Natural gas industry spent $3.5M on lobbying in 2010

HARRISBURG – The natural gas industry spent more than $3.5 million last year to lobby lawmakers and state officials on a range of issues concerning Marcellus Shale gas extraction.

The Marcellus Shale Coalition, a broad-based industry trade association; the Pennsylvania Independent Oil and Gas Association, and 22 companies report this combined spending in quarterly reports filed with the Department of State.

The lobbying disclosure reports document the industry’s growing presence at the statehouse and reflect the ways that public debate over development of the deep pockets of natural gas in the Marcellus Shale formation – its economic potential, environmental protection risks and impact on local governments – casts a wide net over state public policymaking.

Industry lobbyists were active during a high-stakes year when both the House and Senate officially declared their intent to pass a state severance tax on natural gas production with former Gov. Ed Rendell’s backing, but nothing happened.

The Department of Environmental Protection implemented new regulations last year to limit pollutants in drilling wastewater, strengthen well construction standards and require more disclosure of chemicals used in the fracking process.

The Senate convened closed-door working groups, which included industry representatives, last year to shape plans for a local impact fee to offset the costs of drilling as an alternative to a severance tax. Senate President Pro Tempore Joseph Scarnati, R-25, Jefferson County, introduced an impact fee bill, and other impact fee bills have surfaced in the House. But House and Senate Republican leaders have now put off action until the fall.

While the Marcellus drilling boom led to a slew of bills dealing with matters ranging from greater protection for water supplies, a moratorium on natural gas drilling in state forests and state safety inspections of gas pipelines, only two became law in 2010. These are narrowly drawn measures to provide more public access to well production data and make landowners who lease land for natural gas drilling subject to roll-back taxes only for the well site under the state Clean and Green program.

The gas industry hasn’t been monolithic in its approach to the issues facing it. For example, some large Marcellus drillers were more quietly accepting of a modest severance tax last fall while the PIOGA – representing many traditional shallow well drillers – was outspoken in criticism of it.

The industry itself is diverse, ranging from continental drillers, diversifying oil giants such as Exxon Mobil, gas distribution utilities like National Fuel Gas and pipeline companies such as Columbia Gas Transmission all hiring lobbyists in Harrisburg.

The gas industry’s lobbying activities during 2010 bear comparison with that of another nascent Pennsylvania industry also under heavy state regulation: the slots casinos.

Eleven casinos spent more than $1 million on lobbying in 2009, a crucial year leading up to passage of a law giving them more business by legalizing table games such as blackjack and poker. A proposal to bring on potential competition to casinos by legalizing video lottery machines in taverns and social clubs was blocked in the Legislature the same year.

Tallying gas industry spending, the Marcellus Shale Coalition founded in 2008 led the pack in 2010 spending at $1.1 million.

The other top five spenders are Range Resources-Appalachia, $392,000; Chesapeake Energy, $382,000; PIOGA, $247,000; East Resources Management, $225,000; and Chief Oil and Gas, $186,000.

The total spent on lobbying by all interests in Harrisburg last year was $92 million.

The gas lobbying continues this year in a Republican-controlled statehouse. MSC spent $407,000 from January through March, according to Department of State reports. Range Resources spent $136,000 and PIOGA $14,000 in the same period.

That the MSC is the top spender is not surprising.

The coalition has about 200 full and associate members and is continually adding more, said Mark Holman, a partner with Ridge Policy Group, the coalition’s lobbyist. The membership includes a diverse list of companies specializing in gas exploration and production, engineering, construction, pipelines, water treatment and hydraulic fracturing.

A number of MSC members like Range Resources and Chesapeake Energy also run their own lobbying operations.

“Our industry is fully committed to transparency not only in our operational activities, but across the board, including our government advocacy, engagement and outreach efforts,” said MSC Vice President David Callahan in a statement. “The legislative and regulatory issues facing our industry are countless. And while Marcellus development is still in its relative infancy, we recognize that common-sense policies – at all levels of government – are imperative.”

And the gas industry’s lobbying ranks are multiplying.

Shell Oil Co. registered to lobby on Jan. 3 and reported spending $92,000 on lobbying from January through March.

Lobbying spending by the natural gas industry has ramped up quickly in just a few years, said Alex Kaplan of Pennsylvania Common Cause, who has done reports on lobbying spending and campaign contributions by the natural gas industry. The companies have been most active in the quarters when a severance tax has been considered as part of the state budget debate, he added.

“I expect to see more and more companies registering as lobbyists,” said Mr. Kaplan.

The flip side of the lobbying effort is campaign contributions to statewide and legislative candidates.

The natural gas industry contributed more than $7 million to these candidates from 2000 through 2010, according to an analysis by Common Cause PA and the Conservation Voters of Pennsylvania.

The natural gas industry has decided it’s better to spend money on lobbying and campaign contributions than to pay a severance tax, said Rep. Greg Vitali, R-166, Havertown, sponsor of a severance tax bill.

“That $3.5 million figure is staggering,” he added. “It isn’t the type of spending you would find from fledgling companies.”

The 2006 state lobby disclosure law requires corporations and trade associations that spent more than $2,500 in any quarter to register, broadly categorize how the money is spent including for office expanses and salaries and identify general issues they lobby on.

One category covers spending on gifts, lodging, transportation and hospitality. Yet a firm only has to identify individuals who received gifts worth $250 or more in one year and provide individual names when payments or reimbursements for lodging, transportation and hospitality for state officials, state employees and their families exceed $650 in one year. Many firms that lobby stay under these thresholds.

In 2010, Consol Gas Co. reported a $1,000 donation to the legal defense fund for Rep. William DeWeese, D-50, Waynesburg, facing criminal charges relating to the state attorney general’s Bonusgate investigation.

Alpha Natural Resources reported reimbursement to Reps. Jim Christiana, R-15, Monaca; Brian Ellis, R-11, Lyndora; Carl Metzgar, R-69, Somerset ; Mike Vereb, R-150, Collegeville and Paul Costa, D-34, Turtle Creek; and to Dave Thomas, an aide to House Speaker Sam Smith, R-66, Punxsutawney, according to reports.

Columbia Gas Transmission reported donations to senior citizen fairs held by Sen. Tim Solobay, D-46, Canonsburg, during his tenure as a House member; and Reps. Jesse White, D-46, Cecil, and Will Tallman, R-193, Hanover.

Contact the writer: rswift@timesshamrock.com2010 natural gas lobbying expenses

- Marcellus Shale Coalition: $1.1 million

- Range Resources Appalachia: $392,000

- Chesapeake Energy: $382,000

- Pennsylvania Independent Oil and Gas Association: $247,000

- East Resources Management: $225,000

- Chief Oil and Gas: $186,000

- Alpha Natural Resources: $160,000

- Dominion Transmission: $146,000

- Exco Resources: $130,000

- BG North America: $124,000

- EQT Corp.: $105,000

- Talisman Energy: $85,000

- Equitable Gas Co.: $78,000

- Columbia Gas of Pennsylvania: $75,000

- Consol Energy: $75,000

- CNX Gas Corp.: $59,000

- Exxon Mobil: $55,000

- Cabot Oil and Gas: $50,000

- Pennsylvania General Energy: $48,000

- XTO Energy: $41,000

- National Fuel Gas: $36,000

- NiSource: $36,000

- Anadarko Petroleum: $21,000