CLIMATE:

Lobbying cash paved Waxman-Markey's road to House floor

Industries and individual companies with a stake in the landmark House climate and energy bill poured money into lobbying early this year, many at a pace that could shatter previous spending records.

They worked to reshape the bill. They have focused on votes, pressuring moderates, freshman and any lawmaker considered an ally. They are now in a last-gasp effort to push anyone left on the fence.

"When [President] Obama was elected, that was a wakeup call to all the groups that were lobbying that something might happen," said Kenneth Green, resident scholar at the American Enterprise Institute, a conservative Washington think tank. "Once they actually drafted legislation, that opened up the flood gates."

From oil and gas companies to environmentalists, sectors with energy interests this year hired and added lobbyists. Some pushed to make pending climate legislation stronger. Others wanted wording to soften the financial blow of regulation of greenhouse gas emissions. The companies and groups saw a unique moment, with a Democratic president and Democratic majority in Congress set on changing U.S. energy policy.

Many lobbyists say they had both wins and losses in the massive bill from Democratic Reps. Henry Waxman of California and Ed Markey of Massachusetts.

"There's a lot of interest in this bill. There's a lot of different players," said Jim Martin, director of strategic policy for the American Wind Energy Association. "Hopefully, you state your case as best you can and work your allies."

E&E examined spending for 10 industries with stakes in climate and energy legislation: oil and gas, electric utilities, chemical and related manufacturing, agricultural services and products, alternate energy and production services, mining, environmental, forestry and forest products, and natural gas transmission and distribution. The industry data was compiled by the Center for Responsive Politics, which uses reports filed with the House and determines the industry categories.

For half of those industries, funds for lobbying increased. For others, particularly those battered by the recession, spending stayed flat or fell. Mining spent about 24 percent less than it did a year earlier. Utility lobbying stayed about even with last year.

But for others, it was time to ramp up the persuasion.

Oil and gas companies, agricultural services and product makers, alternative energy producers, environmental groups, and those in the natural gas businesses spent more than they did last year. Within each of those categories are stories of individual companies and organizations laying out far more than they have in the past.

Those groups say they must educate Congress.

"We're spending that money to represent our member companies at a time when initiatives in the new administration and Congress will have an impact on the viability of the industry," said Robert Dodge, spokesman for the American Petroleum Institute, a trade group for about 400 small and large companies.

Others see advocacy spending more critically.

"It's influence peddling. What you're doing is trying to purchase influence," said Tyson Slocum, director of the energy program at Public Citizen, a watchdog group. "Most of the time there's a positive return on your investment."

But lobbying is only part of the influence effort, Slocum said. Groups also lavish money on advertising, which is not counted as lobbying unless it is for or against a particular candidate or ballot measure. And those with policy interests give money to political campaigns. Those contributions help open the door to company lobbyists, Slocum said.

"Money buys you access," Slocum said. "That is exactly why they do it. It's an investment"

The big spenders

For the 10 energy interests analyzed, the oil and gas industry led the pack on spending. It shelled out $44.5 million in the first three months of this year, compared with $30.1 million spent in the same quarter in 2008.

For all of last year, oil and gas spent $130 million, at the time a record for the industry. If the pace set by this year's first quarter continues, it would result in a $178 million lobbying total for the year.

Exxon Mobil Corp. spent the most within that group, paying $9.3 million on lobbying the first quarter of this year. Last year the company spent $29 million, its highest level ever.

Oil and gas companies lobby on climate policies but also on tax issues, royalties, offshore drilling and other issues, Slocum said.

"They're also pretty flush with cash," Slocum said, noting record profits by Exxon Mobil and others.

Exxon Mobil did not return calls requesting a comment.

Despite oil and gas companies spending nearly 10 times what environmental groups spent, those in the fossil-fuel business find themselves with little they like in the House climate bill. They criticize what they see as an inequity in how lawmakers distributed "free allowances," permits that will let utilities and other sectors emit some carbon without being charged in the early years of the cap-and-trade program.

Oil refiners get 2 percent of those allowances for two years. Some economists believe free allowances given to utilities to keep electricity costs from rising could push up fuel prices.

"The legislation will saddle consumers with considerable new costs for energy in the future, whether they drive a car, fly in a plane or take a train," said Dodge with the American Petroleum Institute. "We also think the Waxman-Markey bill will kill jobs."

Dodge is not ready, however, to tally wins and losses "until the whole climate debate is over. There's a long way to go yet before I think you can make any kind of evaluation efforts."

And there is more lobbying yet to be done.

"We would certainly hope the Senate would take a more balanced approach," Dodge said.

Promoting 'green'

Alternative-energy producers spent a fraction of the oil and gas total, paying $7.2 million in the first quarter of the year, up from $6.8 million a year earlier.

The American Wind Energy Association spent $1.2 million the first quarter of this year. That is 71 percent of the $1.7 million the company put toward lobbying all of last year.

"We have a new administration and a new House and Senate that are driving a historic opportunity for renewable energy," said Martin with the wind trade group that represents about 2,300 companies. "The bill that's on the floor is the best opportunity ever."

The group said it accomplished its major goal, having both House and Senate climate bills include a renewable electricity standard, a requirement that utilities generate a portion of their power from green sources. Such a requirement was in the House energy bill that passed in 2007 but was dropped when the bill arrived in the Senate.

The House bill includes a standard that starts at 6 percent in 2012 and tops out at 20 percent by 2020. In each time period, utilities can use efficiency to meet part of the requirement.

In the first two years of the program, Martin said, efficiency allowances effectively reduce the requirement to about 3 to 4 percent. That is not enough of a kick-start, he said, to drive investment into the industry. The group also would like to see a 25 percent requirement by 2025.

"We'd like to strengthen it on the floor," Martin said of the House bill, "to see the number as high as possible within the first few years."

The Nature Conservancy, an environmental group, reported $850,000 in lobbying efforts the first three months of this year, already more than 65 percent of last year's $1.3 million lobbying total. That amount was the group's highest lobbying total ever.

"There's a lot of enthusiasm about a new administration coming in to office," said Robert Bendick, the group's director of U.S. government relations. "It's really hard to say whether it's been successful. There's so much legislation in play right now.

"We have a long-term view of things," Bendick added.

The group, after being asked about its lobbying, said it examined its records and found that the $850,000 total was reported in error to the House. That number included two expenditures that were not lobbying, spokeswoman Blythe Thomas said. With those items removed, the lobbying figure would have been about $670,000, she said.

About one-third of that $670,000 was a one-time payment to a coalition effort that will push for an increase in the United States' investment in international conservation, Thomas said.

The Nature Conservancy lobbied on energy but also on "a lot of things of interest to us," Bendick said. The group also is interested in policies affecting land and water conservation, environment restoration, fire policy in wilderness areas, ocean policies, and a major bill that expanded national park and protected areas.

The conservation group has been criticized by those who say it lobbied heavily on the climate bill because it stands to benefit. The measure allows companies with greenhouse gas emissions to opt out of buying emission allowances by buying offsets, projects that soak up atmospheric carbon dioxide. Such projects range from tree plantings to paying farmers to switch from tilling soil -- which emits carbon -- to no-till planting practices.

"The climate bill would be a huge benefit to their operations," Slocum said.

But the Nature Conservancy said it won't benefit from the offset provisions.

The Waxman-Markey bill allows up to 2 billion tons annually of offsets, half from U.S. projects and half international. The international level can rise to as much as 1.5 billion tons if domestic offsets are insufficient.

The Nature Conservancy said the 153,000 acres it owns outside the United States would not qualify for offsets.

"Of this total, 147,000 is in one property in Chile that we are proposing to contribute to a new land trust," Thomas said. "To date, we have no active project there." The rest, she said, is mostly in Costa Rica, Ecuador and Panama in small land parcels "purchased for protection of specific, exceptional biological resources."

The conservancy also owns U.S. forests. It is involved in tree planting on 827 acres in Mississippi and a project on 23,780 acres in California testing forest management techniques.

In both cases, Thomas said, it costs the conservancy more money to operate the projects than what the stored carbon is worth.

If the conservancy changed the management of its forest lands to increase carbon retention, that could qualify as an offset, said Green with American Enterprise Institute.

But the Nature Conservancy says that when it acquires land its strategy and practice is conserving that land, not looking for ways to make money from any stored carbon. It typically works with investment partners including governments and private companies. When there is money made, that income goes to those partners, said Eric Haxthausen, the group's director of climate change policy.

Some lobbying cutbacks

Although they had much at stake in the climate bill, the mining industry spent less on lobbying in the first quarter of this year than in 2008. Mining companies and associations spent $5.5 million on lobbying, down from $7.3 million one year earlier.

The mining sector as compiled by the Center for Responsive Politics includes both coal- and minerals-mining companies, as well as trade groups like the National Mining Association. It does not include the American Coalition for Clean Coal Electricity, or ACCCE, a coalition of coal companies, utilities, railroads and other coal shippers.

ACCCE spent $360,000 on lobbying in the first quarter. It has also been behind a multimillion-dollar advertising campaign promoting coal both as cleaner and as the backbone of American energy.

"We think that public opinion plays a key role in shaping public policy," spokesman Joe Lucas said. "We have been very successful in shaping the public debate."

Evidence of that success is seen in the Waxman-Markey bill, Lucas said, but he declined to give specifics. ACCCE is still lobbying on the measure, he said, seeking a cap on the cost of allowances for emissions. The group also wants to see the program start later than 2012. Preparations to start in that year, Lucas said, should have begun three to four years ago.

Lobbying expenditures can sometimes start out slowly with a new Congress but then build toward the end of a year or a session as deadlines to pass bills approach, said Carol Raulston, spokeswoman for the National Mining Association.

The National Mining Association, a trade group for 325 companies, has shifted to online advertising and beefing up its Web site. That is less expensive than television advertising, Raulston said.

"There has been some reprogramming of dollars," into efforts that are not lobbying, Raulston said.

The forestry and forest-product sector also spent less on lobbying, while pushing for help in the House climate bill. The sector's lobbying dropped to $3.3 million in the first quarter of this year versus $3.8 million a year earlier.

"It's a case of doing more with less," said Scott Milburn, spokesman for the American Forest & Paper Association. "It hasn't been for a lack of need, that's for sure."

The industry has been hit financially, as a severe drop-off in new home construction meant less demand for wood. And the consumer contraction in spending meant less need for packages and boxes. There have been fewer pages in magazines and newspapers.

The trade group, which also lobbies in Washington, cut 12 people from its staff earlier this year.

But the group pushed for special consideration, some of which it received in the Waxman-Markey bill. Lumber mills that generate electricity from their wood scraps will qualify as biomass under the renewable electricity standard, even if the power is only used at the facility.

"We're definitely making progress," Milburn said. "We've worked hard to make sure our story's known."


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