By the time Westmoreland Coal went bankrupt for the first time in the mid-1990s, it was one of America’s oldest and best-known coal companies. Founded before the Civil War, Westmoreland has had an outsized footprint on coal country, particularly the Appalachian mountains it called home for generations. Following those proceedings, Westmoreland overhauled its business model to focus more on surface mining in the West. As for a number of fossil fuel companies, bankruptcy was not an end, but a chance to find different ways to keep raking in profits.
When Westmoreland went back to bankruptcy court in 2018, it became one of at least sixty coal companies to do so in the past decade. These declarations were driven in part by the falling costs of other forms of energy, but also by opportunism: By going through the restructuring process, companies could try to rid themselves of their pricey obligations to fund pension plans and worker benefits. By one estimate, coal companies have managed to shed over $5.2 billion in worker and environmental obligations through bankruptcy, leading some legal scholars to label such bankruptcy deals as bad-faith or outright illegal.
In Westmoreland’s case, more a dozen coal miners wrote to the bankruptcy judge pleading for their pensions and health benefits, describing how they were struggling to survive after decades of backbreaking work. Backbreaking is not a metaphor—one retired miner who literally broke his back working told the judge that he and his wife were “barely surviving” on their retirement payments. “The miners kept our end of the deal and Westmoreland needs to keep their promise, too!” another wrote.
The court was unmoved. In 2019, Judge David Jones allowed Westmoreland to default on over $300 million in collectively-bargained obligations to its workers, while simultaneously paying millions in corporate bonuses. High-level Westmoreland executives, evocatively described by a union leader as “a circus of clowns,” had received over $10 million just in the year before the company declared bankruptcy.
This case is not unique. In recent years, the Supreme Court denied cert to coal miner benefit funds appealing Westmoreland’s bankruptcy proceedings, and denied a similar petition brought on behalf of retired employees of a different company. For communities across Appalachia, the wave of coal bankruptcies has become an all too familiar pattern: Money flows out of working-class communities and into corporate coffers and private equity firms, who have pounced on floundering coal companies as money-making opportunities. Appalachian Voices, a grassroots environmental organization in the region, has spent years tracking regulatory violations and responding to residents put at risk by flooded mine shafts, polluted wells, and other hazards of abandoned mines. In a 2021 report, Appalachian Voices estimated that more than 633,000 acres of coal mines across a seven-state area require cleanup, which could cost up to $9.8 billion.
For people living in the region, coal companies’ strategy can seem like a game of hot potato, or a cursed version of musical chairs. It is reminiscent of the infamous Texas two-step, in which corporations spin off liabilities into subsidiaries to avoid paying them. These plans invariably prioritize corporate interests over labor rights and environmental clean-up costs.
Many of the circumstances that make coal bankruptcies so devastating are unique to the coal industry. Bankruptcy courts don’t always follow what state-level permitting authorities are doing, which means that environmental fines frequently pile up after companies stop paying them. Bonding—the money fossil fuel companies put up to cover future clean-up costs—historically hasn’t been enough to address the hazards caused by abandoned mines and polluted wells. Although the federal Bureau of Land Management is considering raising the bond requirements for oil and gas wells, such reforms still may not be enough unless fossil fuel companies pay to clean up their messes. Abandoned mines can also become more expensive to clean up over time, and may be to blame for worsening fatal floods across Appalachia.
In recent years, impact litigation has demonstrated the power courts have to hold fossil fuel companies accountable. In the landmark case of Held v. State of Montana, for example, a Montana state court recognized a right to a clean and healthy environment under the state constitution. Fossil fuel bankruptcies, however, show that judicial inaction can be just as important as action. Rubber-stamping flawed bankruptcy agreements not only devastates workers and their families, but also entails catastrophic climate consequences. Already, methane leaks from abandoned wells across the U.S. are estimated to emit the equivalent of more than seven million metric tons of carbon dioxide per year. For every time you’ve bitten into a mushy paper straw or biked to work, an abandoned well is venting methane—a greenhouse gas over 25 times as potent as carbon dioxide— directly into the sky, simply because no one paid to plug it.
Judicial review is supposed to be a check on flawed bankruptcy agreements. But when courts allow companies to discharge their environmental and healthcare costs, some of the poorest and most vulnerable people in the country are too often left holding the bag.
