Rep. Henry Cuellar (D-Tex.) delivers remarks on September 12, 2019 in Washington, DC. (Tom Brenner/Getty Images)

Pop-up Group in Texas Democratic Primary Funded by Big Oil

in Sludge
on December 18, 2020

Greetings to readers of The Brick House Cooperative—we’re Sludge, an investigative newsroom focused on money in politics and all the ways that powerful special interests shape the political process, often in ways that don’t need to be publicly disclosed. We’re excited to be putting out more muckraking as part of this collective. We cover what goes on behind the corrupt politicos in the headlines, including shadow lobbying, dark money networks, and the revolving door between government and industry.

Here is how some of our latest stories aim to peel back the un-disclosed and under-disclosed influence tactics of large corporations. My co-founder Donald’s new report draws on the annual Form 990 of the American Petroleum Institute, a 501(c)(6) business league, which revealed a grant of $1.3 million to a group called American Workers for Progress. This pop-up nonprofit appeared just weeks before the Democratic primary election in Texas’ Twenty-Eighth District, an area in South Texas and a strip south of San Antonio, and spent over $720,000 in ads supporting incumbent conservative Democrat Rep. Henry Cuellar, who was facing a tight reelection challenge from Justice Democrats-endorsed progressive Jessica Cisneros. 

An immigration lawyer, Cisneros had also been endorsed by Sen. Bernie Sanders, Sen. Elizabeth Warren, Rep. Alexandria Ocasio-Cortez, the Working Families Party, EMILY’s List, J Street, MoveOn, NARAL, Planned Parenthood, and the Texas AFL-CIO, among others, but she was defeated by 2,746 votes in the March 3 primary, about 3.6% of the vote. Political observers wondered about the vaporous group’s funding sources, and it’s now confirmed they included Big Oil’s trade association. The American Petroleum Institute was part of the Big Money cavalry for Cuellar, a reliably oil-backing Democrat who gave a bipartisan sheen to extractive energy policies. Cisneros’s campaign had supported a Green New Deal to invest in renewable energy infrastructure and jobs instead of drilling and oilfields.

There’s another angle here on how the Democratic Party operates—the president of the pop-up dark money group was Gilberto Ocañas, a former deputy director of the Democratic National Committee (DNC) and the former vice finance chair of the Texas Democratic Party. He’s an attorney at corporate law firm Dentons, the largest firm in the world by number of lawyers, with an extensive oil and gas practice. Another Dentons attorney, Karen Caren Peterson, has been a top DNC official for the past four years as vice-chair for civic engagement and voter protection. In Louisiana, where Peterson is based, Dentons has come under scrutiny for its close relationship advising the New Orleans City Council and its regulation of energy company Entergy. This summer, during virtual convention meetings, DNC members voted down a proposal to bar corporate lobbyists from serving on the DNC, as party leaders have long resisted strengthening of ethics rules for members that would evaluate conflicts of interest.

Also this week, we traced how an advocacy group with multiple ties to the libertarian industrialist Koch family and other major conservative funders is seeking to overturn a new Arizona law approved by voters. Wealthy individuals can route donations through multiple organizations to obscure the extent of their spending, especially through “dark money” nonprofits that are not required to publicly disclose their funders’ identities and donor-advised funds. 

The Arizona ballot measure that was approved by voters last month with 51.75% support, Proposition 208, would help fund the state’s revenue-starved education system in a state where Republicans have held a government trifecta for the past 12 years (the governorship, the Senate, and House of Representatives). The Goldwater Institute, which filed a lawsuit on behalf of a coalition of business interests and Republican legislators to overturn the measure, has received major funding from the foundations of right-wing families like the Kochs, Bradleys, and Mercers, as well as a whopping $1.6 million from 2008-10 from the Donors Capital Fund, a donor-advised charity with extensive ties to the Koch network. 

The Goldwater Institute is the Arizona state affiliate of the State Policy Network, a network of right-wing think tanks that shares a funding base with the conservative “bill mill” the American Legislative Exchange Council, which has numerous corporate funders. By funneling anonymous millions through Donors Capital Fund, the funding network behind the Goldwater Institute’s model legislation and legal work deflects timely disclosure of their spending around crafting state policies. Funding from the opaque Donors Capital Fund was reported to have made up 17% of the Institute’s revenue in 2010.

Sludge’s data reporting recently had another noteworthy impact. Last summer, Sludge put out our second annual version of comprehensive reports on the top vendors to Immigration and Customs Enforcement (ICE) and Customs and Border Protection (CBP) agencies. A June 2019 story by Sludge journalist Alex Kotch looked at the nonprofits and for-profit companies bringing in huge amounts of government funding for detaining immigrant children in facilities that were exposed as being squalid and inhumane. The list of some 61 federal government vendors involved in detaining immigrant children for the Trump administration’s self-described deterrent policies, sourced from a federal data portal, can be seen towards the bottom of the article

Tyler Dukes, investigative reporter with the Charlotte News & Observer, tweeted that he and a colleague noticed a single North Carolina company, New Horizon Group Home, in the our article, and set out to contact it.

It was the start of a year-and-a-half long investigation into the company and its federal grant, with the reporters uncovering that the company lacked a license state regulators said is required to house migrant kids and had previously had a facility shut down over allegations of child abuse and neglect. As a result of this persistent sleuthing, the U.S. Senate Permanent Subcommittee on Investigations issued a report this month that cites Dukes’ reporting in finding serious oversight issues with New Horizon—including $32 million in wasted taxpayer funds for facilities that will never open. The Department of Health and Human Services will now require grant applicants to disclose licensing issues, Dukes reports, and require applicants to disclose allegations of abuse and neglect against children.

Because Sludge analyzed under-scrutinized public data on ICE and CBP vendors, and because the local angle was picked up by the state reporters who pursued their investigation, this North Carolina company that was planning to house children was discovered and will have to pay back $3 million in misspent funds.

Unfortunately, the public will continue to lack comprehensive data to quantify the influence operations of large corporations that encompass all the insider lobbying and PR budgets and dark-money-fueled ads. Congress could take steps to tighten up all sorts of loopholes and deficiencies in public disclosures: requiring “shadow lobbyists” who simply call themselves strategists to register and provide more detailed information, or making the personal finances of members of Congress more easily accessible, especially their stock transactions. But under Republican control, the U.S. Senate is very unlikely to pick up the ethics and campaign finance reform package that House Democrats passed in their chamber early last year. (Although, congressional Democrats and Speaker Nancy Pelosi’s leadership did not move to pass these reforms when they had strong control of both chambers in 2009.)

Looking ahead to the new year and the next Congress and administration, there will be no shortage of opportunities for lobbyists and campaign contribution bundlers to call in their special access to government officials and get the inside track on federal policy. Big Oil companies will continue to use PR consultants who work to shape public perception of energy bills to be introduced or re-introduced, and Sludge will be wading through the swamp on their trail to report out what we find.

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