The fossil fuel industry has been chomping at the bit to seize the economic crisis brought on by the COVID-19 pandemic as an opportunity to solve its preexisting financial woes -- and to no one’s surprise, Donald Trump and his administration are racing to help. At a time when the federal government can’t seem to get it together to help nurses and doctors get the basic protective gear they need, this is deeply infuriating.
Changes to the Main Street Lending Program announced today by the Fed mirror precisely those lobbied for by the fossil fuel industry and its cheerleaders in Congress. This lending program, funded at least in part by money allocated under the CARES Act, is designed to help financially sound small businesses recover from the economic crisis caused by COVID-19. What it wasn’t intended to do? Bail out an industry that has been facing decreasing returns and increasing debt for more than the past decade.
The Sierra Club and our partners, along with congressional Democrats, have been raising the alarm bells in recent weeks about the potential for the Federal Reserve and the Treasury Department to misuse taxpayers’ relief funding on failing fossil fuel companies. We have said from the start that relieving the long-standing debt burden of fossil fuel companies would only be throwing good money after bad, while doing nothing to help protect workers and communities.
Bharat Rhamamurti, a former Senator Elizabeth Warren staffer tapped by Senator Chuck Schumer for the oversight panel designed to hold the Fed and Treasury accountable in their coronavirus-response-related lending, raised the red flag on these changes. Let me summarize his main points.
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Change #1: Allow loan funds to be used to refinance pre-existing debt. Remember that the fracking industry in particular has been awash in debt for the last several years, so this is a top-ticket-item for the US oil and gas industry, as outlined here, in one of their recent lobbying letters pushing for this exact change to the program.
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Change #2: Increase maximum loan size from $150 million to $200 million. Another item on the oil and gas industry’s wishlist.
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Change #3: Weaken the limits on how indebted a company could be and stillqualify for a loan. (Remember these loans are meant to assist companies that were in “solid financial condition” before the crisis. That would exclude much of the oil and gas industry, as their good friend Senator Ted Cruz pointed out in a letter to the Fed). So, presto-changeo!
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And a key change that DIDN’T happen: Despite clear demands that any handouts to the fossil fuel industry be used to assist workers, the Fed again chose NOT to have any such requirements accompany the changes they made today. Companies receiving these loans are under no obligation to keep workers on their payrolls, or to rehire or assist those workers they’ve already laid off.
The fact that these changes include no additional requirements for loan recipients to use these funds to assist workers or their communities is a clear indication of this administration’s priorities -- profits for corporate executives, not security for frontline workers and their families. That’s laid bare by the bailout that Trump and congressional Republicans have been rolling out in dribs and drabs. In addition to these changes today, their plan includes waiving royalty fees for fossil fuel companies extracting oil and gas on public lands. These are the very same lease sales that the Department of the Interior hasn’t slowed or canceled as it continues to attempt to sell our public lands to fossil fuel companies (practically for free) at a time when the public can’t meaningfully participate in that process. The list just goes on and on, and I’m sure fossil fuel bailouts will continue to manifest in every creative way the industry can think up.
And yet, there is a real opportunity at hand. In the face of this devastating crisis, we have the chance to come together and rebuild our economy in a way that would foster a better, more just, and more sustainable future. We could even invest in solutions that address the underlying drivers of the mess in which we find ourselves -- systemic inequality, environmental racism, and climate crisis -- solutions like clean energy jobs, climate-resilient neighborhoods, and a stronger social safety net. As George Monbiot said so eloquently today in The Guardian, “Bail out the living world, not its destroyers.” Yes, please.