Talk:Koch Industries

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Koch Industries (pronounced "coke") is the second-largest privately held company in the United States. Koch Industries engages in a range of extraction, manufacturing, and financial operations, including "refining and chemicals; process and pollution control equipment and technologies; minerals; fertilizers; polymers and fibers; commodity trading and services; forest and consumer products; and ranching."

The company is led by Charles Koch and David Koch, two of the wealthiest men in the world and major funders of an anti-regulatory right-wing infrastructure in the U.S., which includes think tanks such as the Heritage Foundation, non-profits such as the American Legislative Exchange Council, politicians and dark money electoral groups such as Americans for Prosperity, universities and more. Koch Industries' involvement in lobbying and political activities is detailed below. See Kochexposed.org for a list of Sourcewatch articles and resources on the Koch brothers, the Koch network of funders, and the Koch web of nonprofit and political operations.

Koch Industries was reported to have revenue of $115 billion in 2013. As of 2012, the Koch "conglomerate boast[ed] 60,000 employees, 4,000 miles of pipeline and enough refinery capacity to supply 5% of U.S. daily fuel demand," according to Forbes. Charles Koch has vowed that the company will become publicly traded "only over my dead body."

In 2010, Koch Industries was named one of the United States' top 10 air polluters in a study released by the University of Massachusetts at Amherst’s Political Economy Research Institute..

The company was started in 1927 by Fred Koch, a founding member of the John Birch Society.

Koch Wiki

Charles Koch is the right-wing billionaire owner of Koch Industries. As one of the richest people in the world, he is a key funder of the right-wing infrastructure, including the American Legislative Exchange Council (ALEC) and the State Policy Network (SPN). In SourceWatch, key articles on Charles Koch and his late brother David include: Koch Brothers, Americans for Prosperity, Stand Together Chamber of Commerce, Stand Together, Koch Family Foundations, Koch Universities, and I360.

Ties to the American Legislative Exchange Council

Koch Industries is a long-time member and funder of the American Legislative Exchange Council (ALEC), and a long-time member of the ALEC corporate Private Enterprise board.

A list of ALEC corporations can be found here.

About ALEC

ALEC is a corporate bill mill. It is not just a lobby or a front group; it is much more powerful than that. Through ALEC, corporations hand state legislators their wishlists to benefit their bottom line. Corporations fund almost all of ALEC's operations. They pay for a seat on ALEC task forces where corporate lobbyists and special interest reps vote with elected officials to approve “model” bills. Learn more at the Center for Media and Democracy's ALECexposed.org, and check out breaking news on our ExposedbyCMD.org site.

Mike Morgan, Director of Public and Government Affairs, represents Koch Industries on ALEC's corporate Private Enterprise Advisory Council, as of 2014; he was previously Chairman.

Koch Industries was a "Chairman" level sponsor of the 2013 American Legislative Exchange Council Spring Task Force Summit in Oklahoma City. It was earlier a "Vice-Chairman" level sponsor of the 2011 American Legislative Exchange Council Annual Conference, which in 2010, equated to $25,000.

The Charles Koch Institute was a "Trustee" level sponsor of the 2013 American Legislative Exchange Council States & Nation Policy Summit in Washington, DC.

The Charles G. Koch Charitable Foundation gave ALEC donations of $75,858 in 2009 and $71,100 in 2012 to ALEC. Additionally, In 1996, the Charles G. Koch Foundation gave ALEC a $500,000 loan.

The Kochs' Claude R. Lambe Charitable Foundation gave donations totaling $600,000 to ALEC between 2007 and 2012.

Koch Industries financially supported the publication of ALEC's 1995 Sourcebook, the annual publication in which it released its "model" legislation until it moved to online publication.

Affiliations and Funding of Interest Groups

"Koch's Web of Dirty Money and Influence" graphic from Greenpeace, originally published in "Koch Industries Secretly Funding the Climate Denial Machine," 2010.

Koch Money Funds Right-Wing Infrastructure

See also Koch family foundations, Koch brothers.

Charles G. Koch and David H. Koch run Koch Industries as well as the Koch Family Foundations, which together are one of the largest single sources of funding for right-wing organizations in the United States. The Center for Public Integrity wrote in 2009 that "[w]hile Koch has a long history of pushing libertarianism through its grant-making, more recently, the company has established itself as an aggressive opponent of climate legislation and a major funder of climate skeptics."

Organizations and think tanks that have been supported by Koch funding include: Americans for Prosperity, the Heritage Foundation, the Cato Institute, the Institute for Humane Studies, Citizens for a Sound Economy, the Mercatus Center, the Reason Foundation, and the Manhattan Institute, among others.

David Koch is the chairman of the Americans for Prosperity Foundation, a director of the Cato Institute and a trustee of the Reason Foundation.

In addition to providing funding to co-found the Cato Institute and the Mercatus Center, Charles Koch serves on the boards of both Mercatus and the Institute for Humane Studies.

Richard Fink, an executive vice president and director of Koch Industries, is on the boards of several Koch Family Foundations as well as founder, president or director of numerous front groups the Koch foundations support.

Cato Institute

See also Cato Institute.

Charles G. Koch co-founded the Cato Institute, a think tank based in Washington DC, with Edward H. Crane in 1977. David Koch presently serves on its Board of Directors. Koch Industries is an aggressive opponent of climate legislation and a major funder of climate skeptics, including the Cato Institute.Te-Ping Chen, "Behind the Climate Skeptisim Curtain: The Koch Family and the Cato Institute," Center for Public Integrity, April 2009. Accessed July 3, 2014.</ref>

Americans for Prosperity

See also Americans for Prosperity.

Americans for Prosperity (AFP) was founded by David Koch and Richard Fink, a member of the board of directors of Koch Industries. AFP helps fund activities related to the "Tea Party" efforts. AFP's message is in sync with that of other groups funded by the Koch family’s other special interest groups working against progressive or Democratic initiatives and protections for workers and the environment. 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."

David Koch launched AFP in late 2003 as a successor to the Citizens for a Sound Economy Foundation (which David Koch had founded in 1987).

Tea Party Movement and Funding

See also Americans for Prosperity, Citizens for a Sound Economy, Tea Party movement funding.

In 2011, the Center for American Progress reported that "[t]he Koch brothers use their considerable wealth to bankroll the right wing, including the Tea Party. This serves the purpose of furthering not only their right-wing ideology but also their bottom line. Koch Industries has a lot to gain from gutting government oversight and electing candidates who oppose government regulation, especially in the oil-and-gas industry."

The New Yorker noted in 2010 that the Kochs' "Americans for Prosperity has worked closely with the Tea Party since the movement’s inception," and quoted conservative economist Bruce Bartlett, formerly of the Koch-funded National Center for Policy Analysis, saying that with the Tea Party, the Kochs are "trying to shape and control and channel the populist uprising into their own policies.”

A Republican consultant who spoke to the New Yorker said, "The Koch brothers gave the money that founded it. It’s like they put the seeds in the ground. Then the rainstorm comes, and the frogs come out of the mud—and they’re our candidates!"

Leading Opponents of Climate Change Policy

Koch Industries has come to play a major role in funding the climate change denial movement. In 2009, Greenpeace describe Koch Industries as "a partner to ExxonMobil, the American Petroleum Institute and other donors that support organizations and front-groups opposing progressive clean energy and climate policy."

A 2012 report by the International Forum on Globalization (IFG) describes the role of David and Charles Koch as leaders in the opposition to climate change policy in the U.S. The report, titled Behind a Global Crisis: U.S. Carbon Billionaires and the U.N, Climate Deadlock, explains how the Kochs are using their immense wealth to kill U.S. climate legislation and convince America that "energy independence" is more important than addressing adverse climate change. Contained in the report are details of how the Kochs' activity in campaign contributions, lobbying legislators, funding climate denialists, attacking clean air laws, and stopping the shift in subsidies from fossil fuels has helped to halt any serious progress on climate policy in the United States. The result is a deadlock in addressing the global climate crisis.

Meena Raman of the Third World Network and an IFG Board Member noted that, "The world cannot expect U.S. negotiators to do anything but lead a race to the bottom toward a total climate crisis as long as they speak for their oil billionaires and not for the American people. How many more must die from climate disruptions before U.S. negotiators align their position with the scientific reality that says the world needs ambitious actions to cut carbon now?"

Fighting greenhouse gas regulations

EPA Standards on Carbon Pollution

On June 2, 2014, the EPA published draft rules to limit carbon pollution from existing power plants under the authority in the Clean Air Act. At a December 2013 ALEC conference in Washington DC, participants were reportedly told to engage in "Guerrilla Warfare" against the EPA. At the same conference, the American Legislative Exchange Council adopted two new model bills opposing EPA regulation of power plants. The American Legislative Exchange Council held a secret roundtable discussion in December 2013, with members of industry and state legislators, to plan its opposition to the expected draft EPA standards. According to documents obtained by the Center for Media and Democracy, legislators were told that they should budget for possible litigation over the standards. In 2011, the American Legislative Exchange Council submitted comments to the EPA in which it stated: “Carbon dioxide is a naturally occurring, non-toxic and beneficial gas, and it poses no direct threat to public health."

Regional Climate Change Accords

With the collapse of federal cap-and-trade legislation, a total of 32 states became active participants or observing members in the Regional Greenhouse Gas Initiative in the Northeast, the Midwestern Greenhouse Gas Reduction Accord, or the Western Climate Initiative. Some commentators have suggested that Koch family foundations and ExxonMobil have opposed these initiatives, and that the American Legislative Exchange Council has advanced model legislation to that end.

New Hampshire

On Feb. 23, 2011, New Hampshire's overwhelmingly Republican House of Representatives voted to support HB 519, a bill that would repeal participation in the Regional Greenhouse Gas Initiative, which has cut greenhouse gas emissions and other pollution and made improvements in energy efficiency. The bill passed by a nearly party-line vote of 246 to 104 (13 Republicans voted against, two Democrats for). The bill has to pass through the finance committee before a final house vote and consideration by the senate. Gov. John Lynch (D-NH), who has touted the success of RGGI in making the air healthier while increasing economic prosperity, is expected to veto the bill, but Republicans hold veto-proof majorities in both chambers of the New Hampshire legislature. The bill was aided by robocalls from the Koch-funded Americans for Prosperity group, which flooded the state with calls in support the bill. Rep. Sandra Keans (D-Rochester), told the Nashua Telegraph that AFP’s calls were “sleazy” and deliberately false: “I have never seen such a cowardly perpetration pulled on the citizens of New Hampshire."

In July 2011, New Hampshire Gov. John Lynch vetoed the effort, stating ""I am vetoing this legislation because it will cost our citizens jobs, both now and into the future, hinder our economic recovery, and damage our state's long-term economic competitiveness."

EPA, 2011

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.

The House Energy and Commerce Committee, under Republican control, held 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.

California, 2010

Koch subsidiary donates $1 million to stop Calif. GHG 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.

Other Koch funding

Koch-funded organizations

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:

• More than $5 million to Americans for Prosperity Foundation (AFP) for its nationwide “Hot Air Tour” campaign opposing clean energy and climate legislation.
• More than $1 million to the Heritage Foundation, which writes about 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.

Organizations' messaging on "ClimateGate"

• ClimateGate Echo Chamber—At least twenty Koch-funded organizations have repeatedly rebroadcast, referenced and appeared as media spokespeople in the story, dubbed “ClimateGate,” regarding 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.

Tar Sands, 2011

In 2011, TransCanada requested permission to build a 1,661 mile pipeline from Canada's tar sands oil fields to U.S. refiners in Texas. The so-called Keystone XL pipeline would import as much as 510,000 barrels per day. Koch Industries is responsible for close to 25 percent of the oil tar sands crude that is imported into the United States, and are one of the biggest refiners of Alberta oil sands crude oil. Some speculated that Koch Industries would benefit significantly from the project.

In May, 2011, Reps. Henry Waxman (D-Calif.) and Bobby Rush (D-Ill.) formally requested more information from Republican leadership on the House Energy and Commerce Committee about how the project might benefit Koch Industries. They wrote:

Publicly available information indicates that the company is involved in several aspects of Canadian tar sands development. Koch’s Pine Bend Refinery in Minnesota currently processes roughly 25% of the tar sands fuel imports to the United States. Koch owns Flint Hills Resources, LLP, in Calgary, Canada, which is “among Canada’s largest crude oil purchasers, shippers and exporters.” Flint Hills Resources also operates a crude oil terminal in Hardisty, Alberta, where the Keystone XL pipeline will begin. According to the Government of Alberta, Koch Industries has both proposed and producing tar sands projects in the province. The Oil Sands Developers Group also indicates that Koch is a tar sands project developer. Koch’s Corpus Christi refinery is positioned near the end of the proposed Keystone XL pipeline and would be a potential buyer for the tar sands crude shipped through the pipeline.

Direct Lobbying and Campaign Contributions

2014 Campaign Contributions

As of July 3, 2014, Koch Industries PAC and Koch employees had made a total of $3,811,365 in political donations for the 2014 election, including $1,775,000 to the Republican Governor's Association. They had donated $919,200 directly to congressional candidates, with 98% of the money going to Republicans. Top recipients include Mike Pompeo (R-KS), Speaker John Boehner (R-OH), John Cornyn (R-TX), and Lynn Jenkins (R-KS).

2012 Campaign Contributions

2012 Election Spending by State, from Mother Jones.

During the 2012 election cycle, Koch Industries PAC made $4.9 million in federal campaign contributions. This included $2.1 million to the Republican Governor's Association, $250,705 to the Republican State Leadership Committee, and $161,250 to the Republican National Committee.

House candidates receiving at least $12,000 from Koch Industries in 2012:

• Robert Pittenger (R-NC): $12,500
• Joe Walsh (R-IL): $12,500
• Tom Graves (R-GA): $12,000
• Mick Mulvaney (R-SC): $12,000

Senate candidates receiving at least $10,000 from Koch Industries in 2012:

• Ted Cruz (R-TX): $15,000
• Orrin Hatch (R-UT): $15,000
• George Allen (R-VA): $10,000
• John A. Barrasso (R-WY): $10,000
• Rick Berg (R-ND): $10,000
• Scott Brown (R-MA): $10,000
• Dean Heller (R-NV): $10,000
• Josh Mandel (R-OH): $10,000
• Mitch McConnell (R-KY): $10,000
• Richard E. Mourdock (R-IN): $10,000
• Mark Pryor (R-AR): $10,000
• Denny Rehberg (R-MT): $10,000
• Pat Robers (R-KS): $10,000
• Roger Wicker (R-MS): $10,000

2010 Campaign Contributions

The Kochs or the Koch PAC "donated directly to 62 of the 87 members of the House GOP freshman class" during the 2010 election campaign cycle. At the state level, they spent "$5.2 million on candidates and ballot measures in 34 states since 2003. They donated directly to 13 governors that won election" in 2010. They have "pledged to raise $88 million for the 2012 election and have started scheduling events for potential Republican presidential candidates."

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. [7]

Additionally, Koch:

• 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, 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.

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.

Lobbying

Koch wields significant influence on climate change and other issues by direct federal lobbying. Open Secrets reports that Koch Industries :

• Spent $10.4 million lobbying in 2013. Top issues lobbied on were energy & nuclear power, homeland security, taxes, and clean air & water.
• Spent $10.5 million lobbying in 2012
• 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).

The April 2011 Center for American Progress report presented the following chart of the Koch brothers' issue agenda:

Other Political Activities

Links to Union-Busting Efforts in Wisconsin and Nationally (2011-present)

In 2011, Reuters tied the Koch brothers directly to the union-busting effort, reporting that "Charles and David Koch [...] are behind campaign donations of tens of thousands, if not millions, of dollars to Republicans leading the anti-union effort." Writing about the rise of the Tea Party and anti-union efforts in the 2010 election cycle, Brian Doherty, editor of Reason Magazine (published by a Koch-funded think tank), wrote that "this is all a wave of political belief that the Kochs unquestionably have funded in various ways for years and years."

According to NPR, between 1997 and 2008, David and Charles Koch collectively gave more than $17 million to groups lobbying against unions. The New York Times has reported that the Kochs have been one of Wisconsin Governor Scott Walker's largest corporate supporters.

Post-Citizens United, Telling Employees How to Vote (2010)

According to The Nation, "on the eve of the November [2010] midterm elections, Koch Industries sent an urgent letter to most of its 50,000 employees advising them on whom to vote for and warning them about the dire consequences to their families, their jobs and their country should they choose to vote otherwise." The Nation reported that it had obtained a copy of the election packet for Washington State, "which included a cover letter from its president and COO, David Robertson; a list of Koch-endorsed state and federal candidates; and an issue of the company newsletter, Discovery, full of alarmist right-wing propaganda."

Marquette University law professor Paul M. Secunda, who has written on political coercion in the workplace, said that after the Supreme Court's Citizens United decision, "companies like Koch Industries are free to send out newsletters persuading their employees how to vote. They can even intimidate their employees into voting for their candidates."

Koch Network Strategy Retreats (2006-present)

See also Koch network.

The Kochs organize "the funding of the conservative infrastructure of front groups, political campaigns, think tanks, media outlets and other anti-government efforts through a twice annual meeting of wealthy right-wing donors" which is supported by Koch Industries. Charles Koch described the goal of the meetings in a 2010 invitation as 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." A full list of known attendees, donors, participating organizations, and retreat dates is available on the Koch network page.

Lobbying and Ties to Bush Administration (2000-2008)

Koch Industries had multiple personnel ties to the George W. Bush administration.

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

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. [8]

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

2011 Whistleblower Allegations of Lawbreaking

On September 22, 2011, business media outlet Bloomberg released an extensive report detailing the results of an investigation it had conducted into allegations by several former Koch employees turned whistle-blower. One whistle-blower detailed her termination after her compliance check had discovered a number of bribery payments made in order to secure contracts in six countries, including Nigeria, Egypt, and Saudi Arabia. Reporters also discovered that Koch companies had traded with Iran through foreign-held subsidiaries, possibly violating US law. Other sources within the article detailed a culture of poor ethics and allegations of outright theft.

Bribery of Foreign Officials

In 2008, an internal investigation found numerous instances of bribery to foreign officials to secure contracts by Koch Industries subsidiary Koch-Glitsch. One incident which came under investigation was the payment of an unusually high premium to a sales agent who admitted in a French court that the payment had been passed on to someone representing a partially state-owned Egyptian company in order to secure a contract there.

The company attempted to blame the sales agent and terminated him with a six page letter detailing the company's illicit payments to interests in Algeria, Egypt, India, Morocco, Nigeria and Saudi Arabia and placing blame for them on the sales agent. However, the court found that "[the sales agent] was not giving authorizations" for the payments, instead indicating that Charles Ender, a major Koch executive and president of Koch-Glitsch for Europe and Asian operations at the time, was responsible.

Firing of Compliance Officer

Meanwhile, the compliance offer initially assigned to the investigation was removed from the inquiry almost immediately and fired a short time later. After a seven week hospitalization in 2009, saying that she failed to share documents within the company and didn't have the skills she'd claimed on her resume, she was terminated.

The compliance officer argued that she her termination was retaliation for uncovering the illegal payments.

Trading with Iran

Bloomberg also found that Koch companies had traded and worked extensively with Iran over a ten year period. Notable Koch-Iranian collaborations include the construction of the world's largest methanol plant for the National Iranian Petrochemical Company at the city of Bandar Assaluyeh. The plant is being used to tap into Iran's extensive natural gas resources.

A purchase order for refining equipment at the plant was sent the day after President George W. Bush outlined the concept of an "axis of evil" in his 2003 State of the Union address, where he articulated his view that Iran was a direct threat to the United States and specifically advocated for economic sanctions that Koch companies may have been violating. “Every single chance they had to do business with Iran, or anyone else, they did,” said one whistle blower of Koch Chemicals' dealings with Iran.

Legal Complaints Against Koch Industries

Violating Federal Price Controls During Oil Crisis (1973-1981)

The Wichita Eagle reported in 1998 that during the 1970s oil crisis, "from 1973 until 1981, the Department of Energy was continually auditing Koch—as well as many other oil companies—to check for violations of federal price controls. At one point a Koch accountant prepared a document suggesting that, in a worst-case scenario, the company could be liable for up to $1 billion in refunds and penalties. But just before the price controls were abolished in 1981, Koch was required to pay $14 million in refunds, one of the smallest payments ordered by the government."

Fine for Overcharging on Propane (1975)

The New York Times reported that "[i]n 1975, a Koch subsidiary was cited for $10 million in overcharges on propane gas."

Indictment for Conspiring to Rig Oil and Gas Lease Lottery (1980)

According to the Wichita Eagle, the Justice Department under the Carter Administration indicted a Koch subsidiary in June 1980, charging Koch's oil exploration subsidiary for conspiring to rig a lottery for leases to drill for oil and gas on public lands. In the end, three employees were fined and the company "pleaded guilty to a criminal indictment."

EPA Suit for Dumping Waste into Mississippi River

In 1988, the EPA filed a suit against a Koch refinery in Minnesota with the US District Court in Minneapolis. The suit, which sought up to $25 million in penalties, "accused the refinery of dumping excessive quantities of toxic wastes into the Mississippi River," according to The Inquirer (Philadelphia).

Underpaying Indian Lease-Holders for Oil (1989-1999)

A suit filed by William Koch and William Presley in 1989 "alleged that Koch Industries intentionally misrepresented how much oil it was taking from sites in 16 states on more than 25,000 occasions," according to the New York Post. In 1989, the Senate began an "investigation into allegations that the company had been stealing oil from Indians in Oklahoma," according to the New York Times. Bloomberg wrote that the Senate subcommittee sent investigators to observe oil sales in Oklahoma, where they "caught Koch Oil’s employees falsifying records so that the company would get more crude than it paid for, shortchanging Indian families, [FBI agent Richard] Elroy said. Koch’s records showed that the company took 1.95 million barrels of oil it didn’t pay for from 1986 to 1988, according to data compiled by the Senate." Court testimony details one Koch employee who testified under oath that he was taught to steal and cheat in business dealings, using techniques he was taught by superiors, who referred to them as the "Koch Method."

In the run-up to the trial in May 1999, "federal Judge Sam Joyner fined Koch Industries $200,000 for destroying computer records related to the case," the New York Post reported. In December 1999, a federal jury in Oklahoma reached a guilty verdict, finding that Koch Industries had "ripped off the federal government and Indian lease-holders to the tune of $600,000," according to the Post. The company faced potential fines of up to $250 million,</ref name="post"/> but settled the case for $25 million in 2001.

Guilty of Negligence in Waste Dumping (1996-1997)

According to Newsmax,

"Koch Petroleum Group took full responsibility for mistakes and pled guilty to two negligence misdemeanors relating to problems at its Rosemount refinery in 1996 and 1997. These charges involve delays in the cleanup of a tank leak, part of which later appeared in a wetland adjacent to the Mississippi River, and the manner in which refinery waste water was discharged. Koch agreed to pay $6.9 million in 1998 to settle related issues under a stipulated agreement with the Minnesota Pollution Control Agency."

Record Penalties for Oil Spills (1995-2000)

The Clinton Administration brought a suit against Koch Industries in 1995 for violations of the Clean Water Act. The Department of Justice and the EPA "went to court to collect $54 million in fines from Koch. The lawsuit accused the company of causing more than 300 oil spills," as reported by the Kansas City Star, and according to the EPA charged "that Koch illegally discharged crude oil and petroleum products in Texas, Oklahoma, Kansas, Missouri, Louisiana and Alabama." The suit resulted in a settlement, announced January 2000, in which Koch Industries agreed to "pay the largest civil fine ever imposed on a company under any federal environmental law to resolve claims related to more than 300 oil spills from its pipelines and oil facilities in six states," according to a press release by the EPA.

Other Spills Not Prosecuted

Koch has been involved in numerous other spills that have not resulted in fines or litigation, including a 2,100 saltwater spill in North Dakota in 1995 and fuel spills from storage tanks near Lake Waubesa in Wisconsin.

Leak From Corroded Pipe Kills Two Teens (1996)

In 1996, a leak from a corroded butane pipeline led to the death of two teenagers in Texas. According to the Topeka Capital-Journal, "Danielle Smalley and her friend Jason Stone, both 17, were on their way to report a gas leak in the butane pipeline when their truck apparently ignited the fumes, killing them both." The pipe was managed by Koch Industries subsidiary Koch Pipeline Company. The Capital-Journal reported that court records showed that "Koch knew about problems with the pipeline that ran through the area but continued to operate it." According to the New Yorker, "a jury found Koch Industries guilty of negligence and malice in the deaths" in 1999, and Koch "paid an undisclosed settlement" in 2001.

Investigation for Unpaid Offshore Drilling Royalties (1998)

In 1998, the US Department of Interior came under investigation related to "whether the agency properly collect[ed] the money for oil and gas pumped from public land," as reported by the New York Times. Several oil companies agreed to settlements as a result of the investigation. According to the Times, "Mobil was the first to settle and paid more than $40 million in 1998. Chevron paid $95 million. Shell paid $110 million. By 2002, 15 oil companies had paid a total of almost $440 million."

In February 2006, the Department "admitted that energy companies might escape more than $7 billion in royalty payments over the next five years because of errors in leases signed in the 1990s."

Indictment for Benzene Pollution Violating Clean Air Act (2000)

The New Yorker reported that "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." According to the Department of Justice, Koch Industries, Koch Petroleum Group, and four employees were "charged with violating federal air and hazardous waste laws at Koch Petroleum Group's West Plant refinery near Corpus Christi. The indictment also charges the defendants with conspiracy and making false statements to Texas environmental officials." Koch was liable for up to $350 million in fines, with four of its employees facing up to 35 years in prison.

In 2001, after George W. Bush became President, a plea agreement with a smaller penalty was reached. Koch "eventually pleaded guilty to one criminal charge of covering up environmental violations, including the falsification of documents, and paid a twenty-million-dollar fine."

$1.7 Million Fine for DuPont Plant Violations (2009)

In 2009, Invista (a Koch subsidiary) reached an agreement with the EPA to "pay a $1.7 million civil penalty and spend up to an estimated $500 million to correct self-reported environmental violations discovered at facilities in seven states." At the time, this was the largest ever settlement under the EPA's audit policy, which allows the agency to waive penalties for voluntarily disclosed violations. After Invista acquired 12 facilities from DuPont in 2004, it had "disclosed more than 680 violations of water, air, hazardous waste, emergency planning and preparedness, and pesticide regulations" to the EPA.

Company Background

On its website, Koch Industries states that the company is named after Fred C. Koch, "who developed an improved method of converting heavy oil into gasoline in 1927." According to the John Birch Society's New American publication, Koch "was an early member of the The John Birch Society’s National Council, an advisory group to JBS founder Robert Welch." In one profile on the evolution of the company, published by Koch Industries, he "spent most of 1924 and 1925 in England as an employee of the Medway Oil and Storage Company." Subsequently he became the third partner in Keith-Winkler, a Wichita Kansas engineering firm which had been founded by Lewis Winkler and Dobie Keith. Keith left the firm in approximately 1926 and Winkler and Koch's firm struggled by on "small, low-margin projects." The pairs fortunes changed when Koch developed a thermal cracking process which was sold to "several independent refineries in 1928 and 1929." By 1931 the company was known as the Winkler-Koch Engineering Company. When Winkler and Koch "ended their partnership in 1945," Koch established Koch Engineering Company.

In 1940, Koch co-founded the Wood River Oil & Refining Company, which six years later bought the Rock Island Oil & Refining Company's refinery in southwestern Oklahoma. In 1959 Wood River Oil & Refining Company's name was changed to Rock Island Oil & Refining Company. The company's name was changed once more in 1968 to Koch Industries following the death of Fred Koch.

From its foundation in the 1940's up until the late 1980's Koch Industries business interests were dominated by oil and gas industry operations, along with some ranching and engineering subsidiaries.

Koch Industries has 70,000 employees globally, and had annual sales of $115 billion in 2013.

Expansion into Commodity Speculation and Derivatives

In addition to successful investments and expansion of its resource extraction operations over the years, Koch Industries has engaged in commodity speculation and created new types of derivatives. The Nation has reported that Koch Industries was "among the largest traders (including Goldman Sachs and Morgan Stanley) speculating on the price of oil in the summer of 2008," afterwards also playing a prominent role in lobbying against regulation of the derivatives market, according to Bloomberg Businessweek.

Largest Foreign Lease Holder in Canadian Tar Sands

Koch Industries is the largest foreign lease holder in Canada's oil sands with "leases on 1.1 million acres -- an area nearly the size of Delaware -- in the oil sands region of Alberta, Canada," according to a study of Alberta provincial records by the International Forum on Globalization and confirmed by the Washington Post. Koch Industries may "narrowly trail" the top two Canadian companies, Cenovus Energy and Athabasca Oil Company, which each lease just shy of 1.6 million acres. The Post further reported that "[a]n oil industry official with direct knowledge of Koch’s lease holdings, who spoke on the condition of anonymity to protect his relationship with the firm, has said that Koch’s leases in the oil-sands region are 'closer to 2 million,'" in which case Koch Industries would be the largest leaseholder in Alberta's tar sands. Koch Industries is responsible for close to 25 percent of the oil tar sands crude that is imported into the United States, and is one of the biggest refiners of Alberta oil sands crude oil.

Subsidiaries

• Invista polymer company which was acquired from DuPont and manufactures Lycra fiber and Stainmaster carpet
• Koch Minerals which handles bulk commodities
• Koch Carbon which trades and transports petroleum coke, coal, cement, pulp and paper, sulfur and other commodities
• Koch Exploration Company which acquires, develops and trades petroleum and natural gas properties in the United States, Canada and Brazil
• Flint Hills Resources which operates crude oil refineries in Alaska, Minnesota, and Texas, ethanol plants in Iowa and petrochemical plants in Illinois, Michigan and Texas.
• Koch Pipeline Company owns and operates approximately 4,000 miles of pipelines used to transport crude oil, refined petroleum products, natural gas liquids and chemicals
• Koch Alaska Pipeline Company owns an approximate 3 percent interest in the Trans Alaska Pipeline System
• 28% interest in the Colonial Pipeline Company which it describes as the "owner and operator of the world’s largest-volume refined products pipeline."
• Koch Supply & Trading companies "provide risk management services in crude oil; refined petroleum products; natural gas and gas liquids; gas, power and emissions; industrial metals; and other commodities and financial instruments. It also "operates an 80,000 barrel-per-day refinery in Rotterdam, the Netherlands."
• Koch Fertilizer is, according to Koch's website, the world's "third-largest maker of nitrogen fertilizer," and Koch owns or has interests in fertilizer plants in the United States, Canada, and Trinidad and Tobago.
• Georgia-Pacific, which has approximately 300 manufacturing facilities across North America, South America and Europe. Georgia-Pacific facilities include pulp, paper and tissue operations, as well as gypsum plants, box plants and building products operations. Well-known products include Brawny paper towels and AngelSoft toilet paper.
• Subsidiaries of Koch Agriculture Company have cattle ranching businesses in Montana, Kansas, Texas, and South America.

Mergers & acquisitions

Entergy (2001)

In 2001, power company Entergy formed a partnership with Koch Industries to form Entergy- Koch, LP.

Invista (Lycra, etc), 2003

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.

Georgia-Pacific (mills, paper products), 2005

In 2005 Koch Industries acquired the American pulp and paper products giant Georgia-Pacific, which now operates as a subsidiary.

Product brands

Georgia-Pacific's brands include Quilted Northern, Angel Soft, Brawny, Sparkle, Vanity Fair, and Dixie cups. Internationally, its brands include Lotus, Colhogar, Delica, Tenderly, and the Vania brand of personal care products.

Lumber mills

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.

Koch Brothers' Fortune Grows as Koch Employment Declines

On Thursday, September 22nd, MSNBC's Rachel Maddow commented on the publication of the 2011 Forbes 400 and the growth of the Koch brothers' fortune, noting that, rather than being "job creators," as their fortune has risen since 2007, the number of people employed by Koch Industries has fallen. She showed the following chart:

The "Rachel Maddow Show" associate Will Fernia summarized the source of this information as follows:

The net worth of the Koch "job creators" comes from the individual profiles of the Forbes 400 list, with the worth of each brother added together. We took just the October number for each year.

The employee number comes for different souces depending on the year but basically the source is Koch Industries itself. In their current company description they say, "With a presence in nearly 60 countries and about 67,000 employees..." So that's where the 67,000 number comes from for 2011 on the chart. But the 2007 number comes from this 2007 Forbes profile of Koch Industries in which they are ascribed 80,000 employees.

Contact

Wichita, KS

4111 E. 37th St. North
Wichita, KS 67220-3203
Phone: 316-828-5500
Fax: 316-828-5739
Web address: http://www.kochind.com

Washington, DC

600 14th St. NW
Washington, DC

Articles and resources

Related SourceWatch articles

• Americans for Responsible Leadership
• Cato Institute
• Center to Protect Patient Rights
• Charles G. Koch
• Climate change skeptics
• Corbin Robertson
• David H. Koch
• Invista
• Invista Seaford Power Plant
• Invista Waynesboro Power Plant
• Koch Family Foundations
• Koch Network
• Koch Event 2010-06 Attendees
• Meat & Dairy industry
• Oil industry
• Natural Resource Partners
• Plants Need CO2
• Tea Party movement funding
• Vernon L. Smith
• Kyle Vann
• Sean Noble

External resources

• Center for Responsive Politics, "Koch Industries", Open Secrets, accessed April 2011.
• Center for Responsive Politics, "Koch Industries: Totals", Open Secrets, accessed April 2011.
• Center for Responsive Politics, "Koch Industries: Recipients", Open Secrets, accessed April 2011.
• Center for Responsive Politics, "Koch Industries: Congressional Committees: 2010", Open Secrets, accessed April 2011.
• Center for Responsive Politics, "Koch Industries: Lobbying", Open Secrets, accessed April 2011.
• Center for Responsive Politics, "Koch Industries: Individual Contributors", Open Secrets, accessed April 2011.
• Center for Responsive Politics, "Koch Industries: Other Data", Open Secrets, accessed April 2011.
• Center for Responsive Politics, "Koch Industries", accessed April 2011. (This is a listing of the search results of the Open Secreets database for the company).
• "Koch Brothers' Products," List of Koch Industries Products.

External articles

• Robert Parry, D(OIL)E: What Wouldn't Bob Do For Koch Oil?, The Nation, August 26, 1996.
• Robert Parry, Petrodollar Scholars (sidebar to the above), The Nation, August 26, 1996.
• Curtis Moore, Money talks, but often hides its sources Journal of the Society of Environmental Journalists, Vol. 10 No. 3, Fall 2000.
• Chris Graham, Invista, Koch announce leadership changes, Augusta Free Press, 24 November, 2003.
• Jeremy Grant, The private empire of Koch Industries (interview), Financial Times, January 30, 2004.
• Koch Industries and the Pollution of the Bush White House, Media Whores Online, accessed April 2004.
• Curtis Moore, Rethinking the Think Tanks, Sierra Club, accessed April 2004.
• Bob Williams and Kevin Bogardus, Koch's Low Profile Belies Political Power, The Center for Public Integrity, July 15, 2004.
• Josephine Hearn, "Bush aide leaving to join Koch Industries," The Hill, February 1, 2005.
• Loren Steffy, "Another BP question surfaces", Houston Chronicle, August 5, 2006. (This story reports on a lawsuit by Koch Industries over damaged underground pipes at a plant it bought from BP.)
• Judy Pasternak, "Bush again pushes 3 nominees seen as pro-industry: The president could skirt the Senate by using recess appointments," Los Angeles Times, April 1, 2007.
• Michael Ash and James K. Boyce, "Meet the Toxic 100 Corporate Air Polluters," Political Economy Research Institute, Truthout, March 31, 2010.
• How Koch Industries Has Supported Climate Change Denial By Katie Fehrenbacher, Aug. 23, 2010.
• Steven Rosenfeld, "How One Guy Stood Up to the Koch Brothers and Won!", Alternet, October 25, 2013.
• Andy Kroll, "California Watchdog: 'Koch Brothers Network' Behind $15 Million Dark-Money Donations", Mother Jones, October 25, 2013.

Koch Industries' Political Activities

Tar Sands, 2011

In 2011, TransCanada requested permission to build a 1,661 mile pipeline from Canada's tar sands oil fields to U.S. refiners in Texas. The so-called Keystone XL pipeline would import as much as 510,000 barrels per day. Koch Industries is responsible for close to 25 percent of the oil tar sands crude that is imported into the United States, and is one of the biggest refiners of Alberta oil sands crude oil. Some speculated that Koch Industries would benefit significantly from the project.

Koch Industries is the largest foreign lease holder in Canada's oil sands, holding "leases on 1.1 million acres -- an area nearly the size of Delaware -- in the oil sands region of Alberta, Canada," according to a study of Alberta provincial records by the International Forum on Globalization and confirmed by the Washington Post. The Washington Post further reports that "industry sources familiar with oil sands leases said Koch’s lease holdings could be closer to two million acres."

Earlier Editing Notes=

• I deleted the Thomas Frank excerpt (posted below) mainly because leaving it there implies that the "Kochtopus" tag was a term used by "wags". From what I can see it was a term coined in the early 1980's by Murray Rothbard during a factional battle within the Libertarian Party. ("Big News! Lib. Forum Reorganized!" "LP/10: A Mixed Bag," "The Kochtopus: Convulsions and Contradictions," "Hayek's Denationalised Money," "Against a Government Space Program," "Errata," "Consolation for Activists." The Libertarian Forum, Vol. 15 Nos. 5-6 (August 1981-January 1982).[9] There is more disvussion on the politics of Rothbard here.

The original posting that I edited out was: "The Kochs influence is so well known in Washington," Thomas Frank reports, "that wags refer to their intellectual empire as 'the Kochtopus.'" (What's the Matter with Kansas?, 82)

It would be good to include a reference to the term Koctopus but it would be best if the origins and context of it were right.

• I deleted the ref to the Triad Management Services as a front group - an overly broad use of the term as it is, as far as I understand, a consulting/advisory company/service rather than an advocacy group. While there are a few refs to TMS around 1998 do we know if it still operates and its relationship fo Koch entities. It would be good if any ref to TMS in this was either more up to date than 7 year old info or put any refs to TMS in the past tense.

As I'm not esp familiar with the topic maybe this is something Sheldon knows about.--Bob Burton 20:04, 5 Mar 2005 (EST)

Looking into a citation re: Fred Koch co-founding the John Birch Society, that appears to be unclear. Koch's website claims he was an early "supporter" [10], not a founder, which is consistent with a book by Sara Diamond titled Roads to Dominion: Right-Wing Movements and Political Power in the United States--see page 324[11]. Wikipedia cites Forbes and Hoovers in stating that Fred Koch was a JBS co-founder, which are generally considered solid sources but they are not as specific as Diamond's citation of The Blue Book of the John Birch Society, which states Fred Koch became a JBS Council member in 1964 rather than one of the original 26 members. Lee Fang at ThinkProgress has referred to Fred Koch as a "board member" [12] rather than a founder. This conflicting info should be made transparent, it is problematic to continue allow this to set in as conventional wisdom in the Koch Industries story unless there is a more clear indicator that Fred did indeed help found JBS.

This section needs revision and substantiation:

Climate denial and delay

Fighting greenhouse gas regulations

ALEC vs. regional climate accords, 2011 - hidden involvement in at least 6 states

For more detail, see the "Climate Change" section of ALEC.

"The...Koch brothers and their dirty-energy buddies are now bent on dismantling one of the nation’s last hopes for doing anything about climate change in the near term: regional climate accords.

Today, a total of 32 states are active participants or observing members in the Regional Greenhouse Gas Initiative in the Northeast, the Midwestern Greenhouse Gas Reduction Accord, or the Western Climate Initiative. [ But ] that number will get a lot smaller if the American Legislative Exchange Council — a D.C.-based conservative advocacy organization funded by Koch family foundations, ExxonMobil, and other oil companies and big corporations—gets its way.

ALEC offers legislative templates to state lawmakers who don’t want the hassle of writing their own conservative bills....[and] has produced 800 to 1,000 pieces of so-called “model legislation.” [access to which is restricted]... which makes it difficult to trace a bill’s language back to ALEC.

But...it looks like the template has been getting a lot of use lately. Language that regurgitates all of the right’s favorite—and in many cases fallacious—anti-cap-and-trade talking points has cropped up in nearly identical form in resolutions or bills in at least six states...Last year in Michigan...This year...in Montana, New Mexico, Oregon, and Washington...New Hampshire."