Koch Industries, Inc.

Koch Industries, Inc.

Background

Koch Industries, Inc. is the largest privately owned energy company in the United States, and the country's second largest private company. According to Forbes, in 2007 Koch Industries generated $98 billion in revenue and had 80,000 employees. As of 2014, it had over 100,000 employees and sales exceeding $115 billion. [1], [2]

The company began in 1927 when Fred C. Koch developed a better way to convert heavy oil into gasoline. Eventually in 1940, Fred Koch founded the Wood River Oil and Refining Company. After Fred Koch's death in 1967, his son Charles Koch took control of the company. In 1967, Charles renamed the company Koch Industries, Inc. His brother David H. Koch joined the company in 1971 and became president in 1978. [3], [4], [5]

Despite its humble beginnings, Koch Industries quickly began to buy up other oil competitors. Between the years 1959 and 2004, Koch Industries purchased the Great Northern Oil Company, three oil refineries from Sun Oil, the United Gas Pipeline, and oil refineries in Minnesota and North Pole, Alaska. [4] In 2007, Koch Industries produced 800,000 barrels of oil per day. [6]

Koch industries has diversified its business holdings to include more than oil and gas. Koch currently owns companies involved in pollution control, fertilizers, commodity and financial trading, forest and consumer products, fibres and polymers, and ranching. In 2004, Koch purchased Invista, the world's largest fibres company, which it later merged with KoSa. In 2005, Koch acquired paper products giant Georgia-Pacific for $21 billion. [7], [2]

Almost since its inception, Koch Industries has been associated with conservative think tanks. In 1958, Fred C. Koch helped to create the John Birch Society — a conservative political education and action organization. [8] Following in their father's footsteps, Charles and David Koch have created and funded some of the most conservative organizations in the United States. Charles Koch founded the Cato Institute, and David Koch co-founded Citizens for a Sound Economy, which was later known as FreedomWorks. David Koch is also a member of the board of directors for the Cato Institute and a trustee for the Reason Foundation. [9], [10]

Stance on Climate Change

Grist magazine reports that Charles Koch, Chairman and CEO of Koch Industries, “has been see-sawing over climate change for years.” [11] In April 2016, Koch Industries’ Environmental, Health and Safety Director Sheryl Corrigan commented on the Koch's climate beliefs: 

“Charles has said the climate is changing. So, the climate is changing,” Corrigan said. “I think he’s also said, and we believe, that humans have a part in that. I think what the real question is […] what are we going to do about it?” [11] 

Earlier in 2015, Charles Koch said that “it’s been warming some” to The Washington Post. [12] In an interview with Forbes, Koch had said “it’s not certain” that humans are to blame for climate change. [13]

While Koch Industries, Inc. itself has no official stance on global warming, many of the organizations Koch supports have definitive stances on global warming. Think tanks such as the Competitive Enterprise Institute, the Cato Institute, FREE, and Citizens for a Sound Economy espouse limited government and free markets as well as fostering doubt around the dangers of various chemicals, environmental pollutants, and global warming. For example, in 1999 the Citizens for a Sound Economy lobbied against the Clear Air Act. [14] 

An Intermountain Rural Electric Association (IREA) memo from 2006 provides the most authoritative information of Koch's position on climate change. The 2006 IREA letter was created in order to drum up support within the coalition against “global warming alarmists.” [15] 

Within the letter, the IREA states “there are other groups that are interested in the issue of global warming and the concerns about its costs.” The letter goes on to say that Koch was working with American Electric Power (AEP) and the Southern Company to produce a film to counteract An Inconvenient Truth. Even more, the IREA explains that Koch had decided to finance a coalition on the issue.  The coalition was to be administered by the National Association of Manufacturers. [15]

Finally, the IREA explicitly links Koch to the global warming denialist circle when it declares, “we have met with Koch, CEI and Dr. [Patrick] Michaels, and they meet among themselves periodically to discuss their [global warming] activities.” [15] 

Funding

According to Greenpeace, the Koch Brothers have sent at least $100,343,292 to 84 groups denying climate change science since 1997. Their report notes that in more recent years, Koch funding has been funnelled through secretive funding groups like Donors Trust and Donors Capital Find. [16]

Greenpeace has compiled a number of reports on Koch Industries funding including the following. View Greenpeace's video below:

The Koch brothers funnel most of their funding through three “charitable” foundations: The Claude R. Lambe Charitable Foundation, the Charles G. Koch Charitable Foundation, and the David H. Koch Charitable Foundation. 

View the DeSmogBlog entry for Koch Family Foundations for more detailed Koch funding information by year. Between 1985 and 2006, the three foundations have given away $131,872,351 in funding. [17]

Charles Koch's archived profile on the Koch Industries website says that for over 40 years Charles has been supporting academic and public policy research that has a special focus on “developing voluntary, market-based solutions to social problems.” Between 1999 and 2001, Koch Charitable Foundations gave away over $20 million in funding. [18]

Koch Charitable Foundations provide major financial support to the Heritage Foundation, the Reason Foundation, the Hudson Institute, the Competitive Enterprise Institute, and the Foundation for Research on Economics and the Environment (FREE). Each of these organizations has also received funds from ExxonMobil. [4]

Koch and Tobacco

Koch is also connected to Big Tobacco. Throughout the 1990s, Citizens for a Sound Economy (CSE) lobbied extensively for the tobacco industry. A search through the Legacy Tobacco Documents Library for “Citizens for a Sound Economy” produces over 1,400 documents. Included in these files are documents which show Phillip Morris and Lorillard paying CSE for lobbying services. [19]

In 1994 Phillip Morris provided CSE with $250,000 of funding. In 1996, Phillip Morris' funding to CSE jumped to $500,000. Phillip Morris' other financial contributions to CSE could not be located.  In 2000 Lorillard Tobacco Company gave CSE a $100,000 general grant. Included in this grant was a set of guidelines to follow when lobbying on behalf of Lorillard. In his funding letter to CSE, Lorillard's Ronald S. Milstein explained: “we look forward to working with Citizens for A Sound Economy toward fulfilling our mutual goals and ambitions.”

Koch Industries Lobbying

According to data from OpenSecrets, Koch Industries has spent more than $115,372,700 on combined lobbying activities between 1998 and 2017 with approximately 96% of that total ($110,520,000) going to the Oil and Gas Industry. Summary below: [20]

Year Oil & Gas Mining General Contractors Forestry & Forest Products Chemical & Related Manufacturing Grand Total
2017 $3,200,000 $3,200,000
2016 $3,050,000 $3,050,000
2015 $10,830,000 $10,830,000
2014 $13,700,000 $13,700,000
2013 $10,430,000 $10,430,000
2012 $10,550,000 $10,550,000
2011 $8,360,000 $8,360,000
2010 $8,070,000 $8,070,000
2009 $12,450,000 $12,450,000
2008 $17,930,000 $40,000 $1,773,000 $280,000 $20,023,000
2007 $4,170,000 $80,000 $720,000 $98,750 $5,068,750
2006 $3,360,000 $140,000 $440,000 $28,750 $3,968,750
2005 $1,200,000 $80,000 $840,000 $65,000 $2,185,000
2004 $760,000 $40,000 $40,000 $17,200 $857,200
2003 $520,000 $50,000 $40,000 $610,000
2002 $760,000 $80,000 $840,000
2001 $500,000 $500,000
2000 $240,000 $240,000
1999 $240,000 $240,000
1998 $200,000 $200,000
Grand Total $110,520,000 $430,000 $160,000 $3,773,000 $489,700 $115,372,700

Koch Political Spending

During the 2014 election cycle, Koch Industries contributed more than $10,288,600 with $2,182,635 going to various candidates. The OpenSecrets Project breaks it down as follows: [21]

Contributions to candidates: $2,182,635
Contributions to Leadership PACs: $792,750
Contributions to parties: $683,350
Contributions to 527 committees: $52,500
Contributions to outside spending groups: $7,060,000

Top recipients include (screenshot taken from OpenSecrets): 

Key People

Koch Industries, Inc. Board of Directors

According to Bloomberg, Koch Industries' Board of Directors includes: [22]

Name 2009 2016 Description
Charles G. Koch Y Y Chairman and Chief Executive Officer
Joseph W. Moeller Y Y Vice Chairman
David Robertson Y Y President, Chief Operating Officer and Director
Steve Feilmeier Y Y Chief Financial Officer, Executive Vice President and Director
David H. Koch Y Y Executive Vice President and Director
Jeff Gentry Y Past Executive Vice President and Director
Richard Fink Y Past Executive Vice President and Director
James Mahoney Y Y Executive Vice President of Operations Excellence and Compliance and Director

Shareholders

Koch Industries is primarily a family owned business. Until 1983, the shareholders included Charles, David, William, and Frederick Koch. In 1983, Koch Industries purchased the shares of William and Frederick Koch, and those held by the Simmons Family (47.8%), for $1.1 billion. [23]

Actions

Environment, Pollution, and Lawsuits

Koch Industries was sued by the government in 1995 and 1997 as a result of a reported 300 oil spills from pipelines that they owned and operated. It is estimated that during this time, three million gallons of oil were dumped into lakes and streams in six different states. The Environmental Protection Agency's lawsuits ranged from $71 million to $214 million. In 2000, the EPA settled the case for $35 million in fines. Also, during the 1990s Koch was fined $8 million for discharging oil into streams in Minnesota. [24]

In late 2000, as the Clinton administration was preparing to leave, Koch was served with a 97-count indictment for covering up the discharge of more than fifteen times the legal limit of benzene, a known carcinogen, from a refinery in Corpus Christi, Texas.  [24]

The company faced penalties of more than $350 million and four employees were criminally charged and faced up to 35 years in prison. Three months after the Bush administration took office the case was settled out of court. Koch Industries agreed to pay $20 million and plead guilty to one count of concealment of information; in return, the Justice Department dropped all criminal charges against Koch and its employees. In the 2000 elections Koch had contributed $800,000 to Republican candidates, including presidential nominee George W. Bush. [25] 

In 2006, Koch Industries scored a C- in the Pacific Sustainability Index (PSI) created by the Roberts Environmental Center at Claremont McKenna College. The PSI analyzes companies according to their environmental and socioeconomic transparency and performance.  [26], [27]

In the environmental categories, Koch received an overall grade of D- which was calculated from scores received in three categories: Environmental Intent (D+), Environmental Reporting (D-), and Environmental Performance (F). According to the Roberts Environmental Center, the letter grades are normalized to the highest scoring company in the same sector, meaning that Koch scored in the lower range of its sector.  Koch Industries' complete PSI scores are listed on the Roberts Environmental Center website. [28]

According to The Center for Public Integrity, since 2000 Koch Industries has also paid over $50 million in fines for violations of the Clean Air Act and the Clean Water Act. [29]

June 21, 2016

Greenpeace reports that the Koch brothers have given over $21 million to groups that signed a full-page ad in the New York Times by the Competitive Enterprise Institute (CEI) defending ExxonMobil from recent government investigations into what it knew about climate change.  CEI had also been named in the subpoena from Claude Walker, Attorney General for the U.S. Virgin Islands. [30]

This subpoena was an all-out assault on free speech. Forcing the CEI to hand over private information to government officials is an affront to the First Amendment rights of all Americans,” the letter states.

The full New York Times ad (PDF) asserts that the subpoena, while it was eventually withdrawn, was a “dangerous precedent.” [31]

“Free market and taxpayer groups  have been under assault by government officials including the Internal Revenue Service (IRS). This is just another example of how the government is engaging in selective targeting based on a political agenda that is meant to intimidate others from participating and engaging in any debate that may run contrast to the position of the current administration.”  [31]

Funding numbers below: [30]

July, 2015

According to the updated Transparency Register set up by the European Commission, Koch Industries is lobbying European policymakers on the environment, energy markets and EU free trade agreement negotiations, Desmog UK reports. [32]

Koch Industries declared on the voluntary Register that it has spent between €200,000 and €299,999 ($223,634–$335,449 or £142,464–£213,695) on its European lobby efforts in 2014. This is similar to the amount declared for 2013 (€200,000–€250,000) and more than that declared in 2012 (€150,000–€200,000), which was the first year for which the Kochs entered data into the EU registry. [33]

The figure registered could, however, significantly underestimate the amount spent by the Koch family, warns LobbyFacts, a joint project by Corporate Europe Observatory, LobbyControl and Friends of the Earth Europe: “The new EU Transparency Register continues to suffer from seriously unreliable data.” For example, many companies tend to under-report their lobbying spend. [33]

Koch Industries Contact & Location

As of June 2016, Koch Industries provided the following general contact information on its website: [34]

KOCH INDUSTRIES, INC.
P.O. Box 2256
Wichita, KS 67201-2256
[email protected]

    Koch Industries Inc. Companies & Holdings

    Koch companies include, or have included: [7], [35], [36]

    Flint Hills Resources, LP

    Flint Hills Resources operates refineries in Alaska (North Pole), Minnesota (Rosemont) and Texas (Corpus Christi), which together process more than 800 barrels of crude oil a day.  The company also has facilities in Illinois, Michigan, and Texas that produce aromatics, olefins, polymers and intermediate chemicals.  Additionaly, Flint Hills produces and markets asphalt in the midwest.  Finally, Flint Hills owns an interest in a base oil facility in Lousiana; this plant produces base oils for a number of industries including makers of motor oil and commericial lubricants.

    Flint Hills Resources operates refineries in Alaska (North Pole), Minnesota (Rosemont) and Texas (Corpus Christi), which together process more than 800 barrels of crude oil a day.  The company also has facilities in Illinois, Michigan, and Texas that produce aromatics, olefins, polymers and intermediate chemicals.  Additionaly, Flint Hills produces and markets asphalt in the midwest.  Finally, Flint Hills owns an interest in a base oil facility in Lousiana; this plant produces base oils for a number of industries including makers of motor oil and commericial lubricants.

    Koch Pipeline Company, LP

    Koch Pipeline Company and its affiliates own or operate some 4,000 miles of pipelines in the United States.  These piplines transport crude oil, natural gas, and refined petroleum products.

    Koch Alaska Pipeline Company, LLC

    Koch Alaska Pipeline Comapny owns the largest stake (28%) in the Colonial Pipeline Company, which operates the world’s largest-volume refined products pipeline.  Koch Alaska also owns a 3% stake in the Trans Alaska Pipeline System (TAPS).  Alyeska Pipeline Service Company operates and maintains the TAPS for five owner companies:  British Petroleum (BP), Chevron, ExxonMobil, Koch, and Conoco Phillips.  TAPS transports approximately 15% of crude oil in the U.S.

    Koch Chemical Technology Group, LLC

    Koch Chemical Technology Group designs, manufactures, installs, and services pollution control equipment for industries and organizations throughout the world.  The subsidiaries of Koch Chemical that are responsible for producing pollution control equipment are Koch-Glitsch, LP; Koch Memberane Systems, Inc.; Koch Heat Transfer Company, LP; John Zinc Company, LLC; Optimized Process Designs, Inc.; Iris Power, LP; Kock Knight, LLC, and Unifin International, LP.

    Koch-Glitsch, LP supplies mass transfer and mist elimination equipment. Its equipment is found in refining, petrochemical, gas processing, and pharmaceutical industries across the globe.

    Koch Membrane Systems, Inc. develops membrane separation systems for microfiltration, ultrafiltration, nanofiltration, and reverse osmosis.  It also produces membranes used in wastewater treatment.

    Koch Heat Transfer Company, LP designs heat exchangers for consumers in the U.S, Europe, and Asia.

    John Zink Company, LLC produces a variety of low-emission burners, flares, and thermal oxidizers.  It is also a supplier of gas/vapour recovery and vapour combustor systems.

    Optimized Process Designs, Inc. is a consultant for the natural gas and gas processing industries.  It also offers engineering, fabrication, design, and construction services for gas companies.

    Iris Power, LP develops and produces devices to monitor electrical equipment.  Iris Power’s clients include utility companies, pulp and paper manufacturers, mining and ore processing facilities, and petrochemical facilities.

    Koch Knight, LLC designs acid and corrosion-proof ceramics and plastic materials.  Its clients include the chemical process and mining industries.

    Unifin International, LP designs and manufactures heat transfer systems.  It produces transformer oil coolers, transformer oil pumps, and generator coolers.

    Koch Minerals, LLC

    Koch Minerals is one of the world’s largest dry-bulk commodity handlers–it trades more than 40 million tons of product per year.

    Koch Carbon, LLC

    Koch Carbon trades and transports coal, petroleum coke, pulp and paper, cement, and other commodities throughout Europe and the United States.  One of its subsidiaries,Reiss Viking, is one of the largest suppliers of magnetite for the coal industry.  Reiss Viking claims that its products touch more than 40% of the one billion tons of coal produced every year.

    Koch Exploration Company, LLC

    Koch Exploration Company researches, acquires, develops, and trades petroleum and natural gas properties in the United States, Canada, and Brazil.

    Koch Fertilizer, LLC

    Koch Fertilizer owns interests in nitrogen fertizer plants in the United States, Canada, Trinadad and Tobago, and Venezuela.  Koch Fertilizer and its affiliates manufacture and distribute over nine million tons of nitrogen products annually.

    INVISTA

    In 2004, Koch Industries bought INVISTA.  After its purchase, Koch Industries mergedINVISTA with KoSa, thereby creating one of the largest producers of premium fibres and polymers.  INVISTA operates four major businesses–apparel, intermediates, performance surfaces and materials, and polymer and resins.

    Georgia-Pacific, LLC

    In 2005, Koch Industries completed its $21 billion purchase of Georgia-Pacific.  This acquisition represents the largest purchase of a publicly-traded company by a private firm in United States history.  

    Georgia-Pacific is one of the leading manufacturers of paper products in the world.  It has 45,000 employees and operates nearly 300 manufacturing facilities throughout North and South America and Europe.

    Matador Cattle Company

    Matador Cattle Company owns and operates three ranches in the United States.  The ranches represent a total of 425,000 acres of land and 15,000 cattle.  The Matador Cattle Company is one of the ten largest cow/calf operations in the U.S.

    Koch Genesis Company, LLC

    Koch Genesis Company invests direct capital into nascent-stage companies with revolutionary ideas.  The company is primarily focused on industry-changing innovation in areas such as refining and chemicals, fibres and polymers, forest and consumer products, and chemical processes.  Koch Genesis Company investments total somewhere between $5 and $10 million.

    Resources

    1. “America's Largest Private Companies,” Forbes, November 3, 2008. Archived June 27, 2016. WebCite URL: http://www.webcitation.org/6iaVYBJul

    2. “#2 Koch Industries,” Forbes.  Archived .pdf on file at DeSmogBlog.

    3. “History Timeline,” Koch Industries. Archived December 21, 2008.

    4. “Summary of Koch Industries History,” U.S. Securities and Exchange Commission, Exhibit 99.3. Archived June 27, 2016. Archived .pdf on file at DeSmogBlog. WebCite URL: http://www.webcitation.org/6iaWBMYny

    5. “Looking Back” (PDF), Discovery newsletter, July 2001. Archived .pdf on file at DeSmogBlog.

    6. Kevin Grandia. “Why Exxon makes Koch Giggle,” DeSmog, June 29, 2007.

    7. “Koch Industries, Inc. - Company Holdings and Investments,” DeSmogBlog.

    8. “Fred Koch,” The John Birch Society. Archived June 28, 2016. WebCite URL: http://www.webcitation.org/6iajoNtf2

    9. “Board of Directors,” Cato Institute. Archived October 7, 2015. WebCiteURL: http://www.webcitation.org/6c6y6JBGI

    10. “Reason Trustees and Officers,” Reason Foundation. Archived October 19, 2015. WebCite URL: http://www.webcitation.org/6cP3OkLeu 

    11. Melissa Cronin. “Breaking: The climate is changing because a Koch brother said so,” Grist, April 12, 2016. Archived June 27, 2016. WebCite URL: http://www.webcitation.org/6iaSf1DKF

    12. Matea Gold. “Charles Koch on the 2016 race, climate change and whether he has too much power,” The Washington Post, August 4, 2015. Archived .pdf on file at DeSmogBlog. WebCite URL: http://www.webcitation.org/6iaSoZKo0

    13. Daniel Fisher. “Exclusive Interview: Charles Koch On How To Save America,” Forbes, September 29, 2016. Archived .pdf on file at DeSmogBlog.

    14. “Commentary: Lawsuit against Clean Air Act by members of Congress,” The Center for Public Integrity, September 5, 2000. Archived June 27, 2016.

    15. IREA Memo (PDF), July 17, 2006. PDF archived at DeSmogBlog.

    16. “Koch Industries: Secretly Funding the Climate Denial Machine,” Greenpeace USA. Accessed May 13, 2017.

    17. “Aggregated Grants from the Charles G. Koch, David H. Koch, and Claude R. Lambe Foundations,” Media Transparency. Archived June 2, 2009. Archived .pdf on file at DeSmogBlog.

    18. “Charles G. Koch” (PDF), Koch Industries INC. Archived .pdf on file at DeSmogBlog.

    19. “Citizens for a Sound Economy,” Truth Tobacco Industry Documents. Search performed June 27, 2016.

    20. “Koch Industries,” OpenSecrets.org. Accessed June 27, 2016.

    21. “Koch Industries: Profile for 2014 Election Cycle,” OpenSecrets.org. Accessed June 27, 2016.

    22. “Koch Industries Inc.” Bloomberg. Archived .pdf on file at DeSmogBlog.

    23. UNITED STATES COURT OF APPEALSTENTH CIRCUIT case No. 98-3223, February 14, 2000. Archived June 27, 2016. WebCite URL: http://www.webcitation.org/6iadyI96b

    24. “Koch's Low Profile Belies Political Power: Private oil company does both business and politics with the shades drawn,” The Center for Public Integrity, March 31, 2006. Archived December 1, 2008. Archived .pdf on file at DeSmogBlog.

    25. “Koch Industries,” SourceWatch. Archived September 5, 2008. Archived .pdf on file at DeSmogBlog.

    26. “Koch Industries 2006 EHS Report,” Roberts Environmental Center. Archived May 25, 2011. Archived .pdf on file at DeSmogBlog.

    27. “What the PSI Scores Mean,” Roberts Environmental Center at Claremont McKenna College. Archived June 2, 2011. Archived .pdf on file at DeSmogBlog.

    28. “Koch Industries 2006 EHS Report,” Roberts Environmental Center at Claremont McKenna College. Archived May 26, 2011. Archived .pdf on file at DeSmogBlog.

    29. “Unregistered advocates? Influential groups sponsoring $20 million in travel not registered to lobby,” The Center for Public Integrity, June 20, 2006. Archived June 27, 2016. Archived .pdf on file at DeSmogBlog.

    30. “The Koch Brothers Dished Out $21M to Front Groups Defending Exxon In NYT Ad,” DeSmog, June 21, 2016. Crossposted from Greenpeace USA.

    31. “Dear Kent” (PDF), June, 2016. Retrieved from http://www.maciverinstitute.com. Archived .pdf on file at DeSmogBlog.

    32. Kyla Mandel. “Exclusive: Koch Industries Lobbying Europe on Environment, Energy, and Free Trade,” Desmog UK, July 6, 2015.

    33. “Koch Companies Public Sector, LLC,” Transparency Register. Archived June 28, 2016. WebCite URL: http://www.webcitation.org/6iai2Y40d

    34. “Contact,” Koch Industries. Archived June 27, 2016. WebCite URL: http://www.webcitation.org/6iahjEBYq

    35. “Companies,” Koch Industries. Archived June 27, 2016. WebCite URL: http://www.webcitation.org/6iaXE5ZXd

    36. “Summary of Koch Industires' Industry Facts,” Securities and Exchange Commission, Exhibit 99.6, November, 2005. Archived June 27, 2016. WebCite URL: http://www.webcitation.org/6iaZsZNvC

    Other Resources

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