For Immediate Release:
September 17, 2014

Contact:
Craig Richardson
Richardson@eelegal.org

E&E Legal Files Referral With IRS Regarding Sierra Club and Sierra Club Foundation Tax Law Violations

Washington, D.C. – Today, the Energy & Environment Legal Institute (E&E Legal) filed a formal referral with the Internal Revenue Service alleging the Sierra Club and the Sierra Club Foundation are in potential noncompliance regarding two areas of tax law: impermissible benefit to private interests and failure to pay taxes on unrelated business income. A detailed report authored by E&E Legal’s General Counsel David W. Schnare outlining the specific violations accompanied the IRS referral, which seeks the tax agency’s careful review and investigation into these potential tax law violations.

Regarding its failure to pay taxes on unrelated business income, the Sierra Club sends its members into communities to sell the products of a selected local solar panel company in Maryland, Utah and dozens of other states in exchange for contributions to the group. In Maryland, for example, the Sierra Club makes a $750 profit from every sale and has never paid taxes on that commercial enterprise.

As the Sierra Club’s Chief of Staff Jesse Simons has stated, “This has been a great revenue-generating tool for the Sierra Club.” The Sierra Club markets the products of a single company in each jurisdiction, in direct competition to several other similar companies who cannot rely on the Sierra Club sales force. “This violates the law,” says Schnare.

In terms of impermissible benefits to private interest, the Sierra Club’s use of its War on Coal not only produce profits, but apparently conspires with the companies that profit from that war. Eight of the Sierra Club Foundation’s 18 directors own or operate organizations that directly benefit from the War on Coal. These directors are the captains of the renewable energy industry. While the Sierra Club Foundation doesn’t pay these directors, their companies directly profit from the Sierra Club Foundation’s primary “program,” the War on Coal.

Beyond the illegal inurement to these directors’ interests is the direct benefit to major donors. Natural gas producer Chesapeake Energy paid $26 million to the Sierra Club for the express purpose of forcing coal-fired electricity companies to switch to natural gas. David Gelbaum, who controls more than 40 “clean tech” companies that directly benefit from forced shutdown of the coal-power industry, donated more than $100 million to the Sierra Club.

“The Sierra Club Foundation wages a war on coal to the direct financial benefit of its directors and top donors,” added Schnare. “This, too, is not lawful.”

Schnare notes that such IRS referrals are not unusual as they receive complaints from the general public, members of Congress, federal and state government agencies, and internal sources every year and the have established an office tasked exclusively to review these referrals. “The E&E Legal referral, however, is different from recent high-profile complaints to the IRS regarding nonprofits spending money in campaigns since our complaint is not about politics and political spending,” he adds.

Thirty-one years ago, Bruce Yandel coined the phrase “Bootleggers and Baptists” to describe how these strange bedfellows work together to corrupt the economy and the law. “Baptists” point to the moral high ground and give vital and vocal endorsement of laudable public benefits. Bootleggers are simply in it for the money. Today, Yandel’s theory is in full bloom and there is no more prominent “baptist” than the Sierra Club and no more prominent bootleggers than anti-coal/renewable energy businesses.

“These bootleggers and baptists have taken a step too far, and despite their claims of moral superiority, the Sierra Club has become a huckster for the bootleggers and the Sierra Club Foundation has been infiltrated and controlled by the bootleggers themselves,” said Schnare. “In so doing, they have broken the law,” he concluded.

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The Energy & Environment Legal Institute (E&E Legal) is a 501(c)(3) organization engaged in strategic litigation, policy research, and public education on important energy and environmental issues. Primarily through its petition litigation and transparency practice areas, E&E Legal seeks to correct onerous federal and state policies that hinder the economy, increase the cost of energy, eliminate jobs, and do little or nothing to improve the environment.

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