The new loophole: Western Skies ushers in a new era for campaign drilling

(Photo/Jason Kosena)
(Photo/Jason Kosena)

It’s as clear as the Western Skies: Nonprofit 501(c)4s are the new 527s of the Colorado political scene, the latest way that shadowy special interest groups are tapping into seemingly unlimited undisclosed special interest cash to attack or support candidates who can further their agendas. Take, for instance, the Western Skies Coalition, a conservative group claiming to be a 501(c)4 nonprofit dedicated to “promoting issues that make our nation great.”

Though it has yet to show up as actually registered with the Internal Revenue Service as a nonprofit, Western Skies claims ex-Colorado Gov. Bill Owens, a former oil and gas lobbyist and founder of the 2006 notorious but now-defunct 527 political committee, Trailhead Group, as a member of its executive committee.

This campaign cycle, the group has been sponsoring TV ads portraying Republican state Senate candidates such as incumbent Shawn Mitchell (R-Broomfield) as renewable energy advocates despite voting records to the contrary. Western Skies-sponsored ads have also appeared to boost Republican state Senate candidate Libby Szabo, who is running against Democrat Evie Hudak in the northern Jefferson County race, targeted by both parties, to replace Democrat Sue Windels.

In the 2006 election cycle, 527 groups — so-called for the IRS tax code section that governs their operations — emerged in full force as political tools used by both Democratic and Republican special interests to utilize unlimited cash to support or attack candidates and causes while bypassing federal contribution limits in a cloak of secrecy.

After the bruising 2006 election cycle, state Rep. Morgan Carroll (D-Aurora) targeted 527s, pushing through a law requiring they disclose their donors. Now the money is shifting to a new loophole, 501(c)4 nonprofits, By law, (c)4’s — as they are already being called for short — must spend a majority of their funding promoting social causes and less than half their money on political advocacy.

“If they just registered, they could in theory spend $2 million in the next couple of months completely on political activities and the rest of the year spend $2 million and $1 on social welfare activities and therefore their primary purpose was social welfare activities,” said Chantell Taylor, director of Colorado Ethics Watch. “They’re really frustrating to nail down.”

As the Colorado Independent reported earlier this week, state Sen. Josh Penry (R-Fruita) is reported to be a top organizer behind Western Skies, a top-dollar (c)4 that is soliciting funds from oil and gas companies with operations in Colorado and Wyoming with the intent to reinstate Republicans as the power majority in the state senate by 2010. Penry, considered an up-and-coming Republican leader from the oil and gas-rich Western Slope, has not returned several calls and e-mails seeking clarification of his involvement with Western Skies.

“Josh Penry has been raising money from oil and gas companies for this effort and the spending is focused on electing Republican candidates in the Senate,” says Carrie Doyle, the executive director of the environmental group Colorado Conservation Voters. “So, the assumption is the goal is to claim a Republican majority in the state Senate.

“The irony is that this is oil and gas money being used to talk about how these candidates stand for clean energy when their voting records are anything but.”

Other observers, including Rep. Carroll, agree the intent of Western Skies appears clear: By 2010, Republican Party activists in Colorado have expressed the intent to retake control of the state Senate — and potentially the House of Representatives. Specifically, state GOP party Chairman Dick Wadhams has publicly expressed his plan that Republicans expect to make modest gains this year, but are pinning their hopes on a majority takeover by 2010.

As far as Western Skies’ nonprofit charitable activities, Carroll said that she would like to know what nonpolitical function the group serves. It is unclear from the group’s Web site. None of the principles listed as organizers of the organization have returned multiple phone calls seeking clarity this week. Legally, 501(c)4s must channel at least 51 percent of their funds toward charitable donations. No more than 49 percent can be used for strictly political purposes.

It is also unclear which specific companies or individuals have contributed funds to Western Skies to benefit specific GOP candidates or its other charitable activities, but Carroll spoke in blunt terms about why many oil and gas companies and industry interests operating in Colorado are so keen about wanting Republicans back in charge.

“They had virtually the run of state government for 40 years of Republican rule, and when Democrats took over we hurt them and hit them and their obscene profit margin,” Carroll said. “If providing a large influx of cash elects the people they want elected, then they will get carte blanche and go back to do what they want.”

Specifically, since taking control of the legislature in 2004, and the governor’s office two years ago, Colorado Democrats have enacted legislation at odds with the monopoly that oil and gas interests prospered under four decades of largely largely unencumbered Republican majority rule. For example, environmentalists and other interested parties have subsequently been appointed to the state’s oil and gas advisory commission, and have been met with great resistance and criticism from oil and gas special interests, particularly when it comes to a stricter set of regulations to mitigate environmental impacts.

Which leads Carroll to provide the following clarity to the motivations behind efforts to reinstate the old way of doing business:

“It’s cheaper to spend an ass-pile of money to win these elections with relative anonymity and reap the profits down the road,” she said.

After the rise of 527 groups who spent much of 2006 attacking both Democratic and Republican candidates, Carroll successfully pushed through a law requiring 527s to disclose their donors. Now operating under the auspices of the charitable 501c(4)s, organizations like Western Skies are protected from such donor disclosure requirements. However, several sources say that oil and gas interests are behind the funding of this group.

“Part of what’s so offensive is these groups appear to be trying to avoid disclosure — and using a legal apparatus to mask themselves and distance themselves from their true agenda,” Carroll said. “Trying to deceive voters is a problem for the whole system — we have a right to know who they are.”

Meanwhile, State Sen. Mitchell, who voted several times against legislation aimed at mandating increases in Colorado’s renewable energy portfolio, is currently being portrayed in a Western Skies ad as a champion of alternative power sources.

Mitchell did not return calls and e-mails seeking clarification this week about his current position on renewables, but his Democratic opponent, Joe Whitcomb, voiced his concern about the disingenuous and anonymous commercials, noting, however, that they can cut both ways.

“All they end up doing is canceling one another out and then it just ends up being up the candidates and the efforts that they exert, knocking on doors, fund-raising, going to events to persuade people, but that’s not to say [the ads are] not effective. They can be extremely effective,” Whitcomb said.

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