Front Groups Play a Growing and Dangerous
Role in Energy Policy
Thomas P. Lyon*Associate Director,University of Michigan Energy InstituteAnn Arbor, MItplyon@umich.edu
Energy policy has become a hot political topic again in the U.S., with issues surrounding oil and gas fracking, 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: corporations and interest groups manipulating public opinion and the political process for advantage and profit.
Take, for example, CARE, "Clean Affordable Renewable Energy," a Michigan front group created in 2012 to oppose Proposal 3, a ballot initiative in Michigan that would have required that 25% of electricity in Michigan come from renewable sources by 2025. The group created a website, www.careformich.com, to disseminate its views on the internet. The website presented CARE as a “coalition” of dozens of groups across the state that opposed Proposal 3. It expressed concern that Proposal 3 would result in “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, CARE was funded by the two giant electric utilities in Michigan, DTE Energy and Consumers Power. CARE raised $5.9 million to oppose Proposal 3, of which $5.8 million, 98.3% of its funding, was from the two utility companies. In addition, the two utilities spent another $5.9 million opposing Proposal 3 directly.
I had some interesting personal experience with CARE. Its website had a link where one could “Request a Speaker,” so I sought someone to come and participate in a debate on Proposal 3 in front of my graduate course on “Energy Markets and Energy Politics” on October 29, 2012. Indeed, CARE generously provided a retired DTE employee as a speaker, who debated Chris Kolb, President of the Michigan Environmental Council (MEC), a group that had championed Proposal 3. The debate was really no contest. Kolb had a strong grasp of the issues surrounding Proposal 3, and drew upon a recent research report that the MEC had commissioned. The CARE representative simply repeated a handful of soundbites about how Proposal 3 would cost $12 billion, and would force Michigan consumers to pay “thousands of dollars” in higher bills. My graduate students, not surprisingly, found Kolb much more convincing.
As a 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% 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 (and new movie) “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.” Similarly, makers of flame-retardant chemicals sowed doubt about health problems caused by their products through a front group, Citizens for Fire Safety, which was closed down in 2012 after the Chicago Tribune discovered the group was funded by Albermarle Corporation, ICL Industrial Products and Chemtura, the three largest makers of flame retardants.
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 pseudo-scientific set of “facts” to block government action. A few years ago I developed an economic model of Astroturf groups (Lyon and Maxwell, 2004). 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. This basic story describes much of the front group activity one sees today.
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. 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. Thus 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 University of Michigan’s Erb Institute, front groups tend to emerge in two types of settings. The first type is 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. Or they simply pop up in the next election cycle with new names but similar leaders and funding sources. In Michigan we had CARE in 2012 opposing increasing the RPS; in 2014 Citizens for Energizing Michigan’s Economy (CEME) opposed electricity deregulation to the benefit of the incumbent utilities. Going into the 2015 legislative cycle and 2016 election cycle we have been treated to TV ads by Citizens for Michigan’s Energy Future (CMEF) 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.
A second type of front group responds to long-term issues such as tobacco and cancer, the hole in the ozone layer, or climate change. These groups frequently present themselves as “think tanks.” The Energy and Policy Institute recently released a report entitled “Attacks on Renewable Energy Standards and Net Metering Policies by Fossil Fuel Interests & Front Groups 2013-2014.” The report identifies a set of organizations that have lobbied against renewable energy policies in states across the US. Some of the groups most commonly listed are the American Legislative Exchange Council (ALEC), Americans for Prosperity, the Beacon Hill Institute, and the State Policy Network.
It can be challenging to determine which groups are legitimate and which are merely fronts for private interests. Many of the “think tanks” that are part of the State Policy Network, or the global Atlas Economic Research Foundation, do employ “researchers” who churn out policy position papers. However, many of these individuals do not have the professional qualifications that would provide research credibility, nor do they publish in peer-reviewed outlets. They are more like highly opinionated columnists whose views can be predicted without recourse to any facts. Much more work is needed to expose the influence of these increasingly powerful political players.
Free-market think tanks like these that “know” the best answer is always “less government” are 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 NOT always solved by market forces, and public goods are NOT always provided by “the market.” The environmental laws passed in the United States in the early 1970s were a response to real, serious degradation of our natural resources. Indeed, the entire field of environmental economics would have no need to exist if markets automatically solved all environmental problems. Of course, government also fails, and one must balance the harms of market failure against the harms of government failure. And anyone who “knows” that more government regulation is always the best answer is being just as mindless as those who take the opposite position. What America desperately needs is a reasoned political debate based on thoughtful analysis and critical thinking, not simplistic ideologies and sound bites.
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? Beware of front groups whose real agenda, and funding, remain hidden from view.
Leitzinger, Jocelyn M. 2014. A look behind the curtain: Firms’ use of extra-institutional nonmarket strategies. (Doctoral dissertation). Retrieved from ProQuest Dissertations and Theses. (Accession Order No. 3636230).
Lyon, Thomas P. and John W. Maxwell. 2004. “Astroturf: Interest Group Lobbying and Corporate Strategy,” Journal of Economics and Management Strategy, 13(4), pp. 561-598.
* Dr. 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 the Associate Director for Social Science and Policy at the University of Michigan Energy Institute. His research and teaching interests include environmental information disclosure and greenwash; corporate environmental strategy; environmental NGOs; voluntary environmental agreements; government regulation of business; industrial organization; and energy and the environment.
 The Wayback Machine, an internet archive, reveals that the CARE website www.careformich.com was attacking Proposal 3 by July 5, 2012, and was still attacking Proposal 3 on April 28, 2014, http://web.archive.org/web/20140428065649/http://www.careformich.com/. However, by July 6, 2014, it had become a one-page website entitled “Why Soccer Betting is More Popular than Other Sports.” A visit to the site on July 21, 2015, revealed a poorly written, one-page blog entitled “Care for Michigan Football,” two of whose three stories are actually about betting on soccer, and include such savvy advice as “Even if you watch many other sports, it is better if you try soccer beating (sic) as your first beating (sic) platform.”