Super PAC rules would keep Pruitt’s corporate cash flowing

By Benjamin Storrow, Mike Soraghan | 01/06/2017 07:45 AM EST

U.S. EPA Administrator-designate Scott Pruitt answers a reporter's question during a meeting on Capitol Hill this week.

U.S. EPA Administrator-designate Scott Pruitt answers a reporter's question during a meeting on Capitol Hill this week. Photo by Cliff Owen, courtesy of AP Images.

One of the country’s largest coal companies contributed $50,000 to a political action committee supporting Scott Pruitt in August, just as the company and the Oklahoma attorney general prepared for a key court appearance in their challenge to U.S. EPA’s sweeping restrictions on power plants.

Murray Energy Corp., the Ohio-based mine owner, will be able to make a similar contribution this year, legal experts say, even if the Senate confirms Pruitt, a Republican, to run EPA.

The practical impact: Pruitt’s Super PAC, Liberty 2.0, can keep raising money from the corporate interests he is charged with regulating.


A coal company owner "can write him a million-dollar check," said Larry Noble, former general counsel of the Federal Election Commission.

"It’s not a great idea," said Noble, now with the Campaign Legal Center, a money-in-politics watchdog. "It puts him in a very compromising situation."

Pruitt would be among the first Cabinet-level appointees to enter office with such a super PAC. The political action committees, which can accept unlimited donations from corporations, unions and individuals, are a relatively new phenomenon. They’ve been evolving since the Supreme Court’s 2010 Citizens United ruling paved the way for their creation.

The idea of corporate titans writing checks to the head of EPA is astounding to William Reilly, who had the job in the administration of President George H.W. Bush.

"I’d be amazed if he thinks he can keep that going," Reilly said. "That doesn’t pass the smell test."

But the people running the super PAC have made no move to dissolve it since President-elect Donald Trump picked Pruitt in December. Charles Spies, attorney for the committee, said discussions over the super PAC’s future are ongoing.

"[Attorney] General Pruitt’s nomination was just a few weeks ago, and Liberty 2.0 leadership is now assessing plans to continue to fully comply with the law and the highest ethical standards," Spies told E&E News.

Blurry legal and ethical lines

An E&E News review found no record of an Obama administration appointee entering office with a super PAC. Three members of the incoming Trump administration, including Pruitt, are affiliated with active super PACs.

Politicians are technically not allowed to coordinate with their super PACs, but experts say they get around that by hiring trusted aides familiar with their desires.

Liberty 2.0 has paid $24,000 to Crystal Coon, a campaign aide who was Pruitt’s first chief of staff in the attorney general’s office. The top recipient of money from Liberty 2.0, according, is a firm founded by Tamara Cornell, the primary consultant and fundraiser for his state campaign efforts.

Candidates can even solicit money for their super PACs, although any solicited contributions must then stay within federal contribution limits. And solicited donations cannot come from labor unions or corporations, Noble said.

When someone becomes a Cabinet secretary, federal rules prevent him or her from directly soliciting money. But the Cabinet member can speak at fundraisers for political action committees and even help plan the event.

Obama’s former Education secretary, Arne Duncan, and former Energy secretary, Steven Chu, appeared at fundraisers during his 2012 re-election campaign.

Super PACs add another wrinkle to the equation because they are technically independent from the candidate. But Pruitt’s case demonstrates just how blurry those lines can be.

Whether a contribution was solicited or coordinated is a distinction that matters little in the real world. Contributors who want access to a powerful officeholder can usually figure out how to give without a direct request from the politician.

"The donors are aware that he’s going to know," Noble said. "You don’t need to have anything spoken."

That doesn’t mean the public won’t see it for what it is, Noble said. "Even Trump admitted, people make these contributions to influence the policymakers," he said.

Spies noted that the PAC is following the rules regarding coordination.

"Liberty 2.0 is an independent expenditure committee set up by supporters of [Attorney] General Pruitt," Spies said. "Pruitt currently has no control over or involvement with this group and will not going forward."

Spies is counsel for the Rule of Law Defense Fund, an offshoot of the Republican Attorneys General Association where Pruitt is a director.

‘There’s nothing to prevent them in law’

Pruitt is not the only Trump nominee associated with a super PAC. Ben Carson, Trump’s nominee for secretary of Housing and Urban Development, was supported by a super PAC called the 2016 Committee during his presidential campaign. It remains active.

Rep. Ryan Zinke (R-Mont.), the nominee for secretary of the Interior, has come under fire for his relationship to a super PAC, Special Operations for America. The Campaign Legal Center filed a complaint in 2014 accusing Zinke of coordinating with the committee (Climatewire, Jan. 5). FEC filings show it remains active.

Former Texas Gov. Rick Perry (R) has closed three super PACs associated with his presidential campaign, FEC filings show. Perry is Trump’s pick for Energy secretary.

Pruitt and Zinke are the most likely to pursue elective office after their Cabinet stints and therefore can be helped by contributions to super PACs. Political observers think Pruitt might have his eye on the seat of Sen. Jim Inhofe, his fellow Oklahoma Republican, should Inhofe retire.

The influx of nominees with super PACs surprised some legal analysts. Super PACs have been around for several election cycles. But only in 2016 did the barrier between candidates and super PACs dissolve so completely into a paper fiction.

"I have not dealt with this specific problem before, but I have long complained about our corrupt campaign finance system," said Richard Painter, who served as the chief ethics lawyer in the George W. Bush administration. "And the problems spill over to the executive branch when elected officials who are beholden to campaign contributors become Cabinet members."

Steven Billet, director of the legislative affairs master’s degree and PAC management graduate certificate at George Washington University, similarly had never dealt with the issue.

"I don’t know if Cabinet members can have super PACs," he said. "My guess is there is nothing to prevent them in the law."

The legal distance between the super PAC and the Cabinet official would presumably allow the committee to solicit donations, Billet said.

Money flowed as lawsuits piled up

Like many politicians in oil-rich Oklahoma, Pruitt has long looked to the energy industry for campaign contributions. An analysis of his state campaign filings reads like a who’s who of Sooner oil-field royalty. Lew Ward, the late founder of Enid-based Ward Petroleum Corp., made five donations totaling $11,700 to Pruitt’s state campaigns, according to Continental Resources Inc. Chairman and CEO Harold Hamm gave $5,000. Aubrey McClendon, the brash, now-deceased founder of Chesapeake Energy Corp., chipped in $10,000.

Overall, Pruitt raised $282,111 from oil and gas interests over four state campaigns. Only lawyers and lobbyists gave more, at $298,717.

By 2015, Pruitt was seeking to widen his fundraising net. On Feb. 2 of that year, a multi-candidate political committee set up by former Pruitt campaign staff members set up shop at 15 West 6th St. in Tulsa, FEC filings show. The Oklahoma Strong Leadership PAC is able to accept limited donations and coordinate with Pruitt, enabling the Oklahoma attorney general to funnel money to preferred political candidates across the country. The downtown Tulsa address is the same as that of Pruitt’s campaign office.

A couple of weeks later, a second committee, Liberty 2.0, was set up at the same address. Both were housed in the same suite, 2507, and listed Pruitt aide Millan Hupp’s email address under the committee’s contact information.

Pruitt already had several lawsuits against EPA under his belt by that time, including an ultimately unsuccessful challenge to the agency’s Cross-State Air Pollution Rule and its haze mitigation plan for Oklahoma.

A bevy of new Obama administration regulations released that year offered an opportunity to file more. The Oklahoma attorney general sued over the Clean Power Plan and Clean Water Rule in July, then joined 25 states for a second challenge to the Clean Power Plan in October (Greenwire, Dec. 8, 2016).

In the case of Liberty 2.0, the money came slowly at first. American Energy Partners LP, a company founded by McClendon after leaving Chesapeake, and Lucas Oil Products Inc. were among the PAC’s first donors, contributing $10,000 and $50,000, respectively, in 2015.

But the more Pruitt sued, the more the energy dollars rolled in. In August of last year, just as the U.S. Court of Appeals for the District of Columbia Circuit was preparing to hear the state and industry challenge to the Clean Power Plan, Pruitt sued EPA over a rule to limit oil-field methane emissions.

Liberty 2.0 collected $102,500 in energy money that month. The donations included $25,000 from Jeffrey McDougall, president of JMA Energy Co., an oil and gas company; $15,000 from Continental Resources; and the $50,000 from Murray Energy.

In a statement, Murray Energy said its support of Pruitt makes sense.

"Murray Energy Corporation has no choice but to support those politicians who have vowed to protect and defend the United States coal industry, and the jobs and family livelihoods that depend on it," the statement said. "Attorney General Pruitt has been a strong advocate for a fair and balanced approach to environmental protections, which follows the letter of the law."

If he’s confirmed as EPA administrator, Pruitt’s portfolio will go far beyond the energy sector, Reilly said, broadening both opportunities and potential conflicts.

"Can you think of any sector of the economy," Reilly said, "that EPA doesn’t touch?"

This story also appears in Climatewire.