Senators Urge Feds Not To Shut Out Oil And Gas Industry From Relief Package

Senators Urge Feds Not To Shut Out Oil And Gas Industry
An eagle tops the U.S. Federal Reserve building's facade in Washingto.

As the federal government moves to alleviate the economic fallout of the COVID-19 outbreak, senators are taking steps to make sure the oil and gas industry is not prevented from accessing relief assistance recently passed by Congress. 

In a letter to Treasury Secretary Steve Mnuchin and Federal Reserve Chairman Jerome Powell, 17 Republican senators wrote a letter asking that fossil fuel producers be allowed access to the up to $454 billion in loans and loan guarantees offered to businesses as a part of the recently passed CARES Act stimulus. During deliberations about contents of the CARES Act, outside environmental groups have advocated against fracking companies benefitting from a “bailout.”

“Industries, like the energy and transportation sectors are facing significant economic challenges as the demand for products and services have dropped with the constraints on the economy,” the letter read.  “We urge you to ensure that the financial relief offered under the CARES Act is fully available to companies throughout the economy.”    

“Some outside groups have already advocated certain sectors of the economy be excluded from the loans made available under the CARES Act. Acquiescing to these demands would be contrary to Congressional intent and would arbitrarily harm certain American workers. Both are unacceptable,” the senators wrote in their letter.

The lawmakers expressed concern that financial institutions responsible for administering certain aspect of the CARES financial relief and support may discriminate against certain industries.  Of late, banks, insurance companies and institutional investors alike have faced pressure to focus on ESG investments and shift their strategy away from investments in the energy or fossil fuel sector. 

In January, BlackRock—which is the largest investment fund with some $7 trillion in assets—announced changes to its investment strategy with an increased focus on sustainability.  CEO Larry Fink outlined plans to increase its sustainable assets from $90 billion to $1 trillion over the next 10 years and exit coal investments in an annual letter to fellow chief executives. 

In light of these decisions, the Republican coalition implored that these financial firms’ revised investment strategy would not impact how its responsibilities are carried out under the CARES Act. The Federal Reserve is partnering up with BlackRock to help administer its $454 billion bond buying program. 

“…[W]e believe the Federal Reserve should emphasize that, in carrying out its fiduciary duties on behalf of the SMCCF, to avoid conflicts of interest, BlackRock must act without regard to this or other investment policies BlackRock has adopted for its own funds,” wrote the Senators. 

Precedent for blocking capital investment lending to industry on the basis of climate agendas was set in the summer of 2018 when San Francisco-based Bank of the West announced its intention to divest from coal, oil sands and Arctic drilling, and that it would deny financing for fracking or oil sands development.  The decision drew criticism from local officials at the time.

The coalition was led by Senator Kevin Cramer of North Dakota and Senator Jim Inhofe of Oklahoma.  Also signing onto the letter were Senators Shelley Moore Capito (R-W.Va.), John Barrasso (R-Wyo.), Steve Daines (R-Mont.), Ted Cruz (R-Tex.), Dan Sullivan (R-Alaska), John Hoeven (R-N.D.), John Cornyn (R-Tex.), Joni Ernst (R-Iowa), James Lankford (R-Okla.), Michael Enzi (R-Wyo.), Thom Tillis (R-N.C.), Bill Cassidy (R-La.), David Perdue (R-Ga.), Mike Braun (R-Ind.) and Mike Rounds (R-S.D.).


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