Carla Astudillo

Texas has raised $54 million in private donations for its border wall plan. Almost all of it came from this one billionaire

"Texas has raised $54 million in private donations for its border wall plan. Almost all of it came from this one billionaire." was first published by The Texas Tribune, a nonprofit, nonpartisan media organization that informs Texans — and engages with them — about public policy, politics, government and statewide issues.

An out-of-state billionaire who has previously bankrolled attempts to defend controversial immigration laws is responsible for nearly all the donations to Gov. Greg Abbott's $54 million border wall fund.

A member of one of America's richest family dynasties, Timothy Mellon, contributed nearly 98% of the fund's total donations when he donated $53.1 million in stock to the state in August, according to public records. Mellon is the 79-year-old Wyoming-based grandson of banking tycoon and former U.S. Treasury Secretary Andrew Mellon.

Before Mellon's donations, Abbott's private fundraising campaign had stalled at about $1.25 million around mid-August, two months after its launch — a drop in the bucket for a project with a price tag estimated in the billions of dollars. But on Aug. 27, a state website that tracks donations to the crowdfunding effort said the fund had jumped to nearly $19 million. By the end of the month, it had topped $54 million.

The donations have since stalled again.

Mellon did not respond to multiple requests for comment made to his company, New Hampshire-based Pan Am Systems, and a marketing firm that handled publicity for his 2015 autobiography.

Abbott declined to comment.

Mellon does not appear to have close ties to Texas. But he was a top donor to the reelection campaign of former President Donald Trump, who made building a border wall a top priority, and has previously donated money to defend legislation targeting immigrants.

In 2010, he gave an unsolicited $1.5 million to the legal defense of an Arizona law that required police to determine the immigration status of people suspected of being in the country illegally, according to The Washington Post. Critics said the law would lead to racial profiling. The law was challenged all the way to the U.S. Supreme Court, which struck down parts of it but left intact the section allowing officers to ask about immigration status.

Last year, Mellon gave $20 million to America First Action, the main super PAC supporting Trump's reelection. Since 2018, he's donated $30 million to the Congressional Leadership Fund, the House GOP super PAC, and he gave $30 million to the Senate Leadership Fund, which tries to elect Republicans to the U.S. Senate, in 2020.

Mellon has not donated to Abbott, but he gave $2,500 to Republican gubernatorial challenger Allen West when West ran for Congress in Florida in 2012. Mellon ramped up his political donations in 2018.

While he overwhelmingly supports conservative campaigns and Republicans, Mellon also gave to two Democrats: U.S. Rep. Alexandria Ocasio-Cortez of New York in 2018 and former U.S. Rep. Tulsi Gabbard of Hawaii for her bid for the 2020 Democratic presidential nomination. Ocasio-Cortez's campaign later said it did not solicit the donation and would return it.

Mellon has taken heat for using offensive stereotypes to describe Black Americans in his self-published autobiography.

In the 2015 book, Mellon wrote that after the Great Society programs of the 1960s, which were intended to tackle poverty and racial injustice, Black people “became even more belligerent and unwilling to pitch in to improve their own situations," according to The Washington Post.

He also called social safety net programs “slavery redux."

Mellon is the chair of Pan Am Systems, a privately held transportation and freight holding company. In the 1980s, he founded a rail company called Guilford Transportation Industries. In the 1990s, he rebranded the company after buying the brand of bankrupt Pan Am Airways.

Forbes estimated Mellon was worth almost $1 billion in 2014, and last year the magazine estimated the Mellon family was worth $11.5 billion.

Abbott's crowdsourced wall

Abbott, a two-term Republican, has made border security his top priority this year as he seeks reelection next year and is fighting off challenges from his right. Abbott has blamed the Biden administration for an increase in migrants at the border.

In March, Abbott deployed state military and police resources to the border to help federal authorities enforce immigration law. In June, he announced a state of disaster in 34 counties that were seeing large increases in migrant crossings and he unveiled his plan to build a state-funded border wall, picking up where Trump left off.

The Texas Legislature has approved nearly $3 billion over the next two-year budget cycle toward border security, with about $1 billion going to the governor's office for grants, including $750 million dedicated to construction of a border wall.

Texas is already paying $25 million for a nearly 2-mile concrete barrier along State Loop 480 in Eagle Pass. Portions of the federal border wall started by the Trump administration, and put on hold by the Biden administration, ranged from $6 million per mile to $34 million per mile for construction. Abbott's office said it has identified 733 miles of border that may need some type of barrier.

While the state displays the aggregate of private donations to the border wall on its website, it does not readily provide the names of individual donors, despite a commitment from Abbott early on that the crowdfunding effort would have “transparency and accountability."

Outside of Mellon, the fund received more than 12,100 individual donations as of Sept. 14, totaling about $1.3 million. The median donation was $50.

That level of fundraising is more in line with a similar crowdfunding attempt by Arizona lawmakers 10 years ago to raise private money for constructing a fence on the Mexican border. That effort received about $270,000 in three years, according to The Arizona Republic.

During the Trump administration, a nonprofit called We Build The Wall, which included his former political adviser Steve Bannon as a board member, raised $25 million for a border wall. Bannon and Brian Kolfage, the group's leader, were accused by the federal government in August 2020 of looting the charity for personal gain. Bannon was later pardoned by Trump.

Tax benefit

Tax experts say Mellon's decision to donate stock instead of cash could yield a tax benefit for the billionaire.

Normally, a person has to pay taxes on profits made on their investments when they are sold. But investors who donate stock to charity avoid paying a tax on the earnings on their investment and get a tax deduction for the full amount of stock.

“It's common to give stock that's increased in value because they can get rid of the gains and they can deduct the donations," said Lloyd Mayer, a professor at Notre Dame Law School.

Such donations are usually made to nonprofit organizations. But under the tax code, a charitable contribution to a state would likely be tax-deductible if it is “made exclusively for public purposes." Some people, for example, get tax deductions for donating money to cut the federal debt.

The only hurdle is ensuring the money is only used for public purposes.

“In the case of [a] border wall, presumably built upon public land, I think it'd be hard to argue there are private purposes," said Lisa De Simone, an accounting professor at the McCombs School of Business at the University of Texas at Austin.

But Mayer said such donations raise questions about undue influence by wealthy donors on governmental policymaking.

In June, Tennessee billionaire Willis Johnson offered South Dakota Gov. Kristi Noem $1 million to help pay for a state National Guard's deployment to the border to aid Texas' efforts to catch people crossing illegally. The state's soldiers were then sent to the Texas border.

“The thing that's controversial about these kinds of donations is whether they're distorting government priorities. If government collects money in taxes and the government — Legislature and governor — decide how to spend it, they're setting their priorities based on the political environment," Mayer said. “But if you open it up to donations, you're handing what the government should spend their money on to wealthy donors."

Disclosure: University of Texas at Austin's McCombs School of Business has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

This article originally appeared in The Texas Tribune at https://www.texastribune.org/2021/10/06/timothy-mellon-texas-border-wall/.

The Texas Tribune is a member-supported, nonpartisan newsroom informing and engaging Texans on state politics and policy. Learn more at texastribune.org.

Texas leaders raked in millions from energy companies after failure of state power grid in February

"Energy industry showers Gov. Greg Abbott, other Texas politicians with campaign cash after they passed power grid bills" was first published by The Texas Tribune, a nonprofit, nonpartisan media organization that informs Texans — and engages with them — about public policy, politics, government and statewide issues.

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Fixing Texas' power grid was about the only thing Republicans and Democrats in the legislative session seemed to agree on earlier this year. Power companies were in the hot seat, as millions of Texans who endured a week of subfreezing temperatures with no power demanded sweeping, multibillion dollar improvements to prevent another deadly disaster — and lawmakers promised action.

But by the end of the legislative session, if Texas' top power companies were aggrieved by the way they were treated by the Legislature or any of the new laws passed targeting their industry, they didn't show it.

Texas elected officials can't receive campaign donations during the session, but after it ended in May, they were showered in cash by the energy industry — even more than usual for a group known for its deep pockets and generous campaign giving.

From June 21 to June 30, after the legislative fundraising blackout ended, five of the largest and most prominent companies in the Texas power grid supply chain — Calpine, Centerpoint, NRG Energy, Oncor and Vistra — or their top executives collectively donated about $497,000 to state elected officials and political groups. That's more than twice the $207,000 they gave during the same period when the legislative session ended in in 2019, according to a Texas Tribune analysis. A large chunk of that cash was driven by Oncor, Texas' largest transmission and distribution electric company, with many big donations coming from the company's executives.

Over that same short stretch in June, 11 prominent oil industry leaders, including billionaires Kelcy Warren, S. Javaid Anwar and Douglas Scharbauer — all three whom could not be reached for comment — combined to contribute about $3.2 million to Texas elected officials, up from about $2.2 million over the same period following the previous legislative session in 2019. Warren's company Energy Transfer declined to comment on his behalf.

For some energy experts, the increase in donations for the officials at the close of the session looks like a reward for not passing more stringent regulations and raises questions about whether lawmakers let the oil, gas and the broader energy industry off easy for its massive failures.

“Gas producers got a pass by Texas policymakers," said Michael Webber, professor of energy resources at the University of Texas at Austin. “Making a million-dollar political donation to reward the government for its light touch and encourage the government to continue turning a blind eye to price gouging and windfall profits while hundreds of people die seems like a good return on investment."

A spokesperson for Oncor said the company “believes in actively participating in the political process." CenterPoint said: “In this case, CenterPoint Energy Political Action Committee made public contributions to support members of the Texas Legislature who had announced their intention to run for re-election, regardless of party affiliation." A Calpine representative said its CEO, who made up the bulk of contributions tied to the company, donated money “as he develops relationships with these members directly." The other two companies did not respond to requests for comment.

Gov. Greg Abbott, who is heading into a reelection year in 2022, benefited most from the flood of June campaign donations from the energy industry.

Abbott received about $4.6 million from oil, gas and broader energy interests, his largest haul ever from those groups in the post-legislative session fundraising period following the four regular legislative sessions during Abbott's tenure as governor.

Those donations included $1 million from Warren, cofounder of a pipeline company that made $2.4 billion from the winter storm, according to a report from Bloomberg. Warren has given Abbott $250,000 donations almost every year since he won the governor's office in 2014.

“Governor Abbott represents all Texans, and that's what he takes into account every day as he works on behalf of the Lone Star State," spokeswoman Renae Eze said.

Other lawmakers who saw some of the largest spikes in funding from the energy industry were those who authored the power grid legislation and chaired the committees that heard the bills.

State Rep. Chris Paddie, R-Marshall, chair of the powerful state affairs committee in the House, was among those lawmakers.

Just 6%, or $1,141, of his overall campaign contributions in the brief June fundraising period after the 2015 legislative session came from the energy industry. During the same stretch after the two subsequent legislative sessions in 2017 and 2019, fewer than 9% of Paddie's contributions came from energy interests.

After the 2021 regular legislative session, energy industry donations totaling $26,000 for the period made up 88% of Paddie's campaign contributions over just the last 10 days of June.

“Absent that storm, his contributions would have been different,“ said Bill Miller, a longtime Texas political consultant and lobbyist. “The storm, as bad as it was, helped him on his bottom line for contributions."

Paddie received contributions from Oncor; Vistra, the state's largest power generation company; and NuStar Political Action Committee, an oil and gas group. Paddie has received thousands in contributions from these entities in election years, but never this amount immediately after a legislative session.

A spokesperson for Paddie did not respond to questions.

Paddie was among a chorus of elected officials from the governor on down demanding answers and solutions for why Texas' grid was on the brink of total collapse in February. There was a series of finger-pointing and falsehoods from state elected officials who wouldn't accept responsibility and falsely shifted blame to renewable energy sources as they vowed to fix the grid.

The Legislature ultimately passed a bill — shepherded by Paddie in the House and state Sen. Charles Schwertner, R-Georgetown, in the Senate — that requires power generation companies to prepare to withstand extreme weather conditions. But the bill didn't set a hard deadline for when the upgrades need to be complete and it stopped short of detailing how the state would enforce and incentivize the process called weatherization.

Critics said this and other storm response bills spearheaded by these lawmakers also failed to provide direct assistance to people harmed by February's power crisis or to help Texans reduce electricity use to take pressure off the grid during extreme weather.

Schwertner went from receiving 3% of his overall campaign contributions from the energy industry in the fundraising period after the 2015 legislative session to the industry making up about 32% of his contributions in 2021. The amount of money the senator fundraised from energy interests jumped from $1,000 to $44,500, the Tribune found. A Schwertner spokesperson did not respond to questions for this story.

State Sen. Kelly Hancock, R-North Richland Hills, who led much of the upper chamber's response to the storm that left millions of Texans without electricity for days in subfreezing temperatures, also got a boost in funding.

More than a quarter of Hancock's contributions in June came from energy interests, about $53,500 — the most he has ever received in a post-legislative session period. This is up from 19% after the 2019 session. Hancock also has ties to the energy industry in his full-time job as a business owner. His chemical logistics company serves the oil and gas industry, among others. He did not respond to a request for comment.

Oil and politics have been entwined in Texas for more than a century, since wildcatters hit the first gusher at Spindletop back in 1901. Oil grew to become the state's signature industry, rich oilmen and companies started showering politicians with money and a romance blossomed. Oil and gas taxes now boost the state budget.

“The twisted roots between the oil and gas industry and Texas lawmakers is almost as old as the Capitol building itself," said Brandon Rottinghaus, a political science professor at the University of Houston.

The Bush family's origin story in Texas revolves around oil and gas, and money from the industry has funded much of the family's political fortunes in the state ever since they arrived in West Texas.

While former Gov. George W. Bush was heavily funded by his family's well-established energy network, his successor, former Gov. Rick Perry, worked to cultivate a wide base of financial support from energy interests, Rottinghaus said.

Abbott has run a similar playbook as Perry and has taken it to a different level, Rottinghaus said.

Overall since 2014, Abbott has received about $30 million from oil, gas and other energy interests, which is about 18% of his $166 million total raised in that time. Four out of the top 10 individual donors to Abbott are oil and gas men.

Just before the energy donations poured in for Abbott in June, the power grid operator asked Texans, mid-heat wave, to conserve power and turn their thermostats to 78 degrees for a week in order to reduce electricity demand because significant power generation was unexpectedly offline.

The warnings led to renewed calls for the Legislature to take more urgent action to fix the power grid. During that week, Abbott assured Texans the grid was in better shape than ever.

Not long after, Abbott released a list of issues lawmakers needed to address in July during a special-called legislative session. The power grid was not included.

Leading up to Abbott's decision, Lt. Gov. Dan Patrick pressured Abbott in public statements that issues related to the grid needed to be on the agenda. Patrick's calls came after he tried to assert himself prominently in responding to the winter storm by demanding leadership changes at state regulatory agencies and sparring with one Abbott-appointed regulator on the senate floor.

About 26% of Patrick's contributions in June came from energy interests, more than $1.3 million, his most ever in the post-session stretch. That amount is up from 12% of his contributions coming from energy interests after the 2019 session, about $383,000.

Most of Patrick's energy industry money received in June was driven by oil executives.

Patrick spokeswoman Sherry Sylvester said: “No one has been tougher on the energy sector and more proactive for ratepayers this session than Lt. Governor Patrick, who moved immediately following the February storm to call for the resignations of both the PUC board and ERCOT, both of which were fully reformed through Senate Bills 2 and 3."

Disclosure: Calpine, CenterPoint Energy, NRG Energy, Oncor, University of Texas at Austin and University of Houston have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

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This article originally appeared in The Texas Tribune at https://www.texastribune.org/2021/08/04/texas-energy-industry-donations-legislature/.

The Texas Tribune is a member-supported, nonpartisan newsroom informing and engaging Texans on state politics and policy. Learn more at texastribune.org.

Texas Democrats running for the US House have more campaign cash than Republicans — for the first time in years

"For the first time in years, Texas Democrats running for the U.S. House have more campaign cash than Republicans" was first published by The Texas Tribune, a nonprofit, nonpartisan media organization that informs Texans — and engages with them — about public policy, politics, government and statewide issues.

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