Sunlight Foundation

Draft Executive Order On Outside Spending Disclosure Would Have Sweeping Reach

During the 2010 midterm election David and Charles Koch, owners of the massive energy conglomerate Koch Industries, became the face of secret donors to a new set of political groups spawned by the controversial Citizens United Supreme Court ruling. Koch Industries is also a longtime government contractor receiving $85 million in contracts over the past eleven years. These two facts may not seem to overlap, but if President Obama signs a draft executive order leaked this week Koch Industries and a large number of the nation’s companies would face the prospect of having to disclose their now-secret contributions to political efforts when they seek new federal contracts.

The centerpiece of the draft order, which requires disclosure of a variety of contributions that are already disclosed to the Federal Election Commission, is its requirement that any organization bidding on a federal contract disclose contributions made by the organization, its subsidiaries, and its directors to any third party group intending on using that money for independent expenditures or electioneering communications.

The order specifically targets a disclosure loophole created by the Citizens United ruling. The ruling opened the door for a whole host of organizations, including 501(c)(4) nonprofit organizations, to run electoral advertisements without disclosing their donors to the public. The most notable of these groups is Crossroads GPS, a conservative nonprofit that spent more than $15 million on advertisements opposing Democratic candidates for office in the 2010 midterm election.

Under the order donations to Crossroads GPS and other groups including the U.S. Chamber of Commerce, and Americans for Prosperity would have to be disclosed by companies seeking federal contracts.

The order is an attempt by the White House to do what Congress could not do when it failed to pass a legislative response to Citizens United, known as the DISCLOSE Act, at the end of last year.

By applying to all organizations submitting a bid for contract the order would cover a huge swath of the country's companies. JPMorgan Chase, Exxon Mobil, General Electric, and the aforementioned Koch Industries all hold government contracts. Thirty-three of the forty-one companies listed in the top 100 campaign contributors over the past two decades are recipients of federal contracts. According to USASpending.gov, there are 129,083 recipients of federal contracts, although many of these may be duplicates.

Even News Corporation, the owner of Fox News, the Wall Street Journal, and the New York Post, is a government contractor. The executive order would require both the company and its owner Rupert Murdoch to disclose contributions to political groups. Last year News Corporation contributed $1 million to the Republican Governors Association, which already discloses its donors, and, according to a New York Times investigation, another $1 million to the U.S. Chamber of Commerce, which does not disclose its donors.

That Times investigation uncovered a number of contributors to the Chamber’s political efforts, most of whom also hold government contracts and would face new disclosure rules under the potential executive order. In addition to News Corporation, Dow Chemical, Aegon, Chevron Texaco, Prudential Financial, and Alpha Technologies all contributed to the Chamber of Commerce in recent years while holding government contracts.

While the order would certainly not apply retroactively these companies would have to disclose their political giving for the two previous years if they sought a new contract from the government.

House Oversight and Government Reform Chairman Darrell Issa, R-Calif., criticized the draft Executive Order for stifling speech and failing to cover unions that support the President and his party, “This order is a purely political act offered under the benign label of disclosure. The order would not impose the same requirements on the labor unions or other organizations who support the President.” While many unions receive federal grants there are few receiving federal contracts.

One notable exception is the nation’s largest federation of labor unions, the AFL-CIO, which received small contracts from the Department of Labor as recently as last year. USASpending.gov lists two purchase orders from 2010 for contracts with the AFL-CIO Working for America Institute. The contracts were with the Department of Labor and Department of Transportation. The draft order does not distinguish between types of contracts, thus any future contract with the AFL-CIO would trigger the same disclosure requirements applied to corporations with contracts.

Some companies already voluntarily disclose contributions to political groups on their corporate websites, although most of the time the information is dated, poorly defined, or not explained.

General Dynamics lists contributions to political nonprofits, but does not provide names. Instead, the defense contractor lists $125,000 in contributions to three 501(c)(4) nonprofits.

The top recipient of contract dollars from the federal government, Lockheed Martin, lists contributions it made to trade associations in 2010 including a $50,000 contribution to the U.S. Chamber of Commerce. Lockheed states, “We believe that the non-deductible portion of our dues is for trade association lobbying.”

Northrop Grumman and Raytheon Corporation detail their contributions to candidates and 527s, but do not explain a policy for contributions to other politically active organizations. Meanwhile, Pfizer releases an annual report on its political action committee contributions, which does not list contributions to nonprofits or trade associations.

The Blanche Lincoln Energy & Climate Complex

Sen. Blanche Lincoln has put herself front and center in opposing efforts by her party's leadership to pass or implement comprehensive caps on carbon emissions in the United States. She opposes the proposed cap and trade legislation that passed the House of Representatives and has been touted by President Barack Obama and senators John Kerry, Lindsay Graham and Joe Lieberman. Similarly, she has signed on to legislation that would block the Environmental Protection Agency (EPA) from implementing their own regulations to cap carbon emissions should cap and trade legislation fail to pass Congress. In this effort she is aided by a coterie of former staffers who currently lobby for a variety of interests seeking to weaken or derail carbon capping whether through legislation or the EPA's rule-making authority.

Six of Lincoln's former staffers currently lobby for interests invested in influencing carbon capping legislation. These interests include oil & gas trade groups, agriculutural companies, the airplane industry and biofuel and bioenergy firms. As chair of the Senate Committee on Agriculture, Lincoln holds a powerful position to influence carbon capping legislation and she has made no secret of her desire to block the legislation.

(For a full visualization of Sen. Blanche Lincoln's former staffers lobbying for the energy and climate industries click here or the image to the right.)

The most influential of Lincoln's former staffers is Kelly Bingel, a lobbyist for Mehlman Vogel Castagnetti. Bingel is a former chief of staff to Lincoln and has been called "Sen. Lincoln’s alter ego." Bingel's clients include two incredibly powerful organizations opposed to carbon capping: the American Petroleum Institute (API), the lead trade group for the oil industry, and Koch Industries, one of the largest oil manufacturing, trading and investment companies in the country. David Koch, one of the two owners of Koch Industries, is a big contributor to conservative movement organizations and is an outspoken opponent of cap and trade legislation. Koch has invested millions in various conservative organizations that have led lobbying and grassroots stimulation efforts to get people to advocate to their lawmakers to oppose cap and trade legislation. API spent $7.32 million on lobbying last year, almost double what it spent in 2008. API states that any carbon capping legislation or regulations will cost the industry jobs and increase taxes.

According to the Center for Responsive Politics, Lincoln is currently the number one recipient of campaign contributions from the oil and gas industry from 2005 to 2010. She has received, through her campaign committee and her leadership political action committee (PAC),$309,500 from the industry.

Another former staffer to Lincoln, Ben Noble, lobbies for organizations opposed to carbon capping efforts including a variety of agricultural interests. Agricultural companies and trade groups have a major stake in cap and trade legislation as it moves through Congress. According to the EPA, agriculture accounts for 6 percent of all U.S. greenhouse gas emissions. The industry is seeking to avoid carbon capping regulation in cap and trade legislation or through EPA regulation.

One of Noble's clients, the USA Rice Federation, opposes cap and trade legislation and recently praised Lincoln for her stance against the legislation, "We applaud Chairman Lincoln for putting the American economy and jobs first in this debate. While there are a number of questions surrounding the issue of climate change, there is absolutely no question about the severe impact that pending legislation and regulation would have on our economy and jobs."

Lincoln is the top recipient of campaign contributions from a variety of agricultural industries including agricultural services, crop producers, food processors and meat processors and plants. Since 2005, Lincoln has received $789,372 from the agribusiness sector.

Both Bingel and Noble also represent organizations generally supportive of cap and trade legislation, so long as it contains language that allows them to maximize their profits under the new system. Bingel represents the electrical utility trade group the Electric Edison Institute (EEI). EEI, which includes members who have received specific benefits in the House-passed cap and trade legislation, sees the legislation as an openning into new markets with high potential to increase their share of energy distribution.

Noble represents the massive bio-tech, agribusiness firm Monsanto. Monsanto seeks to gain profits from a cap and trade system by getting farms and agribusiness to switch to a "no-till" method of farming. The "no-till" method would require farmers to purchase herbicides and seeds made by Monsanto. The lobbying effort by Monsanto is detailed in Tom Philpott's explanation at Grist.

Last week, Lincoln released her first campaign advertisement in the uphill battle to retain her Senate seat. The ad touts her continued opposition to the passage of cap and trade legislation. This continues her statement from last year that cap and trade is a "complete non-starter."

(Revision: Todd Wooten no longer lobbies for Enerkem. He is currently employed by Duke University.)