Oil Lobby Mulls Shakeup

Flush with D.C. Success, API May Close Many State Offices

Posted September 5, 2003 at 5:29pm

With the oil industry riding high on the federal level thanks to Republican control of Congress and the White House, the American Petroleum Institute is quietly mulling a radical cutback in its state-level lobbying operations.

In a sign of just how comfortable the industry has become, forces within API’s membership are pushing a plan to cut its state-level lobbying operations by one-third.

But not all of the association’s members — oil and gas giants along with small and mid-size energy producers and suppliers — think it is a good move. Some members fear that such changes will leave the industry short-handed if the political tide turns back to Democrats.

“Political circumstances will change,” said a leading oil company executive who did not want to be named. “There are risks involved.”

API officials refused to discuss the matter in any detail. In a prepared statement, an API spokesman said the organization is reviewing its state-level-related activities as it does annually.

“The discussions to date have been general,” said the spokesman. “No specific recommendations or decisions have been made about future staffing and there is no timetable for making such decisions. These discussions did not originate with API management.”

Last month, API members began pushing their plan to downsize the group’s state operations, consolidating much of the lobbying operations inside the Beltway.

“I think to them it makes sense to put their resources at the federal level,” said Kirk Koepsel, the Sierra Club’s senior regional representative for the Northern Plains states. “The oil industry is having its heyday. They aren’t seeing a lot of benefit at the state level.”

To some API members, however, the association’s network of state-level lobbyists on the ground is one of its greatest assets. “It’s unrivaled,” said one oil executive who is highly critical of the plan.

The executive, who provided a detailed list of the closures to Roll Call, said an internal API committee plans to meet next week to discuss the plan and issue a recommendation to the executive board, which meets next month.

Another source associated with API confirmed that most state-level lobbyists have been made aware of the plan and how it would affect individual offices.

Some people familiar with the proposal think it is all but a done deal — and complain that it is being railroaded through the process.

“It has come up very suddenly,” the oil executive said.

API officials in Washington, however, insist that nothing has been decided. The API spokesman stressed that “these discussions did not originate with Red Cavaney,” referring to API’s director in Washington, who is close to Vice President Cheney.

Cavaney is a major player in GOP circles, including the so-called “K Street Project,” the Republican effort to increase GOP influence in Washington. He served in the Nixon, Ford and Reagan administrations.

The oil executive who spoke on the condition of anonymity claimed that Cavaney is eager to downsize state operations. “He is convinced everything can be done out of Washington,” the executive said. “Cavaney is a budget cutter, he’s a slasher.”

API’s membership covers many energy producers and related companies on the East Coast and in the South and Midwest. Its ranks include ConocoPhillips, Dow Chemical, ExxonMobil, Fluor Corp., Halliburton, Marathon Oil, Shell and Unocal and many small to midsize drilling, exploration and engineering outfits.

Its state outreach efforts have tied small and midsize members to the same D.C. lobbying network that larger energy giants tap, creating one of Washington’s strongest lobbying fronts.

While the details of the proposed downsizing are still in the works, the cutbacks would affect API’s 33 state offices.

Offices alleged to be on the chopping block are in Arkansas, Iowa, New Hampshire, Maine, Missouri, Nebraska, Rhode Island, South Dakota, Vermont and West Virginia. This would leave the states “virtually abandoned,” according to the API insider who supplied the list to Roll Call.

Contract lobbyists with limited responsibilities would remain in Connecticut, Delaware, Maryland, Kentucky, Minnesota, North Carolina, North Dakota, Pennsylvania, South Carolina, Tennessee, Virginia and Wisconsin.

While API offices in Alabama, Florida, Georgia, Illinois, Indiana, Kansas, Massachusetts, Michigan, New Jersey, New York and Ohio would remain, their full-time staffs would be reduced.

One observer, who is a state-level manufacturing lobbyist not affiliated with the oil industry or API, questioned the philosophy behind the association’s downsizing proposal.

“My experience is that does not work,” the lobbyist said. “All lobbying is local. If you don’t have a direct contact in the state capital, you can’t gear up. I am not a believer of hiring a lobbyist on a short-term basis.”

Some critics of the API plan fear that the environmental lobby could gain an upper hand in the states, and manipulate regulations to hurt energy producers.

But many environmental lobbyists do not necessarily see it that way. Koepsel said that if API would reduce its efforts in the states, other organizations, like state oil industry organizations, would step in, and the oil lobby “would remain really strong.”