The
Koch Stake in Pollution
Koch Industries and
the billionaire brothers who run it are best known for their involvement in
rightwing causes. The latest controversy is over the Kochs’ reported interest in purchasing the Los
Angeles Times and other major newspapers owned by the Tribune Co. A campaign centered in L.A. is mobilizing opposition
to such a deal among newspaper subscribers and Tribune shareholders, warning
that a Koch takeover would create a new Fox News.
What often gets
forgotten is that Koch Industries is not just part of the Koch ideological
machine. It is a huge privately-held conglomerate with annual revenues of more
than $100 billion and operations ranging from oil pipelines and refining to
paper products (it owns Georgia-Pacific), synthetic fibers (it bought Lyrca and
Stainmaster producer Invista from DuPont), chemicals, mining and cattle
ranching.
I’ve just completed
one of my Corporate Rap Sheets on Koch Industries, and it’s clear that
the sins of the company go far beyond the political realm. The following is
some of what I found.
In November 2011 the magazine Bloomberg Markets published a lengthy article entitled “The Secret Sins of Koch Industries” that made some explosive accusations against the company:
“For six decades around the world, Koch Industries has blazed a path to riches—in part, by making illicit payments to win contracts, trading with a terrorist state, fixing prices, neglecting safety and ignoring environmental regulations. At the same time, Charles and David Koch have promoted a form of government that interferes less with company actions.”
What Bloomberg
revealed for the first time were the allegations involving bribery and dealing
with Iran. The article reported that the company’s subsidiary Koch-Glitsch paid
bribes to secure contracts in six countries (Algeria, Egypt, India, Morocco,
Nigeria and Saudi Arabia) and that it violated U.S. sanctions by doing business
with Iran, including the sale of materials that helped the country build the
world’s largest plant to convert natural gas to methanol used in plastics,
paints and chemicals.
The environmental
cases alluded to by Bloomberg had been previously reported and included the
following.
In 1995 the U.S
Justice Department, the Environmental Protection Agency and the United Stated
Coast Guard filed a civil suit against Koch Industries and
several of its affiliates for unlawfully discharging millions of gallons of oil
into the waters of six states. In one of the largest Clean Water Act cased ever
brought up to that time, the agencies accused Koch of being responsible for
more than 300 separate spills in Alabama, Kansas, Louisiana, Missouri, Oklahoma
and Texas.
In 1997 Tosco
Corporation (now part of ConocoPhillips) sued Koch in a dispute over costs related to
the clean-up of toxic waste at an oil refinery in Duncan, Oklahoma that used to
be owned and operated by Koch. In 1998 a federal judge ordered Koch to
contribute to those costs, and that ruling was upheld by an appeals court in 2000. The
companies later settled the matter out of court.
In 1998 Koch agreed to pay $6.9 million to settle charges
brought by state environmental regulators relating to large oil spills at the
company’s Rosemount refinery in Minnesota. The following year itagreed to plead guilty to related federal
criminal charges and pay $8 million in fines.
Also in 1998, the
National Transportation Safety Board found that the failure of a Koch subsidiary to protect a liquid
butane pipeline from corrosion was responsible for a 1996 rupture that released
a butane vapor. When a pickup truck drove into the vapor it ignited an
explosion that killed the driver and a passenger. In a wrongful death lawsuit a
Texas jury awarded the father of one of the victims $296
million in damages.
In 2000 the U.S.
Justice Department and the EPA announced that Koch Industries would pay what was
then a record civil environmental fine of $30 million to settle the 1995
charges relating to more than 300 oil spills plus additional charges filed in
1997. Along with the penalty, Koch agreed to spend $5 million on environmental
projects in Texas, Kansas and Oklahoma, the states where most of its spills had
occurred. In announcing the settlement, EPA head Carol Browner said that Koch had quit inspecting its
pipelines and instead found flaws by waiting for ruptures to happen.
Later in 2000, DOJ and
the EPA announced that Koch Industries would pay a penalty
of $4.5 million in connection with Clean Air Act violations at its refineries
in Minnesota and Texas. The company also agreed to spend up to $80 million to
install improved pollution-control equipment at the facilities.
In a third major
environmental case against Koch that year, a federal grand jury in Texas returned a 97-count indictment against the
company and four of its employees for violating federal air pollution and
hazardous waste laws in connection with benzene emissions at the Koch refinery
near Corpus Christi.
The Bloomberg
Markets article reported that a former Koch employee
said she was told to falsify data in a report to the state on the
emissions. The company was reportedly facing potential penalties of some
$350 million, but in early 2001 the newly installed Bush Administration’s
Justice Department negotiated a settlement in which many of the
charges were dropped and the company pled guilty to concealing violations of
air quality laws and paid just $10 million in criminal fines and $10 million
for environmental projects in the Corpus Christi area.
With the purchase of
Georgia-Pacific in 2005, Koch acquired a company with its own environmental and
safety problems. For example, in 1984 a G-P plant in Columbus, Ohio had spilled
2,000 pounds of phenol and formaldehyde that reached a nearby community.
Residents complained of health problems from that incident and from a
huge industrial
waste pond that the company
continued to maintain at the plant.
In 2009 the U.S.
Justice Department and the EPA announced that G-P would spend $13 million to
perform clean-up activities at a Michigan Superfund site where it previously
had a paper mill. In 2010 G-P was one of ten companies sued by the Justice Department over PCB
contamination of the Fox River in Wisconsin. Unlike the other defendants, G-P
had already settled with DOJ by agreeing to a $7 million penalty and to pay for
the costs of a portion of the clean-up. One of the other defendants, Appleton
Papers, called the settlement a “sweetheart deal.”
More recently, Koch Industries
has been caught up in the controversy over the Keystone XL pipeline. In 2011
Inside Climate News reported that Koch already responsible for 25
percent of the tar sands oil being imported from Canada into the United States
and stood to benefit greatly from the new pipeline. Koch denied its
involvement, but Inside Climate News found documents filed with Canada’s Energy
Board contradicting that statement.
An August 2012 report by the Political Economy Research Institute
at the University of Massachusetts-Amherst identified Koch as being among the
top five corporate air polluters in the United States.
The reason the Kochs
rail against regulation is clear: they’ve got a big stake in pollution.
Note: The full
rap sheet on Koch Industries can be found here.