LOBBYING:

IRS disclosures show extent of oil and coal groups' outreach

The biggest influence groups for oil and coal spent a combined $115 million last year to burnish their images and shape public opinion on energy, expenditures that dwarf amounts they have previously reported for federal lobbying.

The American Petroleum Institute in 2008 doled out $75.2 million for public relations and advertising, according to reports filed Friday with the Internal Revenue Service. The American Coalition for Clean Coal Electricity, meanwhile, spent nearly $40 million on advertising, grass-roots outreach and communicating its message at federal and state levels.

"The members of these associations ponied up a lot of their shareholder money to influence the legislative and policy debate on climate change," said Tyson Slocum, director of watchdog group Public Citizen's energy program. "While they're spending millions of dollars, there are billions of dollars at stake."

IRS documents lift the veil on the trade groups' activities and financial heft, which had been difficult to determine from their federal lobbying disclosures. Both associations report federal lobbying using a format that does not require them to reveal total budgets, state lobbying, advertising or grass-roots activism.

Both trade groups have fat wallets. API, the IRS report shows, had $320 million in revenue last year, while ACCCE had nearly $47 million. The trade group for the wind industry, by comparison, reported total receipts of nearly $30 million. The solar industry trade group recorded $4.9 million in income.

Critics of the oil and coal trade groups have questioned how much they have bankrolled grass-roots campaigns aimed at drumming up support from citizens who then contact lawmakers. Environmentalists derided rallies this summer as inorganic "AstroTurf" efforts. The oil and coal trade groups said they gave people with concerns a platform to voice opinions. The new IRS reports are from 2008, before this summer's efforts. They show, however, the type of activism the groups fund, watchdog groups and analysts said.

"It's basically raising brand awareness and imprinting yourself as a positive force in people's minds," said Kenneth Green, resident scholar at the American Enterprise Institute.

Both trade groups said they needed to raise important industry issues. For ACCCE, efforts last year marked the beginning of the group's outreach. ACCCE started in 2008 when it took over for predecessor groups Center for Energy and Economic Development and Americans for Balanced Energy Choices. When the Center for Energy and Economic Development in 2007 filed an IRS report, it showed just $7.5 million in revenues, significantly smaller than those now reported by ACCCE.

"It was clear that there was going to be climate legislation considered on the federal stage," said Lisa Camooso Miller, an ACCCE spokeswoman. "We as an organization decided to dedicate our resources to enhance our communication, to enhance our program, to make people aware of coal and the role it plays in everyday life."

"This was our effort as an organization to be part of the dialogue and part of the discussion as this became a federal issue that was going to be decided," Miller added.

The oil trade group wanted "to tell the public and policymakers how our industry works," API spokeswoman Karen Matusic said.

The $75 million, Matusic said, "went for PR, advertising and communications contracts. These contracts covered a wide range of activities, including speaking engagements and salons throughout the country, tech tours designed to demonstrate how drilling and other industry operations work and increased Web-based communications."

"API launched a broad-based educational advocacy effort to inform the American people and American policymakers about the basic facts regarding our nation's energy challenges," Matusic added. "We began this effort following Hurricanes Katrina and Rita, the aftermath of which highlighted much misunderstanding and lack of information about our industry and the importance of oil, natural gas and other energy to the economy and American way of life."

Both the oil and coal industries have a legitimate reason to feel threatened, Green with AEI said.

"They're seriously worried that climate legislation and other energy legislation are going to hurt their bottom line," Green said. "The level of concern has ratcheted up as the bills have gotten closer, and the level of spending has gone up with it."

For coal, he said, the situation is particularly serious. If Congress passes legislation capping carbon emissions and forcing businesses to buy and sell pollution permits, he said, that could make utilities and other coal users switch away from the fuel.

Grass-roots efforts

At least part of the money ACCCE spent on outreach in 2008 went toward influencing the presidential campaign. ACCCE told the IRS that it "facilitated and engaged in a public dialogue with major presidential candidates and their campaigns in several states."

Goals of that campaign included "to raise awareness (among the public and the candidates) of the importance of coal" for low-cost electricity, advocating for technology developments including the ability to capture and store carbon emissions, and showing public support for coal and developing those technologies, it said in the report.

The money paid for advertising, outreach to reporters so that information landed in news stories, Web activity and teams working in several states. ACCCE, in part of that effort, contracted for a project aimed at raising the issue of "clean coal" technology. During that 2008 effort, workers with a subcontractor staffed rallies for presidential candidates, debates and both Republican and Democratic conventions. They reached out to citizens at those events.

It was during a primary rally that a question about coal elicited a response from then-Sen. Barack Obama of Illinois giving support for research into "clean coal technology." ACCCE repackaged part of Obama's statement in a television ad last year.

"If you can get words in the [future] president's mouth, that's a key measure of success," AEI's Green said.

Those ads took up a big chunk of a reported $36 million in communications spending. A coalition of coal backers that includes ACCCE spent about $38 million on advertising last year, ACCCE said in an earlier interview.

ACCCE also reported $3.8 million in "direct programs," which Miller described as lobbying and communications at the state and local levels. The coal trade group listed a payment of $1.2 million to Hawthorn Group as its largest to one contractor. ACCCE and Hawthorn Group earlier this year became embroiled in a scandal over forged letters presumably in opposition to the climate bill that were sent to House members.

ACCCE last year spent money opposing the climate and energy bill by Sens. Joe Lieberman (I-Conn.) and John Warner (R-Va.). The trade group said in its report that it is not opposed to climate legislation.

"Although ACCCE supports the adoption of a federal carbon management program (which could include mandatory cap-and-trade provisions), the organization was compelled to engage its resources to oppose" the Lieberman-Warner bill, ACCCE said, adding that "the bill did not adequately address the organization's legislative principles that were designed for preserving access to affordable, reliable and domestically produced energy."

ACCCE said it also spent money to fight for siting of "advanced, coal-based power plants."

API last year sponsored small speaking groups, town hall meetings and technology tours demonstrating how drilling works, spokeswoman Matusic said.

In addition, there were a series of TV, Internet and radio advertisements. They included spots asking people, "Do you own an oil company?" and telling them that they do if they own a mutual fund or other investments. In addition, there were ads stating that North America is the source of two-thirds of the oil and gas used in the United States and that additional exploration will create more jobs and generate "more than $1 trillion for federal, state and local budgets."

Where it is from and where goes

In the case of both the oil and coal trade groups, the bulk of their revenue comes from membership dues. The public copy of API's report does not disclose its biggest contributors. But the ACCCE report obtained by E&E discloses which companies paid the most to bankroll the trade group.

ACCCE's largest single contributor is the Association of American Railroads, which paid the trade group $6 million last year. Railroads ship coal, Slocum said.

Peabody Energy Corp., Arch Coal Inc. and Consol Energy Inc. each paid $5 million to ACCCE. Atlanta-based utility Southern Co. gave ACCCE $2.1 million. American Electric Power Co. Inc. and FirstEnergy Corp., both Ohio-based utilities, each paid $2 million.

Railroads, coal companies and utilities are "the three big industries that stand the most to gain by preserving coal as king in our energy policy," Slocum said. "It shows that these three very different industries have close coordination on lobbying policy. That's a powerful lobbying voice."

Duke Energy Corp. -- an original member of the U.S. Climate Action Partnership, which authored what became the blueprint of the House climate bill -- paid $2 million to ACCCE last year. ACCCE opposed the House bill at the time of the vote, and Duke decided in August to leave the coal alliance.

"It became increasingly apparent that there were members of ACCCE that would never support climate legislation, whether it was this year or next," Duke spokesman Tom Williams said. "It became counterproductive [to belong]."

Grass roots vs. lobbying

The $75 million that API told the IRS it spent on public relations last year is more than 15 times greater than the $4.8 million it reported spending on federal lobbying.

The nearly $40 million that ACCCE spent on activism and direct programs is about four times the $9.9 million it told Congress it spent on federal lobbying in 2008.

Congress allows groups that file lobbying reports to choose from three formats for totaling spending. One is a narrower disclosure as defined by Congress. The other two are defined by the IRS and use broader definitions for lobbying.

API and ACCCE -- along with groups that include the American Wind Energy Association, the Nature Conservancy and the Solar Energy Industries Association -- currently use the format that excludes grass-roots activity, leaves out most advertising spending, and does not show money spent on state and local lobbying.

ACCCE in 2008 filed under the more expansive IRS definition, and even with that did not show three-fourths of its outreach spending. ACCCE this year switched to the narrower disclosure that API uses. ACCCE so far for 2009 has reported $1.2 million in lobbying spending.

"They very clearly have the right to do this," Slocum said of the lobbying format. But because that format is limited, he said, "it's very crucial that we have adequate disclosure and more frequent disclosure so people know these ads are connected" to industry, he said.

"The ads will be influencing the public's opinion on this," Slocum said, adding, "when you are spending money on advertising, you are spending on a short-term information monopoly."

The spending on advertising and grass-roots efforts has had some effect on Congress, Green said.

"There's certainly a delay in the movement on cap and trade," Green said.

Salaries revealed

Part of the budget for each trade group went to payroll.

API last year paid President Jack Gerard, who also is a registered lobbyist, $1.6 million in total compensation that included $665,267 in base pay. Gerard worked only part of the year in 2008, replacing Red Cavaney, who left in the fall of 2008. API last year paid Cavaney $2.7 million in total pay and benefits.

ACCCE paid President Stephen Miller $1.7 million, which included a base salary of $991,902 plus a $700,000 bonus and other deferred compensation and benefits.

The IRS reports offer other details, as well. API's governing body has 65 voting members, while ACCCE's has 49.

The paperwork also shows what contributions they have made to other groups. API paid $375,000 in a grant for an "energy education" event held by Americans for Tax Reform. It paid a $200,000 grant to Coloradans for a Stable Economy. That group opposed an initiative that sought to revoke a tax credit that allowed energy companies to deduct from their tax bills a large portion of fees paid to remove natural resources from the ground. API also spent $50,000 to sponsor a U.S. Chamber of Commerce event.

In addition to spending $75 million on advertising and public relations, API spent $2.8 million on public opinion surveys done by Harris Interactive Inc. The trade group paid DC Navigator $2.3 million for communications work.

Green group disclosure

The American Wind Energy Association is among the other groups that also filed reports with the IRS revealing details not in their lobbying reports. The trade group for the wind industry disclosed total revenues of nearly $30 million. That money came from conferences, which brought in $14.5 million, and membership dues, which totaled $7.1 million.

The wind trade group last year did not report any money paid to outside public relations firms or for grass-roots advocacy efforts. It disclosed $1.7 million on lobbying in its filing with Congress. It also paid a total of $950,000 to outside lobbying firms.

The trade group has 21 voting members. Larger companies pay more to belong and have more voting shares.

AWEA's biggest single payment went to lobbyist Michael Andrews, whom it paid $120,000. The trade group paid its then-executive director, Randall Swisher, $338,916 in compensation.

The trade group for the solar industry reported revenues of $4.9 million last year, money that came from membership dues and conferences. The Solar Energy Industries Association listed a $282,561 public relations contract with Arlington, Va.-based Tiger Communications.

The solar trade group paid its top executive, Rhone Resch, $362,595 in total compensation.