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Why Is Chevron Spending Millions on a Municipal Election?

Thanks to Citizens United, Chevron is trying to stack the deck in one small California city.

October 21, 2014

One company may not be able to fight city hall, but one company appears to be trying to buy it. Thanks to Cali­for­ni­a’s strong campaign money disclos­ure require­ments voters and share­hold­ers know that Chev­ron has poured over $2.9 million into the mayor’s and certain city coun­cil races in Rich­mond, CA. This raises a host of ques­tions includ­ing whether this use of corpor­ate money is what share­hold­ers had in mind when they bought Chev­ron stock. This also raises the ques­tion of what the proper role is for corpor­ate money in a demo­cracy.

Chev­ron has a yen for polit­ical spend­ing. In the 2012 federal elec­tion, Chev­ron (ticker CVX) was the publicly traded corpor­a­tion that spent most money in polit­ics under their d/b/a (doing busi­ness as) name. They gave $2.5 million to the Congres­sional Lead­er­ship Fund. In the context of the 2012 races, they were in good company, but they out spent other public firms. Clayton Willi­ams Energy (ticker CWEI) gave $1 million to Amer­ican Cross­roads Super PAC. Ches­apeake Energy (ticker CHK) gave $250,000 to Make Us Great Again Super PAC. Scotts Miracle Gro (ticker SMG) gave $200,000 to Restore our Future Super PAC. CONSOL Energy (ticker CNX) and Hallador Energy (ticker HNRG) each gave $150,000 to Restore Our Future Super PAC.

For the last quarter of a century, Chev­ron has not been shy about getting into polit­ics. Accord­ing to www.open­secrets.org, Chev­ron spent over $16 million in federal elec­tions in the past 24 years and accord­ing to www.followthemoney.org, Chev­ron spent over $68 million in state elec­tions the past 26 years. And the Chev­ron polit­ical money is still rolling in, includ­ing a new $1 million repor­ted in the third quarter of 2014 that was given to the Congres­sional Lead­er­ship Fund.

When study­ing Chev­ron’s prede­cessor corpor­a­tion Gulf Oil in my exam­in­a­tion of Water­gate, I found that Gulf Oil got caught red handed giving an illegal $100,000 to Nixon’s Commit­tee to Reelect the Pres­id­ent or (CREEP) in 1972 through its color­ful Vice Pres­id­ent for Govern­mental Rela­tions Claude Wild.  

Later the SEC real­ized on closer exam­in­a­tion that Gulf Oil had spent at least $5.4 million in polit­ical contri­bu­tions and related expenses, much of it in viol­a­tion of law at the time. Gulf Oil was the biggest polit­ical spender of hundreds of publicly traded firms that the SEC examined in the 1970s. Gulf Oil merged with Stand­ard Oil of South­ern Cali­for­nia to become Chev­ron in the mid 1980s.

But the Rich­mond mayor’s race this year is a differ­ent kettle of fish. First it’s not a national or even a state race. Then there is the issue of scale. Rich­mond, CA, a town north of San Fran­cisco, only has a popu­la­tion of 107,000 and the median income is less than $52,000. Mean­while Chev­ron has more money running through it than most nations do. 

So why is Chev­ron being such the school­yard bully in this little race?

Because Chev­ron owns a refinery in Rich­mond, and, accord­ing to a company e-mail state­ment, the oil company “supports City lead­ers who share our commit­ment to policies that foster an economic envir­on­ment where busi­ness can thrive and create jobs to make Rich­mond an even more attract­ive place to live.”

But it’s likely there are other, more prosaic, reas­ons for Chev­ron’s largesse. Rich­mond has a history of stand­ing up to Chev­ron after its refinery exploded in1999 and again in 2012. Rich­mond is suing Chev­ron over the more recent explo­sion. As the Contra Costa Times noted, “The city’s lawsuit…­could cost the company hundreds of millions in damages, and a new coun­cil major­ity sympath­etic to Chev­ron could squelch the suit or pave the way for a settle­ment more favor­able to the oil giant.”

This raises the ugly possib­il­ity that the company is trying to influ­ence more than the elec­tion; that it may be trying to impact the legal case which raises seri­ous rule of law issues.

The candid­ate that does­n’t have Chev­ron’s bless­ing, Tom Butts has a campaign chest of roughly $22,000. Chev­ron is spend­ing more by many orders of magnitude. Given the small war chests of its oppon­ents, the level of corpor­ate spend­ing in Rich­mond seems like overkill. To share­hold­ers it might seem like some­thing more perni­cious: a waste of corpor­ate assets.

While Cali­for­nia allowed corpor­ate spend­ing before Citizens United, ever since this Supreme Court case, good govern­ment advoc­ates have warned that corpor­a­tions could have a distort­ing impact espe­cially in small local elec­tions that used to be sleepy low dollar affairs. Rich­mond seems to be that night­mare come true.

We know about Chev­ron’s recent spend­ing in Rich­mond because Cali­for­nia has partic­u­larly good campaign finance disclos­ure laws includ­ing disclaimer require­ments that require polit­ical spend­ers to list their top two funders on campaign mater­i­als.

Efforts to pass a national law modeled on Cali­for­ni­a’s approach called the DISCLOSE Act failed in Congress several times in a row includ­ing once by a single frus­trat­ing vote. Since Congress can’t get the job done, many share­holder groups have turned their atten­tion to the SEC to seek more disclos­ure. Indeed over a million people have asked SEC for a new rule on corpor­ate trans­par­ency so that investors know across the board where corpor­ate polit­ical money is going—espe­cially in the states with less trans­par­ency than Cali­for­nia. 

The corpor­ate spend­ing in Rich­mond has caught national media atten­tion and has largely been met with revul­sion. As one resid­ent of Rich­mond put it in an L.A. Times edit­or­ial, “Chev­ron is trying to buy my vote.” Is this repu­ta­tion that Chev­ron really wants for itself? At some point, this can’t be good for busi­ness or for the demo­cratic process.

The views expressed are the author’s own and not neces­sar­ily those of the Bren­nan Center for Justice.

(Photo: Flickr)