Koch Industries’ Internet Of Affect

Hatim Al Anwar General Trading LLC - ImportersAt an EPA listening to last summer time, representatives from Koch Industries argued that moderate ranges of the toxic chemical dioxin shouldn’t be designated as a cancer danger for people.

When members of Congress sought greater security at chemical plants to guard against terrorist assaults, Koch Industries lobbyists prowled Capitol Hill to voice their opposition.

And when Congress moved to strengthen regulation of the financial markets after current collapses, Koch Industries a serious commodities and derivatives trader deployed a phalanx of lobbyists to resist proposed changes.

Charles and David Koch, the house owners of the country’s second-largest private corporation, are libertarians of lengthy standing, who contend that authorities rules, taxes and subsidies stifle particular person initiative and hamper American competitiveness. In recent years, the Kochs have played an more and more public position as monetary angels for conservative causes, politicians and foundations.

What’s not so effectively-known is the exercise of Koch Industries in the trenches in Washington, where a Center for Public Integrity examination of lobbying disclosure recordsdata and federal regulatory records reveals a lobbying steamroller for the company’s pursuits, at instances in conflict with its public pose.

The money that Koch (pronounced “coke has spent on lobbying in Washington has soared lately, from $857,000 in 2004 to $20 million in 2008. The Kochs then spent one other $20.5 million over the next two years to influence federal policy, because the company’s lobbyists and officials sought to mold, gut or kill more than one hundred prospective payments or rules.

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 pursuits, and thus its lobbying activities, prolong far beyond petroleum. Koch firms commerce carbon emission credits in Europe and derivatives in the U.S. They make jet gasoline in Alaska from North Slope oil, and gasoline in Minnesota from the oil sands of Canada. They elevate 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.

In accordance with the most recent Forbes journal rankings, Koch had $one hundred billion in revenues in 2009 on a par with corporate giants like IBM or Verizon and stood a detailed second to Cargill Inc. on the list of the biggest private US corporations. The firm has 70,000 employees, and a presence in 60 countries and nearly every state.

Koch’s determination to pour millions into lobbying Washington has put them excessive on the checklist of companies 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 gas companies, according to the center for Responsive Politics.

These totals don’t embrace the work of the commerce associations that Koch makes use of to characterize its interests in Washington. There’s a significant industry group known as the Nationwide Petrochemical & Refiners Affiliation, and obscure organizations like the green-sounding Nationwide Environmental Development Association’s Clear Air Undertaking, whose membership lists Koch and two of its subsidiaries (Georgia-Pacific and Invista) with a dozen industrial giants like ExxonMobil Corp., Basic Electric Co. and Alcoa Inc.

Koch’s lobbyists are identified on Capitol Hill for maintaining a low profile. There are no former U.S. senators or Home committee chairmen on the payroll. The agency had 30 registered lobbyists in 2010, many of whom are Washington insiders with earlier expertise as congressional staffers or federal company employees.

Gregory Zerzan is an efficient instance. Zerzan was a senior counsel for the Home Financial Services Committee earlier than serving as an appearing assistant secretary and deputy assistant secretary on the U.S. Treasury Department in the course of the George W. Bush administration. Zerzan then worked as counsel and head of global public coverage for the International Swaps and Derivative Association before joining Koch Industries as a lobbyist.

Koch clout is augmented by marketing campaign donations to events and candidates for federal workplace $11 million in the last two a long time, in line with the center for Responsive Politics and generous gifts from three family foundations to universities and conservative organizations and curiosity teams.

Based on IRS information, the Koch foundations are important donors (having given $3.Four million from 2007 through 2009) to the Americans for Prosperity Basis, a nonprofit known for its support of the Tea Celebration motion. Among the organizations that have every obtained one million dollars or more over the last 5 years from Koch foundations are the Cato Institute, the Heritage Basis, and two conservative suppose tanks at George Mason University in Virginia: the Institute for Humane Studies and the Mercatus Center.

The Kochs primarily donate to conservative candidates and causes however have given greater than $1 million in the last decade to the liberal Brookings Institution. And amongst politicians they supported last yr was Andrew Cuomo, a Democrat elected governor of latest York with $87,000 from the Koch family.

The emergence of “the Koch internet political motion, campaign giving, funding of teams engaged in political action and campaigns, conferences to expand political and coverage affect 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 telephone calls over more than two weeks, to comment on the firm’s lobbying efforts. Koch’s representatives declined the chance.

But in a March 1 column in the Wall Avenue Journal, Charles Koch defended his and his company’s practices. “As a matter of principle our firm has been outspoken in protection of financial freedom, Koch wrote. “This nation can be higher off if every firm would do the same. As a substitute, we see far too many companies that paint their tails white and run with the antelope. /p>

ETHANOL

The Koch brothers are renowned as free market libertarians. However as a major trader in energy and monetary markets, Koch Industries additionally knows 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 capacity of 435 million gallons. In Washington (the place ethanol tax subsidies value the Treasury some $6 billion yearly) Koch representatives lobbied Congress on ethanol and other biofuel subsidies.

“New or emerging markets, equivalent to renewable fuels, are an opportunity for us to create value within the principles the federal government sets, Flint Hills Assets President Brad Razook instructed his workers within the January firm publication.

Koch Industries status as an ethanol participant goes past its new Iowa plants. Koch blends ethanol and gasoline nearby, in its Minnesota refinery. By its own account, the company’s subsidiaries, Flint Hills and Koch Supply & Trading, at present buy and market about one-tenth of all the ethanol produced in the United States.

The Kochs seem to have recognized that their actions might seem hypocritical and in a January 2011 e-newsletter the company tried to explain issues to workers who have been “scratching their heads and questioning: what’s going on? /p>

“After all, ethanol manufacturing is closely subsidized, mandated and protected, Koch Industries acknowledged, “while Koch corporations openly oppose such authorities applications. /p>

Realism had received out. The corporate has the “capabilities necessary to achieve success within the ethanol industry, the e-newsletter explained. The brand new ethanol plants “fit nicely geographically with several other FHR assets, including gas terminals, a widespread distribution community that features Iowa, and the Pine Bend [Minnesota] refinery. /p>

“We will not be going to put our company and our staff at a competitive drawback by not collaborating in packages that are available to our rivals, Razook assured Koch employees.

The company has a historical past of pragmatism in industrial affairs. Koch was a pioneer importer of Russian oil to the United States, together with a 2002 shipment of Russian crude that Koch sold to the U.S. authorities to assist fill the U.S. Strategic Petroleum Reserve. And although it opposes a cap-and-commerce answer to international warming for the United States, Koch makes money buying and selling emissions credits underneath a similar program in Europe.

Nor is ethanol the only form of corporate welfare Koch Industries supports. As it ventures into biofuel production, and makes use of various fuels to power its plants, the company has its lobbyists working “to broaden the [tax] credit score for renewable electricity production made from biomass.

Georgia-Pacific, the company reported in 2008, was accountable for more than 10 percent of all of the renewable biomass electricity generated in the U.S.

TOXIC SUBSTANCES

Koch’s efforts to restrict regulation of toxic substances illustrate the breadth of its lobbying operation.

In 2004 Koch Industries purchased Invista, a subsidiary of DuPont, known for manufacturing Lycra, Stainmaster carpets and different textiles and fabrics. In 2005, as a part of the identical corporate diversification and growth strategy, Koch Industries bought the giant wooden and paper products agency, Georgia-Pacific, including Brawny paper towels, Angel Smooth bathroom paper, Dixie cups and dozens of factories and plants to its holdings.

Koch has since labored, on Capitol Hill and in varied regulatory proceedings, to dilute or halt tighter federal regulation of several toxic byproducts that might affect its backside line, including 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 facilities across the United States, Georgia-Pacific “has a big curiosity in and will probably be considerably impacted, by the EPA’s decisions on dioxin, Koch officials advised the agency in April 2010.

Tons of of employees must be hired, and trucks and earth-moving equipment leased or purchased. And “of the restricted variety of hazardous waste landfills working in the United States, very few are keen to just accept dioxin-containing soil, the corporate famous.

“Treatment and disposal of dioxin-containing soil is already a challenging, costly and capacity-restricted drawback that may only get worse if additional volumes had been generated. /p>

Courtesy of the middle for Responsive Politics

It’s been three decades because the environmental catastrophes at Love Canal, N.Y., and Instances Seaside, Mo., introduced the American public to the dangers of dioxin. But within the EPA hearing at the Washington Hilton last July, toxicologist John M. DeSesso, a marketing consultant speaking on behalf of Georgia-Pacific, informed the company that the scientific studies on frequent levels of publicity are still inconclusive. He urged further examine.

The Environmental Working Group and numerous public well being organizations, in the meantime, chastised the EPA for dragging its toes, and reminded the company panel that one other arm of the federal government, the U.S. Nationwide Toxicology Program, and the World Health Organization have already categorised dioxin as a known human carcinogen.

“Twenty-five years after publishing its first assessment of dioxin the EPA has yet to establish a protected every 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 handle 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 simply dioxin that has drawn Koch’s interest. On Capitol Hill, and in regulatory proceedings, Koch lobbyists and officials have resisted tighter government regulation of a gallery of toxic and carcinogenic substances, like asbestos, formaldehyde and benzene.

“GP strongly disagrees with the [National Toxicology Program] panel’s conclusion to checklist formaldehyde, a natural 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 control requirements are being mandated on sources which have insignificant levels of HAP (hazardous air pollutants) emissions, a Georgia-Pacific environmental well being and safety supervisor, James Eckenrode, complained to the EPA in November 2008, when it sought to apply tougher air pollution standards on the firm’s manufacture of resins and formaldehyde.

By means of its Flint Hills Resources subsidiary, Koch Industries operates a refinery near Fairbanks, Alaska. “Refineries in Alaska are geographically isolated from the remainder of the U.S. market such that benzene extraction and sale into the petrochemical market can be infeasible, the company argued in 2006, when the EPA proposed new clean air limits on benzene. “Benzene reductions to levels proposed on this rule would both require in depth and economically prohibitive capital upgrades at our facility or would lead to a significant discount in gasoline production. /p>

When Koch Industries bought Georgia-Pacific, it inherited a titanic liability relating to asbestos. Georgia-Pacific had used asbestos to make gypsum-based drywall products, and starting in the 1980s the agency grew to become a goal for greater than 340,000 claims by plaintiffs who said they suffered lung and different diseases, together with mesothelioma, a deadly most cancers. By 2005, the corporate was spending $200 million a yr and had to construct a $1.5 billion reserve fund for asbestos liabilities and protection costs.

In a 2008 Koch Industries publication, General Counsel Mark Holden griped that “many of these claims are an outright abuse of the legal system that always involve individuals who are not sick all due to over-zealous litigators and a authorized system that provides them perverse incentives. /p>

The quantity of recent claims has dropped with more durable federal security standards. But within the 110th Congress Koch lobbyists still sought to sway members on legislative proposals intending to limit the use of asbestos and enhance public knowledge, even Senate Resolution 462, which referred to as for a “National Asbestos Consciousness Week. /p>

Global WARMING AND LOW CARBON Gasoline Standards

It’s within the Kochs industrial interest to preserve America’s reliance on carbon-primarily based vitality sources. Despite recent diversification, Koch remains a significant petrochemical company 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’s not stunning 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 government mandates on carbon discount provisions [and] provisions related to local weather change, and oppose complete invoice, Koch lobbyist Robert P. Hall wrote, listing his goals on the 2008 lobbying disclosure type.

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 worked on measures that will strip the EPA of the ability to regulate greenhouse gases via the Clean Air Act.

Koch-supported teams like the Nationwide Environmental Improvement Association’s Clear Air Mission joined the effort. In a recent meeting, five Koch representatives joined colleagues from ExxonMobil, ConocoPhillips, Eli Lilly and other NEDA-CAP members to register issues with EPA officials over the proposed necessary reporting rule for greenhouse fuel emissions, the record exhibits.

Koch’s lobbying efforts on local weather change are matched by a public campaign. By way of three foundations the Claude R. Lambe Foundation, the Charles G. Koch Basis and the David H. Koch Foundation funded and administered by Koch relations and workers, the Kochs have donated several million dollars in recent times to suppose tanks and groups that have sought to discredit climate science and EPA’s efforts to scale back greenhouse gases.

“Why are such unproven or false claims promoted? the Koch Industries firm publication, Discovery, asked in an article on international warming entitled, “Blowing Smoke. /p>

“Scientists have perverted the peer evaluation process, doing every thing potential to forestall opinions contrary to the alarmist view from being heard, the article stated. People should adapt to international warming, not try to sluggish or stop it, the publication really helpful. “Since we can’t management Mother Nature, let’s figure out methods to get along together with her modifications. /p>

In early March, members of the Republican-led Home Power and Commerce Committee lots of whom had received campaign contributions from Koch employees and PACs final fall voted to bar the EPA from regulating greenhouse gases below the Clean Air Act. Their motion has been endorsed by Speaker John Boehner and Republican Home leaders.

Of particular concern to Koch lobbyists in Washington, in response to their disclosure kinds, are measures to encourage or require using low-carbon fuels. These sources of energy, of their manufacture and use, contribute lower than different fuels to global 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 amongst Canada’s largest crude oil purchasers, shippers and exporters, the corporate says, with a buying and selling and supply workplace in Calgary and a terminal in Hardisty, Alberta. A lot of the oil comes from the mining of oil sands, which have a very heavy carbon footprint as a result of the method releases greenhouse gases from peat lands and boreal forest, and requires a great deal of power to heat and sweat the oil out.

“Canadian crude generates more greenhouse gas emissions and so low-carbon requirements “would cripple refiners that depend on heavy crude feedstocks, the Koch Industries website notes. “It could be notably devastating for refiners that use heavy Canadian crude. /p>

When lawmakers in Washington and states like California sought to deal with world warming by requiring the usage of low carbon fuels, Koch Industries responded. Koch lobbyists listed the laws as a lobbying precedence on Capitol Hill. And in California, the place a large-ranging collection of measures to gradual local weather change have been launched by former Gov. Arnold Schwarzenegger, Koch joined the combat to defeat them.

A Koch subsidiary, Flint Hills Assets, donated one million dollars in assist of Proposition 23, an unsuccessful try funded by Koch and other energy firms last yr to stall implementation of the low-carbon requirements and other remedial local weather measures in California.

Power Trade TAX BREAKS

Koch lobbyists spend a lot of their time, in line with their disclosure reports, fighting makes an attempt by members of Congress to curb price-gouging, windfall revenue-taking and speculation within the oil trade. To this similar finish, Koch officials labored to dilute a 2009 Federal Commerce Fee rule governing manipulation of the power markets.

Meanwhile, Koch has lobbied to preserve a number of the oil industry’s coveted tax breaks and credit.

One profit is thought because the Part 199 deduction, approved by Congress several years ago to help the arduous-pressed U.S. manufacturing sector. In light of the oil and fuel industry’s hearty earnings, the Obama administration and members of Congress have sought to end the Part 199 subsidy for power companies and save the U.S. Treasury $14 billion over 10 years. But Koch lobbyists and commerce associations have labored to preserve the deduction.

One other industry tax break that drew the help of Koch representatives is the venerable “LIFO (final-in, first-out) accounting rule. It allows power corporations effectively to boost the value of their current inventory (and thus pay decrease taxes on earnings from gross sales) when the value of oil soars.

Beneath LIFO, the oil in a company’s inventory, no matter what it really price, is valued at the cost of the final-acquired (normally highest-price) barrel. The LIFO rule has been a goal in recent years for each Democrats and Republicans in Washington, who would like to boost revenue without elevating taxes.

BUSH TAX CUTS

Koch lobbyists listed the expiring Bush tax cuts as a lobbying objective final year, and the Koch brothers had been amongst an elite, relatively few People who profited when the earnings tax cuts for these incomes greater than $250,000 a year had been prolonged in a yr-end deal.

Another of the Bush tax breaks had special meaning for the Koch brothers. Charles Koch, seventy five, and David Koch, 70, are tied for fifth place, every with a web worth of $21.5 billion, in the newest Forbes rankings of the wealthiest Individuals. Included within the deal to increase the Bush tax cuts was a proposal to scale back the federal property 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 Home and Republicans in Congress in December set the property tax at 35 p.c. That makes the brand new charge significantly more favorable than during the Clinton (55 percent) and even the Bush (forty five p.c) years, and the lowest it’s been because the 1930s. If one of many patriarchs should die whereas the brand new price is in impact, it will save the Koch family billions of dollars.

TERRORISM AND National Safety

Another major preoccupation of Koch Industries lobbyists during latest periods of Congress was the Chemical Facility Anti-Terrorism Requirements, a federal effort to establish and regulate chemical amenities that might be vulnerable to terrorist assaults.

In 2009, the House handed legislation that may toughen the standards, and require manufacturers like Koch to make use of safer chemicals and processes to add one other stage of safety and decrease the consequences of toxic releases from terrorist assaults or catastrophic accidents.

Koch opposed the changes, claiming they “increase value and regulatory burden while shifting focus away from safety and towards environmental considerations. The chemical safety provisions were listed as lobbying targets by Koch representatives in 2007, 2008, 2009 and 2010.

In keeping with EPA data, Koch has four 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.

Obligatory use of safer know-how would “result in much more job losses and higher consumer costs as American manufacturers wrestle to conform, Koch contends in an announcement on the chemical security standards on its website. The House laws would “restructure, and sure add extra cost to security applications currently in place for Koch companies amenities. /p>

Monetary REGULATION

Koch pulls no punches when assigning the blame for the good financial meltdown of 2008: It was the government’s fault, not the markets.

“Almost all of these problems (and far of the current chaos) are, at their root, the results of political failure, said Steve Feilmeier, the chief monetary officer for Koch Industries, on the peak of the crash.

It isn’t shocking, then, that Koch Industries a major participant in international trading markets resisted increased regulation and spent heavily on lobbyists who labored to shape the 2010 Dodd-Frank Act and different automobiles for monetary reform. The Koch lobbyists targeted, particularly, on provisions aimed toward regulating systemic danger within the financial markets, and the usage of derivatives.

Koch Industries started out trading crude oil greater than 4 a long time in the past, but its buying and selling group has since branched into commodities, derivatives and different threat administration products.

In that point, the marketplace for trading derivatives and swaps within the vitality industry has gone largely unregulated. And in past Congresses, Koch lobbyists labored to preserve the exemption, identified because the “Enron Loophole, that excused power commodity contracts from regulation.

However the Dodd-Frank law gave the Commodity Futures Buying and selling Fee and the Securities and Alternate Commission the authority to craft new guidelines to subject traders within the vitality business to elevated regulation and transparency, capital and margin requirements, and supervision by a derivatives clearing home. Koch lobbyists labored to favorably form the bill, and have not stopped working since it was passed.

Add a Comment

Your email address will not be published. Required fields are marked *