Indiana coal company with ties to Trump administration gets $10M rescue loan

  • Comments
  • Print

A coal company based in Indiana received $10 million from a federal loan program intended to rescue faltering small businesses from the economic ravages of the coronavirus pandemic.

But Terre Haute-based Hallador Energy has several hundred more employees than the standard firm awarded money under the $2 trillion stimulus bill. And it has at least two important ties to the Trump administration: Scott Pruitt, the former Environmental Protection Agency administrator, was hired last year to lobby for it; and the company’s former government relations director now works at the Energy Department.

A coal and gas extraction firm, Hallador Energy said it got the low-interest loan from the Paycheck Protection Program, a $350 billion fund designed to bolster small businesses during the current downturn. It quickly ran out of money in the face of wide-scale demand: Congress and the White House are nearing a deal to provide $500 billion to replenish the fund.

The measure was designed for companies with fewer than 500 workers, but has been exploited by firms that are far larger.

The administration is now facing a backlash for giving millions of dollars to national hotel and restaurant chains before program ran dry. One of them, the upscale burger chain Shake Shack, decided to return the $10 million loan it got from the program.

Under Small Business Administration guidelines, some bituminous coal mining firms with up to 1,500 employees can qualify for the loans. The company, which moved its headquarters from Denver to Terre Haute last year, had a head count of 768 as of March 9, according to a filing with the Securities and Exchange Commission.

Asked about the loan, agency spokeswoman Carol Wilkerson said in an email Tuesday, “Under SBA’s Small Business Size Standards, mining operations allows for more than 500 employees.”

The program aims to keep workers employed by extending loans that are forgivable if their employers keep workers on the payroll. Hallador said in a statement it plans to use its loan to pay employee salaries for two months, along with other expenses. The company did not reply to questions about the loan.

With unemployment levels not seen since the Great Depression, the lending program has been overwhelmed and has left thousands of traditional small businesses without aid. Hallador’s SEC filing saying it had been approved for the loan came Wednesday, a day before the SBA announced the program had run out of money and that it was no longer accepting new claims.

Several Democrats and environmental groups have called for barring any coronavirus-related money from going to oil, gas and coal firms, arguing they are helping fuel climate change. “No bailouts for the fossil fuel industry,” tweeted Sen. Edward Markey, D-Mass.

President Donald Trump often touts the benefits of “beautiful, clean coal,” and Hallador boasts at least two ties to his administration. In 2019, the publicly traded firm hired former EPA head Pruitt, to lobby for it in Indiana, and its former government relations director now works in the Energy Department.

Like many other American coal-mining companies, Hallador and its main subsidiary, Sunrise Coal, has shrunk as coal-fired electricity generation in Indiana fell by 30% over the past decade due to stiff competition from cheaper gas and wind sources.

Pruitt was brought in to help mount an ultimately unsuccessful effort by Hallador to convince Indiana state legislators to stop two of the state’s electric utilities from moving forward with plans to close most of their coal plants.

During his 17-month tenure heading the EPA, Pruitt cast the Obama administration’s efforts to combat climate change as a “war against coal” and started unraveling rules designed to reduce pollution from the mining and burning of coal.

But Pruitt was unable to see through many of those rollbacks after resigning as EPA head in 2018 under a cloud of ethical and managerial lapses.

When it hired Pruitt as a lobbyist, Hallador ran four coal mines in southwestern Indiana. But in February, Hallador decided to shut down one of them. It began the year with 915 full-time employees and temporary miners, but reduced its headcount to under 800 by early March.

But with a market valuation of about $21 million, Hallador is still not most people’s idea of a small business.

In 2018, it dug up 7.6 million tons of coal, making it the country’s 18th biggest coal producer by weight that year, according to Energy Information Administration data. The firm, whose motto is “Coal Keeps Your Lights On,” also has a stake in an Indiana gas exploration company and in an operation that mines sand in Colorado for use in hydraulic fracturing.

The entire U.S. coal sector has suffered from competition from cheaper natural gas and renewable energy sources and, more recently, a decline in electricity demand due to the pandemic. And the Illinois Basin, where Hallador mines its coal, “is probably at the moment the hardest hit basin” in the country, according to Chiza Vitta, an analyst with S&P Global Ratings.

Locked in the interior of the country, the coal mining region stretching through Illinois, southwestern Indiana and western Kentucky lacks good port access to overseas markets. And unlike Appalachia, it also has little high-quality coal suitable for steel production. One of the region’s leading producer, Foresight Energy, filed for bankruptcy protection last month.

There is at least one other connection between the Trump administration and Hallador beyond Pruitt. Suzanne Jaworowski, Hallador’s former communications and government affairs director, now works as a senior adviser at the Energy Department’s Office of Nuclear Energy. She was also the state campaign director in Indiana for Trump’s 2016 presidential run.

Jayson O’Neill, executive director of the liberal advocacy group Western Values Project, said in an email that Hallador’s loan reveals a flaw in the administration’s approach to addressing the outbreak’s devastating economic impact.

“With small businesses shuttering their doors and unemployment skyrocketing to historic levels, shifting millions of taxpayer-funded bailout dollars to dirty, polluting corporations is only the latest example of the corruption derailing America’s economic recovery under the Trump administration,” O’Neill said.•

Please enable JavaScript to view this content.

Story Continues Below

Editor's note: You can comment on IBJ stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Please note our updated comment policy that will govern how comments are moderated.

3 thoughts on “Indiana coal company with ties to Trump administration gets $10M rescue loan