At an EPA listening to last summer time, representatives from Koch Industries argued that reasonable ranges of the toxic chemical dioxin should not be designated as a most cancers threat for people.
When members of Congress sought larger safety at chemical plants to guard against terrorist attacks, Koch Industries lobbyists prowled Capitol Hill to voice their opposition.
And when Congress moved to strengthen regulation of the monetary markets after latest collapses, Koch Industries a major commodities and derivatives trader deployed a phalanx of lobbyists to resist proposed changes.
Charles and David Koch, the homeowners of the country’s second-largest private company, are libertarians of long standing, who contend that government rules, taxes and subsidies stifle individual initiative and hamper American competitiveness. Lately, the Kochs have performed an more and more public role as financial angels for conservative causes, politicians and foundations.
What’s not so effectively-recognized is the activity of Koch Industries within the trenches in Washington, the place a Heart for Public Integrity examination of lobbying disclosure files and federal regulatory records reveals a lobbying steamroller for the company’s pursuits, at instances in battle with its public pose.
The money that Koch (pronounced “coke has spent on lobbying in Washington has soared in recent times, from $857,000 in 2004 to $20 million in 2008. The Kochs then spent another $20.5 million over the following two years to affect federal policy, because the company’s lobbyists and officials sought to mold, intestine or kill greater than a hundred prospective bills or laws.
Oil is the core of the Koch enterprise empire, and the company’s lobbyists and officials have efficiently fought to preserve the industry’s tax breaks and credit, and to defeat attempts by Congress to regulate greenhouse gases.
But Koch’s diversified interests, and thus its lobbying actions, lengthen far past petroleum. Koch firms commerce carbon emission credits in Europe and derivatives in the U.S. They make jet gas in Alaska from North Slope oil, and gasoline in Minnesota from the oil sands of Canada. They increase cattle in Montana and manufacture spandex in China, ethanol in Iowa, fertilizer in Trinidad, nylon in Holland, napkins in France and toilet paper in Wisconsin.
Based on the most recent Forbes magazine rankings, Koch had $one hundred billion in revenues in 2009 on a par with company giants like IBM or Verizon and stood a detailed second to Cargill Inc. on the listing of the most important non-public US corporations. The agency has 70,000 employees, and a presence in 60 countries and virtually every state.
Koch’s choice to pour tens of millions into lobbying Washington has put them excessive on the checklist of firms whose lobbyists work the corridors of the nation’s capital. Final 12 months, Koch Industries ranked in the top five roughly on a par with BP and Royal Dutch Shell in lobbying expenses among oil and gasoline firms, in accordance with the middle for Responsive Politics.
These totals don’t embrace the work of the trade associations that Koch uses to represent its interests in Washington. There’s a significant trade group known as the Nationwide Petrochemical & Refiners Association, and obscure organizations just like the green-sounding National Environmental Development Association’s Clear Air Challenge, whose membership lists Koch and two of its subsidiaries (Georgia-Pacific and Invista) with a dozen industrial giants like ExxonMobil Corp., Normal Electric Co. and Alcoa Inc.
Koch’s lobbyists are known on Capitol Hill for maintaining a low profile. There are not any former U.S. senators or House committee chairmen on the payroll. The agency had 30 registered lobbyists in 2010, many of whom are Washington insiders with earlier experience as congressional staffers or federal agency staff.
Gregory Zerzan is an efficient instance. Zerzan was a senior counsel for the Home Financial Providers Committee earlier than serving as an appearing assistant secretary and deputy assistant secretary on the U.S. Treasury Division through the George W. Bush administration. Zerzan then labored as counsel and head of worldwide public coverage for the International Swaps and Derivative Affiliation earlier than joining Koch Industries as a lobbyist.
Koch clout is augmented by marketing campaign donations to parties and candidates for federal office $11 million within the final two many years, in response to the center for Responsive Politics and generous gifts from three household foundations to universities and conservative organizations and curiosity teams.
According to IRS data, the Koch foundations are essential donors (having given $three.Four million from 2007 through 2009) to the People for Prosperity Basis, a nonprofit identified for its support of the Tea Occasion movement. Among the many organizations which have every obtained one million dollars or more during the last 5 years from Koch foundations are the Cato Institute, the Heritage Foundation, and two conservative think tanks at George Mason College in Virginia: the Institute for Humane Studies and the Mercatus Middle.
The Kochs primarily donate to conservative candidates and causes however have given greater than $1 million within the last decade to the liberal Brookings Establishment. And amongst politicians they supported final year was Andrew Cuomo, a Democrat elected governor of new York with $87,000 from the Koch family.
The emergence of “the Koch internet political action, campaign giving, funding of teams engaged in political action and campaigns, conferences to expand political and policy influence is a hanging phenomenon, said Norman Ornstein, a scholar at the conservative American Enterprise Institute.
The center asked Koch Industries and its lobbyists in Washington, in a dozen emails and phone calls over more than two weeks, to touch upon the firm’s lobbying efforts. Koch’s representatives declined the opportunity.
But in a March 1 column within the Wall Avenue Journal, Charles Koch defended his and his company’s practices. “As a matter of principle our firm has been outspoken in defense of financial freedom, Koch wrote. “This nation would be better off if each firm would do the same. As a substitute, we see far too many businesses that paint their tails white and run with the antelope. /p>
The Koch brothers are renowned as free market libertarians. However as a serious trader in vitality and monetary markets, Koch Industries also is aware of how you can hedge.
As its company officials and publicists decried ethanol as a pricey government boondoggle, the Kochs purchased 4 ethanol plants in Iowa in latest months, with a combined annual capability of 435 million gallons. In Washington (the place ethanol tax subsidies value the Treasury some $6 billion annually) Koch representatives lobbied Congress on ethanol and other biofuel subsidies.
“New or emerging markets, corresponding to renewable fuels, are a chance for us to create worth within the rules the government units, Flint Hills Sources President Brad Razook advised his workers within the January firm publication.
Koch Industries status as an ethanol player goes past its new Iowa plants. Koch blends ethanol and gasoline close by, in its Minnesota refinery. By its own account, the company’s subsidiaries, Flint Hills and Koch Provide & Trading, at present buy and market about one-tenth of all the ethanol produced within the United States.
The Kochs appear to have recognized that their actions might sound hypocritical and in a January 2011 e-newsletter the corporate tried to clarify things to employees who’ve been “scratching their heads and questioning: what’s going on? /p>
“After all, ethanol manufacturing is heavily subsidized, mandated and protected, Koch Industries acknowledged, “while Koch corporations openly oppose such government programs. /p>
Realism had received out. The company has the “capabilities necessary to achieve success within the ethanol business, the publication explained. The new ethanol plants “fit properly geographically with several other FHR property, together with fuel terminals, a widespread distribution network that includes Iowa, and the Pine Bend [Minnesota] refinery. /p>
“We are not going to place our company and our staff at a competitive disadvantage by not taking part in applications that are available to our competitors, Razook assured Koch employees.
The corporate has a historical past of pragmatism in business affairs. Koch was a pioneer importer of Russian oil to the United States, including a 2002 shipment of Russian crude that Koch offered to the U.S. government to help fill the U.S. Strategic Petroleum Reserve. And though it opposes a cap-and-commerce solution to global warming for the United States, Koch makes cash buying and selling emissions credit beneath an identical program in Europe.
Nor is ethanol the only form of company welfare Koch Industries supports. Because it ventures into biofuel manufacturing, and makes use of various fuels to power its plants, the corporate has its lobbyists working “to expand the [tax] credit score for renewable electricity production made from biomass.
Georgia-Pacific, the company reported in 2008, was chargeable for more than 10 percent of all the renewable biomass electricity generated within the U.S.
Koch’s efforts to limit regulation of toxic substances illustrate the breadth of its lobbying operation.
In 2004 Koch Industries bought Invista, a subsidiary of DuPont, recognized for manufacturing Lycra, Stainmaster carpets and other textiles and fabrics. In 2005, as part of the identical corporate diversification and enlargement strategy, Koch Industries bought the enormous wooden and paper merchandise agency, Georgia-Pacific, including Brawny paper towels, Angel Soft rest room paper, Dixie cups and dozens of factories and plants to its holdings.
Koch has since worked, on Capitol Hill and in various regulatory proceedings, to dilute or halt tighter federal regulation of a number of toxic byproducts that would affect its backside line, together with dioxin, asbestos and formaldehyde, all of which have been linked to cancer.
Dioxin is launched from incinerators, hazardous waste remedy, pesticide manufacturing, paper plants and different sources. With 165 manufacturing amenities across the United States, Georgia-Pacific “has a big curiosity in and will probably be significantly impacted, by the EPA’s choices on dioxin, Koch officials instructed the agency in April 2010.
A whole bunch of staff would have to be hired, and trucks and earth-shifting gear leased or bought. And “of the restricted number of hazardous waste landfills operating within the United States, only a few are willing to simply accept dioxin-containing soil, the corporate famous.
“Treatment and disposal of dioxin-containing soil is already a difficult, costly and capability-restricted downside that might solely get worse if further volumes were generated. /p>
Courtesy of the center for Responsive Politics
It’s been three decades since the environmental catastrophes at Love Canal, N.Y., and Times Beach, Mo., launched the American public to the dangers of dioxin. However in the EPA listening to at the Washington Hilton last July, toxicologist John M. DeSesso, a marketing consultant talking on behalf of Georgia-Pacific, advised the agency that the scientific research on widespread ranges of exposure are still inconclusive. He urged further study.
The Environmental Working Group and quite a lot of public health organizations, in the meantime, chastised the EPA for dragging its ft, and reminded the company panel that another arm of the federal authorities, the U.S. Nationwide Toxicology Program, and the World Well being Organization have already categorised dioxin as a identified human carcinogen.
“Twenty-5 years after publishing its first assessment of dioxin the EPA has yet to establish a protected day by day dose for human exposure for “one of essentially the most-studied of all chemical pollutants, the EWG advised the panel. “It is EPA’s accountability to address this drawback with resolve with out regard to pressure from particular interests who stand to benefit financially from weak requirements and regulations. /p>
It isn’t just dioxin that has drawn Koch’s curiosity. On Capitol Hill, and in regulatory proceedings, Koch lobbyists and officials have resisted tighter authorities regulation of a gallery of toxic and carcinogenic substances, like asbestos, formaldehyde and benzene.
“GP strongly disagrees with the [Nationwide Toxicology Program] panel’s conclusion to checklist formaldehyde, a pure part of every cell in the body, as a human carcinogen, wrote Traylor Champion, the firm’s vice president for environmental affairs, in a February 2010 letter.
“Costly management necessities are being mandated on sources that have insignificant levels of HAP (hazardous air pollutants) emissions, a Georgia-Pacific environmental well being and security supervisor, James Eckenrode, complained to the EPA in November 2008, when it sought to use harder air pollution requirements on the firm’s manufacture of resins and formaldehyde.
Via its Flint Hills Resources subsidiary, Koch Industries operates a refinery close to Fairbanks, Alaska. “Refineries in Alaska are geographically remoted from the remainder of the U.S. market such that benzene extraction and sale into the petrochemical market could be infeasible, the company argued in 2006, when the EPA proposed new clean air limits on benzene. “Benzene reductions to ranges proposed on this rule would both require in depth and economically prohibitive capital upgrades at our facility or would end in a major reduction in gasoline production. /p>
When Koch Industries bought Georgia-Pacific, it inherited a titanic legal responsibility concerning asbestos. Georgia-Pacific had used asbestos to make gypsum-based mostly drywall merchandise, and starting within the 1980s the firm turned a goal for more than 340,000 claims by plaintiffs who said they suffered lung and other diseases, including mesothelioma, a deadly cancer. By 2005, the company was spending $200 million a yr and had to build a $1.5 billion reserve fund for asbestos liabilities and defense costs.
In a 2008 Koch Industries publication, Basic Counsel Mark Holden griped that “many of those claims are an outright abuse of the legal system that often involve individuals who usually are not sick all due to over-zealous litigators and a authorized system that offers them perverse incentives. /p>
The number of recent claims has dropped with tougher federal safety standards. However within the 110th Congress Koch lobbyists nonetheless sought to sway members on legislative proposals intending to limit the use of asbestos and improve public data, even Senate Decision 462, which known as for a “National Asbestos Awareness Week. /p>
World WARMING AND LOW CARBON Fuel Standards
It’s within the Kochs industrial curiosity to preserve America’s reliance on carbon-based vitality sources. Despite latest diversification, Koch stays a significant petrochemical firm with refineries in North Pole, Alaska; Corpus Christi, Texas; Rosemount, Minn., and Rotterdam in the Netherlands; an array of chemical plants; a coal subsidiary (the C. Reiss Coal Co.) and four,000 miles of pipelines.
So it isn’t shocking that, when the Obama administration and the Democrats on Capitol Hill proposed to regulate the emission of greenhouse gases lately, Koch Industries responded with a fervent counteroffensive.
“Oppose authorities mandates on carbon reduction provisions [and] provisions associated to climate change, and oppose whole invoice, Koch lobbyist Robert P. Hall wrote, listing his targets on the 2008 lobbying disclosure form.
The firm’s lobbying expenditures soared in 2008 as Koch Industries and its subsidiaries Georgia-Pacific, Invista, Flint Hills Resources, Koch Carbon, Koch Nitrogen peppered the EPA and members of Congress with objections. Several labored on measures that will strip the EPA of the ability to regulate greenhouse gases through the Clean Air Act.
Koch-supported groups like the Nationwide Environmental Development Association’s Clear Air Challenge joined the hassle. In a latest meeting, five Koch representatives joined colleagues from ExxonMobil, ConocoPhillips, Eli Lilly and other NEDA-CAP members to register considerations with EPA officials over the proposed obligatory reporting rule for greenhouse gasoline emissions, the file reveals.
Koch’s lobbying efforts on climate change are matched by a public marketing campaign. By way of three foundations the Claude R. Lambe Basis, the Charles G. Koch Basis and the David H. Koch Basis funded and administered by Koch relations and workers, the Kochs have donated a number of million dollars in recent times to assume tanks and teams which have sought to discredit local weather science and EPA’s efforts to reduce greenhouse gases.
“Why are such unproven or false claims promoted? the Koch Industries company publication, Discovery, asked in an article on international warming entitled, “Blowing Smoke. /p>
“Scientists have perverted the peer assessment process, doing the whole lot potential to prevent opinions contrary to the alarmist view from being heard, the article stated. Humans should adapt to international warming, not attempt to slow or stop it, the publication really useful. “Since we can’t control Mother Nature, let’s figure out learn how to get alongside along with her modifications. /p>
In early March, members of the Republican-led House Power and Commerce Committee a lot of whom had acquired marketing campaign contributions from Koch workers and PACs last fall voted to bar the EPA from regulating greenhouse gases below the Clean Air Act. Their action has been endorsed by Speaker John Boehner and Republican House leaders.
Of specific concern to Koch lobbyists in Washington, in accordance with their disclosure varieties, are measures to encourage or require using low-carbon fuels. These sources of vitality, in their manufacture and use, contribute lower than different fuels to international warming.
The Koch refinery in Minnesota is designed to process heavy “high-carbon Canadian crude oil, and is fed by a pipeline from Canada. Koch “is among Canada’s largest crude oil purchasers, shippers and exporters, the company says, with a trading and provide office in Calgary and a terminal in Hardisty, Alberta. A lot of the oil comes from the mining of oil sands, which have a particularly heavy carbon footprint as a result of the method releases greenhouse gases from peat lands and boreal forest, and requires quite a lot of power to heat and sweat the oil out.
“Canadian crude generates extra greenhouse fuel emissions and so low-carbon requirements “would cripple refiners that rely on heavy crude feedstocks, the Koch Industries webpage notes. “It can be particularly devastating for refiners that use heavy Canadian crude. /p>
When lawmakers in Washington and states like California sought to handle global warming by requiring the use of low carbon fuels, Koch Industries responded. Koch lobbyists listed the laws as a lobbying precedence on Capitol Hill. And in California, where a large-ranging collection of measures to slow local weather change were launched by former Gov. Arnold Schwarzenegger, Koch joined the fight to defeat them.
A Koch subsidiary, Flint Hills Resources, donated 1,000,000 dollars in help of Proposition 23, an unsuccessful try funded by Koch and different vitality corporations final 12 months to stall implementation of the low-carbon requirements and different remedial local weather measures in California.
Energy Business TAX BREAKS
Koch lobbyists spend a lot of their time, in response to their disclosure reviews, preventing attempts by members of Congress to curb worth-gouging, windfall profit-taking and hypothesis within the oil trade. To this same end, Koch officials worked to dilute a 2009 Federal Trade Commission rule governing manipulation of the vitality markets.
Meanwhile, Koch has lobbied to preserve some of the oil industry’s coveted tax breaks and credit.
One profit is understood because the Section 199 deduction, permitted by Congress several years in the past to help the laborious-pressed U.S. manufacturing sector. In light of the oil and gasoline industry’s hearty earnings, the Obama administration and members of Congress have sought to end the Section 199 subsidy for energy firms and save the U.S. Treasury $14 billion over 10 years. However Koch lobbyists and trade associations have worked to preserve the deduction.
One other business tax break that drew the help of Koch representatives is the venerable “LIFO (last-in, first-out) accounting rule. It permits vitality companies effectively to boost the value of their present stock (and thus pay decrease taxes on earnings from sales) when the value of oil soars.
Underneath LIFO, the oil in a company’s stock, no matter what it really price, is valued at the cost of the final-acquired (usually highest-value) barrel. The LIFO rule has been a target lately for each Democrats and Republicans in Washington, who would like to raise income with out elevating taxes.
BUSH TAX CUTS
Koch lobbyists listed the expiring Bush tax cuts as a lobbying objective last year, and the Koch brothers have been among an elite, comparatively few People who profited when the income tax cuts for these earning more than $250,000 a 12 months were extended in a 12 months-finish deal.
One other of the Bush tax breaks had special which means for the Koch brothers. Charles Koch, 75, and David Koch, 70, are tied for fifth place, each with a internet worth of $21.5 billion, in the newest Forbes rankings of the wealthiest Americans. Included within the deal to extend the Bush tax cuts was a proposal to scale back the federal estate tax. The Kochs have, historically, been gamers in an ongoing effort by wealthy families to curb or remove the tax on inheritances.
The final tax deal reached by the White House and Republicans in Congress in December set the estate tax at 35 p.c. That makes the brand new price considerably more favorable than in the course of the Clinton (fifty five p.c) or even the Bush (45 %) years, and the bottom it’s been for the reason that thirties. If one of the patriarchs should die while the brand new charge is in effect, it might save the Koch household billions of dollars.
TERRORISM AND Nationwide Security
Another main preoccupation of Koch Industries lobbyists throughout recent sessions of Congress was the Chemical Facility Anti-Terrorism Standards, a federal effort to identify and regulate chemical services that could possibly be weak to terrorist assaults.
In 2009, the Home passed laws that might toughen the standards, and require manufacturers like Koch to make use of safer chemicals and processes to add one other stage of protection and minimize the effects of toxic releases from terrorist attacks or catastrophic accidents.
Koch opposed the modifications, claiming they “increase cost and regulatory burden whereas shifting focus away from safety and towards environmental concerns. The chemical security provisions have been listed as lobbying targets by Koch representatives in 2007, 2008, 2009 and 2010.
In accordance with EPA data, Koch has 4 amenities that use chlorine dioxide—in Palatka, Fla.; Zachary, La.; New Augusta, Miss.; and Camas, Wash. It has an Invista plant that uses formaldehyde in LaPorte, Texas. Its Flint Hills refinery in Corpus Christi, Texas, makes use of hydrofluoric acid in refining gasoline.
Necessary use of safer know-how would “result in much more job losses and higher client prices as American manufacturers battle to comply, Koch contends in a press release on the chemical safety requirements on its website. The House laws would “restructure, and likely add extra value to security programs at the moment in place for Koch companies facilities. /p>
Koch pulls no punches when assigning the blame for the nice financial meltdown of 2008: It was the government’s fault, not the markets.
“Almost all of these issues (and far of the present chaos) are, at their root, the result of political failure, stated Steve Feilmeier, the chief financial officer for Koch Industries, on the top of the crash.
It is not surprising, then, that Koch Industries a significant player in international trading markets resisted elevated regulation and spent closely on lobbyists who worked to form the 2010 Dodd-Frank Act and other vehicles for monetary reform. The Koch lobbyists focused, in particular, on provisions aimed toward regulating systemic risk within the financial markets, and using derivatives.
Koch Industries began out buying and selling crude oil greater than four many years ago, however its buying and selling group has since branched into commodities, derivatives and other risk management products.
In that point, the marketplace for buying and selling derivatives and swaps in the energy industry has gone largely unregulated. And in past Congresses, Koch lobbyists labored to preserve the exemption, recognized as the “Enron Loophole, that excused energy commodity contracts from regulation.
However the Dodd-Frank regulation gave the Commodity Futures Trading Fee and the Securities and Trade Fee the authority to craft new guidelines to subject traders within the vitality business to elevated regulation and transparency, capital and margin necessities, and supervision by a derivatives clearing house. Koch lobbyists worked to favorably shape the invoice, and have not stopped working since it was handed.
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