Mainers are familiar with S. Donald Sussman — the billionaire hedge fund manager whose largesse has propped up the liberal-leaning Portland Press Herald, the Maine Democratic Party and a consortium of Democratic non-profit groups and political action committees. But there is another liberal billionaire from away who has set his sights on Maine: Thomas Steyer.
Few knew of Steyer until he announced grand ambitions to spend $50 million of his own money and raise another $50 million from like-minded donors to influence elections across the country. The news was welcomed by liberal Democrats, who would be the primary beneficiaries of Steyer’s effort to make anthropogenic climate change a top campaign issue. With the 2014 midterm elections shaping up to be a Republican wave year, Steyer’s influence was the potential game-changer national Democrats needed. But with 28 days to go until Election Day, Steyer’s much-ballyhooed money bomb has failed to live up to the hype, especially here in Maine.
NextGen Climate describes its mission as acting “politically to prevent climate disaster and preserve American prosperity.” The group has yet to endorse any specific environmental policy, but is instead spending heavily — through affiliated and like-minded political action committees — to oppose candidates they perceive as not taking the threat of man-made climate change seriously enough. According to the NextGen Climate’s website, the group is targeting races in Colorado, Iowa, Pennsylvania, New Hampshire, Minnesota and Maine.
Who is Tom Steyer?
Steyer grew up in New York City, attending an elite private prep school before heading to Yale University and, eventually, Stanford business school. He went on to work at Goldman Sachs under Robert Rubin, who would become the 70th U.S. Treasury Secretary under President Bill Clinton. According to a 2013 New Yorker article, Steyer said he was drawn to Goldman, and to Rubin in particular, because of their connections to the Democratic Party.
In the mid-1980s, Steyer founded Farallon Capital Management, LLC – an investment management firm that would eventually turn him into a billionaire hedge fund mogul. According to Forbes.com, Steyer, 57, is now worth $1.62 billion, making him the 379th richest person in the United States.
Farallon, now reportedly the nineteenth largest hedge fund in the world, received an early boost from Steyer’s alma mater, Yale University, which, in 1990, invested $300 million in his fund. According to news reports, Farallon would go on to manage “about $3 billion of Yale’s endowment,” along with sizable investments from other elite American universities and colleges, including Maine’s Bowdoin College. Farallon’s management of college endowments would eventually bring the nature of its investments under scrutiny from activists at those very educational institutions.
Questions regarding the nature of Farallon’s investments were first raised by students who were interested in knowing what enterprises their schools’ endowments were supporting. In 2004, students from Stanford, Yale, Duke, and other colleges called on Farallon to disclose more information about its investment activity. Those students eventually setup a website – UnFarallon.com – to put a spotlight on the hedge fund. The Website, which is no longer active, provided a platform for students to accuse Farallon of “a proven record of socially irresponsible and environmentally irresponsible investments.”
Those alleged investment activities stand in stark contrast to Steyer’s contemporary attitudes regarding environmental activism, leading contemporary critics to accuse the billionaire of political opportunism and hypocrisy.
Farallon’s “irresponsible” investments, according to 2004 news reports covering the student protests, included a luxury golf course that threatened the California tiger salamander and the western pond turtle. Trifling as these matters may seem to those without a degree in Environmental Studies, a review of Farallon’s more significant investment activities shows a pattern of investing in so-called “dirty” enterprises that runs directly counter to Steyer’s current commitment to reducing carbon emissions.
In 2003, Farallon held a $180 million controlling interest in Indonesia’s first privately-owned coal-fired power plant – the Paiton I. The project was so shrouded in concerns over corruption that the Wall Street Journal published three investigative reports exposing the apparent cronyism involved in financing the operation. According to Carbon Monitoring for Action, the Paiton-I emits more than 6 million tons of carbon dioxide a year.
An April 2013 article in CounterPunch magazine detailed a laundry list of other oil, gas, and environmentally questionable investments made by the latter day environmentalist’s hedge fund: “Farallon Capital … minted a lot of money off oil and gas investments, among other environmentally destructive business ventures. Among the oil and gas companies that Steyer and Farallon financed and got rich from were Energy Partners, Ltd., Link Energy LLC, Halcon Resources Corporation, Devx Energy, Inc., and a gold mining company named Global Gold Corporation. In each case, Steyer’s team bought up large, or even controlling interests in the companies, or acquired corporate debt. Most of the companies were in financial straits when Farallon bought them. Farallon’s partners then used their position as the new owners of equity or debt extract value from the corporation as it restructured itself through asset sales and reorganization. In several cases the bankrupted company was turned around and rebuilt into a profitable oil and gas firm. In the process Steyer and Farallon ironically helped save and rebuild a few major oil and gas drillers, or helped sell-off oil and pipeline assets to bigger players in the energy industry.”
Steyer’s investments in what he now calls “dirty” industries are natural for one of the world’s largest hedge funds, run by one of the world’s richest men. But Steyer’s lucrative stake in carbon-emitting enterprises became problematic once he found himself on the shortlist of potential Energy Secretaries for the Obama administration. Even then, Steyer only moved to divest himself from fossil fuels once media reports put a spot light on his hypocrisy.
As Kim Strassel wrote at the Wall Street Journal, “It’s old news that the billionaire reaped his fortune at hedge fund Farallon Capital, via investments in ‘dirty’ oil and coal projects.”
“Mr. Steyer, who retired from the firm in late 2012, has since publicly repented for his prior investment ways. But what many greens remember is that he didn’t do so until he was caught,” wrote Strassel. “Mr. Steyer had spent months fighting Keystone, attending anti-coal rallies and urging colleges to divest from ‘fossil fuels,’ before the press noted that his money was still parked at Farallon, still profiting from Kinder Morgan pipelines and coal projects. It was only then, last July, that Mr. Steyer issued a press release saying he’d directed his money be moved to a fund that didn’t invest in ‘tar sands’ or ‘coal’ and pledged this process would be complete by the end of 2013.”
Regardless of whether Steyer is a hypocrite for campaigning against the very energy practices that made him personally wealthy, as his Republican opponents allege, his money still spends perfectly fine on advertisements for Maine’s mailboxes and media markets.
NextGen Spending
LePage is one of three governors Steyer is targeting, the others being Gov. Rick Scott in Florida and Gov. Tom Corbett in Pennsylvania. What has LePage done to draw Steyer’s ire? News reports suggest LePage’s skepticism of environmentalists’ claims about climate change is what landed him in NextGen Climate’s cross-hairs. The NextGen Climate website only lists two bullet points: a comment LePage made about climate change potentially offering Maine “a lot of opportunities” and LePage’s appointment of former lobbyist Patricia Aho to head the Department of Environmental Protection.
“Our strategy is to do direct voter contact,” Steyer told the Associated Press last month. “Particularly in an off-year election, which depends more on turnout, actually having people going out and directly speaking with voters face to face is actually the thing that changes elections.”
According to the AP report, Steyer is on pace to raise far less than the $50 million he initially promised, but his national PAC has nonetheless contributed serious cash to its Maine affiliate.
On Monday, NextGen Climate Action Committee – Maine reported a total budget for $1 million dollars. According to campaign finance filings, the committee has already burned through 97 percent of its cash — $408,834 on independent expenditures and more than $568,000 on its lofty operating budget. NextGen’s strategy has been to oppose LePage, boost Democrat candidate U.S. Rep. Michael Michaud, and completely ignore independent Eliot Cutler. According to the campaign finance records, the group has dedicated most of its independent expenditure budget to direct mail, paid canvass services, and automated phone calls.
More Steyer money has trickled into Maine’s gubernatorial race via donations to other political organizations active in this year’s election.
According to campaign finance records, NextGen cut a $100,000 check to MaineForward in July. MaineForward is a PAC representing labor unions and liberal advocacy groups that has spent roughly $1.8 million this year targeting LePage. And, in August, Maine Conservation Voters Action Fund ran a $400,000 ad campaign accusing LePage of weakening water safety standards in the state. That campaign followed a $250,000 contribution, in May, from League of Conservation Voters (LCV) Action Fund to Maine Conservation Voters, the largest contribution of the reporting period. In the same cycle, Steyer’s PAC made its only contribution to another PAC to date — a $500,000 gift to LCV. Those donations may be linked, suggesting Steyer’s influence has extended through multiple political committees.
Although NextGen may be dropping plenty of cash in Maine, many observers believe NextGen’s effort has been less effective than it could have been.
One source familiar with NextGen’s Maine operation said the group initially planned to spend big on “disruptive” campaign tactics, such as sending “trackers” into the field to video tape both LePage and independent candidate Eliot Cutler.
“The whole thing seemed disorganized and they never could all agree on what the game plan should be,” the source said. “Then I got the impression that they pulled back on the money and resorted to a very typical door-to-door lit drop with some anti-LePage literature, which I doubt will be very effective.”
Roy W. Lenardson, a Republican consultant who often works on Maine elections, said that when wealthy donors on either side of the aisle decide to enter the political arena for the first time, it presents an opportunity for political operatives looking to cash in.
“Steyer understands big coal and big oil,” said Lenardson. “But he doesn’t understand big politics.”
“The consulting class is taking him to the cleaners,” he said.
If Steyer was really interested in lowering Maine’s overall carbon emissions, said Lenardson, then he would put his money behind LePage.
“LePage’s focus on developing natural gas infrastructure has probably done more to lower carbon emissions than any governor in Maine history,” he said.
