, one of the country’s largest coal producers has filed for Chapter 11 bankruptcy protection.

West Virginia-based Revelation Energy LLC and its recently-formed affiliate, Blackjewel LLC, began the bankruptcy reorganization process in the U.S. Bankruptcy Court for the Southern District of West Virginia on Monday.

The companies, owned and controlled by Milton, West Virginia, resident Jeff Hoops, a longtime coal executive, employ about 1,700 employees across its Central Appalachian coal mining holdings and two large Wyoming coal mines, which were acquired in 2017.

In court documents, Revelation Energy listed 24 metallurgical coal mines and processing and prep facilities in Virginia, Kentucky, and West Virginia, as principal assets that employ 1,100 workers. The Appalachian mines have an estimated 600 million reserve tons of coal. Last year, the company mined 3.3 millions tons. The federal government’s Energy Information Administration said in 2017 that the companies’ combined output made them the country’s sixth-largest coal producer.

The companies owe millions of dollars in coal royalties, for goods and services and in taxes, which could affect government revenue in Kentucky and Virginia. According to court filings, in Kentucky state officials are owed more than $6 million in taxes. In Virginia, officials are owed $1.6 million in taxes.

The companies estimate they owe $156 million for goods and services across all properties, including $6.1 million to Rich Creek, Virginia-based United Industrial Services, Inc., and $2.7 million to Walker Machinery in Belle, West Virginia.

In a filing by Hoops in support of the bankruptcy petition, he said the companies turned to bankruptcy in large part due to adverse market conditions for coal. Hoops cited reduced demand coal-fired electricity due to the rise of cheaper forms of energy like natural gas and renewables, increased environmental scrutiny and an overall coal market downturn.

“The impact of the macro and regulatory environment is not isolated to the Debtors Performance,” he wrote. “The entire U.S. mining complex has been impacted by these events.”

However, Hoops also laid out a series of unique operational issues that have plagued the companies since 2017. For example, a November 2017 roof collapse at the Lone Mountain mining complex located in Virginia and Kentucky cost the company an estimated $1.4 million in lost revenues.

A 2017 change to Kentucky workers’ compensation laws resulted in an increase in workers’ compensation insurance rates that cost the company $20 million.

According to documents, the largest debts are owed in relation to Blackjewel’s two Wyoming properties — the Eagle Butte and Belle Ayr mines. The Hoops businesses owe $60 million in royalties to the U.S. Department of the Interior and $37 million in county taxes.

Blackjewel purchased the two Powder River Basin mines in late 2017 from Contura Energy, which was seeking an exit from the thermal coal industry. As part of the sale, Contura said it expected to write off more than $400 million in taxes and about $200 million in reclamation liabilities.

Wyoming environmental regulators temporarily blocked the sale of the Wyoming mines to Hoops, citing 42 mine permit violations at Revelation Energy’s Central Appalachia mines.

In a statement, Joyce Evans, chair of the Powder River Basin Resource Council said the bankruptcy announcement was not surprising. The nonprofit group opposed the sale of the Wyoming mines to Hoops in part due to his track record in Appalachia. In one example, a Hoops mine in Kentucky faced potential regulatory action for not addressing violations.

“The entire history of the company’s involvement in Wyoming has had red flags, starting with the fact they were essentially gifted the Belle Ayr and Eagle Butte mines by Contura to rid themselves of the liability,” Evans stated. “And importantly, Blackjewel’s owner, Jeff Hoops, is no stranger to both mine safety and environmental violations at his Appalachian companies, which is why we challenged them even being allowed to operate here.”

An April investigation by the Ohio Valley Resource, found Hoops is responsible for more than $926,000 in delinquent mine safety mines from citations from the federal Mine Safety and Health Administration.

Hoops began his career with Consol Energy at the age of 17, according to a biography on Marshall University’s website. The Hoops Family Foundation is known for its philanthropy in the area. The children’s wing at Cabell Huntington Hospital, for example, bears the Hoops name. The family is also involved in a multi-million dollar project to create a 189-acre resort in Milton complete with 100-room hotel, wedding chapel, horse stables and a nine-hole golf course.

The suit seeks to combine bankruptcy proceedings involving four companies — Revelation Energy LLC, Revelation Energy Holdings LLC, Revelation Management Corp. and Blackjewel Holdings LLC — into one case under the name Blackjewel LLC.

Chapter 11 protection makes a company free from threat of lawsuits from creditors while reorganizing finances. A majority of the company’s creditors must approve the reorganization plan.

Coal Mining Benefits Could Expire at End of April

Lawmakers from coal-mining states are pushing to extend health benefits for more than 22,000 retired miners and widows whose medical coverage is set to…

Lawmakers from coal-mining states are pushing to extend health benefits for more than 22,000 retired miners and widows whose medical coverage is set to expire at the end of April. Last December, West Virginia Sen. Joe Manchin and other coal-state Democrats won a four-month extension that preserves benefits through April 30. With lawmakers returning to the Capitol following a two-week recess, Manchin says the time for extensions is over and that more than a partial fix is needed.

Can Donald Trump Save Miners' Health Benefits?

Would you go into a dangerous profession if you were assured that you and your dependents would have healthcare and pension for life? For thousands of West Virginia coal miners, the answer to that question was yes.

“When we all started in the mines, we were promised healthcare for life – cradle to grave,” said Roger Merriman. He’s referring to a deal struck between the United Mine Workers of America and the federal government in 1946. Union miners who put in 20 or more years were promised lifelong health benefits.

But in October, 12,500 miners, including Merriman, received notice that without Congressional intervention their benefits would be terminated at the end of the year. On Nov. 1, another 3,600 miners received notices. Next year, an additional 6,500 miners will be affected.

That’s because when Merriman’s company, Patriot Coal, filed for bankruptcy in 2012, then again in 2015, a federal bankruptcy judge granted its request to shed retirees’ benefits.

Merriman said this will have a huge impact on him and his family.

“We’ll have to make a choice,” he said, “of … going to the doctors and buying prescriptions, or paying bills and eating. It’s a life and death situation realistically is what it is.”

Patriot is one of five major coal producers in the United States that has sought bankruptcy protection in the last five years. Each time the companies sought to shed employee and retiree benefits.

After the Patriot bankruptcy in 2012, the UMWA negotiated a $400 million payment to shore up the retirees’ benefit funds. But it was not a long-term solution. Existing companies pay into a UMWA fund for retirees, but as those mines close, there is less money going into the pot. The number of retired miners who are drawing from it, though, is increasing. And the fund is about to run out of money.

“We have tens of thousands of miners who are scheduled to lose their health insurance at the end of the month and more next year,” said West Virginia Senator Shelley Moore Capito. She and Joe Manchin are two of 22 bipartisan Senators calling for the passage of the Miners Protection Act.It’s unclear whether the House will support the bill.

“It passed out of committee – bipartisan – and we’re going to keep working hard, but there is no fallback position if it doesn’t pass this year,” she said.

The Miners Protection Act moves money from the Abandoned Mine Reclamation Fund into the UMWA pension and health benefits program.

The wildcard is Senate Majority leader Mitch McConnell of Kentucky. Although McConnell says he does not oppose the bill, he has yet to bring the bill to a vote. In an email, a McConnell representative did not clarify the Senator’s position, beyond stating “there are no scheduling announcements to be made at this time.”

So what role does President-elect Donald Trump play in all this?

“Looking forward, we have a President-elect who has promised to get our coal miners working again,” said West Virginia University law professor Patrick McGinley. McGinley said Trump is in a position to make a huge difference in the lives of about 120,000 miners and their widows.

“I think a strong and forceful statement by [the] President-elect to Senator McConnell could move this bill along to passage.”

McGinley added if Trump does put coal miners back to work, more money could come from the active mines to shore up the retirees’ pensions and benefits. But until then, without intervention, thousands of miners, including Roger Merriman, may be forced to make some tough choices in the coming year.

Appalachia Health News is a project of West Virginia Public Broadcasting, with support from the Benedum Foundation.

Miners Rally to Save Health Benefits and Pensions

Jennings Harrison worked in a coal mine for 36 years, over which time he accumulated back problems, neck problems, carpal tunnel in his wrist and precancerous nodules on his lungs.

“If we didn’t have the healthcare, we’d be hurting,” he said.

By this time next year, not having healthcare could be a reality for him, though.

That’s because Harrison worked for Peabody Energy, then Patriot Coal. Both companies filed for bankruptcy in the last four years.

A little background. In 2007, Peabody created Patriot Coal. Peabody assigned Patriot 13 percent of its coal reserves and 40 percent of its health care liabilities. In a nutshell?

“Peabody was attempting to shed enormous amounts of its existing liability by creating Patriot,” said West Virginia University law professor Patrick McGinley in a Skype interview. McGinley is co-editor of a treatise on coal law and regulation.

“And whether or not Patriot would survive was the question, but there’s a fairly good argument that that’s what Peabody was trying to do at the time,” he said.

As part of a union contract, miners who have put in 20 or more years were promised lifelong health benefits.

But when Patriot filed for bankruptcy in 2012, then again in 2015, a judge granted Patriot’s request to shed retirees benefits. The United Mine Workers of America stepped in and negotiated $400 million from Patriot and Peabody. The companies came up about $100 million short. Those band aid funds will run out by the end of this calendar year.

Without healthcare benefits, Harrison said he could be forced to declare bankruptcy himself.

“I mean after working all your life in the mines and I was promised healthcare and stuff, pensions and stuff, it’d be a shame to lose that when you really need it,” said Harrison.

Carl Egnor drives past an old Patriot mine now owned by Black Hawk in Boone County.

Harrison is just one of almost 22,000 retirees and their dependents from seven states who are slotted to lose their benefits by the end of the year. Today, thousands of these active and retired coal miners from seven states are expected in Lexington, Kentucky, for a United Mine Workers of America rally to fight for those benefits.

“They are going to have to make some very, very difficult and frightening choices,” said Phil Smith, Director of Communications and Governmental Affairs for the United Mine Workers of America.

“Are they going to be able to buy the drugs that they need or pay rent? Are they going to be get the healthcare they need – go see the doctor – or buy food?”

In 1946, United States Government and the UMWA signed an agreement that guaranteed miners with 20 or more years on the job benefits for life. Smith said this is the only such agreement that has ever been signed between the U.S. government and a union.

The miners are rallying today to ask the government to honor that promise.

“What is required at this point is legislation that we are looking at in Congress that would preserve these healthcare benefits for these people that will lose them as a result of these bankruptcies, said Smith.

Protections for miners’ health care and pensions were included in a December 2015 bipartisan budget plan. The plan itself made it through both chambers of Congress, but did not include the additional funding aimed at protecting miners’ health care and pensions. It’s not completely clear why, but Senate majority leader Mitch McConnell opposed the provision. However, it is well known that McConnell has repeatedly clashed with the UMWA.

An emailed statement from a McConnell spokeswoman said he “has been and remains committed to helping ensure the retirement security of our nation’s retirees, including coal miners.”

Smith is worried that “if Congress does not act, if Congress fails to act, to do its job, to keep its promise that the United States government made to these retirees 70 years ago, then the money will run out and those folks will be without their healthcare because there is no other money to take care of it.”

Five major coal producers in the United States have sought bankruptcy protection in the last five years. Each time they sought to shed employee benefits.

“Members of Congress, politicians, it’s their responsibility to fix laws when they are misused in the sort of way that many believe have occurred not only with Peabody and Patriot, but with other corporate entities as well in the coal industry and other forms of business,” said McGinley. “Congress really has to take a look at bankruptcy laws and fix it.”

Peabody did not respond to request for comment and the PR company who worked for Patriot declined comment. No other Patriot spokesperson could be found.

Editor’s Note: An earlier version of this story reported that the miners’ health care and pensions were part of a bill that was approved in 2015. This story has been corrected to show that proposal was part of a budget plan.

Appalachia Health News is a project of West Virginia Public Broadcasting, with support from the Benedum Foundation.