Coal snags $31M in U.S. loans for small businesses
Stimulus loans meant to help small businesses that have been hurt by the coronavirus pandemic are being doled out to coal companies, stoking criticism from environmentalists that the Trump administration is using the aid to help a preferred industry that was already in financial trouble.
The U.S. Small Business Administration has given more than $31 million in loans from the Paycheck Protection Program to publicly traded coal mining companies, according to Securities and Exchange Commission filings.
“The question is, is this a good use of taxpayer dollars when we have other businesses closing their doors? What is the long-term viability of this industry?” said Jayson O’Neill, director of the Western Values Project, a Montana-based conservation group. “I would argue we should focus first on the small businesses that are in the most need.”
Among the recipients are Ramaco Resources, Rhino Resource Partners, Hallador Energy and American Resources.
The stimulus program has drawn criticism for other awards, including loans to Shake Shack, Potbelly and the National Basketball Association’s Los
Angeles Lakers while millions of mom-and-pop firms were left stranded when the program ran out of money. The three companies have since returned the money amid an outcry.
The coal company funding came after the industry successfully lobbied the Trump administration to add the sector to its list of essential industries after being left off the original version, arguing that coal was “critical to supporting hospitals, health care providers and others on the front line.”
The industry — which also asked Congress for aid in March, arguing that coal is “absolutely critical” and should be preserved for national security reasons — says there is no reason coal miners shouldn’t be recipients of stimulus funding.
In fact, the mining industry, which includes coal and other minerals as well as oil and gas extraction companies, tapped the first, $349 billion installment of the Paycheck Protection Program at a higher rate than other industries, a Bloomberg News analysis of payroll data found. Approved PPP loans covered more than 78% of the industry’s eligible payroll, compared to an average for all industries of 52%.
One possible explanation is that the SBA classifies many mining and extraction companies as small even if they have more than 500 employees, the standard for most other industries. Bituminous coal underground mining businesses, for example, can have as many as 1,500 employees and still qualify for PPP loans. Overall, the mining sector got 1.14% of Paycheck Protection Program loans, according to SBA data through April 16.
“The industry is experiencing many of the same challenges confronting so many other industries and deserves the same support,” said Ashley Burke, a spokeswoman for the National Mining Association. “The program is intended to keep Americans employed and these funds will contribute to the industry’s efforts to safeguard the jobs of 116,000 Americans directly employed at our nation’s coal mines.”
Jennifer Kelly, a SBA spokeswoman, said it “is following the law as it executes the PPP program as defined by the Cares Act passed by Congress.”
Lexington, Ky.-based Ramaco Resources received an $8.44 million loan April 17. The company, which has 395 employees and didn’t respond to a request for comment, said in a filing that it would use the funding to recall about one-third of its furloughed work force and reopen a mine May 1.
Rhino Resource Partners, which has 605 employees and is also based in Lexington, received a $10 million stimulus loan, the maximum allowed under the PPP program, according to a company filing. President Donald Trump tapped the company’s former CEO David Zatezalo to serve as head of the nation’s mine safety agency in 2017. The company didn’t respond to a request for comment.