Wyoming Is Using Dark Money To Help Keep Coal Plants In Other States Open

Stephanie Kodish is used to opposition to her work. In her job with the National Parks Conservation Association, she pushes utilities to comply with environmental laws. That can mean installing expensive new anti-pollution technology on coal plants, or even closing them down.

Last year, though, she encountered a completely new kind of opposition that left her disconcerted.

After years of feuding and lawsuits, the utility Entergy Arkansas Inc. had agreed to shut down two coal plants over the next decade. Weeks later, the Arkansas Attorney General and a local coalition called the Arkansas Affordable Energy Coalition intervened, asking a judge to stop the settlement. They argued that other fuel sources would be more expensive and less reliable.

But emails obtained through public records requests show the coalition represents more than just coal, gas and steel businesses in Arkansas. In fact, it was created by a nonprofit — the Energy Policy Network — whose largest financial contributor most years is the state of Wyoming, home to the coal mines that feed the two Arkansas plants slated for shut down.

When told the coalition was backed by Wyoming Kodish first laughed in surprise, but then turned serious. "It's disturbing to learn that those interests are disingenuous and people are being manipulated," she says.

Several ethics and transparency experts say this is the first time they have heard of a U.S. state using so-called "dark money" in this way. They agree that it raises troubling questions about state officials backing a group that surreptitiously seeks to impact policy elsewhere.

"Something we needed to have in the arsenal"

Wyoming officials say the nonprofit Energy Policy Network is a critical piece of their efforts to preserve coal, long a foundation for the state's economy. A Wyoming native who served in the state House and Senate during the 1980s founded the group in 2015.

"This is something we needed to have in the arsenal," says Renny MacKay, the policy director for Wyoming Gov. Mark Gordon. "We are so beholden on what happens outside of Wyoming."

Since 2010, the U.S. has seen dozens of coal-fired power plants retire. Last year, electricity generated from coal fell to a 42 year low according to the U.S. Energy Information Administration, in large part because it can't compete with cheaper natural gas. The current pandemic has delivered another blow, and falling prices for wind and solar energy also pose a long term challenge to coal.

Jason Begger, deputy director of the Wyoming Energy Authority, a state entity, says the Energy Policy Network is an affordable way to boost Wyoming's influence, and combat groups like the Sierra Club who actively fight for coal-plant closures.

"Wyoming certainly doesn't have the resources or the expertise to go out there and fight every fight," says Begger.

But it has weighed in on fights to keep coal plants open in nine states, as the Energy Policy Network has intervened in lawsuits, built local coalitions, and allied with local coal-friendly politicians, mostly behind the scenes.

A playbook for success

The group's first engagement on behalf of Wyoming was a 2016 showdown over a coal-fired power plant in Oklahoma. Oklahoma Gas & Electric wanted to put new pollution controls on the plant to keep it operating, at a cost of $500 million to Oklahoma ratepayers.

Environmental groups, wind energy and natural gas companies all opposed that move and wanted to see the plant shut down in favor of renewables, which an advocate says would have been cheaper for ratepayers.

The Energy Policy Network formed a coalition to support the utility. It included corporations like Michelin Tire and American Airlines, along with railroad companies and rural electric co-ops. EPN argued that keeping the plant open would improve reliability of the electrical grid, and that wind energy would reduce it. Following that intervention, state regulators voted in favor of coal power with pollution controls.

The win meant OG&E would continue to burn 2.6 million tons of Wyoming coal a year, according to Randy Eminger, executive director of the Energy Policy Network.

Environmentalists, however, were dismayed.

"OG&E's decision to keep the Sooner plant operational and take $500 million from the families and small businesses of Oklahoma... is an insult to the hardworking people of the state," says Al Armendariz, who worked to try and close the plant as deputy regional director for the Sierra Club's Beyond Coal campaign.

Like Kodish in Arkansas, Armendariz wasn't aware of Wyoming's involvement.

Neither was one of EPN's allies, the Arkansas Attorney General. When asked if the AG knew Wyoming funds were behind the effort to keep open two coal plants there, an agency spokesperson responded simply, "No."

Ethical questions

Energy Policy Network is registered as a 501(c)(4) nonprofit, and such organizations aren't required to disclose their financial backers. In modern politics the designation is often derided as "dark money." Corporations, foundations and wealthy individuals like the Koch brothers have used 501(c)(4)s to cloak involvement in political and regulatory affairs.

The classification's association with a state government, however, is more novel.

Wyoming Public Media and the nonprofit news site WyoFile used public records requests to gain an understanding of the organization's finances through internal communications, state financial documents, and tax filings. Local and national transparency advocates express concern at the idea of taxpayer dollars funding such political maneuvering.

"It is a little bit troubling that one state might use the subterfuge of dark money to compete with its sister states in a way that is not above board," says Ciara Torres-Spelliscy, an expert on money and politics at Stetson University.

Even the most well known dark money advocates might agree.

"Transparency is meant for the government, not for private individuals," Philip Ellender, the head lobbyist for Koch Industries, told the New York Times in 2018.

Joe Smyth, a researcher with the clean energy advocate Energy and Policy Institute, has tracked EPN's work, and says if Wyoming wants its voice heard in other states it should be transparent about it.

"Anyone is able to make an argument in these proceedings," he says. "The problem is that they're hiding their role in all this through these series of front groups. And so, I think that's what is deserving of scrutiny."

While the state's role has not been widely disclosed elsewhere, it has not been kept secret in Wyoming.

EPN Director Eminger has appeared in front of state legislative committees, and the group was even highlighted at a recent press conference. There, Wyoming Energy Authority's Begger was asked about the nonprofit's lack of transparency.

"Wyoming has never been shy about its involvement," he said, while admitting the state has never encouraged EPN to discuss its relationship with Wyoming. "Due to [EPN's] classification, I don't believe they do need to disclose their donors. So, they don't."

Big savings?

Energy Policy Network's supporters say the group's actions in other states are critical to Wyoming's revenue. In presentations to state officials, the nonprofit highlights four coal plants it claims a key role in keeping open and consuming Wyoming coal.

Begger said at the recent press conference that this has saved Wyoming $38.5 million a year in preserved coal tax revenue, a pretty good return on the $250,000 the state gives EPN most years.

But lawyers and environmental activists in several states question whether EPN really had a substantive role in keeping those coal plants open.

"They threw some sand in the gears, but the gears are still moving," says Kerwin Olson of Citizens Action Coalition in Indiana, where utilities continue to shut down coal plants despite EPN's efforts.

In Arkansas, too, opponents say EPN took credit for events outside of its control, like stopping implementation of an environmental compliance plan that would have closed power plants there. The plan was actually halted by the coal-friendly Trump administration.

Federal coal data also casts doubt on the claims of $38.5 million a year in savings.

The figure assumes the four coal plants in question will continue to generate the same amount of power. But many plants are already running at lower capacity as cheap natural gas and increasing renewable energy dominate the nation's electricity markets, and the pandemic has decreased demand.

Of the four coal plants Wyoming cites as success stories, coal consumption at three is down by about 70% compared with two years ago, according to data from the U.S. Energy Information Administration. Consumption at the fourth plant dropped by half in the same time. All of the plants exclusively use coal from Wyoming's Powder River Basin.

Even so, Wyoming recently announced it's committed another $500,000 to the nonprofit for another two years of work to help the coal industry.

"Is it unusual? Maybe so," says Randall Luthi, Chief Energy Advisor to Wyoming's governor. "But these are certainly unusual times. And these are important times for Wyoming."

This story was a collaboration between Wyoming Public Media and the nonprofit news site WyoFile.

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