A coal mining company linked to Scott Pruitt and a handful of companies serving the oil and gas industry are among the recipients of a loan program put in place by Congress to help small businesses get through the coronavirus pandemic.
Hallador Energy Co., an Indiana-based coal company, said last week that it secured a $ 10 million loan from the Small Business Administration under the Paycheck Protection Program, which it has l ‘Intent to use to fund two months of payroll and other expenses.
Last year, the company hired Pruitt, the former EPA administrator accused of numerous ethics violations, to pressure Indiana lawmakers to prevent the closure of coal-fired power plants in the state (Green wire, July 3).
Hallador is not the only energy company to benefit from the loan program. Drill well services company Enservco Corp., oil well services company DMC Global Inc. and electric truck maker Workhorse Group Inc. are also getting loans.
These companies are among dozens of publicly traded companies that have disclosed their loans to investors.
Some of the beneficiaries have been controversial, as lawmakers wanted the program to benefit small businesses, but large companies with hundreds of millions of dollars in revenue, like Ruth’s Chris Steak House, get the loans.
Asked yesterday about large companies like restaurant and hotel chains that get small business loans, President Trump said some of them may have to repay the funds.
“We will look at individual things, and some people will have to return it if we think it is inappropriate,” he told reporters at a White House briefing. “If someone has something that we think is inappropriate, we’ll get it back.”
The coal and oil companies that receive the funds are also contributing to fears among environmentalists that the $ 2.1 trillion CARES (Aid, Relief and Economic Security) law could become a bailout for the fossil fuel industry.
Some companies had asked for specific help for the oil industry in legislation, but lawmakers resisted. Trump said this morning he ordered Energy Secretary Dan Brouillette and Treasury Secretary Steven Mnuchin to develop a plan to help oil and gas companies (see related story).
“Hypocrisy and arrogance”
Brett Hartl, head of government affairs at the Center for Biological Diversity, accused fossil fuel companies of “fundamental hypocrisy and arrogance” in seeking loans.
“It’s hard to think of another industry that has consistently fought against government regulation, bragged about the power of the free market, and harmed the public good over the past 20 years,” he said. “But now they are coming back to shamelessly ask taxpayers for funds and corporate socialism to save them from their own bad choices.”
Hartl’s group tried to carefully examine the CARES Act’s programs for potential benefits to the fossil fuel industry.
While the $ 349 billion small business paycheck protection program is one of its potential concerns, it is more closely monitoring the $ 450 billion earmarked for sectors specifically affected by the novel coronavirus.
But it is not clear whether the government will ever disclose the beneficiaries of the CARES law funds, as the law’s transparency measures are flawed. The only companies whose stake is publicly known are listed on the stock exchange, so they were required to disclose it to investors.
Sectors benefiting from loans
Banks approved 1.66 million loans, according to SBA data on April 16, the most recent date for which the agency released figures. The program ran out of money that day, and lawmakers are negotiating its renewal (see related story).
Only 1.14% of the money, or $ 3.89 billion, went to the “mining” sector, which is defined in the North American Industry Classification System to include the oil and gas industry. . Only 0.3%, or $ 1.03 billion, went to “utilities,” which include power generation and renewable electricity.
The SBA implements the program through the banks that make the loans. And although the financings are labeled as loans, they actually look more like grants – companies can see loans completely canceled if they continue to pay staff at levels comparable to pre-crisis, among other requirements. .
Hallador did not respond to requests for comment about his loan or whether Pruitt played a role in helping secure it.
The company, whose operations are almost entirely carried out through its subsidiary Sunrise Coal, had 768 employees in early March, up from 915 in December, before the closure of its Carlisle mine in Indiana.
To be eligible for the SBA loan, businesses must have fewer than 500 employees at a given location, which is how large restaurant chains qualified.
Businesses defend aid
Ian Dickinson, CEO of Enservco Told The Associated Press said the $ 1.9 million he received is “used to keep people on the payroll and keep food on their tables,” and he defended the company’s involvement. “At the end of the day, our employees are really no different from employees of a non-public company,” he said.
DMC Global, which recently laid off about a third of its employees, cited financial difficulties in the oil industry as necessitating its $ 6.7 million loan.
“We are trying to keep as many people employed as possible during this downturn, when business comes to a screeching halt,” Geoff High, vice president of investor relations, Told BizWest.
Tecogen Inc., which makes gas-fired equipment for on-site power, said its $ 1.87 million loan would help isolate customers from the impacts of the pandemic.
“The additional cash provided by the Paycheck Protection Program loan improves our ability to continue to manufacture products and provide maintenance services to customers during this time without seriously worrying about temporary financial hardship affecting customers, and allow us to maintain our operations and our employee base without disruption, ”Benjamin Locke, CEO of Tecogen, said in a statement.
Non-fossil fuel companies
Fossil fuel companies weren’t the only ones in the energy sector to disclose getting SBA loans under the program.
Workhorse Group said it believes the coronavirus pandemic will increase demand for its electric delivery vehicles, but in the meantime, the $ 1.4 million loan is helping it maintain operations and weather the immediate impacts of crisis.
“These funds will allow us to continue to meet our payroll needs and, as a vital company supporting the parcel delivery industry, ensuring the safety and work of all of our employees is essential during this difficult time. “said Steve Schrader, Head of Workhorse. chief financial officer, said in a statement.
Broadwind Energy Inc. raised $ 9.5 million. The company, which did not respond to requests for comment, manufactures components that go into wind turbines. It had revenue of $ 178.2 million in 2019, with a net operating loss of $ 4.5 million.
Disclosure: E&E News has received funding from the Paycheck Protection Program.