Analysis

Polluters, firms that ripped off the government got 'small-business' bailouts

A pump jack operated by Somont Oil. The company received a taxpayer bailout after allegedly ripping off the government.

A pump jack operated by Somont Oil. The company received a taxpayer bailout after allegedly ripping off the government.

Among the thousands of fossil fuel companies that received billions in small-business bailouts are dozens charged with violating rules about pollution, worker safety, and government contracting.

At least seven were accused of ripping off the government on fees they were supposed to pay for drilling, mining, and fracking on public land, a BailoutWatch analysis found. One of these, Somont Oil, paid $137,000 last year to settle civil charges that it short-changed the government by disguising deals with a related company as open-market sales.

Somont's taxpayer-funded bailout was worth more than twice that.

It’s no surprise the government bailed out polluters and bad actors. Fossil fuel companies lobbied hard to ensure as many as possible qualified for bailout programs. And they are subject to a host of rules designed to protect their workers and other Americans from unsafe conditions, air and water contamination, and other harms that come with producing and distributing oil, gas, and coal.

As the government considers what companies to support through the pandemic recession with taxpayer dollars, however, critics are questioning the wisdom of bailouts for inherently dirty and unsafe industries that are contributing to climate change.

“As we’ve said all along, federal aid should be going to help small businesses and frontline workers struggling as the result of the pandemic, not the corporate polluters whose struggles are a result of longstanding failing business practices,” Melinda Pierce, legislative director of the Sierra Club, told The Guardian.

The small-business data released Monday names some participants in just one program: the Small Business Administration’s Paycheck Protection Program, which awards up to $10 million to firms with fewer than 500 employees. So long as they use the money for payroll or rent, there’s no obligation to repay it.

The government only named companies that received $150,000 or more, accounting for less than 15% of the nearly 5 million groups that received loans. News organizations are suing for the government to release the rest of the names. The loan amounts were reported in broad dollar ranges, so it’s impossible to say exactly how much any one company received.

BailoutWatch identified more than 6,400 companies in fossil fuel extraction and related industries that received the funds. About 1,100 received $1 million or more.

Workers at a refinery operated by CountryMark. The company was required to spend $18 million on upgrades after Clean Air Act violations.

BailoutWatch’s analysis of rule violations relied in part on public records compiled by Violation Tracker, an online database sponsored by Good Jobs First. It represents a sliver of the violations by the thousands of fossil fuel companies that have already received government bailouts.

Somont Oil settled charges that it underpaid the government for natural gas taken from federal land in Montana between 2010 and 2016. Companies drilling on public land must pay royalties to the government based on their revenue from drilling and costs. Somont’s owner, Charles Jansky, allegedly sold gas at below-market prices to another company he owned and used the artificially low sales to improperly reduce what he owed. He also deducted artificially high transportation and processing costs, the Department of Interior’s Inspector General said in a summary report.

Reducing drillers' royalty obligations is another prong of the Trump Administration's effort to prop up fossil fuel companies, which struggled before the pandemic and are even worse off now. The government has awarded hundreds of royalty breaks during the pandemic, The Associated Press reported last month.

Somont Oil received at least $350,000 from the government in April. Other companies accused of underpaying royalties that later received small-business bailouts include pipeline company Enervest Operating and E&B Natural Resources Management, which each received at least $5 million; and Lime Rock Resources and Finley Resources, which each received at least $2 million.

E&B Natural Resources Management also has a dismal environmental record. The company was cited by environmental regulators more than 20 times between 2015 and 2018 for violations of the federal Clean Air Act.

Other companies with notable histories of violations include Ramaco Resources, which was cited twice by federal mine-safety regulators on March 25, less than a month before receiving a bailout worth at least $5 million; and CountryMark Refining & Logistics, which agreed to pay $167,000 and spend $18 million installing new pollution controls to settle Clean Air Act violations.