Indiana coal company with ties to Trump administration gets $10 million in coronavirus aid

The politically connected parent company of Sunrise Coal, Indiana's second largest coal company, will receive $10 million through a federal coronavirus relief program aimed at small businesses.

Headquartered in Terre Haute, Hallador Energy announced last week that it would use the funds to pay two months of payroll and "other covered expenses." A Hallador spokeswoman did not respond to a request for comment.

Thousands of small businesses across Indiana have shut down in response to the governor's stay-at-home order. Owners of gyms, restaurants, salons and more have seen their revenues evaporate. Many have expressed frustration at the process and big companies receiving funds as they wait for help they desperately need.

Meanwhile, Hallador — whose political connections extend beyond Indiana to the White House — announced that it had received the loan just one day before the program dried up. Hallador has fought to keep coal alive in Indiana, even hiring former EPA chief Scott Pruitt to lobby in the state. And a former company executive now serves in the U.S. Department of Energy.

Is Hallador a small business?

Hallador is among several large, publicly traded companies to receive part of the $349 billion in emergency low-interest loans meant to keep small businesses afloat amid stay-at-home orders.

At least 94 publicly traded companies or their subsidiaries will receive $365 million through the program, according to a review of financial statements by the Associated Press. 

Congress passed the Paycheck Protection Program as part of its $2 trillion Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, designed to stimulate a U.S. economy that has slowed to a crawl in the wake of the coronavirus.

Business closures and limited industrial activity will continue to reduce demand for electricity, especially power generated by coal-fired power plants, according the U.S. Energy Information Administration. That agency predicts that coal generation will fall by 20% in 2020, compared to an increase of 1% of natural gas generation.

But many of the reductions and financial pressures on the coal industry were apparent well before the coronavirus crisis. Coal already faced competition from cheaper natural gas and renewables. The amount of electricity generated by coal has declined by 30% in the past decade, according to the EIA — though 70% of Indiana's electricity was still generated from coal in 2018.

Hallador Energy has not been immune to the shift away from coal. At the end of 2019, it operated four mines in Southwest Indiana and had 915 full-time employees and temporary miners, according to SEC filings. But in January, the company laid off 90 workers and shuttered its Carlisle Mine in Sullivan County, citing weak market conditions and a glut of domestic coal production.

An S&P Global report published in February found that in the first three quarters of 2019, more than half of the coal delivered by Hallador went to plants that are scheduled to retire by 2025 or earlier.

"Do they really fit the description of small business?" asked Kerwin Olson, executive director of the Citizens Action Coalition. His organization, advocates on behalf of consumers in utility proceedings. He applied for a PPP loan for his small nonprofit but has not heard back.

"It's just another slap in the face," Olson said. The well connected, the people who give to campaigns, get help, he said, "while mom-and-pops continue to struggle."

Hallador, while not a giant corporation, is far from a mom-and-pop company. It has a market valuation of just over $20 million, according to market data for Tuesday. And in 2018, it was the country's 18th-biggest producer of coal, by weight, that year: It dug up 7.6 million tons. 

Hallador's reported 768 employees would typically disqualify it from PPP loans, which are for businesses with 500 employees or fewer. There are some exceptions, however, in which several industries, including coal mining, can have as many as 1,250 or 1,500 employees and still be considered a small business by the federal government.

"If they are losing sales, and people are laid off, then I would say there are legitimate reasons for them to get money," said David Schlissel, director of resource planning analysis at the Institute for Energy Economics and Financial Analysis. "It should go to the miners and their families. If it’s not going to the miners, and they haven’t been shut down, then they shouldn’t be getting the money."

It's unclear whether the company has had to stop production or layoff workers in the wake of the coronavirus pandemic. Spokespeople for Hallador did not respond to questions from IndyStar. In an SEC filing, the company said it expected to sell less coal in 2020 due to the pandemic — 6.5 million tons, down from 6.7 million.

Unlike the thousands of Hoosier businesses that have been forced to close their doors, Hallador and the utilities it sells coal to are considered "essential" under the governor's orders.

Ties to Trump administration

Hallador and its Sunrise Coal subsidiary, along with the coal lobby, have mounted a strong front against any moves that would threaten coal. That includes intervening in rate cases before the Indiana Utility Regulatory Commission when utilities propose switching away from coal.

For lobbying help, Hallador turned to Pruitt, the embattled former EPA administrator who cast efforts to combat climate change as a "war on coal." 

During Indiana's 2019 legislative session, Hallador retained his services to push for a moratorium on new electric generation projects in the state. The only new projects being considered in Indiana were natural gas or renewables from utilities such as Vectren and NIPSCO, respectively. 

Pruitt's lobbying is an "attempt to protect the ratepayers of Indiana from Vectren and NIPSCO rate increases," Rebecca Palumbo, vice president of corporate affairs for Hallador, said at that time in a statement to IndyStar.

While that effort was ultimately unsuccessful, Hallador and Sunrise brought Pruitt back for the 2020 session. This time, he was lobbying for legislation that would make it more difficult to retire coal plants. 

Sunrise, along with another Oklahoma-based coal company that operates in the state, made campaign contributions to the bill's author, other legislators that would help shepherd the legislation through and Gov. Eric Holcomb in the last year. 

Though the bill was slightly watered down from its original state, it ultimately passed and was signed by the governor in March. The legislation also included some additional resources and training to help coal industry workers who lose jobs.

Sunrise and Hallador also have connections at the federal level.

Suzanne Jaworowski previously served as the communications and government affairs director for Hallador and its subsidiary. She then made the move to the Indiana State Campaign Director for Trump's 2016 presidential run, before landing as the senior adviser in the Department of Energy's Office of Nuclear Energy. 

Emily Hopkins is a data reporter for IndyStar's investigative team. Reach them at 317-444-6409 or emily.hopkins@indystar.com.

Call IndyStar reporter Sarah Bowman at 317-444-6129 or email at sarah.bowman@indystar.com. Follow her on Twitter and Facebook: @IndyStarSarah.

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IndyStar's environmental reporting project is made possible through the generous support of the nonprofit Nina Mason Pulliam Charitable Trust.