Revealed: Oil and mining firms – some with ties to
Trump officials – taking advantage of funding, review shows
Emily
Holden in Washington
Published
onFri 1 May 2020 13.16 BST
US fossil
fuel companies have taken at least $50m in taxpayer money they probably won’t
have to pay back, according to a review of coronavirus aid meant for struggling
small businesses by the investigative research group Documented and the Guardian.
A total of
$28m is going to three coal mining companies, all with ties to Trump officials,
bolstering a dying American industry and a fuel that scientists insist world
leaders must shift away from to avoid the worst of the climate crisis.
The other
$22m is being paid out to oil and gas services and equipment providers and
other firms that work with drillers and coal miners.
Melinda
Pierce, the legislative director for the Sierra Club, said: “The federal money
Congress appropriated should be going to help small businesses and frontline
workers struggling as a result of the pandemic, not the corporate polluters
whose struggles are a result of failing business practices and existed long
before Covid-19 entered the public lexicon.”
More than
40 Democratic lawmakers have argued that fossil fuel companies should not get
any assistance under the coronavirus aid package.
Some
Democrats have also warned the forgivable loans being made under Congress’
Paycheck Protection Program could be a transparency disaster.
Banks and
lending institutions are distributing the money, so the government says it
cannot track recipients in real time. The loans revealed have been made public
only through news reports and securities filings by publicly-traded companies,
although the Federal Reserve has committed to issuing monthly reports.
So far,
it’s clear the program is not working as intended. The funds are aimed at
helping small businesses to keep paying their employees and covering other
recurring expenses during the economic downturn. But they have been exploited
by large companies forced to return the money amid a public outcry, including
the Los Angeles Lakers, Shake Shack and Ruth’s Chris Steak House.
The
industry aid comes as the Trump administration is reportedly considering a
broader bailout for oil and gas corporations, which were already under pressure
before the coronavirus and have watched oil prices nosedive because of a global
price war and low demand for gasoline. The US government could make loans to
oil and gas companies, essentially making taxpayers investors in the industry.
The Federal
Reserve on Thursday also announced changes to its lending rules that could help
indebted petroleum firms.
“The idea
that oil workers are getting a paycheck is great,” said Jamie Henn, a spokesman
for the Stop the Money Pipeline campaign who co-founded the environment group
350.org. “The worry is that the money’s going to the top and not going to
filter down.”
The $50m
already paid to fossil fuel companies is a small fraction of the the $2.1tn
Coronavirus Aid, Relief and Economic Security Act, known as the Cares Act. But
the total assistance to the industry is likely much larger than can currently
be tallied and will continue to grow.
Environmental
advocates and oversight experts tracking the funds say it’s impossible to count
how much of the money will assist fossil fuels, including because some firms
provide services across multiple industries.
“All of
this is voluntary disclosures by the companies,” said Jesse Coleman, a senior
researcher with Documented. “No matter what, it’s going to be an incomplete
picture of what’s going on.”
Coleman
said in many cases the fossil fuel companies getting aid have made bad
investments and “now they’re going to come crawling hat in hand and say: look
at what the coronavirus did to us”.
It’s both a
bad financial proposition of the Fed and for taxpayers, and a bad situation for
the planet
Graham
Steele
Among the
coronavirus aid recipients is Hallador Coal, an Indiana-based coal mining
company that hired Donald Trump’s former environment chief Scott Pruitt as a
lobbyist. The company’s former government relations director now works at the
energy department. Hallador is taking $10m to fund two months of payroll and
other expenses.
Coal mining
company Rhino Resources, which was formerly run by Trump’s Mine Safety and
Health Administration head, David Zatezalo, is receiving $10m.
Coal firm
Ramaco Resources, whose CEO, Randy Atkins, is on the energy department’s
National Coal Council, is getting $8.4m.
The US coal
industry has been in steep decline, driven out of the market by cheap natural
gas and environmental concerns. Trump campaigned on putting coal miners back to
work, and his agencies have unsuccessfully explored ways to bail out coal
companies, which are seeing their lowest employment levels in modern history.
The Trump administration has also rescinded nearly all of the environment and
climate protections the fossil fuel industry has opposed.
Fossil fuel
companies can also take advantage of tax benefits under the coronavirus
legislation, including deferring payment of social security and medicare taxes.
The
Missouri-based Peabody Energy coal company has said it will speed up collecting
an alternative minimum tax refund of $24m to 2020 and defer $18m of owed taxes.
US
taxpayers already subsidize the fossil fuel industry at roughly $20bn a year,
according to conservative estimates.
The Center
for International Environmental Law has accused the oil, gas and plastics
industries of “exploiting the crisis by aggressively lobbying for massive
bailouts and special privileges in a desperate attempt to revive an oil and gas
industry already in decline”.
The
Institute for Energy Economics and Financial Analysis argues that federal
lending to the oil and gas sector would be “a complete waste of money”, because
it wouldn’t fix the industry’s underlying financial problems.
Oil
industry lobbyists have pushed for changes at the Federal Reserve to let
companies with large amounts of debt use its Main Street Lending Program and
borrow to pay off existing loans.
In an 15
April letter to the Federal Reserve, the oil trade group the Independent
Petroleum Association of America asked for the new provisions, saying “oil and
natural gas producers are not looking for a government handout; they are
seeking a bridge to help survive this economic disruption.”
Environmental
advocates say the move would disproportionately benefit small and mid-sized oil
and gas companies, such as Occidental Petroleum, which has nearly $80bn in
liabilities on its balance sheet.
Graham
Steele, who directs the corporations and society initiative at Stanford
Graduate School of Business, called the situation the “classic disaster
scenario where an opportunistic administration and industry is taking advantage
of a crisis”.
“And by the
way, these are industries driving climate change. It’s both a bad financial
proposition of the Fed and for taxpayers and a bad situation for the planet.”
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