An Ohio legislator defied FirstEnergy lobbyists. Then a ‘dark money’ group helped sink her bid for Congress

Introduction

A “dark money” organization tied to a major electric company pumped significant cash into an Ohio congressional race in what a losing candidate describes as an act of retribution over a failed financial deal.

Christina Hagan, a state representative who was running in the Republican primary for Ohio’s 16th congressional district seat, said a group called the Conservative Leadership Alliance targeted her with a barrage of attack ads after she declined to support legislation Akron, Ohio-based electric company FirstEnergy had lobbied her to help pass.

The Conservative Leadership Alliance’s treasurer is Marc Himmelstein, who has worked for years as a FirstEnergy lobbyist in Washington, D.C. FirstEnergy has paid Himmelstein’s firm, National Environmental Strategies, $640,000 since 2010, according to congressional lobbying filings.

Hagan said she didn’t think the bill, which would have allowed FirstEnergy to collect an additional $300 million annually from customers to shore up its aging power plants, was fair to electric customers. House Bill 178 would have created “zero-emission credits” that would have raised customers’ monthly bills by about 5 percent.

“I didn’t budge when they came into my office to lobby me,” Hagan said of her meetings with FirstEnergy officials, which took place over a period of many months. “I became the target of the company and the members of our leadership team who wanted to get it done but couldn’t because I wasn’t going to be supportive. I’m sure they just wanted to make an example of me in my race for higher office that if you don’t play well, this is what will happen to you.”

Hagan’s main opponent in the Ohio 16th district Republican primary was Anthony Gonzalez, a former Indianapolis Colts and Ohio State University wide receiver who won the race with 53 percent of the vote.

Hagan — an avowed supporter of President Donald Trump — placed second in the May 8 primary, with 41 percent.

Sarah Poggione, associate professor and chair of the department of political science at Ohio University, said establishment Republicans rallied behind Gonzalez, and they spent significant money to back him, because they saw Hagan as especially formidable.

“Both sides were seeing this as really competitive and the possibility that either one could potentially take it,” Poggione said.

Himmelstein did not return multiple messages left on his office phone, nor did he respond to emails to his address with National Environmental Strategies. No one responded to emails sent to a general Conservative Leadership Alliance address, either.

Todd Schneider, director of corporate communications for FirstEnergy, also did not respond to multiple emails and phone messages. When reached by phone, FirstEnergy communications staffer Tricia Ingraham said she would consult with Schneider about how to respond, then ceased further contact with a Center for Public Integrity reporter.

In an April hearing for House Bill 178 — which ultimately did not pass — FirstEnergy CEO Charles Jones told members of the House Public Utilities Committee that “Ohio cannot afford to continue heading down a path that could lead to less fuel-diverse and fewer homegrown energy resources, more energy imports, fewer jobs and less economic growth — not to mention more volatile electricity prices for our customers and your constituents,” according to the Cleveland Plain Dealer.

FirstEnergy describes itself as a “forward-thinking electric utility powered by a diverse team of employees committed to making customers’ lives brighter, the environment better and our communities stronger.”

But the company has come under fire in the past for the high levels of pollution its plants pump into the atmosphere. A 2016 Center for Public Integrity analysis of two federal data sets from 2014 found that four of FirstEnergy’s plants were on the top 100 list of U.S. “super polluters.”

The company’s nuclear and coal-fired power plants have been struggling to remain profitable in recent years because natural gas prices have been so low. Executives have asked the federal government for emergency funds to help keep some its plants operating.

The Conservative Leadership Alliance, an entity that states it’s a 501(c)(4) “social welfare” nonprofit, spent $113,000 in the Ohio 16th district race. Such groups do not have to disclose their donors, and Conservative Leadership Alliance has not revealed who funds it. (Politico reported last week that American Action Network, a politically active nonprofit tied to House Speaker Paul Ryan, R-Wis., gave Conservative Leadership Alliance $200,000 sometime in 2016 or 2017.)

Half of that money — $56,500 — bolstered Gonzalez. The other half funded ads opposing Hagan, according to Federal Election Commission records.

The Conservative Leadership Alliance, or CLA Inc., has spent money in two other congressional races so far this election cycle, federal records indicate.

The group spent $220,800 supporting Tommy Pope and $319,500 opposing Ralph Norman in a Republican runoff for South Carolina’s 5th congressional district seat in May 2017. (Norman won both the primary and special general election by narrow margins.)

CLA Inc. also spent $97,770 opposing John Eichelberger and the same amount opposing Arthur Halvorson in Pennsylvania’s 13th congressional district Republican primary on May 15, calling them, in a press release, “typical repeat politicians who are desperate to be in the swamp.” CLA Inc. spent $35,000 to support John Joyce, who won the eight-way race for the Republican nomination.

CLA Inc. has additionally aired political issue ads that targeted Rep. Walter Jones, R-N.C., and praised Rep. Martha Roby, R-Ala., while not overtly advocating for their re-election or defeat.

The true nature of CLA Inc., is murky. It does not appear to be a political action committee or super PAC, as it has not registered itself as such with the FEC.

Nor does it appear in the IRS’s publicly available registration databases, possibly because it has not requested tax-exempt status or because the IRS hasn’t updated its public-facing databases, tax experts say.

Cecilia Barreda, an IRS spokeswoman, said she was prohibited by law from disclosing information about a specific organization.

CLA Inc. states on its website that its “primary purpose is to put conservative policies into action” through reforms that “grow the economy, lower our national debt, fix a broken healthcare system and make our country safer and stronger through a bold national defense.”

Entities that operate as 501(c)(4) nonprofits and spend cash in political campaigns are called “dark money” groups because they do not have to disclose their donors.

The Supreme Court’s 2010 decision in Citizens United v. Federal Election Commission allowed certain kinds of nonprofit groups, including 501(c)(4) organizations, to spend unlimited amounts of money to independently promote or oppose political candidates — so long as they do not, in practice, spend 50 percent or more of their money on politics, per IRS rules.

Hagan said “dark money” shouldn’t “be able to hide” — a view many in the Republican party disagree with.

“People have the right to know who is putting mail in their mailbox and who is putting ads on their TVs,” Hagan said. “Context is everything.”

FirstEnergy is a politically active company that has spent $24.3 million overall on federal lobbying since 2010, according to congressional lobbying records.

Since Jan. 1, 2017, the company’s political action committee has spent $442,500 to support federal political campaign committees and other PACs. It supports both Republicans and Democrats, but in recent years has favored Republicans, according to data maintained by the nonpartisan Center for Responsive Politics.

The company’s PAC, which is a separate entity from the Conservative Leadership Alliance, has been supportive of Gonzalez this year, giving his campaign $5,000 for the primary race and $5,000 for the general election — the maximum contributions allowed by PACs to congressional candidate committees.

In all, Gonzalez has raised $1.1 million and spent $677,200 between Jan. 1, 2017 and April 18, the end of the latest filing period. Hagan pulled in $386,200 and spent $261,000 in the same time period.

Gonzalez did not return email messages or a phone message left with his campaign’s treasurer, Natalie Baur.

Gonzalez faces Democrat Susan Moran Palmer in the November general election.

Hagan said she will finish out the remainder of her term in the Ohio legislature, and then she will “gladly go to the private sector, but I will not disappear from the public policy sector. I want to be actively engaged.”

Jamie Smith Hopkins contributed to this report.