Never Mind Super PACs: How Big Business Is Buying the Election
The consequence is that API and other trade associations can cloak multinational and even foreign corporate election spending under an American flag. API no longer has to formally segregate its corporate dollars when seeking to influence federal elections, allowing companies like Aramco to pour money into campaign ads without detection. Federal law prevents Saudi lobbyist Al-Gabsani, as a foreign national, from leading a political action committee. But there’s nothing stopping him from leading a trade group that makes campaign expenditures just as a PAC would.
Over the years, API has spent tens of millions of dollars on ads casting oil industry prerogatives as patriotic responsibilities, taking up the GOP’s call for American “energy independence” through increased domestic drilling. After pushing climate reform off the table by funding Republican victories in the midterm elections, API has now set its sights on pressuring the administration to back the Keystone XL pipeline and to preserve billions in tax credits extended to oil companies, both foreign and domestic.
Will President Obama “say ‘Yes’ to new jobs, ‘Yes’ to economic growth, and make our nation more secure?” asks an API television spot calling for approval of the Keystone XL pipeline, a controversial project to bring crude oil from Canadian tar sands to refineries along the Gulf Coast. “Tell the president we need it now,” the ad ends, as the White House phone number appears over an image of the Stars and Stripes.
During this election season, API has tapped similar themes in radio ads targeting several US senators up for re-election. Senator Claire McCaskill (D-Mo.) is still in a tight race against Republican Representative Todd Akin despite his inflammatory remarks about “legitimate rape,” in part because she’s been hit by so many independent ads, including one from API that claimed her position against oil subsidies would raise gas prices. “Senator McCaskill, higher taxes won’t lower gas prices,” the narrator says. “Tell her Americans can’t afford to pay more.” A similar radio ad aired in Massachusetts to support Republican Senator Scott Brown for backing oil tax breaks. (In that case, because Brown and his opponent, Elizabeth Warren, had pledged to reject outside advertising, Brown’s campaign contributed $34,545—half of the ad’s cost—to charity.)
To make both of these issues—the Keystone XL pipeline and oil subsidies—a prominent part of the campaign this year, API launched a mix of paid grassroots and media efforts. The group has deftly exploited the town hall tradition to push its priorities. At a Pizza Ranch restaurant north of Des Moines in July 2011, I watched as several individuals saying they were from a seemingly local organization called Iowa Energy Forum peppered Rick Santorum with questions about his support for Keystone. Though they didn’t disclose it, their organization was fully financed by API. The same ordinary-looking Americans hounded Mitt Romney during the primaries, and Romney has since made building the pipeline part of his platform.
API also led “Energy Citizens” and “Vote 4 Energy” campaigns that paid for billboards and broadcast ads featuring Americans who say that oil and gas are the most important issues this November. The Energy Citizens website features yet another American flag; it asks visitors to “Pledge Today” to vote for candidates who support Keystone and sign up for e-mail alerts to oppose “energy taxes,” API’s deceptive moniker for efforts to end oil company subsidies.
The campaign, like any political endeavor by a trade association, never discloses the individual companies underwriting the effort. And though API’s furious flag-waving certainly benefits American oil firms, it also masks the multinational scope of the organization’s members. In fact, Saudi Aramco, an API power broker, stands to benefit greatly from both Keystone and federal oil subsidies.
The Keystone XL pipeline will get Canadian crude to refineries that will supply the United States, but much of that refined oil is destined for export to buyers across the globe, according to a report from Oil Change International. Saudi Aramco has joined with Shell Oil to expand their refinery in Port Arthur, Texas, soon to be the largest refinery in the country. That refinery is slated to make its money by processing both imported Saudi oil and crude from the Keystone XL. And Aramco owns a 50 percent share.
Aramco isn’t a publicly traded company, and therefore it’s not required to file reports with the SEC, which would provide a better picture of which taxpayer subsidies the firm collects. But the company is eligible for at least some of the many controversial tax credits extended to oil companies. Industry experts say that Aramco is eligible, for example, for the manufacturing tax deduction that was given to oil refineries in 2004, which now permits them to reduce their taxable income by up to 9 percent. Aramco, which co-owns three major US refineries, has much to gain from preserving this loophole.
The API-led campaign to boost these policies promises to help many of its American member companies, including Chevron and ExxonMobil, but likely also Aramco and TransCanada PipeLines, the US subsidiary of the Canadian firm seeking to build Keystone.
According to John Hofmeister, the former chief executive of Shell Oil and a former board member at API, the board on which Al-Gabsani sits approves all major communication campaigns with “essentially unanimous consent.” An internal API document shows that the board oversees the Political Affairs Committee, which is responsible for API’s political campaigns.
As a lobbyist, Al-Gabsani is registered to shape “public debate regarding the importation of crude oil into the United States” on behalf of the Saudi government, according to lobby disclosures. But he is also accomplishing that through his leadership role at API. His position there has been left off the mandatory Justice Department registration forms filed by the Saudi government. (Both Aramco and API declined to comment for this article in response to calls and e-mails. A representative of Al-Gabsani also declined to respond, referring our queries to API.)
API is hardly the only major trade association that represents foreign corporations. SABIC, the Saudi government–owned chemical company that ranks among the world’s largest, is a dues-paying member of the American Chemistry Council, another 501(c)(6) that has taken advantage of the new system. The council, like API, represents large American-based firms, such as DuPont and Dow Chemical, as well as multinationals like Solvay SA, a Belgian chemical concern, and Daikin Industries, a Japanese company.
In 2010, for the first time, the American Chemistry Council spent corporate money from its general treasury on federal campaign ads. One ad promoted Joe Manchin, then West Virginia’s Democratic governor, in his bid for the late Robert Byrd’s open US Senate seat. The commercial, aired with $225,000 in corporate cash from ACC, hailed Manchin as a “Senator for Our Future.”
Once elected, Manchin went to work as a loyal ally of the industry. He has cited ACC in his speeches on job creation, appeared at the group’s events and supported its interests in Congress. In one of his first acts as senator, Manchin was the lone Democrat to co-sponsor Republican Minority Leader Mitch McConnell’s amendment to bar the EPA permanently from using the Clean Air Act to regulate greenhouse gases—a position being pushed at the time by the ACC’s top lobbyist, Cal Dooley.
Since then, the ACC has aired nearly identical campaign-style ads in support of over a dozen lawmakers from both parties who sit on key committees affecting the chemical industry. In July, the association began airing a second set of Manchin ads to aid his re-election. The ads come at a time when Congress has moved to delay key updates to the Toxic Substances Control Act, which regulates the chemicals used in consumer products. When New Jersey Senator Frank Lautenberg introduced a bill to this effect, Manchin’s name was conspicuously absent from a list of supporting senators. Manchin’s staff did not respond to requests for comment.