Analysis

Dakota Access Pipeline builder Energy Transfer LP making $7B acquisition after tax bailout, mass layoffs

Protestors Standing Rock Dakota Access Pipeline water is life

Energy Transfer LP said last week that it will acquire Enable Midstream Partners in an all-stock deal worth $7 billion, adding to the pipeline giant’s footprint through Oklahoma and Texas and yielding  an expected $100 million in expected “cost synergy opportunities” — a category that usually includes layoffs.

Energy Transfer, which is overseeing the Dakota Access Pipeline project, already laid off 1,391 people, nearly 11% of its workforce, in 2020, securities filings show. That’s in spite of a $64 million tax refund the company received, a result of a provision in the March 2020 CARES Act stimulus law that benefits money-losing corporations. The tax-law change particularly benefited battered fossil fuel companies by permitting extended net operating loss carrybacks going back to 2013.

Energy Transfer benefited indirectly from another CARES Act bailout program, the Secondary Market Corporate Credit Facility, through which the Federal Reserve bought $36.5 million of Energy Transfer bonds. By buying bonds from investors in the secondary market, the Fed signaled to Wall Street that it was willing to support their investments in risky and debt-ridden companies.

A federal court last summer ordered the shutdown of the Dakota Access Pipeline pending environmental review. The move was a major victory for Native American protestors, who have argued that the pipeline endangers their sacred lands. It was a setback for then-President Donald Trump, who had championed the project and sought to push it through despite environmental concerns.

Energy Transfer’s CEO Kelcy Warren, a Texas billionaire, was a fixture in former President Donald Trump’s informal cabinet of energy-industry advisors. He participated in a meeting last April with Trump and 11 other oil industry executives to appeal for federal relief, even though the companies were struggling with massive debt loads well before the pandemic struck.

Last June, Warren reportedly hosted Trump’s first in-person fundraiser while much of the country remained locked down because of the pandemic. 

Warren’s net worth is $2.9 billion, according to Bloomberg. He donated more than $14 million to Republican candidates in 2020, including $10 million to America First Action, Trump’s reelection super PAC, federal campaign records show. Former Texas Gov. Rick Perry, who previously served as Trump’s Energy Secretary, sits on Energy Transfer’s board of directors.

He also donated nearly $1 million to Texas Gov. Greg Abbott’s gubernatorial campaigns in the 2014 and 2018 cycles.

Abbott appointed Warren to the Texas Parks and Wildlife Commission in 2015, even though his companies have paid $431 million in environmental fines since 2000 lobbied aggressively to build the environmentally disastrous Dakota Access Pipeline.