Shareholders take on fracking: Why do gas companies spend so much on politicians?

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By now, companies that extract natural gas in Pennsylvania by fracking are used to protests. They've got talking points to answer those who complain that fracking fouls drinking water and makes people sick. They've devised ways to deflect critics who say they've invested millions of dollars in lobbying and political contributions to neutralize state and local regulators.

But on Wednesday, when the oil and gas company EQT holds its shareholders' meeting in Pittsburgh, the company and its spin doctors will face a different kind of challenge -- from their stockholders. The agenda includes a resolution that asks whether pay-to-play politics is a sustainable way to run a business and calls on EQT to "assess the financial risks of refraining from political expenditures."

The resolution brings to EQT's investors -- the company's real owners -- a debate that has raged in the streets of Pittsburgh, in the halls of the state capitol and in hundreds of towns across Pennsylvania.

Shareholders debating this resolution will be looking at the long-term profitability of their company, not just short-term spikes. If they conclude that generous campaign contributions and other political expenditures are necessary for success, what does that say about the merits of the industry's case against taxes, regulations and significant fines for violations of environmental laws?

But if investments in 30-second ads, glossy mailers and thousands of rubber-chicken dinners are not critical to the company's success, why has EQT given $328,000 to Pennsylvania political candidates since 2001? Why should it continue to do so?

From 2001 through 2012, the natural gas industry gave $8 million to political candidates in Pennsylvania and more than $20 million to the state's members of Congress. The industry put another $750 million into lobbying Congress during this period but no one knows how much they spent during those years on lobbying in Pennsylvania, which from 2004 to 2007 was the only state in the country that did not have a lobbyist registration law. Since 2007, the industry has spent more than $15 million lobbying in Pennsylvania.

Opponents of fracking have long documented the state's reluctance to step in and demand greater transparency and accountability around issues like disclosure of the chemicals used in fracked wells or more comprehensive studies of ground-water quality before and after an area has been fracked. And while opponents can't compete with the industry when it comes to gifts like the Super Bowl tickets Consol Energy provided to state Senate President Joe Scarnati or the $1.8 million the industry donated to help elect Gov. Tom Corbett, environmentalists and the industry do have one thing in common. Whatever you think about fracking, you want to have confidence in the process Pennsylvania is using to pass laws and regulate this still relatively-new technology.

As the resolution to be introduced by EQT shareholders states, "Without regulatory reform that is accepted as trustworthy and fair by the public, operators will continue to encounter community concerns and challenges that create instability for shareholders ... [and] the greater extent to which the industry is perceived to be trying to buy influence, the longer it will take for regulators and politicians to establish reforms that are accepted by all."

It's not just EQT's shareholders who are starting to ask hard questions about politics and transparency. This spring, shareholders at ExxonMobil and Chevron will again introduce resolutions calling on those companies to release more information on their efforts to mitigate environmental damage caused by fracking. And investors in banks that hold mortgages on fracked properties are beginning to ask questions about the long-term value of those properties, and the potential for long-term liability issues with land that is no longer being fracked but still contains injection wells full of fracking wastewater.

At EQT, shareholders will be asking a similar question about the company's political expenditures -- what happens to all that money after we write the check, and is it worth the risk?


James Browning is regional director of state operations for Common Cause (


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