Bloomberg News

Koch-Backed Texan Faces Sierra Club Fueled Bid for House

October 24, 2012

Texas Oil Boom Drives Conservationists Backing Democrat

Rep. Francisco Canseco speaks during the Republican National Convention at the Tampa Bay Times Forum in Tampa. Photographer: Mark Wilson/Getty Images

A global-warming skeptic backed by energy giant Koch Industries Inc. is squaring off against an opponent supported by the Sierra Club in a Texas congressional district where the largest U.S. oil discovery in decades drives the economy.

Led by almost $1 million from the League of Conservation Voters, whose directors include former advisers to President Barack Obama, environmental groups have joined labor unions and lawyers in targeting incumbent Francisco “Quico” Canseco. The Republican won the House seat with Tea Party support in 2010.

“We are committed to showing how horrible his record is on environmental issues,” Jeff Gohringer, a league spokesman, said of the Republican. The Washington-based group is helping Pete Gallego, a 50-year-old Democrat, challenge Canseco in a district where thousands of drill rigs have popped up in recent years.

More than $5 million in spending by outside groups has made Canseco’s 23d Congressional District the most competitive House race for a Texas incumbent, according to analysts such as Jim Henson, who teaches politics at the University of Texas in Austin. The Republican and Democratic congressional campaign committees have pumped up the contest with a flood of cash.

Scorching Spots

“Both parties are spending a fortune on this race, doing scorched-earth advertising that started in early September,” said Christian Archer, a Democratic political consultant in San Antonio. He said the district’s Hispanic majority may favor the challenger, as voting data show Latinos usually back Democrats.

Republicans in Strong Position to Keep U.S. House Control

Canseco accepted more than $200,000 from “polluters,” backed cutting funds to create alternative-energy jobs and protected tax breaks for companies that send work overseas, according to a television ad from the league on YouTube.com. The 63-year-old congressman is one of the group’s Flat Earth Five climate-change “deniers” targeted for defeat next month.

Gallego got almost $1 million from “radical environmentalists” who want to tax energy, push up gasoline prices and destroy almost 200,000 Texas jobs, says a spot from the National Republican Congressional Committee in Washington.

The Republican group has put more than $1.6 million into the race, while the Democratic Congressional Campaign Committee has countered with almost $1.4 million, according to the nonpartisan Center for Responsive Politics in Washington.

Latino Republican

Democrats are threatened by a successful Latino who wants to limit government expansion, Canseco said in an interview. He’s a former chairman of Hondo National Bank, leading its growth from $8 million in assets in 1995 to about $139 million in 2010, when he left.

“What makes things interesting is that I’m a Republican, my name is Francisco Canseco, and I speak fluent Spanish,” he said. He’s also a lawyer who has participated in a family-owned commercial development company that builds shopping centers.

Gallego, a state representative from Alpine, got an A- from the league’s Texas branch for his 2011 voting record, though he backed a resolution to limit the U.S. Environmental Protection Agency’s authority to regulate greenhouse gases in the state.

“That’s a disappointing vote,” said David Weinberg, the league’s executive director in Texas. The measure passed the House and failed to come up before the Senate.

“Pete has a reputation for being a moderate and a guy who works very hard” to reach compromises, Weinberg said.

Oil Boom

Companies have paid $7.5 billion to owners of 5 million acres for leases in the region, including parts outside the district, since 2007 and invested $14.6 billion to drill last year alone, the Federal Reserve Bank of Dallas estimated in a 2012 report. Average wages in the district’s Dimmit County rose at an annualized rate of almost 36 percent in parts of 2010 and 2011, the Fed report says.

The district stretches 550 miles (885 kilometers) from San Antonio’s west side to the east edge of El Paso, and from the New Mexico line to Dimmit County, about 50 miles north of Laredo. It covers a region larger than 11 states that includes Big Bend National Park and 800 miles of the Mexican border.

Canseco’s campaign has gotten cash from individuals and political-action committees in the oil and gas industry totaling about $142,700, according to the Responsive Politics center. It said donors included PACs representing San Antonio-based NuStar Energy LP (NS:US) and refiner Valero Energy Corp. (VLO:US), as well as Koch Industries, based in Wichita, Kansas. Federal records show NuStar Chairman William Greehey gave $5,000, as did Paul Foster, chief executive officer of Western Refining Co. (WNR:US) of El Paso.

Melissa Cohlmia, a Koch Industries spokeswoman, didn’t respond to messages seeking comment on support for Canseco.

Jobs Issue

“Canseco says there are credible individuals who question the veracity of man-made global climate change,” said Scott Yeldell, a spokesman. “Here in Texas, the issue is about jobs and middle-class families being able to thrive.”

Gallego has collected more than $70,000 from unions, including the National Education Association and the American Federation of State, County and Municipal Employees, according to the Responsive Politics center. It said lawyers, liquor distributors and unions were giving the most to him.

The conservation league’s money has been augmented by almost $200,000 from a Sierra Club PAC. The league’s board of directors includes John Podesta, an adviser to Obama and a White House aide to President Bill Clinton, as well as Carol Browner, a former EPA head under Clinton and energy policy chief for Obama, and is led by Scott Nathan, a partner and chief risk officer at Baupost Group LLC, a Boston-based hedge fund with more than $24 billion in assets.

Energy Supporter

Gallego, a lawyer who has represented his West Texas district that includes part of the Permian Basin oil region for 22 years, said he has supported energy producers. He cited a September 2011 effort he joined to urge the EPA to delay rules forcing industries to install additional air-pollution controls.

“Unlike Quico, who is content to simply parrot the party line, Pete demonstrated genuine leadership on this issue by working with both parties to both protect jobs and more carefully assess our region’s environmental needs,” Anthony Gutierrez, Gallego’s campaign manager, said in an Oct. 8 statement.

The Democrat’s backers are concentrated in and around San Antonio and El Paso, traditional party strongholds and home to more than half of district residents, Archer said.

Republican Meddling

“I can’t support Canseco because every time they get elected, Republicans try to do something to tear down Medicare,” Jesse Gonzalez, 82, said about the government-run health-insurance system for older Americans. The retired construction worker from San Antonio commented after the candidates debated in Spanish Sept. 25 in San Antonio.

Permits for 4,264 drill rigs have been granted in five district counties since the Eagle Ford Shale discovery in 2008, helping to drive job and wage growth. For some voters in the state that produces the most energy, backing the oil and gas industry is a must.

“I’d be ashamed of myself if I didn’t support someone who supports oil and gas,” said Jerry Farrell, 72, an uncommitted voter who owns a ranch near Cotulla. “It’s a godsend that the Eagle Ford even happened, because lots of ranches here were ready to fold up because of the drought.”

Cotulla, about halfway between San Antonio and Laredo, has one traffic light, seven motels and temporary “man camps” for more than 500 oilfield workers and truck drivers. They can quickly find jobs starting at $60,000 a year or more, said Chris Meyers, a Republican whose family has owned the city’s Ace Hardware store since 1989.

“Businesspeople and working people around here will go for Canseco because he’s our best option,” Meyers said. “But we’ve also got a lot of people here who like getting taken care of by taxpayers, and they’ll vote the way they always have.”

To contact the reporter on this story: David Mildenberg in Austin, Texas, at dmildenberg@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net


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