The coal industry in the United States is struggling to survive but coal company executives are pocketing generous bonus payments, Public Citizen said May 17.
As America’s largest coal producers “were driving their coal companies into the ground through bad investments and overproduction, their CEOs pocketed outrageous bonuses while laying off hundreds of workers,” Public Citizen said in a news release.
All told, bonuses and money spent on bankruptcy lawyers by the four companies – Alpha Natural Resources, Arch Coal, Cloud Peak Energy and Peabody Energy – topped out at nearly a quarter of a billion dollars, Public Citizen said in announcing a new report.
In conjunction with the report, Public Citizen is sending a letter to the CEOs of Alpha, Arch and Peabody (which have all filed for Chapter 11) urging them to “invest their multimillion-dollar bonuses in a trust fund for the workers they have laid off.”
“It is unfortunate that the political discourse has been framed by this fictitious ‘war on coal’ narrative, when the truth reveals an industry hampered largely by market forces and poor financial decisions,” said Tyson Slocum, director of Public Citizen’s Energy Program. “We need an honest dialogue about the future of our energy system and how to prioritize investing in coal mining communities that have been hurt by the transition.”
The companies and their lobbying trade associations “have been quick to point fingers at mine workers, unions, environmental regulations and the federal government rather than accepting blame for their own decisions,” Public Citizen said. These companies have also compensated for their losses by repeatedly cutting worker benefits while continuing to dole out bonuses for their top executives.
Report issued as federal coal lease program under review
The report and letter coincide with the kick-off of a series of public hearings organized by the U.S. Department of the Interior as part of its formal review of the federal coal program. The first hearing will be today in Casper, Wyo., with additional hearings scheduled over the next eight weeks in Salt Lake City, Utah; Knoxville, Tenn.; Pittsburgh, Pa.; Seattle, Wash.; and Grand Junction, Colo.
Public Citizen was referring to hearings on the Interior Department Bureau of Land Management (BLM) moratorium on coal sales on federal lands. The National Mining Association has said that the current royalty paid on federal coal is much higher than the royalty typically paid on coal mined on private land in coal states.
Among other things, Public Citizen asserts that:
- Big compensation packages were delivered to CEOs after the companies committed themselves to producing more metallurgical coal − even as its price slumped from $160.39 per short ton in 2011 to $100.85/ton in 2014.
- After Alpha Natural Resources went filed for bankruptcy reorganization in 2015, it increased lobbying spending by 190% during the fourth quarter of 2015 while attempting to eliminate health care benefits for its workers. Since then, Alpha has petitioned the court to break contracts with the United Mine Workers of America to modify retiree health care benefits, and paid a total of $28.4m in bankruptcy advisory fees.
- After filing for Chapter 11 protection earlier this year, Arch Coal laid off 230 employees from its Black Thunder Mine while paying five executives almost $20m and spending more than $18.5m on bankruptcy advisers.
- After filing for bankruptcy in March 2016, Peabody paid bankruptcy advisers $27.5m through April 2016, with some advisers being paid as much as $1,075 per hour.
- Cloud Peak Energy, the only one of the top four companies that has not declared bankruptcy, is in a more stable financial position likely in part because it has long taken advantage of a loophole allowing the company to value coal at low domestic prices for royalty purposes and then resell it abroad for higher international prices. Although Cloud Peak had $491m in debt as of February, it is “in a comfortable place compared to Alpha, Arch Coal, and Peabody Energy,” according to the report.
Public Citizen is a non-profit consumer advocacy organization and think tank founded by Ralph Nader in 1971.