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MORE AID AVAILABLE FOR DRILLERS: The Federal Reserve unveiled more changes Monday to its Main Street lending program to allow more small and medium-sized businesses to be able to receive support from coronavirus-related financial pain. While the program is broad-based and targeted across multiple industries, oil companies could stand to benefit, again.
The Fed had already tweaked the program in a way that could help oil companies with large debt loads, a move applauded by Energy Secretary Dan Brouillette. He did not comment on the new changes.
What’s in it for oil? David Livingston, a senior analyst with the Eurasia Group, a geopolitical risk firm, told Josh the latest adjustments to the program “can certainly benefit” shale companies “on the margin.”
He notes that the North American oil and gas sector, before the pandemic, had at least $40 billion of debt coming due in 2020, with $160 billion more through 2023. Within the industry, there is more than $50 billion in speculative-grade debt maturing over the next four years.
Large oil companies looking to refinance debts in the hundreds of millions of dollars could find the loan program’s expanded terms “potentially useful,” Livingston said.
The new changes: The Federal Reserve Board’s expanded terms announced Monday would lower the minimum loan size to $250,000 from $500,000, increase the maximum loan size to up to $300 million from $200 million, allow companies to repay the loan in five years rather than four, defer principal repayment for two years instead of one, and have the Fed buy up to 95% of all loans.
But the Main Street lending program, approved March 27 as part of the CARES Act passed by Congress, still does not have a launch date.
Uncertainty remains: Livingston cautioned that oil companies might not tap the Main Street program in a huge way because of restrictions related to a company’s financial sustainability pre-pandemic, the stipulations (and likely intense public scrutiny) on making efforts to keep jobs, and the limit on eligible debt levels at recipient companies.
Also, oil prices have stabilized and companies are starting to bring back production, providing some relief “that may see companies looking to tap purely private sources of finance rather than government-backed options.”
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REPUBLICANS LOOK TO SAVE CLIMATE PROGRAM THREATENED BY PANDEMIC: More than a half-dozen GOP lawmakers told Josh they support giving states and towns more time to spend money awarded to them through the Obama-era program, the National Disaster Resilience Competition, which was created in 2014 after Hurricane Sandy devastated the East Coast.
The problem: Last week, officials from states such as Louisiana, Virginia, New York, Iowa and Tennessee told lawmakers that the coronavirus will prevent them from meeting a 2022 deadline to use funding to build projects that provide defense from floods and wildfires.
The Obama administration’s Department of Housing and Urban Development distributed the money in 2016 to projects in 13 states and cities or counties, including for building an underground flood wall in Connecticut, raising roads in Norfolk, Virginia, and relocating residents of a coastal village in Louisiana, Isle de Jean Charles, that has lost 98% of its land due to sea level rise in the Gulf of Mexico.
Support from coastal and Midwest Republicans: Lawmakers (or their spokespeople) who told Josh they favor a funding extension include Sen. Joni Ernst of Iowa, Louisiana Rep. Garret Graves and Sen. Bill Cassidy, Rep. Tom Reed of New York, Rep. Chuck Fleischmann of Tennessee, Rep. Francis Rooney of Florida, and Rep. Greg Walden of Oregon, the top GOP member of the Energy and Commerce Committee.
Graves, the top Republican on the House’s special select climate change committee, said the program was a “fantastic idea to inspire innovation in community resilience.”
He said he’s skeptical about pandemic-related delays in implementing the projects, blaming “bureaucratic regulatory red tape,” but he supports new legislation to allow for more time to finish work.
Read more of Josh’s story posted this morning.
VULNERABLE GARDNER AND DAINES SPEAK ON CONSERVATION BILL THAT COULD SAVE THEM: Sens. Cory Gardner and Steve Daines, two of the chamber’s most endangered Republicans, are touting their leadership in advancing a major bipartisan conservation bill, which is being debated on the Senate floor this week.
“The far-left environmental groups that have attacked me for the last 10 years are not going to change their mind, but it’s very difficult to say I don’t support public lands when I helped pass the most significant public lands package going back to Teddy Roosevelt,” said Gardner, an incumbent senator from Colorado who will likely face off in the general election against former Gov. John Hickenlooper, in an interview with Josh for a story published in the latest issue of our magazine.
The “Great American Outdoors Act,” endorsed by President Trump, provides full and permanent federal funding to the Land and Water Conservation Fund, which provides money to federal, state, and local governments for buying land and waters to improve national parks, forests, wildlife refuges, and other public areas.
It also creates a separate fund to pay for a $12 billion maintenance backlog in national parks and other federal lands, using energy revenues to pay for repairs to broken bathrooms, visitor centers, roads with potholes, trails, and campgrounds.
“Oftentimes, good policy can result in good politics,” said Daines, a Montana senator and “passionate outdoorsman” who spoke with Josh from his Ford F-150. “It’s important to note that it’s public lands and conservation that will bring a divided Congress together,” added Daines, who is defending his red seat from Montana’s popular former Gov. Steve Bullock.
‘Rare’ bipartisan opportunity: Democrats and environmental groups are not faulting Gardner and Daines for seeking credit.
“However it came about, there is not a Democrat backing away from the bill thinking it might help the chances of a Republican getting reelected,” Sen. Joe Manchin, top Democrat of the Energy Committee, told Josh. “I am so proud of that.”
The Senate voted 80-17 on Monday to allow debate on the bill, but the final vote could run into next week, Gardner said, depending on if Senate Leader Mitch McConnell will allow amendment votes that could slow the process.
“We have a rare opportunity to make a big step forward with some of our nation’s most cherished treasures,” McConnell said on the Senate floor Tuesday.
ENERGY COMMITTEE MOVES MENEZES’ NOMINATION FOR DOE NO. 2: The Senate Energy and Natural Resources Committee advanced the nomination of Mark Menezes on Tuesday to be deputy secretary of the Department of Energy, the No. 2 spot at the agency.
The committee approved Menezes by voice vote, moving his nomination to the Senate floor.
Only Democratic Sen. Catherine Cortez Masto of Nevada said she opposes Menezes’ nomination.
Menezes “has shown he is up to the task and capable of handling the job,” said Manchin.
Menezes currently leads policy at DOE as the under secretary of energy, and was formerly chief counsel of the House Energy and Commerce Committee, and a lobbyist at Berkshire Hathaway Energy.
MEANWHILE, MURKOWSKI SAYS DONT @ ME, TRUMP: The Energy Committee’s GOP Chairman Lisa Murkowski responded to Trump’s tweets threatening to campaign against her when she’s up for re-election.
Trump made the comment after Murkowski last week offered support for the sentiment expressed by former Trump Defense Secretary Jim Mattis in a scathing op-ed questioning the president’s leadership.
“I made the comments that I made,” Murkowski told CNN on Monday. “I stand by them. Again, I think it’s important that we have a president who is working to bring people together. … And tone and words matter.”
She added, “I cannot live in fear of a tweet. That’s where I am now.”
RESEARCHERS SEE OPENING FOR 90% CLEAN ELECTRICITY BY 2035: The scenario, as outlined by researchers from the University of California Berkeley, would require a buildout of 1,100 new gigawatts of wind and solar energy over the next 15 years, or about 70 GW each year, a pace the study released Tuesday says is “challenging but feasible.”
The scenario also wouldn’t allow for any new fossil fuel plants to be built — even natural gas, which would only make up about 10% of U.S. generation in 2035 in the 90% clean electricity scenario. The researchers say 70% of U.S. power during normal periods of generation and demand would come from wind, solar, and battery storage, with hydropower and nuclear energy filling in the remaining 20%.
How to get there with policy: A separate report from Energy Innovation says the U.S. should consider a range of policies to support such a rapid renewable energy buildout, primarily a nationwide clean electricity standard targeting 100% clean by 2045. The firm also recommends extending tax credits for wind and solar, creating tax incentives for energy storage, streamlining renewable energy and transmission siting, and reforming wholesale markets to support clean energy goals.
CORN-STATE LAWMAKERS RAMP UP PRESSURE ON TRUMP TO PROTECT RFS: More than 40 bipartisan lawmakers are calling on Trump to deny requests from oil-state governors to waive this year’s biofuels blending requirements, slamming those requests as “unjustified” and “contrary to the EPA’s well-established precedents.”
The lawmakers’ Monday letter to Trump comes as the EPA is weighing how to respond to petitions from six governors to waive the 2020 Renewable Fuel Standards requirements, which they say are causing severe economic harm amid the coronavirus pandemic. The EPA also has yet to respond to petitions Administrator Andrew Wheeler has said it’s received from several small refiners for exemptions from prior years of the RFS.
Biofuels producers are turning up the heat on EPA: They say the EPA isn’t being transparent about the “gap” petitions for exemptions it’s received, and they’ve slammed such requests as an attempt by oil refiners to circumvent a federal court decision limiting the EPA’s ability to grant small refinery waivers.
“Without further clarification, EPA appears to be reverting to a secretive pattern in the management of RFS refinery waiver petitions,” a coalition of biofuels groups, including the Renewable Fuels Association, the National Biodiesel Board, and Growth Energy, wrote Wheeler on Tuesday. “It is difficult to give EPA the benefit of the doubt on SREs.”
HOUSE DEMOCRATS QUESTION WHETHER FEMA IS PREPARED FOR DISASTERS: Democrats on the House Oversight Committee’s environment panel are demanding a briefing from the Federal Emergency Management Agency on whether it’s adequately equipped to respond to natural disasters like hurricanes and wildfires amid the pandemic.
FEMA hasn’t made public its plans for how it is preparing for natural disasters and addressing resource limitations, beyond hurricane guidance for states and localities it released last month, the Democrats wrote in a letter Monday to FEMA Administrator Peter Gaynor. And even that guidance lacks details about the availability of staff and supplies during the pandemic, the lawmakers say.
The Democrats also say FEMA “will continue to face mounting challenges in responding to large catastrophes without adequate resources” as climate change intensifies extreme weather.
The Rundown
Bloomberg A glut of diesel is quietly undermining oil price resurgence
Wall Street Journal US frackers to zero in on richest oil fields after coronavirus
Washington Post Trump administration to make it easier for hunters to kill bear cubs and wolf pups in Alaska
Wall Street Journal US sets plan to expand sanctions on tankers, in bid to pressure Venezuela
Calendar
TUESDAY | JUNE 9
12 p.m. The House Energy and Commerce Committee’s Subcommittee on Environment and Climate Change holds a virtual hearing entitled, “Pollution and Pandemics: COVID-19’s Disproportionate Impact on Environmental Justice Communities.”
2:30 p.m. The House Natural Resources Committee hosts a virtual forum entitled, “After Coronavirus: Building a Prosperous, Environmentally Friendly Economy.”
