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Laid-Off Employees Of Bankrupt Blackjewel Mining Seek Pay, Answers

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Blackjewel miners and family members gathered in Whitesburg, KY, to learn more about the bankruptcy. Photo: Sydney Boles, Ohio Valley ReSource

This article was originally published by Ohio Valley ReSource.

Patrick Fitchpatrick has worked at Blackjewel’s D-11 coal mine in Cumberland, Kentucky, for more than a year. He said he enjoyed the work right up until he was told not to come in last Monday. 

“Everything was smooth sailing and then one day it just all goes to hell,” he said.

The country’s sixth-largest coal company filed bankruptcy last week, and Fitchpatrick was among many of Blackjewel’s 1,100 workers across Kentucky, Virginia and West Virginia who were suddenly out of work.

Then Fitchpatrick got more bad news, this time from the bank: His paycheck bounced. Fitchpatrick said he has yet to receive some $4,200 in owed wages. The father of two just bought a house and truck. Now he’s struggling to pay his bills. 

“I’m having to sell my tools, my guns, everything that I’ve worked hard for just to make ends meet,” he said. 

More than a hundred coal miners and their family members in similar situations gathered Wednesday in Whitesburg, Kentucky, in an attempt to get some answers and some of their pay from the failed mining company. Miners from across the region are largely still waiting for back wages as well as answers about the company’s future. 

Chaotic Ten Days

The coal industry is no stranger to bankruptcy. Over the last decade, a wave of bankruptcies roiled the sector as major players including Alpha Resources, Peabody Energy and Arch Coal sought to restructure under Chapter 11 protection. 

But since its surprise filing on July 1, Blackjewel’s bankruptcy has been anything but routine. 

“Obviously I don’t think last week went the way anyone was hoping or expecting,” attorney Travis McRoberts explained in a bankruptcy court hearing Saturday. McRoberts is with the firm Squire Patton & Boggs which is representing Blackjewell LLC.

Federal bankruptcy Judge Frank Volk called the hearing to discuss problems with company paychecks. 

“It has visited as we all know a significant hardship on these employees and their families,” Volk said.

Last week, Volk approved a $5 million loan to Blackjewel to help keep it afloat on the condition the company’s CEO – Milton, West Virginia, resident and multi-millionaire Jeff Hoops – would resign. 

But McRoberts told Volk the company needs more money, a lot more. It owes tens of millions in unpaid local, state and federal taxes, mineral royalties, bills to vendors and fines for environmental and mine safety violations. 

The amount of debt leaves some industry observers aghast. 

“When you look at the list of debt, it’s just like, holy cow. You know, how do you get this far in debt?” Clark Williams-Derry said. He directs energy finance at the Sightline Institute, a Seattle-based think tank that works on environmental and economic sustainability issues. He said Blackjewel’s bankruptcy has been unusually chaotic. 

“How do you get this far behind on your payments with $100,000 in the bank and not think you’re getting close to bankruptcy?” he asked.

At the Saturday hearing, Blackjewel’s lawyers told the court that without another infusion of cash, it can’t pay its Appalachian employees. Currently, the company is only paying workers in the region once they are called back to work. And so far, few have gotten that call.

Documenting Loss

At the Wednesday information session in Whitesburg, Blackjewel employees and their families packed the Letcher County Recreation Center. 

Miner Stacy Trotter, 43, who worked at a mine in Harlan County, said he found out about the layoffs when he checked Facebook after coming home from a 17-hour shift. 

“I’m about to lose everything,” he said. “I got a sick kid and no insurance … no money to feed him.” 

Trotter said his paycheck had been taken out of his account after he had already spent some of it, leaving him with an overdraft of $3,200 in his bank account. Trotter said he doesn’t know when he might be called back to work. 

County officials and attorneys urged employees to keep paperwork documenting their hardships from the sudden layoffs and lost pay. 

“You have rights under state and federal law to receive the wages that you earned,” attorney Sam Petsonk with the public interest law firm Mountain State Justice told the crowd. Petsonk said that in addition to the missing pay, he’s concerned about the company’s required payments to employee retirement plans and health savings accounts. 

On Tuesday, lawyers representing a Wyoming employee of Blackjewel filed a class action lawsuit alleging the company failed to provide adequate notice of the layoffs under the Worker Adjustment and Retraining Notification Act of 1988, more commonly known as the WARN Act. 

“This is actually the type of case that Congress really intended the WARN Act to protect against,” said Stuart Miller, an attorney with Lankenau & Miller, LLP, who is leading the case.

“Had the employer given the 60 days notice, as the acronym indicates, it gives the employees the opportunity to seek new employment, to seek new training over a 60-day period, which would certainly mitigate the devastation that is caused by a sudden closure of a facility like this.”

Kentucky Attorney General Andy Beshear has opened an investigation into the Blackjewel bankruptcy and assigned a mediator to help employees deal with debts that resulted from bounced paychecks. Governor Matt Bevin announced that the state Labor Cabinet is also looking into the matter. 

Kentucky miner Bobby Balthis found his last Blackjewel paycheck was no good. Photo: Courtesy of Bobby Balthis

Broken Trust

Bobby Balthis was among the miners at the Whitesburg event Wednesday. He worked at Blackjewel’s Clover Lick 3 mine in Harlan County. He said he was able to cash his last paycheck but then it was “clawed back,” or made void after deposit. 

“They actually took the check that I had cashed out of my savings and then charged me $12 for the company’s check that had bounced,” Balthis said.

The Kentucky Department of Financial Institutions issued a statement Wednesday encouraging banks to help affected customers by extending loan repayment terms and waiving overdraft fees, but it comes a bit late to help Balthis.

He said he knows many who are hurting who were living from paycheck to paycheck. As a veteran of the mining business, he had put some money aside in case of a layoff.

“I’ve been doing this for 27 years and you can’t never trust the coal industry, because you don’t know one day to the next,” he said.

Blackjewel’s next bankruptcy court hearing is scheduled for Friday. The court is set to consider a series of procedural motions filed by the company. Additional financing is not currently on the agenda. 

Coal hard cash

Mine Workers Sue Federal Regulators Over Controversial Mine Safety Decision

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Photo: MSHA

The United Mine Workers of America is suing the federal Mine Safety and Health Administration, or MSHA, after the agency reduced its heightened oversight of a West Virginia coal mine with a poor safety record.

MSHA has the power to declare mines with a history of significant safety violations as having a “Pattern of Violations.” Known as “POV status,” the declaration is an enforcement tool that allows the agency to increase regulatory scrutiny at a mine with repeated safety issues.

Under the Obama administration, MSHA used that authority to place the Pocahontas Coal Company’s Affinity mine in southern West Virginia on POV status in October, 2013, after two miners were killed in separate incidents within a two-week span.

This year, under the Trump administration, agency officials decided to remove POV status for the Affinity mine in an agreement with the company that resolved litigation on the matter, despite a continued record of spotty safety performance at the mine.

An MSHA inspection photograph of the equipment that killed Affinity scoop operator Edward Finney in 2013.
Photo: MSHA

The UMWA’s complaint claims that MSHA’s actions violate the Administrative Procedures Act and the Mine Act. UMWA spokesperson Phil Smith said MSHA should keep the pattern of violations status in place until the Affinity mine is proved safe.

“The message that this sends to operators and miners is that the Mine Safety and Health Administration is not going to fully enforce the law is a wrong one,” Smith said. “We think that message needs to be countered immediately.”

The union’s lawsuit echoes concerns from mine safety experts and some lawmakers, including a former MSHA director, a former member of a federal mine safety review commission, and the incoming chair of a Congressional committee with oversight on mine safety.

Path To POV

In the wake of the 2010 Upper Big Branch mine disaster in West Virginia, MSHA leadership used the POV designation to press for safety improvements at problem mines. In 2010, MSHA identified 51 mines that had safety records that could place them at risk for being given a pattern of violations notice.

This MSHA inspection photograph shows where Affinity mine shuttle operator John Myles was killed in 2013.
Photo: MSHA

In order to have the POV designation removed, the Federal Mine Safety and Health Act of 1977 mandates that the mine must receive a full inspection with no serious and substantial violations.

MSHA data show the Affinity mine has received a total of 37 significant and substantial violations in 2018. Three were issued as recently as August.

Robert Cohen, then a member of the federal mine health and safety commission, pointed out that record in a dissent to the Affinity decision when it was made public over the summer. The commission is an independent agency that provides review of legal disputes that arise under the Mine Safety Act. Cohen, who has since left the commission, said MSHA’s decision on Affinity was “legally unsupportable.”

Cohen stressed that under federal law, mines must have a clean health and safety inspection in order to have POV status changed.

Undermining Safety?

Joe Main, MSHA director under President Obama, said in a September interview that the agency’s decision to remove the POV designation from the Affinity mine may undermine the effectiveness of one of MSHA’s most powerful enforcement tools.

“I think whenever things happen where a mine can get into litigation and free themselves through a settlement agreement of the statutory penalty, that raises concern about…what kind of perception is this leaving in the mining industry?” he said.

Tony Oppegard, a mine safety lawyer based in Kentucky, said the agency’s decision to settle the lawsuit with Affinity sends the wrong message to the industry.

“They took the Affinity mine off of the pattern even though they had never complied with the statutory requirements,” he said. “I just think it’s wrong.”

The issue also caught the attention of some members of Congress who oversee MSHA. Rep. Bobby Scott of Virginia, the ranking Democrat on the House Committee on Education and the Workforce, wrote to the Department of Labor in September requesting more information about the Affinity POV decision.

Specifically, Scott wanted “to assess whether MSHA’s actions to terminate the POV exceeded its statutory authority and whether the Department of Labor acted properly.”

As Democrats assume control of the House next year Scott will likely become become the committee chair, greatly enhancing his power to investigate.

Former mining executive David Zatezalo leads the U.S. Mine Safety and Health Administration. Photo: Jesse Wright, WVPB

Industry Connections

In an August press release, United Coal Company, Pocahontas Coal’s parent company, said the Affinity site has greatly increased its safety record.

“The Affinity team was very relieved to hear that the POV is terminated, but understand our commitment and actions towards safety and compliance will not change,” Jeff Birchfield, Affinity mine manager wrote.

At a September event at West Virginia University, Assistant Secretary of Labor for Mine Safety and Health David Zatezalo, President Trump’s choice to lead MSHA, defended the Affinity mine’s safety record, calling it one of the best in West Virginia.

Zatezalo added that he has no concerns that the settlement might dilute the POV as an enforcement tool.

However, the agency’s Affinity decision has also raised questions about Zatezalo’s industry connections. Zatezalo worked for 40 years in the coal mining industry, including a stint as chairman at Rhino Resources, which operates mines in West Virginia and Kentucky.

In 2010 and 2011 the company received two POV notices from the agency Zatezalo now leads. Zatezalo also had leadership roles with coal industry associations in Ohio  and Kentucky, both of which are parties to lawsuits challenging MSHA’s regulatory changes in 2013.

MSHA officials referred questions regarding the UMWA lawsuit to the Department of Justice, which did not immediately respond to a request for comment.

Graphic: Alexandra Kanik, Ohio Valley ReSource

The agency’s controversial decision comes amid a mixed two years of industry safety under the Trump administration. Following an uptick in mining fatalities in 2017, the U.S. coal industry is on track to complete one of its safest years on record in 2018. Eight coal miners have died on the job in 2018, half of them in West Virginia. Last year, 15 U.S. coal miners were killed during work, an unexpected spike in fatalities after a long downward trend.

The general decline in mining fatalities reflects both improvements in safety practices and a decline in the size of the coal workforce.

This article was originally published by Ohio Valley ReSource

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Appalachian health

Black Lung Benefits Fund in Deepening Debt as Epidemic Surges

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A new study from the Government Accountability Office finds that the federal fund supporting coal miners with black lung disease could be in financial trouble without Congressional action. As NPR has reported, the GAO found that the fund’s debt could rise dramatically at the same time that black lung disease is surging.

Disabled former miner Bethel Brock fought years to win federal black lung benefits.
Photo by Benny Becker/OVR.

Most federal benefits for coal miners disabled by back lung are paid from the Department of Labor’s Black Lung Disability Trust Fund, which covers the cost for companies that have gone bankrupt.

The trust fund is mainly supported by a tax on coal, but according to the GAO, those taxes have not covered costs, leaving the trust fund over $4 billion in debt. The GAO says that debt could soon climb to more than three times that amount if Congress doesn’t take action.

Other recent federal studies show that black lung disease is surging both in frequency and severity, especially in central Appalachia.

Bethel Brock, a retired paralegal in Wise, Virginia, is a disabled former coal miner who fought for years to win federal black lung benefits. As Brock explained, more cases of severe black lung could raise costs significantly.

“The cost is on giving a miner a health card for his lungs and heart,” he said. “Cases where a miner might have to have a lung transplant can run into the millions of dollars.”

Decades of Debt

In 1981, Congress approved a temporary tax increase on coal in hopes of getting the trust fund out of debt. The increase was extended in 2008, and is set to expire at the end of this year. That would cut the fund’s income by more than half and the GAO predicts the fund’s debt would more than triple by 2050, reaching over $15 billion. Even if the tax cut is extended, the fund’s debt is expected to continue to grow slightly.

Republican Senate Majority leader Mitch McConnell of Kentucky said he’s aware of the issue, but would not say whether he’d support extending the tax.

“It doesn’t expire until the end of the year,” McConnell said, “and so we’ve got plenty of time to take a look at solving that problem.”

The issue puts McConnell in an uncomfortable position. Many of the affected miners are his constituents but he also enjoys support from the mining industry, which opposes extending the tax.

Who Pays?

The National Mining Association told NPR it hopes that some or all of the debt will be forgiven. That’s what happened in 2008, when taxpayer funds absorbed $6.5 billion of the fund’s debt.

United Mine Workers of America president Cecil Roberts argues against forgiving the debt. In a press release, Roberts said reducing the amount companies pay is “not just wrong, it is rewarding bad corporate behavior.”

Evan Smith, a black lung attorney and blogger at the Appalachian Citizens Law Center, said industry opposition to extending the tax raises some big questions.

“I want coal to make sense. I want there to be coal mines, I want there to be coal miners,” he said. “But if you say that you cannot protect your workers at the current price of coal, then does the entire enterprise make sense?”

Because black lung can be prevented by limiting dust exposure, experts for many years thought the disease would soon be a thing of the past. But central Appalachia is now facing the largest epidemic of severe black lung ever documented.

This article was originally published by Ohio Valley Resource.

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