Environmental Protection Agency (EPA) Administrator Scott Pruitt cannot escape controversy. This week news emerged that he had rented a room in a Capitol Hill condo, co-owned by the wife of an energy lobbyist, for just $50 a night.
Bloomberg reported on Thursday that, in total, Pruitt paid $6,100 to use one room in the two-bedroom condo during a six month period in 2017. But then on Friday afternoon it emerged that Pruitt’s daughter occupied the other bedroom in the apartment while she served as a White House intern during this time.
The apartment’s co-owner is a health care lobbyist named Vicki Hart. Her husband, Steven Hart, is chairman and CEO of Williams and Jensen PLLC, a lobbying firm with several energy industry clients regulated by the EPA. The firm’s clients include ExxonMobil and Oklahoma Gas & Electric Co. He has also lobbied on behalf of Cheniere Energy, a developer of liquefied natural gas (LNG) export terminals in the United States.
At first glance this scandal may not seem as important as Pruitt’s repeated use of taxpayer money to fly first class or build a soundproof booth in his office. But renting an apartment for himself and his family from what has been described as a lobbying “power couple” poses serious ethics questions about whether or not this exchange was a gift from a lobbyist to a top government official.
This is a “serious violation of ethics law” said Norm Eisen, former White House ethics czar under the Obama administration.
This is a serious violation of ethics law incl. 5 CFR 2635.202, Pruitt apparently had room on demand, yet paid below market rent and only for nights when he stayed there? Trump admin has broken so many laws they are more like a RICO conspiracy than a govmt https://t.co/1EQTB42mUG
— Norm Eisen (@NormEisen) March 30, 2018
Following the news about Pruitt’s apartment deal, Rep. Don Beyer (D-VA) called for Pruitt to resign or be fired. This comes just one day after environmental groups launched a separate campaign to “boot Pruitt” from the EPA.
Watchdog group Public Citizen is also calling for the EPA’s Office of Inspector General to probe Pruitt’s apartment rental.
It all comes down to a few key points about the price Pruitt paid for the apartment, the use of the space by his family, and whether or not Pruitt had a personal relationship with the Harts.
Did Pruitt pay market value?
The deal Pruitt had was an unusual one. To begin, Pruitt only paid for the nights he actually spent in the apartment, rather than renting it on a monthly basis as one would for a permanent residence.
Then there’s the rate he paid: $50 a night. This is well below what he would have paid in other comparable, or worse, locations. According to ABC News, other apartments in the same building go for $5,000 a month. At Pruitt’s rate, he was paying roughly a third of that price.
There are conflicting reports about Pruitt’s use of the apartment space. According to Bloomberg, “the payments covered Pruitt’s room in the two-bedroom unit, but did not afford him liberal use of common areas.”
Yet, according to ABC News, “One source added that the two [Pruitt and his daughter] had use of the rest of the condo unit, including the kitchen and living space on a lower level.”
No one else, however, lived in the condo during the time Pruitt rented it.
And it is unclear how much, if anything, was charged for the use of the second bedroom by Pruitt’s daughter.
Pruitt’s daughter also stayed there
If Pruitt had used the one room in the apartment alone, then the conversation would be a lot more fuzzy. But as Walter Shaub, former director of the Office of Government Ethics, tweeted, the fact that Pruitt’s daughter also used the apartment “casts doubt on whether he paid market value for the rooms.”
market value for the rooms, if he had the place to himself and paid only $50. It now comes down to whether the personal relationship exception to the gift rules applies. For that to apply, he would have to establish that he and the other individual had the kind of relationship /2
— Walter Shaub (@waltshaub) March 30, 2018
The EPA’s current ethics counsel told Bloomberg on Thursday that Pruitt’s deal was routine and did not “causes us concern.” However, as Buzzfeed’s Zahra Hirji then tweeted on Friday, “The EPA ethics lawyer that weighed in on Pruitt’s situation last night *did not know* about his daughter.”
According to reports, Pruitt did not seek an ethics approval before entering into the rental agreement with the Harts. Regardless, as Justina Fugh, the EPA’s top career ethics official, said in a statement: “I don’t conclude that this is a prohibited gift at all. It was a routine business transaction and permissible even if from a personal friend.”
And this is the crux of the issue says Shaub: Did Pruitt and the Harts have a personal relationship?
So, were they friends?
According to the ethics rules, there is a “personal relationship” exception when it comes to government officials accepting gifts.
“For this to apply, he [Pruitt] would have to establish that he and the other individual had the kind of relationship in which they would normally give one another significant gifts of this sort,” Shaub tweeted. “For this exception to apply, he would usually have to show things like a past history of exchanging gifts, frequent personal communications and social outings, and a relatively long acquaintanceship.”
He continued: “The circumstances must ‘make it clear’ that the gift was motivated solely by the personal relationship, and the burden of demonstrating such circumstances is on the employee.”
It boils down to this: Given that his daughter stayed in the apartment too, the $50/day rate was most likely well below market value, leaving virtually no room to argue Pruitt was paying a fair market rate. This would make it a gift — made more controversial by the fact that it came from two lobbyists, one of which works in the energy space.
If Pruitt can establish a long, personal relationship with either or both of the lobbyists — one where, if he visited D.C. in the past in his capacity as Oklahoma attorney general he would have been offered the same deal — then this might be exempt from the ethics rules.
Ethics gift rules
Even so, Pruitt should still have considered the outward appearance of accepting such a gift in his capacity as EPA administrator — there are guidelines about this.
As the law states, “Even though acceptance of a gift may be permitted by one of the exceptions… it is never inappropriate and frequently prudent for an employee to decline a gift if acceptance would cause a reasonable person to question the employee’s integrity or impartiality.”
During the final weeks of Obama’s presidency, the ethics rules on receiving gifts were updated and strengthened. However, proposed restrictions around gifts involving conflicts of interest did not pass. Instead, a non-binding provision was put in encouraging federal officials to “decline otherwise permissible gifts when accepting them would raise concerns about the appearance of impropriety.”
And it appears this is exactly the loophole that Pruitt’s apartment may fall into.
As Shaub wrote, “a cabinet official like Pruitt owes the public an explanation as to his analysis of the relevant factors so we can understand how he arrived at the conclusion that no reasonable person would be concerned if he accepted a gift of below market rate lodging from a lobbyist.”