University of Michigan, Ann Arbor, Michigan (Image: Ken Lund, Flickr)
University of Michigan students and faculty are part of the growing national effort to pressure university endowments to divest from the fossil fuel industry. UMich organizers are demanding that the Board of Regents divest its $12.4 billion from fossil fuels and move towards carbon neutrality by 2030. Against this backdrop of rising climate activism, the Regents recently voted down a $50 million investment in Vendera Resources, an oil and gas holding company. All this comes on the heels of a growing movement across the U.S. calling on institutions of higher education, in the face of our mounting climate emergency, to pull their billions in endowment investments out of oil, gas, and coal.
Given this, the University of Michigan community might be surprised to know that their endowment is helping to finance not merely a major U.S. oil driller, but one who uses his fossil fuel fortune to pour millions into funding the Texas far right and its efforts to restrict abortion rights and the civil rights of LGBTQ people, among other things.
Tim Dunn is a billionaire Texas oilman who is the driving force behind Empower Texans, a dark money operation that has pumped millions of dollars into advancing an ultra-conservative takeover of Texas politics. He’s used his massive fossil fuel wealth to advance his libertarian, evangelical agenda through Empower Texans and a host of other organizations, PACs, and political candidates. One journalist has labeled Dunn “probably the most influential donor operating in Texas today.”
As of October 2018, the University of Michigan has $26 million invested in the private equity fund that finances Tim Dunn’s business operations. The fund, Lime Rock Partners IV AF, is overseen by the private equity firm Lime Rock Partners, and it bankrolls the business operations of CrownQuest, which is Tim Dunn’s oil drilling company. CrownQuest is a major extractor of fossil fuels – it was the 30th top oil producer in Texas in 2017. The joint venture between Lime Rock Partners and Dunn’s CrownQuest is called CrownRock, which combines Lime Rock’s financing with CrownQuest’s field operations. Dunn serves as CEO of both CrownQuest and CrownRock.
It is important that the flow of money that goes towards Tim Dunn and his funding of Empower Texans be made more transparent. Tim Dunn’s right-wing movement is not just a Texas story – it is a national one, with far-flung pension funds and endowment money directed toward Dunn’s business from institutions whose professed values stand in stark contrast with Dunn’s political agenda. This raises the question of whether an institution like the University of Michigan should reconsider pumping tens of millions into financing Tim Dunn’s oil profits and his use of those profits to bankroll far-right politics.
Tim Dunn and Empower Texans
Tim Dunn is a billionaire oilman who lives in Midland, Texas. He is the founder and CEO of CrownQuest, one of the top oil producers in Texas. Dunn is an ultra-right evangelical conservative who has poured millions into Texas politics, and specifically towards PACs and candidates to push the Texas GOP further to the right.
The main vehicle through which Dunn has exerted this influence is Empower Texans, a hard-right political project that uses millions in PAC and dark money, advocacy, and media efforts to advance ultra-conservative state candidates and causes. It is known for its questionable tactics in seeking to discredit opponents and push its agenda. Empower Texans is financed primarily by a small handful of fossil fuel billionaires and multi-millionaires. Dunn is the founder and chairman of Empower Texans.
Dunn is a hardline opponent of gay rights, the rights of transgender people, women’s reproductive freedom, and environmental regulation. He is a promoter of private Christian education and a convention of the states – a right-wing demand, backed by the Koch brothers, aimed at rewriting the U.S. constitution to devolve more power to the states.
As we documented in our recent report, Tim Dunn is the top funder of Empower Texans – he and his family gave at least $7,662,500 to Empower Texans from 2008 to 2018, as well as hundreds of thousands to a range of state and local candidates pushing the Empower Texans agenda. Dunn and his wife Terri spent at least $9.771,693 on Texas politics from 2002 to 2018 (this does not include any dark money donations that do not need to be disclosed).
Here are just a few of the highlights of the ultra-conservative activity of Dunn and Empower Texans:
- Empower Texans was a top backer of the anti-transgender “bathroom bill” that failed in recent years. It bankrolled politicians, such as Lieutenant Governor Dan Patrick, who supported the legislation.
- Dunn is a big opponent of marriage equality – going so far, once, to write to the Texas Attorney General, Ken Paxton, to “make the resources of the attorney general’s office available to any Texas businesses, schools or individuals who incur governmental penalties for resisting gay marriage,” in the words of the Dallas News. (Dunn personally gave $670,000 to Paxton from 2014 to 2018).
- Empower Texans backed an effort to go after so-called “voter fraud” in Texas, which quickly collapsed amidst revelations that 95,000 registered voters were mistakenly flagged for “citizenship reviews.” Journalist Michael Barajas reported that civil rights groups filed three lawsuits “alleging the botched purge discriminated against naturalized citizens and was designed to scare people out of registering or voting.”
- Empower Texans has given millions to Texas politicians advancing an anti-choice agenda to restrict abortion rights and women’s reproductive freedom. Dunn personally gave $175,000 to Empower Texans’s ally Texas Right to Life from April 2016 to January 2018. Dunn’s fellow Empower funders, Dan and Farris Wilks, have given millions to anti-choice PACs and to “crisis pregnancy centers.”
- Dunn has opposed environmental regulation. “At CrownQuest,” journalist R.J. Ratcliffe wrote, Dunn “has fought against limits on methane emissions and the potential listing of the dunes sagebrush lizard as endangered, a designation that would have halted drilling in parts of West Texas and eastern New Mexico.”
Two close allies of Dunn are Dan and Farris Wilks, the second top funders of Empower Texans. The Wilks brothers became billionaires through fracking and have spent tens of millions of dollars on ultra-right candidates and causes, such as supporting “crisis pregnancy centers,” which ReWire News calls “fake clinics that use anti-choice propaganda to try to trick people from seeking abortion services.” The Wilks brothers have also been funders of rightwing media outlets such as PragerU and the Daily Wire, Ben Shapiro’s extreme-right news outlet.
In 2019 alone, Dunn and the Wilks brothers gave at least $250,000 to Trump Victory.
In sum, it’s hard to overstate the scope of Tim Dunn’s influence in pushing an ultra-right agenda in Texas. One writer in the Houston Chronicle called Dunn “arguably the most influential donor to the Texas GOP’s far-right flank” while a Texas Observer op-ed called him “the most influential political player that most Texans never heard of.” Over the past decade, Dunn, his billionaire allies, and Empower Texans have effectively bankrolled a far-right resurgence in the Texas GOP, gained huge influence among a range of power elected officials, and driven a host of reactionary fights that have threatened some of the state’s most marginalized people.
How the University of Michigan is helping to prop up Dunn’s oil fortune that he uses to fund the Texas far right
The University of Michigan is helping to fund Tim Dunn’s business operations. It may be doing so unwittingly, because the University isn’t directly invested in Dunn’s business. Rather, UMich’s money goes towards Dunn through a private equity fund that UMich invests in, which in turn finances Dunn’s business with UMich’s and other investors’ money.
First, some quick context: private equity firms create “funds” that wealthy people and big institutional investors (pension funds, endowments, etc.) commit money to, usually with the promise of higher- and sooner-than-usual returns. The private equity firms invest those funds in a range of companies and sectors – housing, retail, fossil fuels – with the aim of raking in quick profits, often through means that are destructive to the companies they invest in but bring in hefty returns for their investors. Sometimes, single private equity funds or firms essentially own entire companies. In turn, private equity firms charge very large fees, which makes their executives some of the wealthiest people in the world.
One of the private equity firms that UMich invests with is Lime Rock Partners, which has offices in Houston and Connecticut. Lime Rock focuses its private equity investments in the energy sector and has several funds, with different names, that each pool the money of the investors in those funds to finance different oil and gas companies.
One of the specific funds that UMich invests in is a Lime Rock fund called Lime Rock Partners IV AF. This is the specific fund whose money – i.e., money from UMich and other investors in the fund – Lime Rock used to finance Tim Dunn’s business operations.
Here’s how this all works. In 1996, Tim Dunn formed EnerQuest Resources, an oil company that later became CrownQuest Operating LLC, or just CrownQuest. In 2007, Lime Rock Partners, the private equity firm, entered into a joint venture with Dunn’s CrownQuest, and that joint venture was called CrownRock.
From 2007 to 2018, Lime Rock funded CrownRock with a fund that was called Lime Rock Partners IV LP. But in 2018, the life of that fund expired, and Lime Rock bought out its own fund for $1.9 billion and named the new fund Lime Rock Partners IV AF. Bloomberg reported that the “vast majority of the asset value” in Lime Rock Partners IV AF comes from its stake in CrownRock.
Dunn serves as the CEO of both CrownQuest and CrownRock. According to CrownQuest’s website, almost everything it does is for CrownRock. “Substantially all of the time of CrownQuest’s employees is allocated to the operation of CrownRock’s properties and the provision of general and administrative services to CrownRock,” CrownQuest says. “In addition, CrownQuest operates approximately 98% of CrownRock’s total net wells, and the wells CrownQuest operated for CrownRock provided approximately 98% of CrownRock’s average daily production in 2018.”
Here’s how the University of Michigan is involved. In May 2018, it committed $26 million to Lime Rock Partners IV AF, the new fund (UMich had also been invested in the older fund that financed CrownRock, and it rolled its investment in the old fund into the new fund). Another major institution of higher education in Michigan, Michigan State University, also has $15.6 million invested in the new fund. (Michigan State students have also been pushing for fossil fuel divestment by their university).
This slideshow map shows the relationship between the University of Michigan, Lime Rock Partners, its funds, CrownQuest, CrownRock, Tim Dunn, and Empower Texans:
A host of other colleges and universities may also be invested in Lime Rock Partners IV AF. A number of endowments were invested in the old fund, Lime Rock Partners IV LP. These include Harvard, the University of Chicago, Johns Hopkins University, Rice University, Reed College, the Rochester Institute of Technology, Pomona College Carnegie Mellon University, Scripps College, and DePauw University. However, it is yet unknown if, like investors such as UMich and Michigan State, these institutions also rolled over their investment from the old fund into the new fund.
As we wrote in our report, a variety of pension funds and charitable foundations also invested in the older fund.
What will the University of Michigan do?
As the dire implications of our climate crisis continue to surface everyday across the world, universities have a big decision to make. Will they continue to invest their hundreds of billions of endowment money in the fossil fuel companies – and their financiers – that are driving our climate emergency? Or will they divest from the fossil fuel industry in order to materially weaken this engine of climate crisis and to send an important message across the world that big investors can no longer keep trying to profit from planetary catastrophe? (The University of California recently announced that it was ending its investments in fossil fuels, including its private equity investments in fossil fuels).
The University of Michigan faces an even clearer question: will it continue to spend tens of millions of dollars that go towards funding Texas oil money that props up that state’s extreme right? Or will it live up to its purported values – and support its diverse community of students, faculty, and other workers – by breaking with the fund that finances Tim Dunn’s business operations?