AP

Murray Energy, WV's largest coal producer, seeks bankruptcy protection

Murray Energy, WV's largest coal producer, seeks bankruptcy protection

In this Aug. 20, 2007, file photo Robert Murray, founder and chairman of Cleveland-based Murray Energy Corp., arrives at a news conference at the entrance to the Crandall Canyon Mine, northwest of Huntington, Utah. Ohio-based Murray Energy filed for Chapter 11 bankruptcy reorganization on Tuesday.

Murray Energy, West Virginia’s largest coal producer, filed for bankruptcy court protection Tuesday while it reorganizes its finances, a move that the United Mine Workers union warned brings on a potential battle over miner pensions and health care benefits.

The Ohio-based company sought Chapter 11 bankruptcy protection despite a flurry of regulatory breaks that its CEO pushed for, and received, from the Trump administration.

Murray Energy joins a growing list of struggling mining companies as utilities switch away from coal to cheaper and less-polluting renewable energy or natural gas.

The filing marks a significant political failure for Trump, who had sought to end what he called a “war on coal” by Democrats as a key part of his campaign and early presidency. Murray Energy was the country’s fourth-largest coal producer in 2018, accounting for 6 percent of total production, according to the U.S. Energy Information Administration. Other major producers that have sought bankruptcy protection this year include Blackjewel Mining in West Virginia and Cloud Peak Energy in Wyoming.

Murray Energy is the largest coal producer in West Virginia and the largest producer of underground-mined coal in the nation, according to U.S. Mine Safety and Health Administration data.

The company employs about 3,000 miners in West Virginia, with most of them being UMW members who work at operations in Harrison, Marion, Marshall, Monongalia and Ohio counties that Murray purchased in 2013 from Pittsburgh-based Consol Energy.

“Although a bankruptcy filing is not an easy decision, it became necessary to access liquidity and best position Murray Energy and its affiliates for the future of our employees and customers and our long-term success,” said company founder Robert E. Murray, who was replaced as Murray Energy CEO on Tuesday.

The company’s operations also span Alabama, Illinois, Indiana, Kentucky, Pennsylvania and Utah, as well as Colombia, South America.

UMW President Cecil Roberts said Tuesday that the Murray bankruptcy has been expected for some time, and that the union believes the next step will be for the company to seek bankruptcy court authorization to break its contract with mine workers.

“It will seek to be relieved of its obligations to retirees, their dependents and widows,” Roberts said in a statement. “We have seen this sad act too many times before.”

Roberts promised to protect UMW members.

“We have high-powered legal, financial and communications teams in place that will fight to protect our members’ interests in the bankruptcy court,” Roberts said.

Roberts also said the bankruptcy shows that it’s time for Congress to act on legislation to protect the union’s troubled health care and pension plans.

“Let this finally be the catalyst that spurs action this year on Capitol Hill,” Roberts said. “There truly is no more time to wait.”

West Virginia Senate President Mitch Carmichael, R-Jackson, said the bankruptcy filing was surprising, even with the evident struggles in the coal business. He said he’s concerned about pensions and protections for Murray Energy’s nearly 7,000 employees. Sen. Joe Manchin, D-W.Va., said on Twitter that Murray Energy must continue meeting its obligations to pay into pension plans for union miners.

The coal giant had signaled that it wasn’t immune to the industry’s downturn earlier this month when it announced it missed loan and interest payments to its lenders. Brian Lego, an assistant research professor at West Virginia University, said the bankruptcy of such a large company is a heavy blow to an already beleaguered sector.

“It doesn’t bode well, as far as the overall state of the industry is concerned,” he said.

As CEO, Murray was averse to filing bankruptcy and criticized other coal operators that chose to streamline. In a 2016 interview with The Associated Press, Murray lamented the number of bankruptcies in the coal industry and how his competitors were able to shed debt and re-enter the market.

“They come out of bankruptcy, all streamlined, and they don’t close the mines. That’s the key, they don’t close a single mine,” Murray said at the time. “So now you’ve got these companies all streamlined down, dumping their obligations, competing in the same market as me.”

Murray has tied his fortunes to Trump. He hosted a fundraiser for the president in July, which had been expected to raise $2.5 million. He has flexed his influence at the local level, as well, donating thousands of dollars to the 2020 campaign of West Virginia Gov. Jim Justice and successfully pushing for a tax cut on steam coal in the economically depressed Mountain State.

Murray, who has called climate change an “environmental hoax,” also is a proponent of Trump’s regulatory actions aimed at scaling back environmental protections put in place during Barack Obama’s presidency. In the first weeks of Trump’s tenure, Murray presented incoming Cabinet members and other administration figures with a written wish list of environmental regulations he hoped to see knocked down to ease what he depicted as a regulatory burden on the sagging coal industry.

Trump’s own gusto for “clean” and “beautiful” coal and coal miners helped to make Appalachian coal country one of his most fervent bases of support as he racked up big wins in West Virginia, Ohio, Kentucky and other states.

In March 2017, Trump surrounded himself with coal miners at the White House to sign an executive order pledging to kill off Obama’s effort against climate change, a measure that would have pushed dirty coal-burning plants out of the national power grid.

“We are putting our great coal miners back to work,” Trump said to thunderous applause and cheers at a 2018 rally in West Virginia, where the president also attended a big-money GOP fundraiser hosted by Murray.

Trump put Andrew Wheeler, a lobbyist for Murray Energy, in charge of the Environmental Protection Agency. Along with targeting the Obama-era Clean Power Plan, the administration moved ahead on proposals to reduce environmental protections on coal ash, mercury emissions from coal plants and other smokestack pollutants.

But it was market competition from cheaper natural gas and renewables that was hitting the coal industry the hardest, driving U.S. coal consumption under Trump to its lowest levels since the Carter administration.

Trump has lessened his call-outs for coal as the industry continues its decline despite his administration’s support.

Power companies announced the retirement of more than 546 coal-fired power units over the last decade, as coal-fired power plants faced economic pressure due to stagnant growth in electricity demand and increased competition from natural gas and renewables, according to the EIA.

“Murray Energy’s bankruptcy filing is another sign of the significant stress on the coal industry today,” said Benjamin Nelson, a Moody’s vice president and lead U.S. coal analyst. “While the demand for thermal coal has been declining for about a decade, healthy export prices helped the industry generate stronger cash flows in 2017 and 2018. A sharp reduction in export prices shines light on poor underlying demand fundamentals for thermal coal in the domestic market.”

Tyson Slocum, energy program director for Public Citizen, said there is little anyone can do to save coal.

“Even when coal companies get exactly the corporate welfare and license to pollute that they want, they still go bankrupt because renewable energy has been outcompeting coal in the market,” he said in a statement. “Instead of propping up the failing coal industry with taxpayer-funded bailouts, we should support the workers in transition and shut these mines down.”

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