Beleaguered MMS Is Target of Energy Industry

Posted June 18, 2010 at 5:22pm

As offshore drilling and other energy issues have risen in importance in recent years, so has the lobbying pressure on the Minerals Management Service, the agency now under attack for approving permits for the ill-fated BP well in the Gulf of Mexico.

The number of companies, advocacy groups and associations that disclosed lobbying MMS or agency-related issues more than doubled from 2006 to 2009, when 37 entities reported such lobbying, according to a CQ MoneyLine analysis of lobbying disclosure reports filed with Congress.

In the first quarter of this year alone, 17 companies or groups reported they lobbied MMS, almost double the number that did so during the entire year of 2005, when only nine entities lobbied the agency.

Tyson Slocum, an energy expert at the liberal advocacy group Public Citizen, said he was not surprised at the uptick as interest in drilling in the Gulf of Mexico among oil companies has increased.

“Trying to influence the agency regulating that was going to be a priority for the industry,” he said. “The easier time they had at regulation increases their viability with shareholders.”

Since the April 20 oil rig explosion and subsequent spill, MMS, which is part of the Department of Interior, has drawn harsh criticism for not being scrupulous enough in its review of BP’s permits. President Barack Obama recently installed a new MMS chief, former assistant U.S. attorney Michael Bromwich, and is demanding more accountability from an agency he said had become too cozy with industry.

Energy industry experts say that the decisions by former President George W. Bush and Congress in 2008 to lift the moratorium on much offshore drilling helped drive more activity at MMS.

At the time the Bush administration was developing a new five-year plan for offshore oil and gas leases that was to run from 2010 to 2015. That plan, however, was put on hold by Obama administration officials who sought more comment as they developed their own blueprint, which was finalized at the end of March of this year and which will be in effect from 2012 through 2017. Since the spill the president has slapped a six-month moratorium on much offshore drilling.

While the five-year plans were being developed, oil companies were busy lobbying the agency on where offshore drilling should be allowed.

BP, for example, sent a letter to MMS in September 2009 offering its input on the leasing plan.

“BP strongly supports continuation of regular leasing in the central and western Gulf of Mexico,” said the letter from David Rainey, vice president of BP’s Gulf of Mexico exploration. Rainey said the projects are “hugely expensive and require many years to deliver.”

“This said,” he added, “the projects are being delivered and continue to be delivered, with a safety and environmental record that would be the envy of the industry.”

Between 1999 and this year BP disclosed that it had lobbied MMS for five of those years, including 2008 and 2009.

Of the oil giants, Shell lobbied the most during the 12-year period analyzed, reporting activity for every year except 2010.

In a September 2009 letter to MMS, David Lawrence, Shell executive vice president for exploration and commercial, commended the agency for including new areas for leasing in the Atlantic, eastern Gulf of Mexico and Alaska in its five-year plan.

The letter stated that drilling “does not present a substantial risk of negative environmental impacts.”

The letter also urged that “federal government begin now to streamline the regulatory process for oil and gas exploration and development, as it currently exists in the central and western Gulf of Mexico.”

Other oil companies were also actively lobbying MMS. During the period from 1999 through the first quarter of this year, Exxon Mobil Corp. lobbied for seven of those years, including 2008 and 2009, and ConocoPhillips for six, including 2007 to 2009.

The American Petroleum Institute, which represents the large oil companies, also reported lobbying MMS and related issues for six years, including 2007 through the first quarter of this year.

“I think there were a lot of issues during that period,” said Cathy Landry, a spokeswoman for API, which also lobbied on the five-year leasing plan.

But Landry also said there are other MMS issues that have cropped up, including tax matters and the efforts to renegotiate leases from the late 1990s, which omitted royalty payments to the government.

Environmental groups also have been weighing in on the lease plans; the Sierra Club disclosed it lobbied MMS in 2009 and this year. Melinda Pierce, a Sierra Club lobbyist, said her group sought to influence MMS’ decision regarding possible future leases off the coast of Virginia. Such lobbying, she said, included “driving public turnout at hearings.”

MMS was also lobbied by other energy interests, including those involved in a controversial plan for a wind energy project off the coast of Cape Cod.

The Alliance to Protect Nantucket Sound, which included wealthy energy mogul William Koch, fought the plan and employed the firm of Perkins Coie to lobby in Washington, D.C.

The alliance disclosed lobbying MMS for five years beginning in 2006. Interior Secretary Ken Salazar approved the plan in April.

MMS officials did not respond to questions about lobbying at the agency.

In addition to lobbying and letters, several companies that were trying to influence the agency paid for trips for MMS employees. For one trip in February 2005, BP paid for the agency’s director, R.M. “Johnnie” Burton, to dedicate the Thunder Horse platform oil rig in the Gulf of Mexico.

Just five months after Burton attended the BP event and applauded the new drilling facility for “providing thousands of jobs,” there was a major problem with the rig after Hurricane Dennis hit the area. On July 12, 2005, a valve issue caused rooms to be flooded and made the huge structure list by almost 30 degrees — putting it in danger of capsizing and sinking into deep water. The Department of Homeland Security’s U.S. Coast Guard and MMS had to be deployed in a successful rescue effort.

Since that time MMS employees have continued to accept trips from companies that lobby them, including the American Petroleum Institute and the National Ocean Industries Association.

There has also been a revolving door between industry and the regulators. Randall Luthi, who was MMS director from 2007 through 2009, is now president of the National Ocean Industries Association, which lobbied MMS from 1999 through 2004.

One of the ways oil companies and other clients lobbied MMS was to weigh in with agency officials during crucial periods when the government rewrites its regulations. During one such rulemaking almost two years ago, BP wrote the agency to oppose a new mandate that would have required a third-party audit of oil companies’ safety and environmental system programs every three years.

“We are not supportive of the extensive, prescriptive regulations as proposed in this rule,” wrote Richard Morrison, a BP America vice president in a letter to MMS officials. “We believe industry’s current safety and environmental statistics demonstrate that the voluntary programs implements … to be very successful.”

Others weighing in with MMS agency officials about the rule were some of those that listed lobbying the agency the most, including Shell Oil Co., API, Chevron Corp., Devon Energy Corp., Exxon Mobil Corp., Marathon Oil Corp. and the National Ocean Industries Association.