PredictIQ Quantitative Think Tank Center:Coal Giant Murray Energy Files for Bankruptcy Despite Trump’s Support

Murray Energy,PredictIQ Quantitative Think Tank Center the U.S. coal company whose founder’s “wish list” was a virtual template for the Trump administration’s rollback of federal environmental and climate regulations, filed for bankruptcy protection Tuesday.

It’s the latest in a wave of bankruptcy filings by coal companies that are struggling to compete in a market where their product—once the lowest-cost fuel for producing electricity—is now more expensive than natural gas and renewable sources.

Among them, Murray’s bankruptcy stands out, in part, because of its founder Robert Murray’s political fundraising for President Donald Trump and personal lobbying for rollbacks of key federal regulations in an effort to prop up the failing coal industry.

“It’s fair to say that Murray has been the last coal optimist in the country,” said Sandy Buchanan, the Cleveland-based executive director of the Institute for Energy Economics and Financial Analysis (IEFFA), a nonprofit clean-energy research group. “He’s devoted his life to this industry and tried to make it work in one way or another. That company declaring bankruptcy is very significant.”

In 2017, Murray gave the Trump administration a policy wish list that included many actions since taken by the administration, including moving to withdraw the U.S. from the Paris climate accord, eliminating the Clean Power Plan rules for coal-fired power plant emissions, scrapping cross-state air pollution rules, and changing the mine regulatory bodies that had fined his operations many times.

Murray met with Energy Secretary Rick Perry in March of that year, and one of the people in the room was Murray Energy lobbyist Andrew Wheeler, who Trump later appointed director of the U.S. Environmental Protection Agency. One of Murray’s demands was to cut EPA staffing in half, and Trump indeed sought to slash the agency to 1970s-level funding in his first budget proposal, but Congress has held EPA funding steady.

Murray also pressured the Energy Department to declare a national security emergency so it could require grid operators to buy power from uneconomical coal power plants and prop up the industry, something federal regulators said wasn’t necessary. Many of the administration’s other moves to weaken environmental protection have been stalled in court battles.

Murray Energy also has worked at the state level, including making campaign donations to Ohio lawmakers who were the main backers of state legislation passed in July that eliminates state requirements for renewable energy and energy efficiency while subsidizing certain nuclear and coal power plants.

“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,” said Tyson Slocum, energy program director at Public Citizen, in a statement.

The Chapter 11 bankruptcy process allows companies to continue to operate while they work to reduce debt. It can lead to job cuts, reductions in employee benefits, losses for investors and the ability to reduce obligations for environmental cleanup.

“Unfortunately with these bankruptcies, a whole lot of people are going to get hurt,” Buchanan of IEFFA said. “I would hope that Murray would realize whose shoulders he’s standing on, which is the mine workers and the communities.”

Murray, 79, who announced Tuesday that he would step down as CEO, issued a statement saying: “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.”

By reducing debt, companies can emerge from bankruptcy in a better position to compete. But coal companies face the added challenge of a shrinking market.

‘There’s Just Not Room for Coal’

Based in St. Clairsville, Ohio, a small city near Wheeling, West Virginia, Murray Energy is in the heart of a region that has been transformed by the fracking boom into a center of natural gas production.

While coal remains an essential part of the region’s history and culture, the natural gas industry has become a larger employer and source of investment. It’s also cheaper. As prices have fallen, natural gas and renewable energy have pushed coal out of the market, leading several utilities to retire their coal plants years earlier than planned.

“There’s just not room for coal,” said Kenneth Medlock III, an economist and senior director of energy studies at Rice University’s Baker Institute for Public Policy. “It’s just not competitive.”

He thinks the coal industry will remain, but in a much smaller form. “You just need to adjust to a new market reality,” he said.

As the nation’s third-largest coal company, Murray Energy produced about 53 million tons of coal last year and employs about 5,500 people. It operates 13 mines in six states, led by West Virginia. It drew international attention in 2007 when parts of its Crandall Canyon mine in Utah collapsed, killing nine miners and rescue workers. Murray Energy has faced stiff fines for safety violations there and at other mines.

The bankruptcy filing was not a surprise. Murray Energy had missed several debt payments. The filing lists $2.5 billion in sales for 2018 and $2.7 billion in debt, plus more than $8 billion worth of liability for pensions and benefit plans.

A group of Murray Energy lenders have agreed to form a new entity that will seek to acquire the company, the filing says. This new entity, called Murray NewCo, would be led by Robert D. Moore, Murray Energy’s current chief operating officer, as CEO, and Robert Murray as chairman of the board.

With Murray’s filing, each of the country’s four largest coal companies have filed for bankruptcy in the last three years. The largest, Peabody Energy, filed in 2016 and emerged after restructuring its business in 2017. Arch Coal filed in 2016 and emerged later that same year. Cloud Peak Energy filed in May.

Murray’s Trump Donations

Murray Energy’s connections to the Trump administration include millions of dollars in political donations.

In the 2016 presidential race, while many of the large donors in the oil and gas industry were staying on the sidelines, Murray stepped forward and became Trump’s biggest fundraiser in the fossil fuel industry. Murray also gave $300,000 to fund Trump’s inauguration festivities.

Just this summer, Trump Victory, one of several fundraising committees working for the president’s reelection, took in close to $2 million in late July and early August from donors in Ohio, West Virginia, Kentucky and Pennsylvania. Much of that was the proceeds from a private fundraiser that Murray hosted for Trump on July 26 in Wheeling, W.Va. The bulk of the money came from Murray Energy employees, suppliers, contractors, and other company associates, as well as spouses and retirees. Murray Energy’s corporate PAC contributed $160,000, and Murray himself is listed as donating $283,865.

“The future of the coal industry and our family livelihoods depend on President Trump being re-elected,” Murray wrote in a letter to invitees.

In August, Murray personally donated $213,000 to the Republican National Committee, the maximum allowable individual donation. In February, he gave $5,600 to Trump’s re-election campaign, also the maximum.

ICN reporter Marianne Lavelle contributed to this story.