The Fossil Fuel Industry's Dark Money Is Getting Even Darker
By David Sirota and Andrew Perez, Jacobin
31 October 20
A fossil fuel company admitted it made $9.5 million worth of political
expenditures to advance its corporate interests - and a Delaware court is
helping hide the details.
In its landmark Citizens United ruling, the Supreme Court insisted that
"independent expenditures, including those made by corporations, do not give
rise to corruption or the appearance of corruption," and conservative
justices added that such political "expenditures do not lead to, or create
the appearance of, quid pro quo corruption."
But a little-noticed court case involving the fossil fuel industry recounts
a much different reality - and now the judiciary is trying to make sure the
public can never see the ugly details.
The situation is unfolding in a Delaware federal court, where Extraction Oil
& Gas declared bankruptcy earlier this year. State records show the company
has spent more than $4 million on political causes since 2015. However,
during the bankruptcy proceedings, the Denver-based company asked the judge
for permission to redact - and keep sealed - information about $9.5 million
worth of political donations it has made since 2018. That's an average rate
of more than $12,000 of political spending every single day.
Extraction has been active in Colorado elections and ballot measure fights,
and it has fought "setback" efforts that would require oil and gas wells be
sited further away from homes and schools. According to Reuters, nearly
three-quarters of Extraction's land in Colorado could become "nonviable"
under new setback rules proposed by Colorado regulators.
Many of the political contributions at issue do not appear to be disclosed
in state or federal records, according to an analysis by the Denver Business
Journal and data compiled by the National Institute on Money in Politics -
suggesting some of the money may have gone to "dark money" groups, or
politically active nonprofits that aren't required to publicly disclose
their donors.
"Such Political Donations Are Made by Corporations Anonymously"
In trying to prevent the public from learning exactly which candidates or
political groups received the money, Extraction explicitly says that its
executives make political donations "as part of their business strategy" to
protect their corporate interests.
"Such contributions are made to protect both the current interests of the
debtors as well as the debtors' long-term interests," wrote Extraction's
lawyers. They said:
It is likely that the disclosure of the specific recipients of the debtors'
contributions would jeopardize many of the debtors' business relationships,
which in turn would adversely affect the debtors' business. The public
disclosure of certain contributions (or the lack thereof) would also
adversely affect the debtors' longstanding relationships with both state and
local governments.
For years, ethics advocates have unsuccessfully pushed financial regulators
at the U.S. Securities and Exchange Commission to require basic disclosure
of corporate political spending. Extraction favorably cites the lack of such
requirements as proof that "such political donations are made by
corporations anonymously" - and then the company says that being forced to
disclose the donations could let its competitors buy up its political
relationships.
"Competitors would be able to exploit the debtors' lost business
relationships while continuing their own political contributions,"
Extraction wrote.
The regional office of the U.S. Public Trustee, a Justice Department
watchdog program that oversees bankruptcy cases, objected to Extraction's
request, writing that the "debtors offer no evidence that either support
these allegation(s) or that otherwise overcome the strong presumption of
public disclosure."
However, the judge who oversees Delaware's federal bankruptcy court ruled
for Extraction, allowing the donations to remain anonymous.
Shutting Down One of the Few Ways to Discover Political Money
There are two takeaways here.
First, the case proves what a complete sham Citizens United really is. The
Supreme Court pretended that corporate independent expenditures on politics
don't corrupt anything, and now Extraction openly admits that political
expenditures are used to advance business interests.
Second, dark money may have just gotten a lot darker. Delaware is home to
thousands of corporations, and now its federal bankruptcy court has ruled
that companies can keep their dark money expenditures on politics secret in
bankruptcy proceedings.
In a sense, it is a special carveout for records that document influence
buying: while companies' day-to-day financial records remain available for
public scrutiny in bankruptcy, now there's a ruling that allows those
companies to hide exactly which politicians and political groups they are
bankrolling.
That's no small development: bankruptcy cases have been one of the few
venues where the public can learn about dark money political donations. Last
year, the Intercept reported that coal company Cloud Peak Energy had donated
to a host of conservative dark money groups - including the Koch network's
political arm, Americans for Prosperity - using documents filed in a
bankruptcy case presided over by the same Delaware judge.
