OIL AND GAS:

Industry pours campaign cash into state, local races

The chairwoman of the Texas Railroad Commission, Elizabeth Ames Jones, gets more campaign contributions from oil and gas than from any other industry.

The Railroad Commission doesn't oversee railroads. By accident of history, the elected three-member panel regulates Texas's oil and gas industry. And when the three commissioners campaign, they turn to the companies they regulate to fill up their war chests.

That's drawn criticism from a Texas legislative panel that did a top-to-bottom review of the agency and said it should be "fundamentally restructured."

"Elected officials rely on campaign contributions to seek office, re-election or otherwise," the Texas Sunset Advisory Commission reported in 2010, "creating an opportunity for regulated entities to help elect commissioners they believe will be sympathetic to their issues."

The oil and gas industry's ability to dominate the fundraising for its own regulators is the starkest example of how drillers' financial resources can influence officials at the state and local levels. Since oil and gas production is regulated at the state level, state legislators, commissioners and department heads often make more important decisions about the company's operations than federal lawmakers.

Campaign finance figures show that industry focuses closely on state races, contributing nearly as much to state candidates as they do to congressional and presidential contenders.

Of the $264 million the industry's executives and political action committees spent on candidates since 2001, 46 percent went to state candidates, according to a Greenwire analysis of data from the National Institute on Money in State Politics and Opensecrets.org. In the nonpresidential election years of 2006 and 2010, state candidates got more than federal candidates for the House and Senate.

When she ran in 2006, Jones got $700,000 from oil and gas companies she had been regulating since she was appointed the year before. That was a third of the $2.1 million she raised and about five times more than the $142,000 contributed by her next-highest category, lawyers and lobbyists.

When she tried to make the leap to the U.S. Senate this year, the oil and gas industry was again her top financial backer. Companies gave her $336,000 of the $1.8 million she has raised. She has since switched to running for state Senate and has not filed a campaign finance report.

But she is not unique. The board's other elected commissioner, David Porter, got more from oil and gas than any other industry when he challenged an incumbent who also got the lion's share of his take from oil and gas. The defeated incumbent then went to work for an oil and gas company. Former Commissioner Michael Williams, who resigned to run for Congress, has received more money from oil and gas than any other industry for his federal campaign.

While the Sunset panel did not outline any direct payments for votes, which would be a criminal offense, it did find a lot of sympathy at the agencies for the companies they regulate. Its report cited a reluctance by agency officials to take action against oil companies and said the problem was nothing new.

"The 2001 Sunset review of the Commission found that the agency's enforcement efforts did not adequately address serious pollution violations," the report said, "and noted that even then, poor enforcement had been a longstanding problem for the Commission."

The commissioners did not return messages seeking comment on the relationship between contributions and commission policies. But the commission's executive director has disputed the criticism that his agency's enforcement is lax (Greenwire, Nov. 14).

'They're just big' at state level

Many of the companies leading the nationwide shale-drilling boom give more in political contributions at the state level than they do at the federal level, according to the institute's figures.

The Williams Cos. Inc., a drilling and pipeline company, put $1.2 million into state races and about $372,000 into federal races in 2007 and 2008. Anadarko and Pioneer also put more than $1 million each into state races in that cycle, several times more than than they spent in federal races.

A lot of that money went to industry's $12 million effort to preserve an industry tax credit in Colorado that then-Gov. Bill Ritter (D) wanted to end in order to fund scholarships. Ritter blamed the loss on being outspent.

In Oklahoma, the three elected members of the Corporation Commission regulate oil and gas production along with a bevy of other industries. But they still get more than twice as much campaign money from oil and gas than from any other industry.

Last year, according to an analysis of data from the National Institute on Money in State Politics, the oil and gas industry gave state candidates a record $34 million.

Oil and gas still is not a top spender in state races, said Ed Bender, executive director of the National Institute on Money in State Politics. But those totals do not reflect the considerable amount of money the industry can put into lobbying in each state.

"They're just big," Bender said. "They're able to make the jobs argument very effectively."

And the industry money keeps flowing after Election Day. In addition to lobbying, oil and gas companies also finance some of the regular gatherings of the state officials who regulate them.

Earlier this year at a regular meeting of the Interstate Oil and Gas Compact Commission in Bismarck, N.D., companies paid as much as $20,000 to serve as sponsors of the event.

The IOGCC, which serves as something of a trade group for the men and women who run the state regulatory agencies, provided a menu of sponsorship opportunities for oil and gas companies that want access to the people who attend their gatherings.

"The Interstate Oil and Gas Compact Commission (IOGCC) Midyear Issues Summit offers a unique opportunity to spotlight your business to governors, state and federal oil and natural gas regulators, state and federal lawmakers and leading oil and natural gas industry representatives," the sponsorship packet said. "Conference sponsors will receive prominent recognition for their participation."

The $20,000 earned the title of "platinum" sponsor. In return, the commission offered Marathon, Whiting, Enbridge and the North Dakota Petroleum Association the opportunity to be the "featured sponsor" of an evening reception, logo placement on the "conference promotional giveaway" and five complimentary registrations. Other companies could sign up to be "gold" sponsors for $15,000 down to $5,000 for "bronze" sponsors, who did not get much more than a bronze sponsor name badge and one complimentary registration.

But they did get a chance to mingle with the state regulatory chiefs far from the fishbowls of their state capitals and the bureaucratic distractions of daily life.

The regulators could play golf or shoot skeet on the dime of the oil and gas industry, or take a trip to the restored Western town of Medora, courtesy of BP America Production Co. in a 40-foot super-stretch SUV limousine.

Officials with the Oklahoma City-based IOGCC did not respond to messages seeking comment.

Local races

The financial influence of oil and gas companies extends beyond the state level to more local races, such as the 2010 race for a seat on the Garfield County, Colo., Board of County Commissioners.

The pace of drilling was a top issue in Garfield, often referred to as the "most drilled" county in the state. The county was recovering from the bust that came after a drilling boom when prices fell. But there were several new drilling projects on the drawing board in addition to studies of the industrial side effects of drilling.

The race pitted Republican challenger Tom Jankovsky, who had the backing of the oil and gas industry, against Democratic incumbent Tresi Houpt, supported by the state's environmental community.

Jankovsky outspent Houpt by about $20,000, and most of that fundraising edge came from oil and gas, which contributed about that much to his campaign. Half of that figure, $10,000, came from Russell Gordy, a Texas oilman, and his business partner, Lester Smith. Their company, SG Interests, was looking for local support to counter opposition to its drilling plans in the nearby Thompson Divide.

Jankovsky won with 54 percent of the vote, an outcome that also booted Houpt from the Colorado Oil and Gas Conservation Commission, where Ritter had picked her to represent local government.

In the months that followed, the local oil and gas industry, dominated by Williams Cos. and another driller, Encana Corp., saw its political fortunes rise. The county manager restructured county government to make sure it was friendlier to oil and gas. The board canceled support for a study of the health effects of drilling. And the county official overseeing oil and gas, who was criticized by the companies, was pushed out (Greenwire, Nov. 28).

Bender said that is how things commonly work when politics and business intersect.

"They'll spend as much as they need," he said, "to get what they want."

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