Coal Miner Bankruptcy Uncovers Political Spending
Until it filed for bankruptcy, no one knew if the nation’s second-largest coal producer was spending anything on politics.
Do you know what your coal stocks are up to?
If you – or your retirement fund – invest in Alpha Natural Resources, you had no clue whether your money has been used to influence elections until very recently. Alpha, the nation’s second-largest coal producer, filed for bankruptcy August 3rd. Filings from the bankruptcy proceeding reveal the recipients of grants from the company, although not the amounts. The list of politically active groups that received money from Alpha is impressively long.
The Virginia company gave to the Kentucky Opportunity Coalition, a group that spent millions to reelect Sen. Mitch McConnell (R-Ky.). Now the majority leader of the Senate, McConnell announced after the election that limiting the EPA’s power to regulate coal companies would be his top priority. Other recipients of Alpha donations include the U.S. Chamber of Commerce, one of the biggest outside spenders on federal elections; the American Legislative Exchange Council, or ALEC, which has crafted model legislation to block state compliance with EPA regulations; and the Heartland Institute, which paid for billboards associating the belief in climate change with the Unabomber and Charles Manson. Several of Alpha’s grantees are part of the Koch brothers’ network of politically active organizations, which has set a goal of spending almost $900 million to influence the 2016 elections.
But Alpha wasn’t required to reveal any of its political spending by the laws governing either publicly traded corporations or elections. Neither were the organizations that took the funds. So shareholders were kept in the dark about the uses of their money. Even after the revelations from the bankruptcy filings, investors still don’t know how much money the company spent on political efforts.
(As an aside for money-in-politics geeks, Alpha’s bankruptcy was caused in part by the debt incurred from its $7.1 billion purchase of Massey Energy four years ago. In the 2008 Caperton v. Massey decision, the U.S. Supreme Court set aside a state supreme court decision overturning a large damages verdict against Massey because the company’s CEO spent millions to get one of the state justices elected.)
Current weaknesses in the laws allow for secrecy in election spending. That leaves both voters and investors in the dark about what they need to know to make informed decisions. But there are efforts to solve the problem: The SEC is considering a proposed rule that would require companies to disclose their political expenditures. A federal bill called the DISCLOSE Act and analogs in state legislatures would require greater transparency from groups that spend on elections. Action from the SEC and Congress can ensure that all investors know what their money is up to.