POLITICS:

Lobbyists retool to win money in no-spend era

The call to slash federal spending creates a new world for lobbyists, who've begun retooling strategies to win prizes for clients.

In shops along K Street, lobbyists are revising arguments and hunting for those that will persuade lawmakers to spend money. They are focusing on federal agencies as the place to gain traction. Watchdogs warn that beefed up campaign contributions could play a role in the lobbyists' success.

The days of securing money through earmarks are over, lobbyists and analysts said, and now every expense must be justified.

"There is a new reality," said Frank Maisano, energy expert at Bracewell & Giuliani, a law firm that represents utilities, refiners, drilling companies and wind developers. "In long days past you could argue that 'this is a good project, it had merit and that's why it needed an earmark.' That's not going to happen anymore.

"You're looking for new vehicles and new ways to let people know about the importance of a project," Maisano added.

The GOP-led House over the past day has proposed cutting as much as $100 billion> from the federal budget. In a nearly all-night session they offered hundreds of amendments targeting countless parts of government spending.

Some of the newest amendments include whacking $3 billion from U.S. EPA and $1.6 billion from the Energy Department's science office and its renewables and efficiency program.

Democrats have said they are looking at a reduction closer to $41 billion. There is buzz about a potential stalemate that could trigger a government shutdown.

Lobbyists watching the proposed carnage say that they do not expect money to stop flowing entirely. Now it becomes a fight to get what is left of the pie.

"The budget's going to be reduced, but the government's still going to spend a lot of money, so the choice is what they're going to spend money on," said Steve McBee, founder and CEO of McBee Strategic, whose clients include Tesla Motors, Solyndra and SolarCity Inc. "You have to make the case that this is more important than other things, this is all about our ability to be competitive going forward."

But the ban on earmarks by President Obama and congressional leaders (E&E Daily, Feb. 2) could reshuffle which lobbyists hold power, several people said.

In the past, lobbyists who could secure big earmarks often ranked as top dogs. Many were lobbyists who previously worked on Capitol Hill and have relationships with former colleagues to help gain earmarks for corporate clients.

But those relationships might be less influential, several people said, as lawmakers feel pressure to steer away from spending.

Now getting a meeting with an Appropriations Committee chairman might not be as valuable as knowing the right people in federal agencies like DOE, several people said.

"There are a bunch of people who are trying to cast themselves as a new breed," said Steve Ellis, vice president for the nonprofit Taxpayers for Common Sense. "There are some entities that are probably going to fail, and some lobbyists who are going to have to find a new gig."

Getting inside agencies

Many lobbyists will seek to get help for their clients through the regulations enacted by federal agencies.

Agencies spend money through programs like research and development into carbon capture and sequestration technology or improved wind turbines. Programs often are managed by federal labs.

Corporations can take advantage of that structure if they understand how those systems operate, said one energy lobbyist and former DOE official, who asked not to be identified in order to speak freely.

"Even in these tight budget times agencies continue to have competitive solicitations for the programs that are funded," the lobbyist said, adding "what you have to do is position yourself to know where those competitive solicitations stand ... and how [you] might shape them to fit your technology better."

Companies and their lobbyists who "understand what the agency is trying to achieve" are in a good position, the lobbyist said.

Businesses look at their technology, what they offer that competitors lack and suggest to DOE that to "get best results they should seek a technology that has the following attributes," the lobbyist said, with those criteria fitting the company's technology.

It's a "classic tactic," the lobbyist said.

Lobbyists who know agencies and how they write their programs now potentially are best positioned to help clients, Maisano said.

There also will be increased attention on loan guarantee programs, green banks and other ways where the government and industry share costs, lobbyists said.

To make sure those kinds of programs are funded, lobbyists are arming themselves with illustrations they hope will persuade lawmakers.

McBee, for example, worked with an efficiency company that received a $2 million government grant, used that to grow, and slightly more than a year later has raised $45 million from private investors. He said that he could not identify the company because that second round of fundraising has not yet closed.

The Northern California company, which had seven employees 14 months ago, by the end of the year will have 250 workers, McBee said.

"It's the government not as the solutions provider but as enabler," McBee said. "Everybody's got to be creative in thinking about how we achieve the goals with less capital."

Working with Congress

Lobbyists also are expected to step up appeals to members of Congress for letters to federal agencies. Those typically urge the agency to support certain projects, sometimes specifically identifying businesses or interests, Ellis said.

That approach happened with the stimulus legislation money, Ellis said, when lawmakers wrote agencies seeking funding for various companies.

"Lawmakers can be a creative bunch so we'll have to keep our eyes open," Ellis said.

There is also the possibility lawmakers will write bill language so narrowly tailored that it gives one or two companies a large advantage, Ellis said, adding "you structure it so if the agency is going to meet the criteria, the answer is the beneficiary you intend."

The only lawmakers who would be able to do that would be senior members of committees that write spending bills, Ellis said. And that approach might backfire, he said, if people figure what business the legislation is trying to help.

"It's going to blow up in somebody's face," Ellis said. "It's not going to be pretty."

One watchdog group predicted that campaign contributions will enable lobbyists to remain powerful.

The Supreme Court's Citizens United decision last year allowed corporations to spend unlimited money to support and oppose candidates. That is an unspoken but powerful element when lobbyists ask lawmakers for spending that helps corporate clients, said Craig Holman, Public Citizen's government affairs lobbyist.

"Corporate lobbyists walk into these Capitol Hill meetings with the knowledge that they have unlimited deep pockets when it comes to the next election," Holman said.

"When it comes to cutting budgets, this is where lobbyists really get their money," Holman added, as they work to protect the interest of their clients. "Lobbyists are more important than ever on Capitol Hill."

The right arguments

Lobbyist who are seeking policies over money also are revamping their arguments. Because most legislation has a price tag, they know they have to show that the results outweigh the costs.

"We're clearly in a period where the austerity theme is the most powerful policy theme in Washington," McBee said. "You've got to make sure that your priorities are positioned in a way that demonstrates value, that shows efficiency, that shows a return on investment to the government."

In the energy sector, McBee said, his firm is focused on policies that can trigger private investment. Those include mandates that would require utilities to generate a portion of power from clean or renewable sources.

The firm also supports legislation that would advance plug-in electric vehicles, like the bill last year from then-Sen. Byron Dorgan (D-N.D.).

In pushing for those kind of measures, McBee said he will be arguing that the polices will create jobs and generate needed tax revenue. The wind, solar and other renewable industries are the ones poised to create manufacturing work, he said.

He will point out that businesses in the green sector are choosing whether to invest in the United States or other countries that have more favorable policies.

"We're either going to make those products or we're going to buy those products from other countries that made them," McBee said. "Those are the choices that we're going to try to frame up for policymakers as they consider some really difficult choices in the next six months or so."

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