BP, Oil Allies Mobilize Huge Lobby Operation

Industry Bracing for Gusher of New Regulations

Posted May 3, 2010 at 6:26pm

BP and its allies are drawing on their considerable resources and deep lobbying teams in Washington as they seek to mitigate the fallout — including Congressional grillings and possible legislative action — from the oil spill in the Gulf of Mexico.

Already the London-based oil company has launched a major public relations effort, utilizing social media such as Facebook and Twitter to communicate its efforts to deal with an environmental disaster originating at one of its oil rigs.

The company’s CEO, Tony Hayward, has made the rounds of the television talk shows, which were posted on the company’s website. On Monday, he met with top Obama administration officials, including Interior Secretary Ken Salazar and Homeland Security Secretary Janet Napolitano in Washington, D.C., to discuss BP’s mitigation plan, according to administration officials.

The company is also relying on an international public relations firm, Brunswick Group, to help Hayward with the formidable task of getting the company’s message out.

“Tony Hayward has been clear with his entire executive team that BP’s focus is stopping the flow of oil, mitigating the impact and keeping the public informed,” said Su-Lin Nichols, a director at Brunswick. She said Brunswick was assisting BP with communications strategy.

But the coming weeks will provide more than public relations challenges for the company and the oil industry in general as some lawmakers demand tougher safety standards and re-evaluate the wisdom of widespread drilling off the coasts.

The Senate Energy and Natural Resources Committee has scheduled a hearing for May 11 on the oil rig accident, where experts on offshore exploration are expected to testify. The House Energy and Commerce Subcommittee on Oversight and Investigations has announced a hearing for that week as well to examine the companies’ safety measures and emergency responses.

In anticipation of that hearing, Energy and Commerce Chairman Henry Waxman (D-Calif.) and subcommittee Chairman Bart Stupak (D-Mich.) have sent letters to the executives of BP and two other companies involved in the operation, Transocean Ltd. and Halliburton, requesting documents related to the accident. They have asked BP for copies of complaints lodged by employees with the company’s ombudsman regarding engineering concerns at any of the company’s deep-water projects.

Meanwhile, New Jersey Democratic Sens. Frank Lautenberg and Bob Menendez and Florida Democratic Sen. Bill Nelson have proposed legislation to raise the cap on oil company liability for spill damages from $75 million to $10 billion.

Dampened Enthusiasm

Energy lobbyists expect that the oil spill will dampen the enthusiasm of some Members to expand offshore drilling.

“The implication of the incident is significant in the debate to open up the Eastern Gulf of Mexico” to drilling, said Mike Olsen, a former deputy assistant secretary for Land and Minerals Management who now works in the Washington office of the Houston-based law firm of Bracewell & Giuliani. Olsen, who said his firm does not represent BP or the other directly affected companies, said the energy industry will be watching closely how Congress deals with the spill.

“Ultimately, any number of companies could be impacted,” he said.

BP and other oil companies are well-positioned to deal with Capitol Hill maneuvering, ranking near the top in terms of annual lobbying budgets.

“They all have very adequate Washington representation,” said Bill Wicker, the majority spokesman for the Senate Energy and Natural Resources Committee. Wicker said that BP has kept the committee informed, sending an e-mail to the staff within hours after the accident occurred.

But Rep. Gene Green, a Democrat from Houston who sits on the Energy and Commerce Committee, said that BP’s lobbying prowess will only do the company so much good.

“They can bring everyone in they want. But I want to see someone who will cap that well,” Green said.

Millions Spent Lobbying

Last year, BP’s American subsidiary spent $15.9 million on federal lobbying, $5 million more than it did the previous year and more than triple what it spent in 2007, according to CQ MoneyLine. The company spent $3.5 million in the first quarter of this year on lobbying.

Last year, four oil companies, Exxon Mobil, Chevron, ConocoPhillips and BP, all ranked in the top 20 in terms of lobbying expenditures.

These companies also employ powerful outside firms. This year, BP has employed five outside firms, including the Democratically connected Podesta Group and the Duberstein Group, which has strong GOP ties.

The energy industry has also been active in political fundraising. Historically, most of the political action committee contributions from the industry went to Republicans. But in the current election cycle, Democrats are doing slightly better, receiving 41 percent of the donations.

At BP, the shift has been more marked, with a slight majority of its contributions, or $6.9 million, going to Democrats in this election cycle compared with $6.5 million to Republicans.

The top recipients since 2005 of BP contributions have been House Majority Leader Steny Hoyer (D-Md.), Energy and Commerce ranking member Joe Barton (R-Texas) and Rep. Don Young (R-Alaska), all of whom received $9,000.

In Washington, the voice of the oil industry is often its trade group, the American Petroleum Institute, which spent $7.3 million on lobbying last year and $1.2 million in the first quarter of this year.

Under the leadership of Jack Gerard, the industry group has overhauled its operations, bringing in a new chief lobbyist, Martin Durbin, who is the nephew of Senate Majority Whip Dick Durbin(D-Ill.).

The API has sought to get out in front of the oil spill crisis, posting a question-and-answer section on its website. On the site, the organization said it did not oppose new safety regulations as some news reports indicated but rather “expressed concern to the government about the potential effectiveness of the proposed safety regulations.”

The organization, which has often been at odds with the administration on energy policy, is working with the White House to set up task forces to review equipment the industry is using for deep-water drilling and reviewing operating procedures.

Nevertheless, Gerard said that there will still be a need for energy exploration and that once the immediate response to the accident is over the industry will have to deal with the reaction on Capitol Hill.

“We’ll need to work on that down the road,” he said.