Shale lobby's expense claims under fire

The Marcellus Shale Coalition, the regional gas industry's trade association, retroactively amended its 2016 Pennsylvania disclosure reports to list a $3 million reduction in lobbying expenses last year, raising suspicions among anti-drilling activists that the organization is downplaying its influence.

The amended statements, which erased about 80 percent of the coalition's previously reported lobbying expenditures for the first three quarters of 2016, were filed with the Pennsylvania Secretary of State's office at the end of January, said State Rep. Greg Vitali (D., Delaware), an outspoken environmental advocate.

"It just seems like such a large amendment, and I have no idea why," Vitali said Thursday. "We're not saying something nefarious is going on, but it is just such a huge discrepancy, I think it raises questions."

The industry group dismissed Vitali's comments, saying that its earlier financial statements reported "budgeted" lobbying expenses it corrected with actual expenditures in the amended reports. The industry dramatically reduced spending last year because of the downturn in gas drilling, Erica Clayton Wright, a coalition spokeswoman, said in a statement.

The Marcellus organization's restatement of its 2016 expenses is included in a broader presentation Vitali plans to make Friday in Harrisburg highlighting what he says is the enlarged influence of shale-gas drilling interests in the state capital. His report outlines lobbying expenses, campaign donations, and legislative ethics filings that he says show the natural-gas industry's reach.

Vitali's presentation is the latest salvo in a running battle over shale drilling that is likely to crescendo after Gov. Wolf's proposal this week of a 6.5 percent severance tax on gas production. Such a tax has failed to advance through the Republican-controlled legislature in previous years.

Vitali said the Marcellus Shale Coalition filed its amended lobbying reports after he and nine other House Democrats announced they were forming a "climate caucus" to fight for environmental legislation. At that Jan. 25 event, which was attended by a shale coalition official, Vitali said he publicly objected to the group's spending "nearly a million dollars a quarter" on lobbying.

The lawmaker suggested that the coalition's revised filing might be related to his public statement on Jan. 25. "I have no idea if there was a relationship between the fact that we raised it publicly at an event," he said.

The shale coalition spokeswoman scoffed at Vitali's suggestion that the filing of the revised financial reports was related to the climate caucus event.

"We're not particularly surprised by Rep. Vitali's efforts aimed at generating a few headlines," Wright said in the statement. "He's always been a harsh critic of the tens of thousands of hardworking men and women across Pennsylvania's natural-gas industry. While this anti-natural-gas activist has raised a number of highly suggestive and inflammatory questions regarding our organization's lobbying-disclosure filings and corresponding amendments, the facts are as clear his motives."

The shale industry's reported lobbying expenses do follow a curious pattern.

From 2014 through the first three quarters of 2016, the coalition consistently reported quarterly expenses between $916,000 and $943,000. But the revised statements reduced quarterly spending in 2016 to amounts ranging between $167,000 and $179,000.

According to the amended reports, the coalition underwent an abrupt 80 percent reduction in lobbying expenditures in 2016. It reported $3.75 million in expenses in 2015, and $716,000 for all of 2016.

"Given the significant and ongoing energy-market challenges, our operating budget and corresponding actual lobbying expenses were ultimately much lower," the coalition said in its statement. "Accordingly, amended filings were submitted to reflect our actual expenses to ensure that this over-reporting was appropriately modified."

The coalition's lobbying expenses amount to three pages out of a 32-page PowerPoint presentation Vitali plans to unveil on Friday. Most of his presentation largely borrows from previously released campaign-finance reports compiled by Common Cause and Conservation Voters of Pennsylvania.

Those reports say that the "gas industry" gave $833,000 in campaign contributions to Pennsylvania legislators last year, mostly Republican leaders, and that it reported $7.4 million in lobbying expenses.

The reports tend to overstate the "gas industry's" expenses by including some energy companies that are not involved in natural-gas production. For instance, two of the "Top Ten 2016 Gas Industry Contributors" listed are PPL and Exelon Corp., which are primarily electric utilities and not involved in gas production. Exelon, as a large nuclear-power generator adversely affected by low natural-gas prices, does not necessarily share the same interests as the "gas industry."

The shale industry also complains that its lobbying expenditures are infrequently compared to efforts of opposing activists, including public-employee unions, which have supported severance-tax initiatives through direct lobbying and also through support of an influential think tank, the Keystone Research Center.

Vitali said that shale-gas opponents are thoroughly outgunned by the industry. "They just always seem to win, and to me it seems like they have undue influence due to the amounts they have to spend on lobbying," he said.