The Wizards of Oil: How the Koch brothers are influencing U.S. environmental policy
Koch Industries Inc. isn't just in Kansas anymore, Toto.
The nation's second largest private company and its subsidiaries are also in Colorado, Florida, Iowa, Michigan, Minnesota, New Mexico, Texas and just about every other state in the nation. But the locale where Koch Industries is making its presence felt the most isn't a state at all. It's Washington, D.C.
The Wichita-based conglomerate has spent a fortune lobbying for its oil, gas, mineral and chemical interests this past decade while bankrolling the campaigns of sympathetic congressmen. It has paid special attention to lawmakers that make up the House Energy and Commerce Committee. Koch Industries is diversified — it manufactures household staples such as Angel Soft toilet paper, Brawny paper towels, Dixie cups, Lycra fabrics and Stainmaster carpets — but its main investment is in oil.
While the influence of Koch Industries has been ongoing for years, it wasn't until after 2008 that it captured mainstream attention for the tornado of dollars it funneled into campaign coffers as the Democrats — buoyed by House, Senate and White House control — pushed for cap and trade. What followed was a conservative takeover of the House in 2010 that capitalized on widespread voter frustration with the job-hemorrhaging economy and the government's inability to put a stop to it.
In the 2010 elections, Koch Industries and its partners spent tens of millions of dollars to elect politicians who would roll back environmental and financial regulations that benefit their businesses.
The men behind the curtain are Charles and David Koch who, with an estimated net worth of $25 billion a piece, are tied for fourth in Forbes magazine's annual list of The Richest People in America.
There's no place like a second home
Increasingly the Koch brothers, both in their 70s, are becoming visible in Colorado, where they own trophy homes in Aspen and throw lavish laissez faire strategy sessions with captains of industry. This summer they convened the Republican Governors Association's annual summit in Aspen, where they vetted Texas Gov. Rick Perry's right-wing mettle weeks before he announced his bid for the presidency.
A month before in Beaver Creek, the Koch brothers declared they were all in for this election cycle. At a private function honoring the likes of Charles Schwab for donating one million dollars or more to defeat President Obama, Charles Koch warned the 2012 election would be “the mother of all wars.”
Their businesses also have a foothold in Colorado. Koch Mineral Services LLC, Koch Chemical Technology Group LLC and Flint Hills Resources LP each operate facilities along the Front Range.
Meanwhile, a third brother (there are four altogether) William Koch, has also made a name for himself in the Rockies. He marches to the beat of his own drummer and doesn't always agree with his slightly older twin, David, and the eldest, Charles. But they all share a common bond: extreme wealth.
Even though his net worth isn't that of his richer brothers — it is estimated at $4 billion – “Wild Bill” owns a bigger house than his brothers in Aspen. He gobbled up four properties in the area — including a 17,000-square-foot lodge — for $51 million four years ago. His brothers own Victorians in the West End. A short helicopter ride away, Bill Koch owns another mountain paradise. It overlooks the Ragged Range, a dozen miles upstream from a mine in Somerset controlled by his company, Florida-based Oxbow Carbon & Minerals Holdings. Using state-of-the-art long-wall mining technology, Oxbow extracts five million tons of low-sulfur coal from the mine each year for electricity production.
Koch's spread outside of Somerset is something else.
Known as Bear Ranch, it is under development with plans for a train station, saloon, firehouse and other buildings to complement a pair of huge homes. It is also the site of a controversial land swap that will require an act of Congress for it to be completed.
The three Koch brothers are pouring a lot of cash into Colorado. They are lining the pockets of real estate agents and construction workers while consuming other goods and services to support their lifestyles. They are also giving money to politicians. A new analysis reveals the Kochs and their employees made more than $200,000 in campaign contributions in the state over the last five years. When an anti-tax group the Kochs founded is factored into the equation, the amount is much higher.
U.S. Rep. Cory Gardner is currently the biggest beneficiary of the Kochs' generosity in Colorado, having raked in at least $13,300 from Koch and Oxbow in the 2010 and 2012 election cycles. The anti-tax nonprofit the Kochs founded, Americans for Prosperity, gave Gardner an additional $302,000, according to the Democratic Congressional Campaign Committee.
So far in the 2012 election cycle, Gardner and U.S. Reps. Doug Lamborn and Scott Tipton — all Republicans — appear to be the only congressmen to have received Koch or Oxbow contributions, but a review of previous election cycles shows Democrats benefit from the companies' giving as well. Sens. Michael Bennet and Mark Udall have each received funding from Koch interests in the past. Bill Koch, his wife and Oxbow employees donated nearly $70,000 to ex-Rep. John Salazar, a Democrat.
But the scales tip to the right when all the Koch and Oxbow money is calculated. So despite having received and solicited funds from the Kochs, the Democrats use the Kochs as political ammo.
“We’ve seen that the votes and actions of Republicans are for sale to the highest bidder,” said Democratic state chair Rick Palacio. “With Koch money flowing to Cory Gardner, Doug Lamborn and Scott Tipton, D.C. interests are able to trump the needs of our communities here in Colorado. That’s bad news for their constituents in the short term, but as these issues become known, I’m confident that Coloradans will send a strong message about this kind of corruption by voting them out of office.”
Messages left for the Kochs, Gardner and Americans for Prosperity were not returned.
Follow the yellow-bricked pipeline
The non-partisan group Public Campaign compiled data for The Colorado Independent that shows Koch and Oxbow campaign contributions in the state have nearly doubled in each of the last three election cycles, going from at least $31,400 in 2006 to at least $60,900 in 2008 to at least $111,200 in 2010.
And that doesn't include Americans for Prosperity, which is spending freely in Colorado. Just last week Americans for Prosperity sponsored a bus tour that rolled through the state, reminding residents of the vast coal resources in Craig and the potential for more U.S. oil and natural gas drilling.
Colorado is far from the only state where the Kochs are investing in political capital. Koch Industries contributed to 62 of the 87 new members of the U.S. House of Representatives in 2010 and, over the last decade, it is the largest political donor in the energy sector, outspending Exxon Mobil and Chevron.
One congressman who won't be receiving any gifts from the Kochs anytime soon is U.S. Rep. Henry Waxman, D-Calif., the top Democrat on the House Energy and Commerce Committee, who is calling for an investigation into Koch Industries' denials that it stands to profit from the Keystone XL pipeline.
"When I first raised this issue in May, representatives from Koch denied any interest in the pipeline and Chairman Upton called the idea that there could be a link between Koch and the pipeline an 'outrageous accusation' and a 'blatant political sideshow,'" Waxman wrote in a recent letter to committee chairmen Fred Upton, R-Mich., and Ed Whitfield, R-Ky. "Recently, however, I have become aware of evidence that appears to contradict the assertions of the Koch representatives and Chairman Upton. If members of the Committee were misled by Koch, that is a serious matter that deserves prompt and thorough investigation."
Republicans on the committee are pressuring the White House to quickly approve TransCanada Corp.’s pipeline, which would transport crude oil from Canada's oil sands to U.S. Gulf Coast refineries.
“It may seem unusual for Congress to have to publicly vote on a bill that simply asks the president to do his job; unfortunately, such action is warranted as the long-delayed Keystone XL pipeline continues to languish and workers continue to wait for the Obama administration to make a decision,” the Republicans said in a group statement last week.
Earlier this year, the Los Angeles Times noted that Koch Industries and its employees together were the largest single oil and gas donor to members of the House Energy and Commerce Committee, contributing $279,500 to 22 of the committee's 31 Republicans, and $32,000 to five Democrats. Gardner is on the committee, along with Rep. Diana DeGette, D-Colo., who the Kochs don't sponsor.
Nine of the 12 new Republicans on the House Energy and Commerce Committee signed a pledge distributed by Americans for Prosperity to oppose legislation designed to regulate greenhouse gases. Gardner and Tipton have signed the pledge. Gardner is on the record as a climate change denier.
Lions, tigers and polar bears — oh my!
The Kochs are dumping money into academia and right-wing think tanks that are vigorously targeting environmental regulations. Koch-funded groups including the American Enterprise Institute, the Heritage Foundation and the National Association of Manufacturers have tangled with the federal government for listing the polar bear as an endangered species, and Koch-supported scientists contradict the majority of peer-reviewed scientists who say humans are warming the planet.
Greenpeace estimates the Kochs spent more than $50 million since 1998 on climate science attacks, and the Center for Responsive Politics reports the Kochs spent $8 million on lobbying last year alone.
The CATO Institute, which Charles Koch founded and continues to fund, is a consistent critic of climate science and its senior fellows are regularly interviewed on talk shows and in newspapers. Their efforts may be working. Over the last two years, Gallup polls indicate a growing number of Americans don't see global warming as a serious threat to their standard of living. Greenpeace largely attributes the change to the work of scientists who receive funding from the fossil fuel industry.
This all comes at a time when weather is getting wackier, new heat records are becoming the norm and Bengal tigers and African lions are among the latest species now facing the threat of extinction as their habitat is further diminished by a global human population that is now more than seven billion strong.
But the Kochs aren't seeing a return on all of their investments. Richard Muller, a physics professor at the University of California at Berkeley, was a climate science skeptic who added legitimacy to the Kochs' cause. The brothers gave Muller a grant that helped him launch the Berkeley Earth Surface Temperature project. What the professor found is that not only is the earth's surface warming, it is doing so at an accelerating rate. He wrote about his findings in a Wall Street Journal op-ed.
Off to see the wizards
Who is giving exactly what to whom is sometimes hard to pin down.
Colorado Ethics Watch reports it has obtained evidence Americans for Prosperity spent $100,000 on TV ads targeting recent Colorado Springs mayoral candidate Richard Skorman and did not disclose it. Luis Toro, director of Ethics Watch, said Under the Fair Campaign Practices Act, which was adopted by ordinance to govern Colorado Springs municipal elections, groups that pay for “electioneering communications” must disclose any spending in excess of $1,000, as well as the identity of any contributor who provided more than $250. Americans for Prosperity began airing the TV ads in April but it hasn't been disclosed and the Colorado Springs clerk and recorder hasn't taken any action.
“The more fundamental problem is the city of Colorado Springs won't enforce its laws,” said Toro, adding that, in his mind, the nondisclosure of the TV ad campaigns is “legally indefensible.”
Exceptions to rules often crop up in situations where large sums of money are involved.
During the time Oxbow was generously giving to Salazar an exemption to the 2001 Clinton Roadless Rule was made for the company to bulldoze into a roadless area to drill wells for methane. It helped that Oxbow had support from Delta County residents who saw the mine as a boon to their economy. Salazar also championed the Bear Ranch land swap but he was unable to get it done before Tipton unseated him. Shortly after taking office this year Tipton indicated Bear Ranch is on his radar.
Over the summer, when Charles and David Koch came out against a bipartisan bill promoted by oil magnate T. Boone Pickens that would have awarded tax credits for natural gas use in commercial vehicles, three Colorado Republican congressmen — Gardner, Tipton and Mike Coffman — who were sponsoring it abruptly removed their names from the legislation saying it was unfair to competitors.
It didn't go unnoticed that two of the three of them had received contributions from the Kochs.
How contributions influence political and scientific decisions isn't easy to discern.
“It's hard to prove quid pro quo but clearly businesses — whether it is Koch Industries or other businesses — aren't making these donations out of altruism,” said Steve Ellis, vice president for Taxpayers for Common Sense. “They are trying to either sway someone's position or get people re-elected who already support their position. That's the challenge when you look at these issues: Is it the chicken or the egg? Clearly they aren't going to give to someone that doesn't support their interests. The Kochs are certainly not naïve to the way the game is played. And they're not alone.”
This story first published on www.ColoradoIndependent.com. For more stories from the American Independent News Network's series "Campaign Cash: Outing the Corporations," click here. This report was produced as part of a collaborative investigative effort to expose the influence of corporate money on the political process by members of The Media Consortium, in partnership with the We the People campaign. To read more, visit CampaignCash.org or follow #CampaignCash on Twitter.
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