Anchorage Daily News

Early last summer, voters in four key western states were exposed to radio and newspaper ads exhorting them to push Congress to allow more oil drilling on U.S. soil, in the name of national security -- and cheaper gas at the pump.

The ads were identified as coming from an organization called Americans for American Energy, which described itself a "grassroots-based group" with support from coast to coast.

In fact, Americans for American Energy was an empty front, set up by a political ad agency working under a controversial $3 million sole-source contract from the State of Alaska.

The ad campaign was funded by the Legislature last year to press Congress to open the Arctic National Wildlife Refuge to drilling. But Congress didn't do it, and with Democrats now in charge, the prospects for drilling are dimmer than ever.

This month, however, the Legislature voted to extend the contract for Pac/West Communications another year and broaden its mission to include "continued education efforts on Alaska energy issues."

Gov. Sarah Palin at first supported continuing and expanding the contract. But last week, after questions were raised about how Pac/West had spent $1.3 million in state funds so far, Palin reconsidered.

The governor said Friday she is pulling the plug on the state's advertising campaign. Palin's concern, a spokeswoman said, was not with the campaign itself but with the hurried $3 million contract, which "was not part of an open and transparent process."

Palin plans to freeze the contract, "re-evaluate the needs of those dollars and, if appropriate, start a new award process" with competitive bids, said Meghan Stapleton, the governor's communications director.

On the losing end of the decision is Oregon-based Pac/West, a company with conservative Republican ties known here for its recent political campaigns opposing efforts to ban bear baiting in Alaska and impose new taxes on cruise ships.

Pac/West was coming off its successful bear-baiting campaign and already talking to legislators and Alaska's congressional delegation about an ANWR effort, say company and state officials, when U.S. Sen. Ted Stevens visited Juneau in March 2006 to urge funding a last-minute campaign.

Votes in Washington on ANWR were coming soon, and Alaska House Speaker John Harris, R-Valdez, said he understood the need to develop grass-roots support for drilling in key congressional districts. The state went with a no-bid contract because time was short, Harris said.

The no-bid deal raised hackles among some Republicans as well as Democrats last year. But it was defended by Stevens' son, then-Senate President Ben Stevens, R-Anchorage.

"It's obviously a strategic maneuver at the national level, so why would we put it out to an RFP and tell the opposition what we want to do?" Ben Stevens said at the time.

FRONT GROUPS CARRY MESSAGE

The creation of a front group by Pac/West for its ANWR campaign reprised a familiar strategy for the company.

Such organizations, often funded by industries with a stake in the political process, have become common ways to carry the media message in "social marketing," which is how Pac/West president Paul Phillips has described these voter-education efforts.

Critics refer to them as Astroturf groups, as opposed to real grass-roots groups.

In the 2004 bear-baiting campaign, Pac/West's group, Alaskans for Professional Wildlife Management, drew much of its money from the Ballot Initiatives Coalition, a national hunting-rights organization, and from Safari International. The effort turned around public opinion here by shifting the campaign's focus to the supposed motives of national anti-hunting groups.

Alaskans for Professional Wildlife Management did draw significant contributions from Alaska-based groups. The same could hardly be said about Pac/West's 2006 organization, Alaskans Protecting Our Economy.

Pac/West's $1 million ad campaign against a new cruise-ship tax featured Alaska small-business owners. But it was financed almost entirely by the North West CruiseShip Association of Vancouver, British Columbia, according to state campaign records. This time the campaign didn't work and even drew questions about whether the heavy advertising caused a voter backlash.

THE ANWR CAMPAIGN

An examination of Pac/West bills filed with the state Department of Commerce and interviews with officials draw a picture of an ANWR campaign that ran in several locations, with most of the effort coming in May-July 2006.

First came polling and focus groups to hone the campaign's message.

Research pointed planners to the name Americans for American Energy, Phillips said.

Newspaper and radio ads targeted Nebraska, North Dakota, Arkansas and Montana. The advertising equated drilling on American soil with national security. The ads never use the words "Alaska" or "wildlife refuge."

An e-mailed "action alert" hit harder, talking about Iran, terrorism, nuclear weapons and the need for "drilling in just .01% of a barren, mostly frozen area known as ANWR."

The state-funded campaign included paying subcontractors to write opinion columns for newspapers and appear on talk radio, according to spending records. Phillips said there was grass-roots outreach in several other states as well.

The state has a lobbying firm on contract in Washington, D.C., but a second lobby group received $17,500 a month through Pac/West to meet on ANWR with officials and key stakeholder groups, referred to in one billing memo as "grasstop constituencies."

WERE MINDS CHANGED?

John Katz, the longtime head of the state's Washington, D.C., office, defends the work done by Pac/West as an essential part of today's political system. He said the state needs to combat the work done by environmental groups, which he portrayed as exerting grass-roots pressure in key congressional districts with imported money and groups with "interesting sounding names."

Katz was the state official in charge of checking through Pac/West's bills. He said they did a good job -- though his main concern was that "the money is properly expended and accounted for and everything is ethical and legal."

So did Alaska's "education" program accomplish anything?

"That's the most difficult question," Katz said. "It's so hard to see the causal relations."

Phillips calls the effort "phenomenal" given how little time they had to prepare. The House of Representatives voted to open the refuge to drilling, as expected. Though the Senate could not muster enough votes to override a filibuster, Republican leaders were poised to push the matter again after the 2006 election, Phillips said.

In a few cases, the campaign may have caused a negative reaction. A columnist for the Fargo, N.D., newspaper assumed the ads were funded secretly by oil companies and derided them as "big-money, out-of-state slickers trying to pull a fast one."

The Omaha World-Herald got the funding source right, but picked at the energy-security arguments in an editorial and surmised it was all about "Alaska's spending money."

One blogger derided the name Americans for American Energy, saying it sounded like a parody dreamed up by political satirist Stephen Colbert.

Phillips said he never tried to hide the source of the front group's funding if asked by reporters.

Pac/West steered away from getting involved in last fall's congressional races, Katz said. Concern about the ANWR campaign becoming partisan had been strong in the Alaska Legislature. Billing records show expenditures dropped off sharply as the fall election approached.

Spending stopped altogether after the Democrats took control of Congress in November. The political equation for Alaska had turned 180 degrees.

"It's unlikely that legislation to open the coastal plain of ANWR will pass anytime soon," said Katz.

ALASKA ON THE DEFENSIVE

In the nation's capital, the state's concerns have now turned to defending resource development in places such as Bristol Bay's North Aleutian Basin and contested habitats in the National Petroleum Reserve-Alaska, Katz said. He said the state is worried about possible Democratic efforts to ban drilling or to create new wilderness.

The Palin administration at first proposed changing Pac/West's contract to reflect those new concerns, Katz said.

"Sometimes the best defense is a good offense," he said. "We don't want this to be an easy environmental vote for someone to take."

But Katz said officials with the former administration of Gov. Frank Murkowski, as well as Palin, were uneasy all along about the sole-source nature of the contract.

Palin began looking at the latest legislative reappropriation last week after the Anchorage Daily News asked how the money was being spent, Stapleton said.

Phillips said Monday he hadn't heard anything about the state's weekend decision to freeze his contract.

"The last I heard, they were very pleased with the work we'd done," he said.

Reporter Tom Kizzia can be reached at tkizzia@adn.com or in Homer at 1-907-235-4244.