Lyon: Dark money clouds energy debate

Thomas P. Lyon

Voters are long familiar with Michigan’s big issues each election — jobs, education, infrastructure and taxes are perennial defining platforms for Michigan candidates. Energy is poised to join that short list, with issues surrounding energy choice, oil and gas development, renewables, and environmental stewardship top-of-mind for a growing percentage of legislators, corporate interests and voters. And with energy issues come “front groups” paid for by energy companies.

We hear messaging from front groups frequently during elections, but it may be hard to recognize them and even harder to know who is behind them these days. Bearing names that suggest grassroots origins, they appear to be selling apple pie, motherhood, and the American Way. Find your way to the back room, however, and their real character emerges. These are corporations and special interest groups manipulating public opinion and the political process for private advantage and profit.

Take, for example, CARE, Citizens for Affordable Renewable Energy, a Michigan front group created in 2012. It appeared to be trying to protect fellow citizens from the “thousands of dollars in higher electric bills for Michigan families and small businesses” if more electricity were required to come from renewable sources instead of coal. In reality, it was not run a grassroots citizens group at all – it was funded primarily by the two giant electric utilities in Michigan, DTE Energy and Consumers Power, who poured nearly $23 million into fighting a renewable energy proposal in Nov. 2012.

Reality check: the University of Michigan Energy Institute (UMEI) recently produced a report that carefully analyzed the impact of higher renewable energy standards in Michigan. It found that we could get 25 percent of our power from renewable sources by 2025 at a cost of just $2.60/month for the average customer – hardly the “thousands of dollars” that CARE was trying to scare people with.

Artificial grassroots groups like CARE are often referred to as “astroturf groups.” There are hundreds around the country, and they are nothing new. According to the book “Merchants of Doubt,” the tobacco industry pioneered the concept, starting in the 1960s. With covert funding from Big Tobacco, groups with names like “Americans for Freedom” trumpeted claims that “there is no evidence that smoking causes cancer.”

The common denominator is easy to find: groups that profit when government fails to regulate health hazards and environmental pollution hide behind a veneer of concern for average citizens and a pseudoscientific set of “facts” to block government action. A few years ago I developed an economic model of astroturf groups. In the model, a special interest group lobbies to influence a public policy decision. Although it is well known that the group has a particular bias, it may still be able to provide valuable information to the decision-maker as long as its sources of funding are transparent. But when the group is funded by corporations affected by the policy, it loses its credibility. Thus, if it wants to maintain its influence, it is crucial to keep such funding covert.

Sadly, when Congress passed the Lobbying Disclosure Act of 1995, it deleted from the bill any reference to astroturf lobbying groups. As a result, astroturf groups can still fly below the radar. Worse, recent Supreme Court decisions in Citizens United v. Federal Election Commission and Speechnow.org v. Federal Election Commission have allowed the creation of 501(c)4 groups that can accept unlimited amounts of money and engage in political activity without disclosing their donors. There is emerging an array of new “dark money” groups that act as fronts for donors who wish to remain anonymous.

According to the research work of Dr. Jocelyn Leitzinger, a post-doctoral fellow with UMEI and the Erb Institute, some front groups are created in response to a short-term legislative threat, especially if it involves a ballot proposal to be voted on by the public. These groups – such as CARE – tend to disappear as soon as the immediate threat has passed.

In Michigan we had CARE in 2012 opposing increasing the RPS; in 2014 Citizens for Energizing Michigan’s Economy opposed electricity deregulation to the benefit of the incumbent utilities; and going into the 2015 legislative cycle and 2016 election cycle we have been treated to TV ads by Citizens for Michigan’s Energy Future warning of electricity shortfalls if coal-fired power plants are shut down due to old age or EPA regulations. Not only do these three groups have key funding sources in common, but there is striking overlap among the membership of their leadership teams.

Free-market think tanks that “know” the best answer is always “less government” are actually not engaging in thought at all – they are merely parroting an ideology that provides cover for private interests who are making money at the expense of the public. For economists, who have a well-developed theory of “market failure,” the simple-minded assertion that “free markets” are always the best form of policy is just bunk. Environmental externalities are usually not solved by market forces, and public goods are not often provided by “the market.”

The next time you hear a TV ad sponsored by “Concerned Americans for a Better World” or from a “free-market think tank” pay careful attention. Do they disclose who is funding them? Do they provide rigorously documented facts? Or, more likely, are they offering simple slogans backed only by scary assertions?

Thomas P. Lyon is the Dow Professor of Sustainable Science, Technology and Commerce at the University of Michigan Ross School of Business and the School of Natural Resources and Environment. He is also associate director for social science and policy at the University of Michigan Energy Institute.