Those Pesky Koch Brothers.

From SourceWatch
This article is part of the Coal Issues portal on SourceWatch, a project of CoalSwarm and the Center for Media and Democracy. This article is part of the Center for Media & Democracy's spotlight on global corporations.


Koch Industries, (pronounced "coke"), is the largest privately owned company in the United States with 70,000 employees and annual sales of $100 billion in the fiscal year ending December of 2008. [1] Cargill comes in second for privately owned companies. Operations include refining, chemicals, process and pollution control equipment, technologies, fibers and polymers, commodity and financial trading and consumer products. The company operates crude gathering systems and pipelines across North America. One subsidiary processes 800,000 barrels of crude oil daily in its three refineries.

Koch also owns ranches with a total of 15,000 head of cattle in Kansas, Montana and Texas. Though diversified, the company amassed most of its fortune in oil trading and refining.[2] The company was started in 1927 by Fred Koch, a charter member of the John Birch Society, with an oil delivery business in Texas.

Koch Family Foundations

Sons Charles G. Koch and David H. Koch run the company as well as Koch Family Foundations, one of the largest single sources of funding for conservative organizations in the United States. Organizations and think tanks supported by the foundation include Citizens for a Sound Economy, the libertarian Cato Institute, Reason Magazine, the Manhattan Institute, the Heartland Institute, and the Democratic Leadership Council. David H. Koch ran for president on the Libertarian Party ticket in 1980. Author Thomas Frank wrote in "What's the Matter with Kansas?" that "Koch money flowed through Triad Management Services"[3], an advisory service to conservative donors groups and candidates, for the 1996 Senate campaign of Sam Brownback.[4] Other sources only hint at a connection of Koch family members and Triad.[5]

Cato Institute

Charles G. Koch co-founded the Cato Institute, a libertarian think tank based in Washington DC, with Edward H. Crane in 1977. [6] Recently, Koch Industries has become an aggressive opponent of climate legislation and a major funder of climate skeptics, including the Cato Institute. [7]

Americans for Prosperity

Americans for Prosperity (AFP) is an astroturf front group started by David Koch and Richard Fink (a member of the board of directors of Koch Industries). AFP works together with the Koch family’s other conservative foundations and think tanks to disrupt Barack Obama's presidency. Accordingly, AFP has opposed health care reform, stimulus spending, and cap-and-trade legislation, which is aimed at making industries pay for the air pollution that they create. AFP was also involved in the attacks on Obama’s "green jobs" czar, Van Jones, and has crusaded against international climate talks. According to an article in the August 30, 2010 issue of The New Yorker, the Kochs are known for "creating slippery organizations with generic-sounding names," that "make it difficult to ascertain the extent of their influence in Washington." [8]

AFP was established in late 2003 as a successor to the Citizens for a Sound Economy Foundation, an industry-funded think tank,[9] following an internal rift between Citizens for a Sound Economy and its affiliated foundation.[10] The October 2003 Washington Times report on the formation of AFP stated, "Nancy Pfotenhauer, an executive of Citizens for a Sound Economy [CSE] in the 1990s who helped defeat Hillary Rodham Clinton's health care reform proposal, has been tapped to head a new national advocacy organization to protect 'every American's fundamental right to pursue prosperity.'"[11] Before joining the Independent Women's Forum in 2001 and AFP in 2003, Pfotenhauer headed the Washington office of Koch Industries.[12]

Justices Scalia & Thomas

On October 19, 2010, the N.Y. Times reported on a personalized invitation signed by Charles Koch to prospective members to “develop strategies to counter the most severe threats facing our free society and outline a vision of how we can foster a renewal of American free enterprise and prosperity.” The invitation discussed meetings called “Understanding and Addressing Threats to American Free Enterprise and Prosperity” that Koch Industries hosts twice a year to plan and expand its efforts “to review strategies for combating the multitude of public policies that threaten to destroy America as we know it.” Those efforts, the letter makes clear, include countering “climate change alarmism and the move to socialized health care,” as well as “the regulatory assault on energy,” and making donations to higher education and philanthropic organizations to advance the Koch agenda. The goals for the twice-yearly meetings include attracting more investors to the cause, and building institutions “to identify, educate and mobilize citizens” and “re-establish widespread belief in the benefits of a free and prosperous society.”[13]

Mr. Koch’s letter included a list of roughly 200 participants from past meetings, including hedge fund executives, Republican donors, and free-market evangelists. Koch also notes that previous guests have included Supreme Court Justices Antonin Scalia and Clarence Thomas; Governors Haley Barbour and Bobby Jindal; Senators Jim DeMint and Tom Coburn and Representatives Mike Pence, Tom Price and Paul Ryan. [13] The attendance of Thomas and Scalia has sparked debate over judicial ethics and the 2010 Citizens United decision, as Koch Industries has since become a large donor to conservative causes through Americans for Prosperity and other groups.[14]

Pollution

Koch Industries is also a major polluter. During the 1990s, its faulty pipelines were responsible for more than 300 oil spills in five states, prompting a landmark penalty of $35 million from the Environmental Protection Agency (EPA). In Minnesota, it was fined an additional $8 million for discharging oil into streams. During the months leading up to the 2000 presidential elections, the company faced even more liability, in the form of a 97-count federal indictment charging it with concealing illegal releases of 91 metric tons of benzene, a known carcinogen, from its refinery in Corpus Christi, Texas. Koch Industries was ranked number 10 on the list of Toxic 100 Air Polluters by the Political Economy Research Institute in March, 2010. [1][2]

In a study released in the spring of 2010, the University of Massachusetts at Amherst’s Political Economy Research Institute named Koch Industries one of the United States' top ten air polluters. [15]

Republican Ties

If convicted, the company faced fines of up to $352 million, plus possible jail time for company executives. After George W. Bush became president, however, the U.S. Justice Department dropped 88 of the charges. Two days before the trial, John Ashcroft settled for a plea bargain, in which Koch pled guilty to falsifying documents. All major charges were dropped, and Koch and Ashcroft settled the lawsuit for a fraction of that amount.

Koch had contributed $800,000 to the Bush election campaign and other Republican candidates.

Alex Beehler, assistant deputy under secretary of defense for Environment, Safety and Occupational Health, previously served at Koch as director of environmental and regulatory affairs and concurrently served at the Charles G. Koch Foundation as vice president for environmental projects. [16] Beehler was later nominated and re-nominated by the Bush White House, to become the U.S. Environmental Protection Agency's Inspector General. [17]

Other environmental crimes & convictions

According to an August 30, 2010 article in The New Yorker magazine, "In 1999, a jury found Koch Industries guilty of negligence and malice in the deaths of two Texas teen-agers in an explosion that resulted from a leaky underground butane pipeline. (In 2001, the company paid an undisclosed settlement.) And in the final months of the Clinton Presidency the Justice Department levelled a ninety-seven-count indictment against the company, for covering up the discharge of ninety-one tons of benzene, a carcinogen, from its refinery in Corpus Christi, Texas. The company was liable for three hundred and fifty million dollars in fines, and four Koch employees faced up to thirty-five years in prison. The Koch Petroleum Group eventually pleaded guilty to one criminal charge of covering up environmental violations, including the falsification of documents, and paid a twenty-million-dollar fine. David Uhlmann, a career prosecutor who, at the time, headed the environmental-crimes section at the Justice Department, described the suit as “one of the most significant cases ever brought under the Clean Air Act.”[18]

Climate Change

Koch subsidiary donates $1 million to stop CA global warming law

In September 2010, a company controlled by the Koch brothers donated $1 million to the campaign to pass Proposition 23, the Suspend AB 32 California ballot initiative that would halt the state's global warming law. The contribution came from Flint Hills Resources, a Kansas petrochemical company that is a subsidiary of Koch Industries. The Koch donation came a day after Tesoro, a Texas oil company that has been bankrolling the pro-Prop 23 campaign, put $1 million into the campaign coffers. According to the No Prop 23 campaign, 97 percent of the $8.2 million raised by the Yes forces has been given by oil-related interests and 89 percent of that money has come from out of state. Three companies, Koch Industries, Tesoro, and Valero -- another Texas-based oil company -- have provided 80 percent of those funds.[19]

EPA and greenhouse gas regulations

The Energy Tax Prevention Act of 2011 is proposed by Sen. Jim Inhofe (R-OK), Rep. Ed Whitfield (R-KY), and House Energy and Commerce Committee Chairman Rep. Fred Upton (R-MI), who describe the bill as "a sensible, narrowly crafted 'fix' to clarify that the Clean Air Act was never intended to be used to impose cap-and-trade by regulation." The bill seeks to prevent the EPA from regulating greenhouse gas emissions that contribute to climate change.[20]

The House Energy and Commerce Committee, under Republican control, is holding a hearing on Feb. 9, 2011 to discuss the bill, chaired by Whitfield, who has received $9,000 from Koch Industries since 2008. Koch operatives reportedly met with Rep. Upton on the first day of the 112th Congress to discuss such a bill. Upton received $20,000 from Koch employees in 2010, making them among his top 10 donors. Nine of the 12 new Republicans on the panel signed the Koch-funded Americans for Prosperity “No Climate Tax” pledge that opposed any government action to reduce carbon dioxide pollution.[20]

Climate Change Denial

According to the 2010 report by Greenpeace, Koch Industries: Secretly Funding the Climate Denial Machine, Koch has out-spent ExxonMobil in funding climate change denial. From 2005 to 2008, ExxonMobil spent $8.9 million, while the Koch Industries-controlled foundations contributed $24.9 million in funding to organizations of climate change skeptics. Efforts include:

ClimateGate Echo Chamber—At least twenty Koch-funded organizations have repeatedly rebroadcast, referenced and appeared as media spokespeople in the story, dubbed “ClimateGate,” of supposed malfeasance by climate scientists from stolen emails from the University of East Anglia in November 2009. These organizations claim the emails prove a “conspiracy” of scientists and "proves" climate change is a hoax.

More than $5 million to Americans for Prosperity Foundation (AFP) for its nationwide “Hot Air Tour” campaign to spreading misinformation about climate science and opposing clean energy and climate legislation.

More than $1 million to the Heritage Foundation, a mainstay of misinformation on climate and environmental policy issues.

Over $1 million to the Cato Institute, which disputes the scientific evidence behind global warming, questions the rationale for taking climate action, and has been heavily involved in spinning the recent ClimateGate story.

$800,000 to the Manhattan Institute, which has hosted Bjorn Lomborg twice in the last two years, a prominent media spokesperson who challenges and attacks policy measures to address climate change.

$365,000 to Foundation for Research on Economics and the Environment (FREE), which advocates against taking action on climate change because warming is “inevitable” and expensive to address.

$360,000 to Pacific Research Institute for Public Policy (PRIPP) which supported and funded An Inconvenient Truth...or Convenient Fiction, a film attacking the science of global warming and intended as a rebuttal to former Vice-President Al Gore’s documentary An Inconvenient Truth. PRIPP also threatened to sue the U.S. Government for listing the polar bear as an endangered species.

$325,000 to the Tax Foundation, which issued a misleading study on the costs of proposed climate legislation.

The reports says such contributions are only part of the picture, because the full scope of direct contributions to organizations is not disclosed by individual Koch family members, executives, or from the company itself. But contributions through Koch’s political action committee (PAC) are a matter of public record. Since the beginning of the 2006 election cycle, Koch’s PAC spent more on contributions to federal candidates than any other oil-and-gas sector PAC. For that period, Koch Industries and its executives spent $2.51 million compared to next three biggest contributors: Exxon ($1.71 million), Valero ($1.68 million), and Chevron ($1.22 million).

Koch executives and their families wield political influence on climate change in other ways too, including direct federal lobbying and campaign contributions. Over the last few years, Koch Industries, Koch employees, and Koch family members:

Spent $37.9 million from 2006 to 2009 for direct lobbying on oil and energy issues, outspent only by ExxonMobil ($87.8 million) and Chevron Corporation ($50 million).

Spent $5.74 million in PAC money for candidates, committees, and campaign expenditures since the 2006 election cycle.

Contributed at least $270,800 to federal political party committees since the 2006 election cycle.

Gave $10,000 to Senator Lisa Murkowski in 2010,[21] who, in January, proposed stripping the EPA of its ability to regulate greenhouse gases under the Clean Air Act, and lamented that BP's Deepwater Horizon oil disaster has temporarily halted exploratory offshore drilling in the arctic planned by Shell Oil for summer 2010, a topic that even many conservative opponents of climate action have remained silent on in the face of the unfolding historic despoiling of the gulf.[22][23]

Mergers & acquisitions

In 2003, Koch announced a $4.4 billion cash purchase of Invista, the world's largest fibers company and owner of brand names such as Lycra and Teflon; from DuPont. [24] In 2005, Koch purchased paper products giant Georgia-Pacific for $21 billion, acquiring brands such as Quilted Northern, Angel Soft, Brawny, Sparkle, Vanity Fair, and Dixie cups. Internationally, brands include Lotus, Colhogar, Delica, Tenderly, and the Vania brand of personal care products. See also Invista.

Fossil Fuel use
Koch Industries and Coal

In 2005 Koch Industries acquired the American pulp and paper company Georgia-Pacific, which now operates as a subsidiary.[25] Georgia-Pacific owns and operates the following mills:

Naheola mill in Pennington, Alabama, which began operations in 1958. Currently, the principle products from the Naheola mill include both plate stock and cup stock for use in the food service market.

The Crossett mill, located in Crossett, Arkansas, produces bleached paperboard grades, including folding carton, plate stock, bleached linerboard, and various cup stock grades.

The recently acquired Brewton mill, located in Brewton, Alabama, produces folding carton, blister packaging, and skin packaging grades.

Fort James Muskogee Mill Power Plant is a coal-fired power station in Muskogee, Oklahoma that provides power to Georgia-Pacific's Muskogee paper mill. [26]

Tar Sands

A February 2010 SolveClimate News analysis, based on publicly available records, found that Koch Industries is responsible for close to 25 percent of the oil tar sands crude that is imported into the United States, and is positioned to benefit from increasing Canadian oil imports. A Koch Industries operation in Calgary, Alberta, called Flint Hills Resources Canada LP, supplies about 250,000 barrels of tar sands oil a day to an oil refinery in Minnesota, also owned by the Koch brothers. Flint Hills Resources Canada also operates a crude oil terminal in Hardisty, Alberta, the starting point of the proposed Keystone XL Pipeline. The company's website says it is "among Canada's largest crude oil purchasers, shippers and exporters." Koch Industries also owns Koch Exploration Canada, L.P., an oil sands-focused exploration company also based in Calgary that acquires, develops and trades petroleum properties.[27]

Lobbying

The company spent $3,528,750 for lobbying in 2006. $820,000 was to outside lobbying firms with the remainder being spent using in-house lobbyists. [28]

In February 2005, the Hill reported, "Top White House official Matt Schlapp is joining the Washington office of oil-and-gas conglomerate Koch Industries, the latest example of high-level administration and congressional staffers making post-election leaps to the lobbying world." Schlapp had headed the White House’s Office of Political Affairs. At Koch, Schlapp will be the executive director of federal affairs, directing Washington lobbying. [3]

Elizabeth Stolpe, previously in-house lobbyist for Koch Industries, is now Associate Director For Toxics & Environmental Protection at the White House Council on Environmental Quality.

Political Contributions

Koch Industries is the single largest oil company contributor to both Republican and Democratic candidates for Congress. These contributions total $1,065,750 to the 110th US Congress (as of the third quarter), the largest of which has been to Rep. Todd Tiahrt (R-KS) for $42,950. Rep. Tiahrt, for his part, has consistently voted with the oil industry on energy, war and climate bills. [4]

Contributions like this from fossil fuel companies to members of Congress are often seen as a political barrier to pursuing clean energy. More information on oil industry contributions to Congress can be found at FollowtheOilMoney.org, a project created by the nonpartisan, nonprofit organization Oil Change International.

Koch Industries gave $948,000 to federal candidates in the 05/06 election cycle through its political action committee (PAC) - 17% to Democrats, 82% to Republicans. [29]