Critics say the group’s laser-like focus on lobbying for Pruitt’s confirmation after raising money from companies he would regulate raises concerns.
A dark-money group supporting Scott Pruitt’s confirmation as EPA administrator raised nearly a half-million dollars from at least one oil company and other donors who did not have to identify themselves, according to documents obtained by POLITICO.
Protecting America Now, a nonprofit incorporated in Delaware the day after President Donald Trump announced Pruitt’s nomination, is only now revealing basic information about itself, two years after the former Oklahoma attorney general was successfully confirmed to lead EPA and seven months after he resigned under a cloud of ethics scandals. POLITICO received the documents through a records request.
Pioneer Natural Resources, a Texas-based oil and gas company, voluntarily disclosed that it contributed $100,000 — the largest single contribution and more than 20 percent of the group’s total haul in 2017 — but the group’s remaining donors remain secret. A few weeks after he was confirmed, Pruitt halted work on a methane rule that Pioneer had identified as a threat to its business, although it’s unclear whether the company’s support influenced that decision.
Critics say the group’s laser-like focus on lobbying for Pruitt’s confirmation after raising money from companies he would regulate illustrates concerns about the lack of disclosure required by such organizations, known as 501(c)(4) groups after the relevant section of the tax code.
“It raises a question of, is this nonprofit a shell that’s using tax-exempt status as a shield for donors to engage in political spending?” said Robert Maguire, research director for the watchdog group Citizens for Responsibility and Ethics in Washington.
Protecting America Now touted its ability to raise unlimited, anonymous donations in its initial pitch for donations, as POLITICO first reported two years ago. Donors can be individuals, partnerships or corporations, which are able to give directly to 501(c)(4)s, unlike traditional political candidates or federal PACs. It got involved in Oklahoma politics following Pruitt’s confirmation, airing an attack ad targeting the Democratic candidate in last year’s election for governor.
The group’s 2017 tax return shows it raised $459,500 for its mission to help Pruitt get confirmed but provides little detail on its spending. It is run by a single board member and lists a UPS Store mailbox in downtown Washington as its primary address — additional red flags in the eyes of some money-in-politics watchdogs.
“The questions come in when you have a nonprofit that’s run out of a P.O. box, has one board member, no employees, no volunteers, was just founded, has hundreds of thousands of dollars and just starts … to help a single person,” Maguire said. “They’re using a legitimate function of a nonprofit and sort of turning it on its head and using it as a tool.”
Along with Pioneer, 16 other donors contributed between $5,000 and $75,000 apiece to the group, according to a redacted list of donors submitted to the IRS.
Pioneer voluntarily disclosed its donation in a document posted to its website, but the company did not respond to additional questions from POLITICO about its support for Pruitt’s nomination.
A few weeks before Pruitt was confirmed, Pioneer identified EPA’s methane regulations among a list of rules that could “adversely affect demand” for its products, according to its 2016 annual report to the SEC. Once he was in place at EPA, Pruitt halted work on that rulemaking.
It is unclear if Pruitt ever became aware of the group’s donors. Pruitt’s lawyer did not respond to questions about his knowledge of Protecting America Now. But in January 2017, before his confirmation, Pruitt told Congress that he was “not affiliated in any way” with the group and had “no knowledge” of any donors at that time.
Protecting America Now did not return calls or emails sent to its officers and lawyers, and its website no longer exists (a cached version is available here).
According to its tax filing, the group’s mission is “ensuring environmental regulations protect the environment and create jobs,” and it spent nearly $390,000 in 2017 working “with the U.S. Senate, state officeholders and interested parties” to get Pruitt confirmed. The Lobbying Disclosure Act typically requires companies or interest groups to report such outreach to Congress, but Protecting America Now never submitted any lobbying registration, according to a separate search of the LDA database.
Nonprofit groups often spend big on advertising, particularly on TV, but POLITICO was unable to find any evidence of Pruitt-related advertising from PAN. And the group said it did not pay any contractors more than $100,000, a threshold that experts said any significant spending on advertising likely would have crossed.
Protecting America Now also spent more than $17,000 to hire professional fundraisers, but its tax return does not identify whom it hired nor how donations were solicited. The IRS requires nonprofits to list any professional fundraisers who are paid more than $5,000 in a given year, but Protecting America Now said it did not have “a written or oral agreement with any individual … or entity in connection with professional fundraising services.”
However, at least one professional helped the group raise money. Kate Doner, a Texas fundraiser who has raised cash for Republican candidates such as Scott Walker and Ted Cruz, was identified on PAN’s initial flier seeking donations. Doner confirmed to POLITICO that she raised money for the group but didn’t say how much she was paid and referred additional questions to the group.
Maguire said the singular focus on helping one person also may run afoul of IRS guidelines requiring nonprofits to represent a community’s interests — like how the Audubon Society advocates for bird-watchers or the National Rifle Association represents gun owners and manufacturers.
“If they’re a nonprofit and they spend all of their money solely trying to help Scott Pruitt in some way … the IRS can deem that to be excessive private benefit,” Maguire said.
Karl Sandstrom, a former Democratic member of the FEC, suggested the group should have organized itself under a different section of the tax code. So-called 527 organizations are formed “primarily for the purpose” of trying to influence “the selection, nomination, election, or appointment” of anyone to public office, according to federal law, but they must disclose their donors.
“It seems if that’s what you’re organized to do, you’re a 527, not a (c)(4),” Sandstrom said. But he cautioned that the IRS has shown little interest in policing nonprofits’ disclosure issues.
An IRS spokesman declined to answer questions about PAN, saying it is barred from discussing specific cases.
The only person listed as an officer, president Michael Cys, reported receiving no compensation for his time running the group. Cys, who has no background in energy or environmental issues, made his name in politics as campaign manager for the successful 1998 run of single-term Sen. Peter Fitzgerald (R-Ill.), Barack Obama’s predecessor in the Senate. He also held positions at the American Medical Association and National Retail Federation, according to his LinkedIn profile.
It is unclear how Cys ended up running the pro-Pruitt group. His little-used Twitter account makes no mention of the former EPA administrator, and state and federal records show no donations from Cys to Pruitt’s previous political committees.
Last year, he took a job as director of external affairs for the Corporation for National and Community Service, the government organization that runs AmeriCorps and other volunteer programs. Cys could not be reached for comment.
At the end of 2017, Protecting America Now had $33,000 left in the bank, according to its tax return. But in October 2018, the group told Oklahoma officials that it planned to spend $403,000 on ads attacking the Democratic candidate for governor, Drew Edmondson. Produced by the Annapolis-based Republican firm Strategic Partners & Media, it warned that the “liberal” Edmondson would hike taxes, “expand Obamacare and block Trump at every turn.” The spot, collected by Advertising Analytics, makes no mention of any energy or environmental issues.
PAN’s spending in that race was reported at the time by state media.
The 2018 disclosure filed in Oklahoma lists Jacob Parsons as PAN’s president. The group did not return POLITICO’s questions about Parsons’ identity. It could refer to Jake Parsons, a former operations director for the state Republican Party who now works for the speaker of Oklahoma’s House. That individual did not return emails and phone messages about Protecting America Now. The group’s 2018 tax return will not be filed with the IRS until later this year, potentially as late as November.
It’s not clear why the group targeted Edmondson, or whether it has changed its stated mission away from environmental issues. Edmondson, now 72, served as Oklahoma’s attorney general for 16 years before Pruitt was elected to that job in 2010. After Pruitt’s resignation last year, Edmondson said he had done the “honorable thing.”