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.