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Cleveland
Plain Dealer...
Ohio’s oil and
gas industry emerging as a big player in the political process
By Aaron Marshall
Monday, April 09, 2012
COLUMBUS, Ohio - Ohio’s black gold rush has struck the Statehouse.
The frenzy of activity surrounding the energy-rich shale deposits
changing the face of Eastern Ohio has also begun pumping up Ohio’s oil
and gas industry into a lobbying heavyweight.
The billion-dollar bets on Ohio shale being made by energy giants such
as Chesapeake Energy have brought a fresh crop of lobbyists to
Statehouse corridors and a new source of campaign contributions.
While the added lobbying muscle of Ohio’s oil and gas industry is still
emerging, campaign finance reports show five of the major oil and gas
industry PACs poured nearly $600,000 into politician coffers since
2010, including nearly $100,000 since last March to state lawmakers
from Chesapeake Energy.
The industry’s new might has critics from the political left worried
that the industry may be strong enough to swamp the environmental
concerns some have about the horizontal fracking done to crack open the
shale and release energy.
And Ohio’s Republican governor John Kasich -- as far from a
tree-hugging lefty as you can find -- has called into question whether
a recent House Republican decision to block a proposed tax hike on
drillers was the victim of the growing lobby.
Republican leaders who control the General Assembly vehemently dispute
that, and a gas and oil industry lobbyist called the charge offensive.
Chesapeake Energy comes to town
Whether Ohio’s oil and gas lobby was behind the power play or not, it’s
impossible to ignore that the industry in Ohio is rapidly being
transformed from “primarily mom and pops,” in the words of Senate
President Tom Niehaus, into a collection of some of the industry’s
biggest names -- ExxonMobil, Anadarko Petroleum Corp., Hess Energy, and
Devon Energy Corp. And the self-proclaimed “biggest fracker in the
world”-- Chesapeake Energy.
No company represents the sea change for oil and gas development in
Ohio better than Chesapeake Energy, an Oklahoma-based company. The
company is headed by CEO Aubrey McClendon, a self-made billionaire with
a J.R. Ewing-like swagger, who appeared at a Columbus energy conference
last September. McClendon told the conference crowd that shale
development in Ohio would change the Buckeye State forever.
“This will be the biggest thing to hit the state of Ohio economically
since maybe the plow or the seed or something like that,” he said.
“This is going to be truly, truly extraordinary.”
McClendon has done more than talk a big game as his company has gobbled
up almost 1.4 million acres in Ohio -- a massive stake representing
more than 10 percent of the total land in Eastern Ohio.
As Chesapeake has grabbed a big position in Ohio, it has been the
earliest to get wells operating, with 132 of 179 permits for drilling
in the Utica Shale since November 2010 being issued to Chesapeake ,
according to a March 25 Ohio Department of Natural Resources report.
The last six months have been especially active, with 132 permits
issued -- most of them going to Chesapeake.
At the same time, Chesapeake has begun to have an aggressive Statehouse
presence, with eight registered lobbyists. Outside the Statehouse, the
company signed a five-year deal to sponsor Ohio State University sports
and last season began having its blue flame logo displayed on the
scoreboard at the south end of Ohio Stadium.
The Ohio State football ties also include unofficial lobbying time at
tailgate parties thrown near the Horseshoe on home game Saturdays that
attract GOP lawmakers and others from the Statehouse, according to
several eyewitnesses.
Since March 2011, Chesapeake’s PAC or members of its Statehouse
lobbying team have donated nearly $100,000 to 19 House members and 14
Senate members, a group that includes 30 Republicans and three
Democrats. Most of the contributions to lawmakers have come in the last
six months, with Chesapeake giving a total of $84,350 since October.
A Chesapeake spokesman did not grant an interview. The Plain Dealer
submitted written questions Thursday at his request, but got no
response by Friday.
Robert Chase, a professor in the department of petroleum engineering at
Marietta College, said Chesapeake’s largesse with lawmakers is a smart
business investment.
“Their acreage position is bigger than everybody else. They have
invested billions of dollars and need to insure that investment pays
off,” said Chase. “You can’t leave things to the whim of political
factions when making billion-dollar investments.”
But the Chesapeake lobbying crew as well as a recent influx of other
new players in the shale development game in Ohio have environmental
groups feeling besieged.
“When I am with citizens trying to reach out to legislators on these
issues, I am outnumbered 10 to 1 at the Statehouse now,” said Cheryl
Johncox, executive director of the Buckeye Forest Council.
Newfound fundraising prowess
Nowhere can the impact of Chesapeake’s generous donations as well as
contributions from other oil and gas interests be illustrated better
than in Rep. David Hall’s campaign finance report for the final six
months of 2011.
A former Holmes County Commissioner who heads the House’s Agriculture
and Natural Resources committee, Hall had been a relatively modest
fundraiser, never having picked up more than $45,000 in any one
reporting period.
But in the final six months of 2011, a year in which Hall did not face
an election, his fundraising has exploded, as he raised more than
$128,000, with most of the money connected to Ohio’s oil and gas
industry, including about $18,000 from Chesapeake’s PAC or its
lobbyists. In all, 13 of 15 donations to Hall of $2,000 or more during
that period came from Ohio’s oil and gas lobby.
Hall’s fundraising during the final six months of 2011 outpaced the
contributions received by 19 of 20 House Republicans who either chair a
committee or sit in GOP leadership. The sole exception: House Speaker
William G. Batchelder, a Medina Republican.
While Hall declined to be interviewed for this story, Batchelder said
the oil and gas lobby is merely supporting those who support them.
Companies new to Ohio merely “want to get known,” and giving campaign
contributions helps them get face time at fundraisers with lawmakers,
Batchelder said.
“We have a number of people who are knowledgeable about the oil
industry, people who want to see that industry grow and create jobs and
so forth, and sometimes they are very articulate about that,”
Batchelder said. “The oil interests want to encourage them and want
them to be in the legislature.”
Hall’s committee handles legislation that affects the state Department
of Natural Resources, the agency that oversees all aspects of oil and
gas drilling in Ohio.
Last spring, Hall’s committee was the scene of hearings on a bill
opening state parkland to possible oil and gas drilling. Environmental
groups packed the hearing room with opponents testifying into the early
morning, but the bill passed Hall’s committee -- even over the
objection of the state Department of Natural Resources.
Hall “did spend the time to make sure that people were heard, but I
don’t feel that the testimony was considered,” said Johncox, the
environmental lobbyist.
Kasich decries “special interests”
The suggestion that special interests were influencing legislators came
last month from an angry Gov. Kasich, who isn’t used to being
stonewalled by his fellow Republicans. But that’s exactly what happened
when Republicans who control the House announced they were introducing
the governor’s mid-budget review -- but without a key hike in oil and
gas taxes designed to pay for a small income tax cut for all Ohioans.
On a hastily-called conference call, Kasich lashed out at fellow
Republicans, saying they were protecting special interests in Ohio’s
oil and gas industry.
“Special interests have a different point of view than I have on this,”
Kasich told reporters, while declining to name names. “This appears to
be the first inning of what’s going to be a long ballgame.”
Tom Stewart, executive vice president of the Ohio Oil and Gas
Association, the main lobbying organization for oil and gas interests
in Ohio, said the governor’s comments were off-base and offensive.
“I think using the word ‘special interests’ and saying it’s driving
legislators to do something is populist rhetoric that doesn’t serve the
public interest and misinforms the citizens of Ohio,” Stewart said.
“The governor’s premise is not true -- it’s merely political
blathering. I think that legislators should be offended at the innuendo
that is suggested by that and they probably are.”
House Speaker Batchelder said Kasich is “dead wrong” and said oil and
gas interests “never said a word to me” about blocking the so-called
severance tax proposal. Stewart also said he never broached the subject
with any lawmakers.
Legislative leaders say money doesn’t buy influence
Batchelder and Senate President Niehaus -- the Republican leaders who
routinely see the most campaign contributions -- both said while they
know if a company has donated to them, they don’t track how much has
been given.
Both bristled at the perception that big checks buy big influence, with
Niehaus saying his door is open to all.
“I would be hard pressed to name an industry or organization who has
asked to come see me and has been turned away,” said Niehaus. “I
suspect that is true of my Senate colleagues as well.”
But state Rep. Bob Hagan, a Youngstown-area Democrat who has called for
a moratorium on drilling activity in Eastern Ohio while the
environmental impact can be studied, said the oil and gas money is
“papering over people’s objections with green dollars.”
“I’ve seen how people have shut their mouths and are telling me to back
off,” Hagan said. “They are trying to run roughshod over this
legislature and, frankly, they are doing a hell of a job of it.”
Plain Dealer Columbus Bureau Chief Reginald Fields contributed to this
story.
Following are the total contributions that members of the
Republican-controlled Ohio General Assembly received from March 2011
through this January from the political action committee of Chesapeake
Energy, or from lobbyists for Chesapeake. All are Republicans unless
otherwise noted.
HOUSE
David Hall, Holmes County (Agriculture and Natural Resources Committee
chair, Finance Committee member) - $16,500
House Speaker William G. Batchelder, Medina - $8,500
Christina Hagan, Stark County - $7,500
Cheryl Grossman, Columbus area (Finance Committee member) - $7,000
Timothy Derickson, Southwest Ohio, (Finance Committee member) - $2,350
Anne Gonzales, Columbus area (Finance Committee member) - $2,000
Andy Thompson, Southeast Ohio - $1,350
Jim Buchy, Southwest Ohio - $1,250
Al Landis, Southeast Ohio - $1,250
Matt Huffman, Lima (majority floor leader - $1,000
Terry Boose, Norwalk - $1,000
Rex Damschroder, Northwest Ohio - $1,000
Ron Amstutz, Wooster (Finance Committee chair) - $1,000
Jim Butler, Dayton area - $1,000
Craig Newbold, Eastern Ohio - $500
John Adams, Sidney (majority whip) - $500
John Carey, Southern Ohio (Finance Committee member, no longer in the
legislature) - $300
Margaret Ann Ruhl, Mount Vernon - $300
Casey Kozlowski, Ashtabula County - $250
SENATE
Senate President Tom Niehaus, Southwest Ohio - $11,500
Keith Faber, Western Ohio (president pro tempore) - $6,000
Cliff Hite, Northwest Ohio - $5,750
Dave Daniels, Southern Ohio (no longer in the legislature) - $3,500
Troy Balderson, Southeast Ohio - $3,000
Tim Schaffer, Central Ohio - $2,500
Gayle Manning, North Ridgeville - $2,000
Tom Patton, Strongsville - $2,000
Shannon Jones, Southwest Ohio - $1,000
Jason Wilson, Eastern Ohio (Democrat, no longer in the legislature)
-$1,000
Lou Gentile, Steubenville (Democrat) - $1,000
Jimmy Stewart, Athens area (no longer in the legislature) - $500
Bob Peterson, Southern Ohio - $500
Joe Schiavoni, Youngstown area (Democrat, assistant minority leader) -
$300
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