Ben casselman, russell gold

#
00378809

Before the Deepwater Horizon oil rig sank four weeks ago, the oil industry and its main trade group, the American Petroleum Institute, led by Mr. Gerard, had scored a series of victories in policy fights with the Obama administration and congressional Democrats.

Lobbyist Jack Gerard and Sen. Mary Landrieu at the Capitol in 2006.

Mr. Gerard's group helped stave off one proposal by President Barack Obama to collect tens of billions of dollars in taxes on the industry over a decade, largely by eliminating tax breaks, and was gearing up to fight another. The API had helped organize opposition to legislation—backed by Mr. Obama, and now stalled in Congress—that would force fossil-fuel industries to pay for their impact on the climate. And the group appeared poised to benefit from Mr. Obama's decision in March to allow drilling in the Eastern Gulf of Mexico.

Now, Mr. Gerard and the API are fighting to contain the backlash as thousands of barrels of oil gush into the Gulf each day.

Mr. Obama's aides have announced a halt on the issuance of new offshore permits, and the president has promised to end the "cozy" relationship between federal regulators and companies exploring for oil offshore.

More on the Spill

See graphics covering how the spill happened, what's being done to stop it, and the impact on the region.

Timeline

The administration and its allies in Congress are rallying support for legislation that would raise the liability cap on oil companies involved in spills to $10 billion from $75 million.

Mr. Gerard's group said the legislation would make oil and natural-gas operations in the Gulf uninsurable for all but the largest companies, and discourage domestic oil exploration.

The industry got a reprieve last week when Sen. Lisa Murkowski (R., Alaska) blocked Democrats' efforts to raise the liability cap through the unanimous consent of the Senate. Democrats are expected to make another attempt to pass the measure this week. An NBC News/Wall Street Journal poll published last week suggested public support for offshore drilling remained strong.

Ms. Murkowski has expressed concern the spill would undermine congressional support for a major expansion in offshore drilling. "This incident will have an impact on the development of our energy policy for this country," she said at a recent hearing on the spill.

Experience WSJ professional

Editors' Deep Dive: Spill Hastens New Rules Push

IHS GLOBAL INSIGHT DAILY ANALYSIS

Spill Prompts Regulatory Fight in Canadian Arctic

Superfund Report

Democrats Vow to Push Oil Spill Liability Bill

Huge Gulf Oil Spill Could Derail New Drilling Efforts

Access thousands of business sources not available on the free web. Learn More

Mr. Gerard said the industry would "consider all ideas and approaches as we determine the cause.... If there's another technology or another practice [that could prevent accidents], it's all on the table for conversation." The API has formed two task forces of industry officials to examine what lessons the incident holds for safe operation of offshore rigs.

His message to Congress: slow down."One of our top priorities is to get a root-cause analysis and determine what was the cause, and make sure it never happens again," Mr. Gerard said in an interview. "We should not legislate or regulate in a vacuum based on speculation."

Since 2006, as Democrats have gained seats in Congress, the API's annual lobbying expenditures have more than doubled, to $7.3 million last year from $3.3 million in 2006, according to the Center for Responsive Politics, a Washington-based nonpartisan group that tracks lobbying expenditures and campaign financing.

Mr. Gerard took over the API in 2008, and under his leadership, the group's message has taken on a populist flair. API helped organize a series of rallies across the country last summer to protest climate legislation. At one, attendees munched hot dogs and wore T-shirts with such slogans as "It's the JOB climate, stupid."

In February, Interior Secretary Ken Salazar summoned some API member companies to Washington for a meeting during which he told them that API's attacks on the administration were "not helpful," according to a person familiar with the matter.

The meeting came after Mr. Salazar and Mr. Gerard traded shots in the press over Mr. Salazar's decisions reversing certain industry-friendly policies on drilling.

Mr. Salazar's spokeswoman declined to comment on what he told the executives. "From the beginning of this administration, Secretary Salazar has made it clear that he was committed to reforming certain past practices at DOI and that he would represent the interests of the taxpayers, not the special interests," she said.

Mr. Gerard said the matter was in the past and that his group and Mr. Salazar have developed good communication.

Write to Stephen Power at stephen.power@wsj.com

©2010 Dow Jones & Company. All Rights Reserved.