Inconvenient Mogul: Big Oil’s Shadow War on Billionaire Steyer

San Francisco activist Tom Steyer discusses his opposition to the Keystone XL pipeline during an interview in Washington, D.C., U.S., on Thursday, June 20, 2013

Photographer: Julia Schmalz/Bloomberg

Oil companies that bankrolled a $9.7 million effort in 2014 to block laws against fracking in California now are focusing their sights on Tom Steyer, the billionaire hedge-fund founder turned climate-change activist.

The top individual political donor in the U.S. last year, Steyer has put millions of his $2.7 billion personal fortune into the cause, hired Governor Jerry Brown’s former top spokesman and challenged Chevron Corp. Chief Executive Officer John Watson to a public debate on gas prices.

In its campaign against him, Californians for Energy Independence -- whose contributors include Chevron, Occidental Petroleum Corp. and Exxon Mobil Corp. -- has been probing possible conflicts between Steyer’s business interests and legislative advocacy, attacking him in press statements as a “billionaire super-PAC king” and shadowing his public appearances.

The Battle Between Big Oil and Billionaire Tom Steyer

“This is part and parcel of the way politics works right now,” said Bob Biersack, senior fellow at the Center for Responsive Politics in Washington, which documents the influence of money in politics. “You have a small number of people who are making their presence felt in a huge way, and they become fair game.”

Steyer is part of this small but growing cadre of mega-donors whose influence has grown since the U.S. Supreme Court ruling in the 2010 Citizens United case lifted limits on independent campaign spending. Now, non-candidates including Steyer, the Koch brothers and George Soros are subjects of attacks, much like politicians.

Unflattering Films

The conservative David and Charles Koch have been the focus of at least three unflattering films and a KochWatch.org website with the tagline “Billionaires Corrupting Democracy.” The liberal Soros was featured in an hour-long Fox News television program, “The Puppet Master,” with conservative host Glenn Beck.

Steyer -- who founded and ran Farallon Capital Management LLC for almost 27 years before leaving at the end of 2012 to focus on climate issues -- backs a bill in the California Senate that would cut petroleum use in half, double the energy efficiency of buildings and increase retail sales of renewable electricity to 50 percent by 2030.

He worked on the bill with Kevin de Leon, its author and the Senate president pro tem, and has lobbied for the legislation. He also criticized oil refiners about California gas prices at a press conference with Jamie Court, president of the Santa Monica, California-based Consumer Watchdog advocacy group.

Media Outreach

In July, Steyer hired Gil Duran, a former top spokesman for Brown, as a spokesman on California issues. Duran minimized his role, saying in an interview that Steyer had effective media-outreach aides already.

Last week, in a letter he made public, Steyer challenged Chevron’s Watson to an open debate on why gas prices in California have risen more than in other states. Chevron spokesman Braden Reddall didn’t say how Watson responded to the challenge, but noted in an e-mail that the company already engages in discussions about gas prices with politicians, regulators and the media.

NextGen Climate Action, Steyer’s super political action committee, has spent $729,000 on lobbying the California government so far this year, compared with about $100,000 in the prior legislative session, according to data from the Secretary of State’s office. Oil and gas interests, led by the Western States Petroleum Association trade group and Chevron, have spent $6.8 million -- including on lobbying against the bill Steyer supports.

Energy-Efficient Retrofits

Californians for Energy Independence says it has evidence that one of Steyer’s businesses, Kilowatt Financial, could make more money if the bill is passed. Steyer is listed as a manager of the limited-liability company in an April 2014 filing with the Secretary of State. Kilowatt makes consumer loans for energy-efficient home renovations and is merging with another lender.

Sabrina Lockhart, spokeswoman for the energy-independence group, said Kilowatt stands to gain from the legislation because the bill mandates the renovations.

“He’s trying to shape policies and he’s trying to benefit financially,” she said.

Steyer’s spokeswoman, Suzanne Henkels, says he stepped down from Kilowatt last year and directed all his green-energy investments into a charitable trust, meaning he won’t profit from the company’s operations.

Keystone Critic

Steyer also was criticized for his opposition to the Keystone XL oil pipeline between Alberta, Canada and Nebraska. The national Republican Party denounced him in a Web posting for opposing the pipeline after Farallon profited from oil and gas investments, and invested in a company proposing a rival pipeline. Steyer still has vowed to back Democratic lawmakers who face attacks for voting against it.

Lockhart said Steyer “takes up a good chunk of my time.” She was in the room on June 12 when Steyer called on leaders of the $191.5 billion California State Teachers’ Retirement System to consider divesting from fossil-fuel stocks. On Aug. 11, Lockhart sent reporters an e-mail calling Steyer a “billionaire super-PAC king” and asserting his criticism of higher gas prices is out of sync with his goal of weaning drivers off gasoline.

Her e-mail also noted that a July 2014 Washington Times article said Steyer used tax havens in the Cayman Islands, the British Virgin Islands and Mauritius while heading Farallon. Steyer declined to comment to the Washington Times, and Duran and Henkels didn’t respond to an e-mailed request for comment from Bloomberg News.

‘Dirty Him Up’

“They are going to try to dirty him up,” said Court, a Steyer ally. “He is personally committed on a moral level to preventing a 4-degree temperature change that is irreversible, and he has $3 billion to pursue his passion.”

Last year, Steyer’s NextGen super-PAC tried to influence elections in several states by appealing to voters concerned about climate change. In Florida, it dispatched more than 500 staffers and volunteers to criticize Governor Rick Scott’s energy policies and used a “Noah’s ark” to show the threat of rising ocean levels. Scott still won re-election.

Steyer gave $75.4 million to federal candidates and causes in 2014, according to the Center for Responsive Politics, almost triple the contributions of the next-highest individual donor, Michael R. Bloomberg, majority owner of Bloomberg News parent company Bloomberg LP.

Inequality, Environment

On Aug. 12, Steyer announced he’ll broaden his policy agenda to include “income inequality and middle-class opportunity.” In an interview at the event in Oakland, California, where he unveiled the “Fair Shake Commission,” he said issues related to inequality are linked to his environmental activism.

Lockhart of Californians for Energy Independence said before the announcement that Steyer “didn’t become a hedge-fund billionaire without getting a significant return on his investment,” and he could “take the same path in politics.”

Steyer has denied his efforts are intended to position himself for political office, even while refusing to rule out a bid. He considered running for the U.S. Senate before bowing out in January.

For now, he says the opposition won’t deter him and he’s focusing on his climate initiatives by giving speeches and meeting with editorial boards and policy makers in Iowa, participating in a panel on clean energy with business leaders and environmentalists in New Hampshire and joining a public clean-energy discussion in Ohio.

“I’m choosing to take it as a compliment that they’re taking us as a threat,” he said. “They’re making too much money if they’re going to waste it on stuff like that.”

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