koch

THIS IS A TAG

3/14 overflow from koch3

see koch 1-4

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tag site

http://www.politico.com/tag/the-koch-machine

Through their companies, the Kochs are the largest U.S. leaseholder in the Alberta oilsands. They’ve provided funding to Canada’s pro-oil Fraser Institute and are known to fuel the Agenda 21 conspiracy theory, which claims a 1992 UN non-binding sustainable development proposal is a plot to remove property rights and other freedoms.

Researchers reveal they’re also behind many anti-transit initiatives in the U.S., in cities and states including Nashville, Indianapolis, Boston, Virginia, Florida and Los Angeles. They spend large amounts of money on campaigns to discredit climate science and the need to reduce greenhouse gases, and they fund sympathetic politicians.

In late January, 50 U.S. anti-government and pro-oil groups—including some tied to the Kochs and the pro-oil, pro-tobacco Heartland Institute—sent Congress a letter opposing a gas tax increase that would help fund public transit, in part because “Washington continues to spend federal dollars on projects that have nothing to do with roads like bike paths and transit.”

The letter says “transportation infrastructure has a spending problem, not a revenue problem,” an argument similar to one used by opponents of the transportation plan Metro Vancouver residents are currently voting on. Vancouver’s anti-transit campaign is led by the Canadian Taxpayers Federation—a group that doesn’t reveal its funding sources and is on record as denying the existence of human-caused climate change—along with Hamish Marshall, a conservative strategist with ties to Ethical Oil.

American and Canadian transit opponents paint themselves as populist supporters of the common people, a tactic also used against carbon pricing. Marshall told Business in Vancouver, “I love the idea of working on a campaign where we can stand up for the little guy.” The U.S. letter claims the gas tax increase “would disproportionately hurt lower income Americans already hurt by trying times in our economy.” Both fail to note that poor and middle class families will benefit most from public transit and other sustainable transportation options.

Although many organizations that promote the fossil fuel industry and reject the need to address climate change—including the Heartland Institute, International Climate Science Coalition, Ethical Oil and Friends of Science—are secretive about their funding sources, a bit of digging often turns up oil, gas and coal money, often from the Kochs in the U.S. And most of their claims are easily debunked. In the case of the U.S. Heartland Institute, arguments stray into the absurd, like comparing climate researchers and those who accept the science to terrorists and murderers like the Unabomber and Charles Manson!

In some ways, it’s understandable why fossil fuel advocates would reject clean energy, conservation and sustainable transportation. Business people protect their interests—which isn’t necessarily bad. But anything that encourages people to drive less and conserve energy cuts into the fossil fuel industry’s massive profits. It’s unfortunate that greed trumps the ethical need to reduce pollution, limit climate change and conserve non-renewable resources.

It’s also poor economic strategy on a societal level. Besides contributing to pollution and global warming, fossil fuels are becoming increasingly difficult, dangerous and expensive to exploit as easily accessible sources are depleted—and markets are volatile, as we’ve recently seen. It’s crazy to go on wastefully burning these precious resources when they can be used more wisely, and when we have better options. Clean energy technology, transit improvements and conservation also create more jobs and economic activity and contribute to greater well-being and a more stable economy than fossil fuel industries.

To reduce pollution and address global warming, we must do everything we can, from conserving energy to shifting to cleaner energy sources. Improving transportation and transit infrastructure is one of the easiest ways to do so while providing more options for people to get around.

Those who profit from our continued reliance on fossil fuels will do what they can to convince us to stay on their expensive, destructive road. It’s up to all of us to help change course.

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Some of America's biggest welfare ranchers:

David and Charles Koch (Koch Industries)

The brothers hold a half-dozen grazing permits on public land in Montana to go with its 300,000-acre Matador Ranch there. The brothers are tied for fourth place on Forbes 2014 400 Richest People in America list (net worth: $ 42 billion each). The Koch family ($ 89 billion) is #2 on Forbes Richest Families list; Koch Industries is #2 on Forbes America's Largest Private Companies list, ($ 115 billion in sales).

J.R. Simplot Corp.

The largest U.S. public lands ranching entity (with an estimated 2 to 3 million acres of allotments in CA, ID, NV, OR and UT) is #63 on Forbes 2014 list of America's Largest Private Companies ($ 5.8 billion in sales). In 2014, the family was #29 on Forbes list of America’s Richest Families (net worth: $ 8 billion).

Bruce McCaw (McCaw Cellular)

McCaw was #382 on Forbes 400 list of America’s Richest People in 2005 (net worth: $ 925 million). Through his 9 sprawling ranches, he controls a significant number of public grazing leases in ID and possibly NV. One of them (Camas Creek ranch) includes 272,000 acres of Federal grazing allotments in Idaho's Camas Prairie. Grazing permitted to his other ranches could easily double or triple that to a million acres or more.

Barrick Gold

The Canadian mining company is one of the two largest public lands ranchers in NV, ranking 771st on Forbes Global 2000 list of the World’s Biggest Public Companies in 2014, (sales: $ 12.56 billion). Like many other large public lands ranchers, Barrick buys ranches to secure water rights.

Southern Nevada Water Authority (SNWA)

The supplier of drinking water to Las Vegas is a large NV public lands rancher with an estimated 1 million acres of public grazing allotments. Like Barrick Gold, it, buys up private ranches to gain their water rights.

W. Barron Hilton (Hilton Hotels)

The hotel heir dropped off Forbes Billionaires list (ranked #459 in 2011) as well as its list of the 400 Richest Americans (#144 in 2010), with a net worth of $ 2.5 billion. He died in 2013.

Though records are hard to pin down, Hilton's heirs inherited a ranching operation in the CA-NV border area, which has been known to have vast public lands grazing allotments permitted to it.

Mary Hewlett-Jaffe (Hewlett-Packard)

Jaffe holds the largest BLM public lands grazing permit in central ID and is among the top 15 public lands ranchers in the state (estimated at under 200,000 acres that are said to be in extremely degraded condition, according to sources).

James Barta (Sav-Rx.com)

Barta is not on any Forbes rich lists, but owns one of the largest cattle ranching operations in the U.S., according to his attorneys. Barta holds grazing permits to nearly 900,000 acres of public grazing allotments in connection with two properties: White Horse Ranch (in OR) and Soldier Meadows (in NV). Barta may have additional NV grazing leases through two other ranches in NV, according to Jon Marvel, founder of Western Watersheds Project.

T. Wright Dickinson

Though not on any Forbes list, the Dickinson family is a large public lands rancher, with  grazing permits estimated at more than a half million acres of CO, UT and WY public lands under its LLC, Vermillion Ranches. Dickinson is a former County commissioner and proponent of county efforts to gain control of federal lands, according to the Denver Post.

Stan Kroenke (Kroenke Group) & Ann Walton Kroenke (Walmart)

With just two of his ranches (in MT and WY) totaling 664,000 acres (not including public grazing allotments), Kroenke is one of the ten top land owners in the U.S. In 2014, he ranked #89 on Forbes list of the 400 Richest Americans, #247 on its Billionaires list, and #5 on its list of Richest American Sports Team Owners (net worth: $ 5.8 billion). His wife, Ann Walton Kroenke (net worth: $ 5.6 billion), was #261 on Forbes Billionaires list and #11 on its list of America’s Richest Women.

Family of Robert Earl Holding (Sinclair Oil and hotels)

Forbes ranks the family #87 on its 2014 list of America’s Richest Families (net worth: $ 2.7 billion). With 400,000 acres of land, the family is the 19th largest private land owner in the US, according to the 2014 Land Report 100. This includes land that Forbes reported “may be the largest ranching operation in the Rocky Mountains.” Public grazing leases are associated with some of the family’s WY and possibly MT holdings, according to Jon Marvel, founder of Western Watersheds.

Ted Turner

He's the second largest U.S. land owner (2 million acres in 6 states), is estimated to hold grazing leases in MT and NM (estimated at as much as 300,000 acres), and owns the world's largest bison herd. Forbes ranked him #296 on its 2014 list of the 400 Richest Americans and #818 on its global Billionaires list (net worth: $ 2.2 billion).

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2/15 Roll S expose reaction

http://www.dailykos.com/story/2014/09/30/1333457/-Kochs-brothers-freak-out-in-response-to-Rolling-Stone-expose

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2014 post mortem

The Kochs are not just oligarchs; they are now a political party. Koch groups were projected to spend some $300 million this election cycle. For comparison, the DNC and RNC, combined spent $300 million.

To learn more, check out my colleague Mary Bottari’s article "The Koch Party Wins, Planet in Peril." Check out Rebekah Wilce’s rundown of the pet politicians who will be working to implement the Koch agenda"ALEC Pols Moving Up in 2014 Midterms." And let’s not forget Brendan Fischer's in-depth work exposing money in politics and the criminal investigation of ALEC stalwart Scott Walker.

These are dark days, but the fight back is already underway. A few days ago CMD’s research director Nick Surgey discovered that ALEC’s corporate board chair is quitting the group over ALEC’s denial that climate change is happening and other issues, joining Google and a cluster of other tech firms, including AOL just this week. This brings to more than 90 the number of private sector firms that have stopped funding ALEC, since we launched ALECexposed and citizen groups across the country joined us in exposing ALEC and its funders..

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9/14

By Tim Dickinson | September 24, 2014

RS

The enormity of the Koch fortune is no mystery. Brothers Charles and David are each worth more than $40 billion. The electoral influence of the Koch brothers is similarly well-chronicled. The Kochs are our homegrown oligarchs; they've cornered the market on Republican politics and are nakedly attempting to buy Congress and the White House. Their political network helped finance the Tea Party and powers today's GOP. Koch-affiliated organizations raised some $400 million during the 2012 election, and aim to spend another $290 million to elect Republicans in this year's midterms. So far in this cycle, Koch-backed entities have bought 44,000 political ads to boost Republican efforts to take back the Senate.

Related David Koch

Three New Ways the Koch Brothers Are Screwing America

What is less clear is where all that money comes from. Koch Industries is headquartered in a squat, smoked-glass building that rises above the prairie on the outskirts of Wichita, Kansas. The building, like the brothers' fiercely private firm, is literally and figuratively a black box. Koch touts only one top-line financial figure: $115 billion in annual revenue, as estimated by Forbes. By that metric, it is larger than IBM, Honda or Hewlett-Packard and is America's second-largest private company after agribusiness colossus Cargill. The company's stock response to inquiries from reporters: "We are privately held and don't disclose this information."

But Koch Industries is not entirely opaque. The company's troubled legal history – including a trail of congressional investigations, Department of Justice consent decrees, civil lawsuits and felony convictions – augmented by internal company documents, leaked State Department cables, Freedom of Information disclosures and company whistle­-blowers, combine to cast an unwelcome spotlight on the toxic empire whose profits finance the modern GOP.

Under the nearly five-decade reign of CEO Charles Koch, the company has paid out record civil and criminal environmental penalties. And in 1999, a jury handed down to Koch's pipeline company what was then the largest wrongful-death judgment of its type in U.S. history, resulting from the explosion of a defective pipeline that incinerated a pair of Texas teenagers.

The volume of Koch Industries' toxic output is staggering. According to the University of Massachusetts Amherst's Political Economy Research Institute, only three companies rank among the top 30 polluters of America's air, water and climate: ExxonMobil, American Electric Power and Koch Industries. Thanks in part to its 2005 purchase of paper-mill giant Georgia-Pacific, Koch Industries dumps more pollutants into the nation's waterways than General Electric and International Paper combined. The company ranks 13th in the nation for toxic air pollution. Koch's climate pollution, meanwhile, outpaces oil giants including Valero, Chevron and Shell. Across its businesses, Koch generates 24 million metric tons of greenhouse gases a year.

Related koch brothers

The Koch Brothers – Exposed!

For Koch, this license to pollute amounts to a perverse, hidden subsidy. The cost is borne by communities in cities like Port Arthur, Texas, where a Koch-owned facility produces as much as 2 billion pounds of petrochemicals every year. In March, Koch signed a consent decree with the Department of Justice requiring it to spend more than $40 million to bring this plant into compliance with the Clean Air Act.

The toxic history of Koch Industries is not limited to physical pollution. It also extends to the company's business practices, which have been the target of numerous federal investigations, resulting in several indictments and convictions, as well as a whole host of fines and penalties.

And in one of the great ironies of the Obama years, the president's financial-regulatory reform seems to benefit Koch Industries. The company is expanding its high-flying trading empire precisely as Wall Street banks – facing tough new restrictions, which Koch has largely escaped – are backing away from commodities speculation.

It is often said that the Koch brothers are in the oil business. That's true as far as it goes – but Koch Industries is not a major oil producer. Instead, the company has woven itself into every nook of the vast industrial web that transforms raw fossil fuels into usable goods. Koch-owned businesses trade, transport, refine and process fossil fuels, moving them across the world and up the value chain until they become things we forgot began with hydrocarbons: fertilizers, Lycra, the innards of our smartphones.

The company controls at least four oil refineries, six ethanol plants, a natural-gas-fired power plant and 4,000 miles of pipeline. Until recently, Koch refined roughly five percent of the oil burned in America (that percentage is down after it shuttered its 85,000-barrel-per-day refinery in North Pole, Alaska, owing, in part, to the discovery that a toxic solvent had leaked from the facility, fouling the town's groundwater). From the fossil fuels it refines, Koch also produces billions of pounds of petrochemicals, which, in turn, become the feedstock for other Koch businesses. In a journey across Koch Industries, what enters as a barrel of West Texas Intermediate can exit as a Stainmaster carpet.

Koch's hunger for growth is insatiable: Since 1960, the company brags, the value of Koch Industries has grown 4,200-fold, outpacing the Standard & Poor's index by nearly 30 times. On average, Koch projects to double its revenue every six years. Koch is now a key player in the fracking boom that's vaulting the United States past Saudi Arabia as the world's top oil producer, even as it's endangering America's groundwater. In 2012, a Koch subsidiary opened a pipeline capable of carrying 250,000 barrels a day of fracked crude from South Texas to Corpus Christi, where the company owns a refinery complex, and it has announced plans to further expand its Texas pipeline operations. In a recent acquisition, Koch bought Frac-Chem, a top provider of hydraulic fracturing chemicals to drillers. Thanks to the Bush administration's anti-regulatory­ agenda – which Koch Industries helped craft – Frac-Chem's chemical cocktails, injected deep under the nation's aquifers, are almost entirely exempt from the Safe Drinking Water Act.

koch brothers

A 1996 explosion of a Koch-owned pipeline in Texas killed two teens. (Photo: National Transportation Safety Board)

Koch is also long on the richest – but also the dirtiest and most carbon-polluting – oil deposits in North America: the tar sands of Alberta. The company's Pine Bend refinery, near St. Paul, Minnesota, processes nearly a quarter of the Canadian bitumen exported to the United States – which, in turn, has created for Koch Industries a lucrative sideline in petcoke exports. Denser, dirtier and cheaper than coal, petcoke is the dregs of tar-sands refining. U.S. coal plants are largely forbidden from burning petcoke, but it can be profitably shipped to countries with lax pollution laws like Mexico and China. One of the firm's subsidiaries, Koch Carbon, is expanding its Chicago terminal operations to receive up to 11 million tons of petcoke for global export. In June, the EPA noted the facility had violated the Clean Air Act with petcoke particulates that endanger the health of South Side residents. "We dispute that the two elevated readings" behind the EPA notice of violation "are violations of anything," Koch's top lawyer, Mark Holden, told Rolling Stone, insisting that Koch Carbon is a good neighbor.

Over the past dozen years, the company has quietly acquired leases for 1.1 million acres of Alberta oil fields, an area larger than Rhode Island. By some estimates, Koch's direct holdings nearly double ExxonMobil's and nearly triple Shell's. In May, Koch Oil Sands Operating LLC of Calgary, Alberta, sought permits to embark on a multi-billion­dollar tar-sands-extraction operation. This one site is projected to produce 22 million barrels a year – more than a full day's supply of U.S. oil.

Charles Koch, the 78-year-old CEO and chairman of the board of Koch Industries, is inarguably a business savant. He presents himself as a man of moral clarity and high integrity. "The role of business is to produce products and services in a way that makes people's lives better," he said recently. "It cannot do so if it is injuring people and harming the environment in the process."

The Koch family's lucrative blend of pollution, speculation, law-bending and self-righteousness stretches back to the early 20th century, when Charles' father first entered the oil business. Fred C. Koch was born in 1900 in Quanah, Texas – a sunbaked patch of prairie across the Red River from Oklahoma. Fred was the second son of Hotze "Harry" Koch, a Dutch immigrant who – as recalled in Koch literature – ran "a modest newspaper business" amid the dusty poverty of Quanah. In the family legend, Fred Koch emerged from the nothing of the Texas range to found an empire. But like many stories the company likes to tell about itself, this piece of Koch­lore takes liberties with the truth. Fred was not a simple country boy, and his father was not just a small-town publisher. Harry Koch was also a local railroad baron who used his newspaper to promote the Quanah, Acme & Pacific railways. A director and founding shareholder of the company, Harry sought to build a rail line across Texas to El Paso. He hoped to turn Quanah into "the most important railroad center in northwest Texas and a metropolitan city of first rank." He may not have fulfilled those ambitions, but Harry did build up what one friend called "a handsome pile of dinero."

Harry was not just the financial springboard for the Koch dynasty, he was also its wellspring of far-right politics. Harry editorialized against fiat money, demanded hangings for "habitual criminals" and blasted Social Security as inviting sloth. At the depths of the Depression, he demanded that elected officials in Washington should stop trying to fix the economy: "Business," he wrote, "has always found a way to overcome various recessions."

In the company's telling, young Fred was an innovator whose inventions helped revolutionize the oil industry. But there is much more to this story. In its early days, refining oil was a dirty and wasteful practice. But around 1920, Universal Oil Products introduced a clean and hugely profitable way to "crack" heavy crude, breaking it down under heat and heavy pressure to boost gasoline yields. In 1925, Fred, who earned a degree in chemical engineering from MIT, partnered with a former Universal engineer named Lewis Winkler and designed a near carbon copy of the Universal cracking apparatus – making only tiny, unpatentable tweaks. Relying on family connections, Fred soon landed his first client – an Oklahoma refinery owned by his maternal uncle L.B. Simmons. In a flash, Winkler-Koch Engineering Co. had contracts to install its knockoff cracking equipment all over the heartland, undercutting Universal by charging a one-time fee rather than ongoing royalties.

It was a boom business. That is, until Universal sued in 1929, accusing Winkler­Koch of stealing its intellectual property. With his domestic business tied up in court, Fred started looking for partners abroad and was soon doing business in the Soviet Union, where leader Joseph Stalin had just launched his first Five Year Plan. Stalin sought to fund his country's industrialization by selling oil into the lucrative European export market. But the Soviet Union's reserves were notoriously hard to refine. The USSR needed cracking technology, and the Oil Directorate of the Supreme Council of the National Economy took a shining to Winkler-Koch – primarily because Koch's oil-industry competitors were reluctant to do business with totalitarian Communists.

koch brothers

Outside its London offices, protesters gather. (Photo: P.Wolmuth/REPORT DIGITAL-REA/Re)

Between 1929 and 1931, Winkler-Koch built 15 cracking units for the Soviets. Although Stalin's evil was no secret, it wasn't until Fred visited the Soviet Union, that these dealings seemed to affect his conscience. "I went to the USSR in 1930 and found it a land of hunger, misery and terror," he would later write. Even so, he agreed to give the Soviets the engineering know-how they would need to keep building more.

Back home, Fred was busy building a life of baronial splendor. He met his wife, Mary, the Wellesley-educated daughter of a Kansas City surgeon, on a polo field and soon bought 160 acres across from the Wichita Country Club, where they built a Tudor­style mansion. As chronicled in Sons of Wichita, Daniel Schulman's investigation of the Koch dynasty, the compound was quickly bursting with princes: Frederick arrived in 1933, followed by Charles in 1935 and twins David and Bill in 1940. Fred Koch lorded over his domain. "My mother was afraid of my father," said Bill, as were the four boys, especially first-born Frederick, an artistic kid with a talent for the theater. "Father wanted to make all his boys into men, and Freddie couldn't relate to that regime," Charles recalled. Frederick got shipped East to boarding school and was all but disappeared from Wichita.

With Frederick gone, Charles forged a deep alliance with David, the more athletic and assertive of the young twins. "I was closer with David because he was better at everything," Charles has said.

Fred Koch's legal battle with Universal would drag on for nearly a quarter-century. In 1934, a lower court ruled that Winkler-Koch had infringed on Universal's technology. But that judgment would be vacated, after it came out in 1943 that Universal had bought off one of the judges­ handling the appeal. A year later, the Supreme Court decided that Fred's cracker, by virtue of small technical differences, did not violate the Universal patent. Fred countersued on antitrust grounds, arguing that Universal had wielded patents anti-competitively. He'd win a $1.5 million settlement in 1952.

Around that time, Fred had built a domestic oil empire under a new company eventually called Rock Island Oil & Refining, transporting crude from wellheads to refineries by truck or by pipe. In those later years, Fred also became a major benefactor and board member of the John Birch Society, the rabidly anti-communist organization founded in 1958 by candy magnate and virulent racist Robert Welch. Bircher publications warned that the Red endgame was the creation of the "Negro Soviet­ Republic" in the Deep South. In his own writing, Fred described integration as a Red plot to "enslave both the white and black man."

Like his father, Charles Koch attended MIT. After he graduated in 1959 with two master's degrees in engineering, his father issued an ultimatum: Come back to Wichita or I'll sell the business. "Papa laid it on the line," recalled David. So Charles returned home, immersing himself in his father's world – not simply joining the John Birch Society, but also opening a Bircher bookstore. The Birchers had high hopes for young Charles. As Koch family friend Robert Love wrote in a letter to Welch: "Charles Koch can, if he desires, finance a large operation, however, he must continually be brought along."

But Charles was already falling under the sway of a charismatic radio personality named Robert LeFevre, founder of the Freedom School, a whites-only­ libertarian boot camp in the foothills above Colorado Springs, Colorado. LeFevre preached a form of anarchic capitalism in which the individual should be freed from almost all government power. Charles soon had to make a choice. While the Birchers supported the Vietnam War, his new guru was a pacifist who equated militarism with out-of-control state power. LeFevre's stark influence on Koch's thinking is crystallized in a manifesto Charles wrote for the Libertarian Review in the 1970s, recently unearthed by Schulman, titled "The Business Community: Resisting Regulation." Charles lays out principles that gird today's Tea Party movement. Referring to regulation as "totalitarian," the 41-year-old Charles claimed business leaders had been "hoodwinked" by the notion that regulation is "in the public interest." He advocated the "barest possible obedience" to regulation and implored, "Do not cooperate voluntarily, instead, resist whenever and to whatever extent you legally can in the name of justice."

After his father died in 1967, Charles, now in command of the family business, renamed it Koch Industries. It had grown into one of the 10 largest privately owned firms in the country, buying and selling some 80 million barrels of oil a year and operating 3,000 miles of pipeline. A black-diamond skier and white-water kayaker, Charles ran the business with an adrenaline junkie's aggressiveness. The company would build pipelines to promising oil fields without a contract from the producers and park tanker trucks beside wildcatters' wells, waiting for the first drops of crude to flow. "Our willingness to move quickly, absorb more risk," Charles would write, "enabled us to become the leading crude-oil­gathering company."

Charles also reconnected with one of his father's earliest insights: There's big money in dirty oil. In the late 1950s, Fred Koch had bought a minority stake in a Minnesota refinery that processed heavy Canadian crude. "We could run the lousiest crude in the world," said his business partner J. Howard Marshall II – the future Mr. Anna Nicole Smith. Sensing an opportunity for huge profits, Charles struck a deal to convert Marshall's ownership stake in the refinery into stock in Koch Industries. Suddenly the majority owner, the company soon bought the rest of the refinery outright.

Almost from the beginning, Koch Industries' risk-taking crossed over into recklessness. The OPEC oil embargo hit the company hard. Koch had made a deal giving the company the right to buy a large share of Qatar's export crude. At the time, Koch owned five supertankers and had chartered many others. When the embargo hit, Koch had upward of half a billion dollars in exposure to tankers and couldn't deliver OPEC oil to the U.S. market, creating what Charles has called "large losses." Soon, Koch Industries was caught overcharging American customers. The Ford administration in the summer of 1974 compelled Koch to pay out more than $20 million in rebates and future price reductions.

Koch Industries' manipulations were about to get more audacious. In the late 1970s, the federal government parceled out exploration tracts, using a lottery in which anyone could score a 10-year lease at just $1 an acre – a game of chance that gave wildcat prospectors the same shot as the biggest players. Koch didn't like these odds, so it enlisted scores of frontmen to bid on its behalf. In the event they won the lottery, they would turn over their leases to the company. In 1980, Koch Industries pleaded guilty to five felonies in federal court, including conspiracy to commit fraud.

With Republicans and Democrats united in regulating the oil business, Charles had begun throwing his wealth behind the upstart Libertarian Party, seeking to transform it into a viable third party. Over the years, he would spend millions propping up a league of affiliated think tanks and front groups – a network of Libertarians that became known as the "Kochtopus."

Charles even convinced David to stand as the Libertarian Party's vice-presidential candidate in 1980 – a clever maneuver that allowed David to lavish unlimited money on his own ticket. The Koch-funded 1980 platform was nakedly in the brothers' self-interest – slashing federal regulatory agencies, offering a 50 percent tax break to top earners, ending the "cruel and unfair" estate tax and abolishing a $16 billion "windfall profits" tax on the oil industry. The words of Libertarian presidential candidate Ed Clark's convention speech in Los Angeles ring across the decades: "We're sick of taxes," he declared. "We're ready to have a very big tea party." In a very real sense, the modern Republican Party was on the ballot that year – and it was running against Ronald Reagan.

Charles' management style and infatuation with far-right politics were endangering his grip on the company. Bill believed his brothers' political spending was bad for business. "Pretty soon, we would get the reputation that the company and the Kochs were crazy," he said.

In late 1980, with Frederick's backing, Bill launched an unsuccessful battle for control of Koch Industries, aiming to take the company public. Three years later, Charles and David bought out their brothers for $1.1 billion. But the speed with which Koch Industries paid off the buyout debt left Bill convinced, but never quite able to prove, he'd been defrauded. He would spend the next 18 years suing his brothers, calling them "the biggest crooks in the oil industry."

Bill also shared these concerns with the federal government. Thanks in part to his efforts, in 1989 a Senate committee investigating Koch business with Native Americans would describe Koch Oil tactics as "grand larceny." In the late 1980s, Koch was the largest purchaser of oil from American tribes. Senate investigators suspected the company was making off with more crude from tribal oil fields than it measured and paid for. They set up a sting, sending an FBI agent to coordinate stakeouts of eight remote leases. Six of them were Koch operations, and the agents reported "oil theft" at all of them.

One of Koch's gaugers would refer to this as "volume enhancement." But in sworn testimony before a Texas jury, Phillip Dubose, a former Koch pipeline manager, offered a more succinct definition: "stealing." The Senate committee concluded that over the course of three years Koch "pilfered" $31 million in Native oil; in 1988, the value of that stolen oil accounted for nearly a quarter of the company's crude-oil profits. "I don't know how the company could have figures like that," the FBI agent testified, "and not have top management know that theft was going on." In his own testimony, Charles offered that taking oil readings "is a very uncertain art" and that his employees "aren't rocket scientists." Koch's top lawyer would later paint the company as a victim of Senate "McCarthyism."

By this time, the Kochs had soured on the Libertarian Party, concluding that control of a small party would never give them the muscle they sought in the nation's capital. Now they would spend millions in efforts to influence – and ultimately take over – the GOP. The work began close to home; the Kochs had become dedicated patrons of Sen. Bob Dole of Kansas, who ran interference for Koch Industries in Washington. On the Senate floor in March 1990, Dole gloatingly cautioned against a "rush to judgment" against Koch, citing "very real concerns about some of the evidence on which the special committee was basing its findings." A grand jury investigated the claims but disbanded in 1992, without issuing indictments.

Arizona Sen. Dennis DeConcini was "surprised and disappointed" at the decision to drop the case. "Our investigation was some of the finest work the Senate has ever done," he said. "There was an overwhelming case against Koch." But Koch did not avoid all punishment. Under the False Claims Act, which allows private citizens to file lawsuits on behalf of the government, Bill sued the company, accusing it of defrauding the feds of royalty income on its "volume­enhanced" purchases of Native oil. A jury concluded Koch had submitted more than 24,000 false claims, exposing Koch to some $214 million in penalties. Koch later settled, paying $25 million.

Self­interest continued to define Koch Industries' adventures in public policy. In the early 1990s, in a high-profile initiative of the first-term Clinton White House, the administration was pushing for a levy on the heat content of fuels. Known as the BTU tax, it was the earliest attempt by the federal government to recoup damages from climate polluters. But Koch Industries could not stand losing its most valuable subsidy: the public policy that allowed it to treat the atmosphere as an open sewer. Richard Fink, head of Koch Company's Public Sector and the longtime mastermind of the Koch brothers' political empire, confessed to The Wichita Eagle in 1994 that Koch could not compete if it actually had to pay for the damage it did to the environment: "Our belief is that the tax, over time, may have destroyed our business."

To fight this threat, the Kochs funded a "grassroots" uprising – one that foreshadowed the emergence, decades later, of the Tea Party. The effort was run through Citizens for a Sound Economy, to which the brothers had spent a decade giving nearly $8 million to create what David Koch called "a sales force" to communicate the brothers' political agenda through town hall meetings and anti-tax rallies designed to look like spontaneous demonstrations. In 1994, David Koch bragged that CSE's campaign "played a key role in defeating the administration's plans for a huge and cumbersome BTU tax."

Despite the company's increasingly sophisticated political and public-relations operations, Charles' philosophy of regulatory resistance was about to bite Koch Industries – in the form of record civil and criminal financial penalties imposed by the Environmental Protection Agency.

Koch entered the 1990s on a pipeline-buying spree. By 1994, its network measured 37,000 miles. According to sworn testimony from former Koch employees, the company operated its pipelines with almost complete disregard for maintenance. As Koch employees understood it, this was in keeping with their CEO's trademarked business philosophy, Market­Based Management.

For Charles, MBM – first communicated to employees in 1991 – was an attempt to distill the business practices that had grown Koch into one of the largest oil businesses in the world. To incentivize workers, Koch gives employees bonuses that correlate to the value they create for the company. "Salary is viewed only as an advance on compensation for value," Koch wrote, "and compensation has an unlimited upside."

To prevent the stagnation that can often bog down big enterprises, Koch was also determined to incentivize risk-taking. Under MBM, Koch Industries books opportunity costs – "profits foregone from a missed opportunity" – as though they were actual losses on the balance sheet. Koch employees who play it safe, in other words, can't strike it rich.

On paper, MBM sounds innovative and exciting. But in Koch's hyperaggressive corporate culture, it contributed to a series of environmental disasters. Applying MBM to pipeline maintenance, Koch employees calculated that the opportunity cost of shutting down equipment to ensure its safety was greater than the profit potential of pushing aging pipe to its limits.

The fact that preventive pipeline maintenance is required by law didn't always seem to register. Dubose, a 26-year Koch veteran who oversaw pipeline areas in Louisiana, would testify about the company's lax attitude toward maintenance. "It was a question of money. It would take away from our profit margin." The testimony of another pipeline manager would echo that of Dubose: "Basically, the philosophy was 'If it ain't broke, don't work on it.'"

When small spills occurred, Dubose testified, the company would cover them up. He recalled incidents in which the company would use the churn of a tugboat's engine to break up waterborne spills and "just kind of wash that thing on down, down the river." On land, Dubose said, "They might pump it [the leaked oil] off into a drum, then take a shovel and just turn the earth over." When larger spills were reported to authorities, the volume of the discharges was habitually low-balled, according to Dubose.

Managers pressured employees to falsify pipeline-maintenance records filed with federal authorities; in a sworn affidavit, pipeline worker Bobby Conner recalled arguments with his manager over Conner's refusal to file false reports: "He would always respond with anger," Conner said, "and tell me that I did not know how to be a Koch employee." Conner was fired and later settled a wrongful-termination suit with Koch Gateway Pipeline. Dubose testified that Charles was not in the dark about the company's operations. "He was in complete control," Dubose said. "He was the one that was line-driving this Market-Based Management at meetings."

Before the worst spill from this time, Koch employees had raised concerns about the integrity of a 1940s-era pipeline in South Texas. But the company not only kept the line in service, it increased the pressure to move more volume. When a valve snapped shut in 1994, the brittle pipeline exploded. More than 90,000 gallons of crude spewed into Gum Hollow Creek, fouling surrounding marshlands and both Nueces and Corpus Christi bays with a 12-mile oil slick.

By 1995, the EPA had seen enough. It sued Koch for gross violations of the Clean Water Act. From 1988 through 1996, the company's pipelines spilled 11.6 million gallons of crude and petroleum products. Internal Koch records showed that its pipelines were in such poor condition that it would require $98 million in repairs to bring them up to industry standard.

Ultimately, state and federal agencies forced Koch to pay a $30 million civil penalty – then the largest in the history of U.S. environmental law – for 312 spills across six states. Carol Browner, the former EPA administrator, said of Koch, "They simply did not believe the law applied to them." This was not just partisan rancor. Texas Attorney General John Cornyn, the future Republican senator, had joined the EPA in bringing suit against Koch. "This settlement and penalty warn polluters that they cannot treat oil spills simply as the cost of doing business," Cornyn said. (The Kochs seem to have no hard feelings toward their one-time tormentor; a lobbyist for Koch was the number-two bundler for Cornyn's primary campaign this year.)

Koch wasn't just cutting corners on its pipelines. It was also violating federal environmental law in other corners of the empire. Through much of the 1990s at its Pine Bend refinery in Minnesota, Koch spilled up to 600,000 gallons of jet fuel into wetlands near the Mississippi River. Indeed, the company was treating the Mississippi as a sewer, illegally dumping ammonia-laced wastewater into the river – even increasing its discharges on weekends when it knew it wasn't being monitored. Koch Petroleum Group eventually pleaded guilty to "negligent discharge of a harmful quantity of oil" and "negligent violation of the Clean Water Act," was ordered to pay a $6 million fine and $2 million in remediation costs, and received three years' probation. This facility had already been declared a Superfund site in 1984.

In 2000, Koch was hit with a 97-count indictment over claims it violated the Clean Air Act by venting massive quantities of benzene at a refinery in Corpus Christi – and then attempted to cover it up. According to the indictment, Koch filed documents with Texas regulators indicating releases of just 0.61 metric tons of benzene for 1995 – one-tenth of what was allowed under the law. But the government alleged that Koch had been informed its true emissions that year measured 91 metric tons, or 15 times the legal limit.

koch brothers

Charles Koch (Photo: Larry W. Smith / Polaris)

By the time the case came to trial, however, George W. Bush was in office and the indictment had been significantly pared down – Koch faced charges on only seven counts. The Justice Department settled in what many perceived to be a sweetheart deal, and Koch pleaded guilty to a single felony count for covering up the fact that it had disconnected a key pollution-control device and did not measure the resulting benzene emissions – receiving five years' probation. Despite skirting stiffer criminal prosecution, Koch was handed $20 million in fines and reparations – another historic judgment.

On the day before Danielle Smalley was to leave for college, she and her friend Jason Stone were hanging out in her family's mobile home. Seventeen years old, with long chestnut hair, Danielle began to feel nauseated. "Dad," she said, "we smell gas." It was 3:45 in the afternoon on August 24th, 1996, near Lively, Texas, some 50 miles southeast of Dallas. The Smalleys were too poor to own a telephone. So the teens jumped into her dad's 1964 Chevy pickup to alert the authorities. As they drove away, the truck stalled where the driveway crossed a dry creek bed. Danielle cranked the ignition, and a fireball engulfed the truck. "You see two children burned to death in front of you – you never forget that," Danielle's father, Danny, would later tell reporters.

Unknown to the Smalleys, a decrepit Koch pipeline carrying liquid butane – literally, lighter fluid – ran through their subdivision. It had ruptured, filling the creek bed with vapor, and the spark from the pickup's ignition had set off a bomb. Federal investigators documented both "severe corrosion" and "mechanical damage" in the pipeline. A National Transportation Safety Board report would cite the "failure of Koch Pipeline Company LP to adequately protect its pipeline from corrosion."

Installed in the early Eighties, the pipeline had been out of commission for three years. When Koch decided to start it up again in 1995, a water-pressure test had blown the pipe open. An inspection of just a few dozen miles of pipe near the Smal­ley home found 538 corrosion defects. The industry's term of art for a pipeline in this condition is Swiss cheese, according to the testimony of an expert witness – "essentially the pipeline is gone."

Koch repaired only 80 of the defects – enough to allow the pipeline to withstand another pressure check – and began running explosive fluid down the line at high pressure in January 1996. A month later, employees discovered that a key anti­corrosion system had malfunctioned, but it was never fixed. Charles Koch had made it clear to managers that they were expected to slash costs and boost profits. In a sternly worded memo that April, Charles had ordered his top managers to cut expenditures by 10 percent "through the elimination of waste (I'm sure there is much more waste than that)" in order to increase pre-tax earnings by $550 million a year.

The Smalley trial underscored something Bill Koch had said about the way his brothers ran the company: "Koch Industries has a philosophy that profits are above everything else." A former Koch manager, Kenoth Whitstine, testified to incidents in which Koch Industries placed profits over public safety. As one supervisor had told him, regulatory fines "usually didn't amount to much" and, besides, the company had "a stable full of lawyers in Wichita that handled those situations." When Whitstine told another manager he was concerned that unsafe pipelines could cause a deadly accident, this manager said that it was more profitable for the company to risk litigation than to repair faulty equipment. The company could "pay off a lawsuit from an incident and still be money ahead," he said, describing the principles of MBM to a T.

At trial, Danny Smalley asked for a judgment large enough to make the billionaires feel pain: "Let Koch take their child out there and put their children on the pipeline, open it up and let one of them die," he told the jury. "And then tell me what that's worth." The jury was emphatic, awarding Smalley $296 million – then the largest wrongful-death judgment in American legal history. He later settled with Koch for an undisclosed sum and now runs a pipeline-safety foundation in his daughter's name. He declined to comment for this story. "It upsets him too much," says an associate.

The official Koch line is that scandals that caused the company millions in fines, judgments and penalties prompted a change in Charles' attitude of regulatory resistance. In his 2007 book, The Science of Success, he begrudgingly acknowledges his company's recklessness. "While business was becoming increasingly regulated," he reflects, "we kept thinking and acting as if we lived in a pure market economy. The reality was far different."

Charles has since committed Koch Industries to obeying federal regulations. "Even when faced with laws we think are counterproductive," he writes, "we must first comply." Underscoring just how out of bounds Koch had ventured in its corporate culture, Charles admits that "it required a monumental undertaking to integrate compliance into every aspect of the company." In 2000, Koch Petroleum Group entered into an agreement with the EPA and the Justice Department to spend $80 million at three refineries to bring them into compliance with the Clean Air Act. After hitting Koch with a $4.5 million penalty, the EPA granted the company a "clean slate" for certain past violations.

Then George W. Bush entered the White House in 2001, his campaign fattened with Koch money. Charles Koch may decry cronyism as "nothing more than welfare for the rich and powerful," but he put his company to work, hand in glove, with the Bush White House. Correspondence, contacts and visits among Koch Industries representatives and the Bush White House generated nearly 20,000 pages of records, according to a Rolling Stone FOIA request of the George W. Bush Presidential Library. In 2007, the administration installed a fiercely anti-regulatory academic, Susan Dudley, who hailed from the Koch-funded Mercatus Center at George Mason University, as its top regulatory official.

Today, Koch points to awards it has won for safety and environmental excellence. "Koch companies have a strong record of compliance," Holden, Koch's top lawyer, tells Rolling Stone. "In the distant past, when we failed to meet these standards, we took steps to ensure that we were building a culture of 10,000 percent compliance, with 100 percent of our employees complying 100 percent." To reduce its liability, Koch has also unwound its pipeline business, from 37,000 miles in the late 1990s to about 4,000 miles. Of the much smaller operation, he adds, "Koch's pipeline practice and operations today are the best in the industry."

But even as compliance began to improve among its industrial operations, the company aggressively expanded its trading activities into the Wild West frontier of risky financial instruments. In 2000, the Commodity Futures Modernization Act had exempted many of these products from regulation, and Koch Industries was among the key players shaping that law. Koch joined up with Enron, BP, Mobil and J. Aron – a division of Goldman Sachs then run by Lloyd Blankfein – in a collaboration called the Energy Group. This corporate alliance fought to prohibit the federal government from policing oil and gas derivatives. "The importance of derivatives for the Energy Group companies?.?.?.?cannot be overestimated," the group's lawyer wrote to the Commodity Futures Trading Commission in 1998. "The success of this business can be completely undermined by?.?.?.?a costly regulatory regime that has no place in the energy industry."

Koch had long specialized in "over-the-counter" or OTC trades – private, unregulated contracts not disclosed on any centralized exchange. In its own letter to the CFTC, Koch identified itself as "a major participant in the OTC derivatives market," adding that the company not only offered "risk-management tools for its customers" but also traded "for its own account." Making the case for what would be known as the Enron Loophole, Koch argued that any big firm's desire to "maintain a good reputation" would prevent "widespread abuses in the OTC derivatives market," a darkly hilarious claim, given what would become not only of Enron, but also Bear Stearns, Lehman Brothers and AIG.

The Enron Loophole became law in December 2000 – pushed along by Texas Sen. Phil Gramm, giving the Energy Group exactly what it wanted. "It completely exempted energy futures from regulation," says Michael Greenberger, a former director of trading and markets at the CFTC. "It wasn't a matter of regulators not enforcing manipulation or excessive speculation limits – this market wasn't covered at all. By law."

Before its spectacular collapse, Enron would use this loophole in 2001 to help engineer an energy crisis in California, artificially constraining the supply of natural gas and power generation, causing price spikes and rolling blackouts. This blatant and criminal market manipulation has become part of the legend of Enron. But Koch was caught up in the debacle. The CFTC would charge that a partnership between Koch and the utility Entergy had, at the height of the California crisis, reported fake natural-gas trades to reporting firms and also "knowingly reported false prices and/or volumes" on real trades.

One of 10 companies punished for such schemes, Entergy-Koch avoided prosecution by paying a $3 million fine as part of a 2004 settlement with the CFTC, in which it did not admit guilt to the commission's charges but is barred from maintaining its innocence.

Trading, which had long been peripheral to the company's core businesses, soon took center stage. In 2002, the company launched a subsidiary, Koch Supply & Trading. KS&T got off to a rocky start. "A series of bad trades," writes a Koch insider, "boiled over in early 2004 when a large 'sure bet' crude-oil trade went south, resulting in a quick, multimillion loss." But Koch traders quickly adjusted to the reality that energy markets were no longer ruled just by supply and demand – but by rich speculators trying to game the market. Revamping its strategy, Koch Industries soon began bragging of record profits. From 2003 to 2012, KS&T trading volumes exploded – up 450 percent. By 2009, KS&T ranked among the world's top-five oil traders, and by 2011, the company billed itself as "one of the leading quantitative traders" – though Holden now says it's no longer in this business.

Since Koch Industries aggressively expanded into high finance, the net worth of each brother has also exploded – from roughly $4 billion in 2002 to more than $40 billion today. In that period, the company embarked on a corporate buying spree that has taken it well beyond petroleum. In 2005, Koch purchased Georgia Pacific for $21 billion, giving the company a familiar, expansive grip on the industrial web that transforms Southern pine into consumer goods – from plywood sold at Home Depot to brand-name products like Dixie Cups and Angel Soft toilet paper. In 2013, Koch leapt into high technology with the $7 billion acquisition of Molex, a manufacturer of more than 100,000 electronics components and a top supplier to smartphone makers, including Apple.

Koch Supply & Trading makes money both from physical trades that move oil and commodities across oceans as well as in "paper" trades involving nothing more than high-stakes bets and cash. In paper trading, Koch's products extend far beyond simple oil futures. Koch pioneered, for sale to hedge funds, "volatility swaps," in which the actual price of crude is irrelevant and what matters is only the "magnitude of daily fluctuations in prices." Steve Mawer, until recently the president of KS&T, described parts of his trading operation as "black-box stuff."

Like a casino that bets at its own craps table, Koch engages in "proprietary trading" – speculating for the company's own bottom line."We're like a hedge fund and a dealer at the same time," bragged Ilia Bouchouev, head of Koch's derivatives trading in 2004. "We can both make markets and speculate." The company's many tentacles in the physical oil business give Koch rich insight into market conditions and disruptions that can inform its speculative bets. When oil prices spiked to record heights in 2008, Koch was a major player in the speculative markets, according to documents leaked by Vermont Sen. Bernie Sanders, with trading volumes rivaling Wall Street giants like Citibank. Koch rode a trader-driven frenzy – detached from actual supply and demand – that drove prices above $147 a barrel in July 2008, battering a global economy about to enter a free fall.

Only Koch knows how much money Koch reaped during this price spike. But, as a proxy, consider the $20 million Koch and its subsidiaries spent lobbying Congress in 2008 – before then, its biggest annual lobbying expense had been $5 million – seeking to derail a raft of consumer-protection bills, including the Federal Price Gouging Prevention Act, the Stop Excessive Energy Speculation Act of 2008, the Prevent Unfair Manipulation of Prices Act of 2008 and the Close the Enron Loophole Act.

In comments to the Federal Trade Commission, Koch lobbyists defended the company's right to rack up fantastic profits at the expense of American consumers. "A mere attempt to maximize profits cannot constitute market manipulation," they wrote, adding baldly, "Excessive profits in the face of shortages are desirable."

When the global economy crashed in 2008, so did oil prices. By December, crude was trading more than $100 lower per barrel than it had just months earlier – around $30. At the same time, oil traders anticipated that prices would eventually rebound. Futures contracts for delivery of oil in December 2009 were trading at nearly $55 per barrel. When future delivery is more valuable than present inventory, the market is said to be "in contango." Koch exploited the contango market to the hilt. The company leased nine supertankers and filled them with cut-rate crude and parked them quietly offshore in the Gulf of Mexico, banking virtually risk-free profits by selling contracts for future delivery.

All in, Koch took about 20 million barrels of oil off the market, putting itself in a position to bet on price disruptions the company itself was creating. Thanks to these kinds of trading efforts, Koch could boast in a 2009 review that "the performance of Koch Supply & Trading actually grew stronger last year as the global economy worsened." The cost for those risk-free profits was paid by consumers at the pump. Estimates pegged the cost of the contango trade by Koch and others at up to 40 cents a gallon.

Artificially constraining oil supplies is not the only source of dark, unregulated profit for Koch Industries. In the years after George W. Bush branded Iran a member of the "Axis of Evil," the Koch brothers profited from trade with the state sponsor of terror and reckless would-be nuclear power. For decades, U.S. companies have been forbidden from doing business with the Ayatollahs, but Koch Industries exploited a loophole in 1996 sanctions that made it possible for foreign subsidiaries of U.S. companies to do some business in Iran.

In the ensuing years, according to Bloomberg Markets, the German and Italian arms of Koch-Glitsch, a Koch subsidiary that makes equipment for oil fields and refineries, won lucrative contracts to supply Iran's Zagros plant, the largest methanol plant in the world. And thanks in part to Koch, methanol is now one of Iran's leading non-oil exports. "Every single chance they had to do business with Iran, or anyone else, they did," said Koch whistle-blower George Bentu. Having signed on to work for a company that lists "integrity" as its top value, Bentu added, "You feel totally betrayed. Everything Koch stood for was a lie."

Koch reportedly kept trading with Tehran until 2007 – after the regime was exposed for supplying IEDs to Iraqi insurgents killing U.S. troops. According to lawyer Holden, Koch has since "decided that none of its subsidiaries would engage in trade involving Iran, even where such trade is permissible under U.S. law."

These days, Koch's most disquieting foreign dealings are in Canada, where the company has massive investments in dirty tar sands. The company's 1.1 million acres of leases in northern Alberta contain reserves of economically recoverable oil numbering in the billions of barrels. With these massive leaseholdings, Koch is poised to continue profiting from Canadian crude whether or not the Keystone XL pipeline gains approval, says Andrew Leach, an energy and environmental economist at the business school of the University of Alberta.

Counterintuitively, approval of Keystone XL could actually harm one of Koch's most profitable businesses – its Pine Bend refinery in Minnesota. Because tar-sands crude presently has no easy outlet to the global market, there's a glut of Canadian oil in the midcontinent, and Koch's refinery is a beneficiary of this oversupply; the resulting discount can exceed $20 a barrel compared to conventional crude. If it is ever built, the Keystone XL pipeline will provide a link to Gulf Coast refineries – and thus the global export market, which would erase much of that discount and eat into company profit margins.

Leach says Koch Industries' tar-sands leaseholdings have them hedged against the potential approval of Keystone XL. The pipeline would increase the value of Canadian tar-sands deposits overnight. Koch could then profit handsomely by flipping its leases to more established producers. "Optimizing asset value through trading," Koch literature says of these and other holdings, is a "key" company strategy.

The one truly bad outcome for Koch would be if Keystone XL were to be defeated, as many environmentalists believe it must be. "If the signal that sends is that no new pipelines will be built across the U.S. border for carrying oil-sands product," Leach says, "that's going to have an impact not just on Koch leases, but on everybody's asset value in oil sands." Ironically, what's best for Koch's tar-sands interests is what the Obama administration is currently delivering: "They're actually ahead if Keystone XL gets delayed a while but hangs around as something that still might happen," Leach says.

The Dodd-Frank bill was supposed to put an end to economy­endangering speculation in the $700 trillion global derivatives market. But Koch has managed to defend – and even expand – its turf, trading in largely unregulated derivatives, once dubbed "financial weapons of mass destruction" by billionaire Warren Buffett.

In theory, the Enron Loophole is no longer open – the government now has the power to police manipulation in the market for energy derivatives. But the Obama administration has not yet been able to come up with new rules that actually do so. In 2011, the CFTC mandated "position limits" on derivative trades of oil and other commodities. These would have blocked any single speculator from owning futures contracts representing more than a quarter of the physical market – reducing the danger of manipulation. As part of the International Swaps and Derivatives Association, which also reps many Wall Street giants including Goldman Sachs and JPMorgan Chase, Koch fought these new restrictions. ISDA sued to block the position limits – and won in court in September 2012. Two years later, CFTC is still spinning its wheels on a replacement. Industry traders like Koch are, Greenberger says, "essentially able to operate as though the Enron Loophole were still in effect."

Koch is also reaping the benefits from Dodd-Frank's impacts on Wall Street. The so-called Volcker Rule, implemented at the end of last year, bans investment banks from "proprietary trading" – investing on their own behalf in securities and derivatives. As a result, many Wall Street banks are unloading their commodities-trading units. But Volcker does not apply to nonbank traders like Koch. They're now able to pick up clients who might previously have traded with JPMorgan. In its marketing materials for its trading operations, Koch boasts to potential clients that it can provide "physical and financial market liquidity at times when others pull back." Koch also likely benefits from loopholes that exempt the company from posting collateral for derivatives trades and allow it to continue trading swaps without posting the transactions to a transparent electronic exchange. Though competitors like BP and Cargill have registered with the CFTC as swaps dealers – subjecting their trades to tightened regulation – Koch conspicuously has not. "Koch is compliant with all CFTC regulations, including those relating to swaps dealers," says Holden, the Koch lawyer.

That a massive company with such a troubling record as Koch Industries remains unfettered by financial regulation should strike fear in the heart of anyone with a stake in the health of the American economy. Though Koch has cultivated a reputation as an economically conservative company, it has long flirted with danger. And that it has not suffered a catastrophic loss in the past 15 years would seem to be as much about luck as about skillful management.

The Kochs have brushed up against some of the major debacles of the crisis years. In 2007, as the economy began to teeter, Koch was gearing up to plunge into the market for credit default swaps, even creating an affiliate, Koch Financial Products, for that express purpose. KFP secured a AAA rating from Moody's and reportedly sought to buy up toxic assets at the center of the financial crisis at up to 50-times leverage. Ultimately, Koch Industries survived the experiment without losing its shirt.

More recently, Koch was exposed to the fiasco at MF Global, the disgraced brokerage firm run by former New Jersey Gov. Jon Corzine that improperly dipped into customer accounts to finance reckless bets on European debt. Koch, one of MF Global's top clients, reportedly told trading partners it was switching accounts about a month before the brokerage declared bankruptcy – then the eighth-largest in U.S. history. Koch says the decision to pull its funds from MF Global was made more than a year before. While MF's small-fry clients had to pick at the carcass of Corzine's company to recoup their assets, Koch was already swimming free and clear.

Because it's private, no one outside of Koch Industries knows how much risk Koch is taking – or whether it could conceivably create systemic risk, a concern raised in 2013 by the head of the Futures Industry Association. But this much is for certain: Because of the loopholes in financial-regulatory reform, the next company to put the American economy at risk may not be a Wall Street bank but a trading giant like Koch. In 2012, Gary Gensler, then CFTC chair, railed against the very loopholes Koch appears to be exploiting, raising the specter of AIG. "[AIG] had this massive risk built up in its derivatives just because it called itself an insurance company rather than a bank," Gensler said. When Congress adopted Dodd-Frank, Gensler added, it never intended to exempt financial heavy hitters just because "somebody calls themselves an insurance

In "the science of success," Charles Koch highlights the problems created when property owners "don't benefit from all the value they create and don't bear the full cost from whatever value they destroy." He is particularly concerned about the "tragedy of the commons," in which shared resources are abused because there's no individual accountability. "The biggest problems in society," he writes, "have occurred in those areas thought to be best controlled in common: the atmosphere, bodies of water, air.?.?.?."

But in the real world, Koch Industries has used its political might to beat back the very market-based mechanisms – including a cap-and-trade market for carbon pollution – needed to create the ownership rights for pollution that Charles says would improve the functioning of capitalism.

In fact, it appears the very essence of the Koch business model is to exploit breakdowns in the free market. Koch has profited precisely by dumping billions of pounds of pollutants into our waters and skies – essentially for free. It racks up enormous profits from speculative trades lacking economic value that drive up costs for consumers and create risks for our economy.

The Koch brothers get richer as the costs of what Koch destroys are foisted on the rest of us – in the form of ill health, foul water and a climate crisis that threatens life as we know it on this planet. Now nearing 80 – owning a large chunk of the Alberta tar sands and using his billions to transform the modern Republican Party into a protection racket for Koch Industries' profits – Charles Koch is not about to see the light. Nor does the CEO of one of America's most toxic firms have any notion of slowing down. He has made it clear that he has no retirement plans: "I'm going to ride my bicycle till I fall off."

Read more: http://www.rollingstone.com/politics/news/inside-the-koch-brothers-toxic-empire-20140924#ixzz3ERpcjgRT

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gore RS

For consumers, this good news may soon get even better. While the cost of carbon­based energy continues to increase, the cost of solar electricity has dropped by an average of 20 percent per year since 2010. Some energy economists, including those who produced an authoritative report this past spring for Bernstein Research, are now predicting energy-price deflation as soon as the next decade.

For those (including me) who are surprised at the speed with which this impending transition has been accelerating, there are precedents that help explain it. Remember the first mobile-telephone handsets? I do; as an inveterate "early adopter" of new technologies, I thought those first huge, clunky cellphones were fun to use and looked cool (they look silly now, of course). In 1980, a few years before I bought one of the early models, AT&T conducted a global market study and came to the conclusion that by the year 2000 there would be a market for 900,000 subscribers. They were not only wrong, they were way wrong: 109 million contracts were active in 2000. Barely a decade and a half later, there are 6.8 billion globally. 
These parallels have certainly caught the attention of the fossil-fuel industry and its investors: Eighteen months ago, the Edison Electric Institute described the floundering state of the once-proud landline-telephone companies as a grim predictor of what may soon be their fate.

The utilities are fighting back, of course, by using their wealth and the entrenched political power they have built up over the past century. In the United States, brothers Charles and David Koch, who run Koch Industries, the second-largest privately owned corporation in the U.S., have secretively donated at least $70 million to a number of opaque political organizations tasked with spreading disinformation about the climate crisis and intimidating political candidates who dare to support renewable energy or the pricing of carbon pollution.

A Call to Arms: An invitation to Demand Action on Climate Change

They regularly repeat shopworn complaints about the inadequate, intermittent and inconsistent subsidies that some governments have used in an effort to speed up the deployment of renewables, while ignoring the fact that global subsidies for carbon-based energy are 25 times larger than global subsidies for renewables.

One of the most effective of the groups financed by the Koch brothers and other carbon polluters is the American Legislative Exchange Council, or ALEC, which grooms conservative state legislators throughout the country to act as their agents in introducing legislation written by utilities and carbon-fuel lobbyists in a desperate effort to slow, if not stop, the transition to renewable energy.

The Kochs claim to act on principles of low taxation and minimal regulation, but in their attempts to choke the development of alternative energy, they have induced the recipients of their generous campaign contributions to contradict these supposedly bedrock values, pushing legislative and regulatory measures in 34 states to discourage solar, or encourage carbon energy, or both. The most controversial of their initiatives is focused on persuading state legislatures and public-utility commissions to tax homeowners who install a PV solar cell on their roofs, and to manipulate the byzantine utility laws and regulations to penalize renewable energy in a variety of novel schemes.

The chief battleground in this war between the energy systems of the past and future is our electrical grid. For more than a century, the grid – along with the regulatory and legal framework governing it – has been dominated by electric utilities and their centralized, fossil-fuel-powered­ electricity-generation plants. But the rise of distributed alternate energy sources allows consumers to participate in the production of electricity through a policy called net metering. In 43 states, homeowners who install solar PV to systems on their rooftops are permitted to sell electricity back into the grid when they generate more than they need.

These policies have been crucial to the growth of solar power. But net metering represents an existential threat to the future of electric utilities, the so-called utility death spiral: As more consumers install solar panels on their roofs, utilities will have to raise prices on their remaining customers to recover the lost revenues. Those higher rates will, in turn, drive more consumers to leave the utility system, and so on.

But here is more good news: The Koch brothers are losing rather badly. In Kansas, their home state, a poll by North Star Opinion Research reported that 91 percent of registered voters support solar and wind. Three-quarters supported stronger policy encouragement of renewable energy, even if such policies raised their electricity bills.

In Georgia, the Atlanta Tea Party joined forces with the Sierra Club to form a new organization called – wait for it – the Green Tea Coalition, which promptly defeated a Koch-funded scheme to tax rooftop solar panels.

Meanwhile, in Arizona, after the state's largest utility, an ALEC member, asked the public-utility commission for a tax of up to $150 per month for solar households, the opposition was fierce and well-organized. A compromise was worked out – those households would be charged just $5 per month – but Barry Goldwater Jr., the leader of a newly formed organization called TUSK (Tell Utilities Solar won't be Killed), is fighting a new attempt to discourage rooftop solar in Arizona. Characteristically, the Koch brothers and their allies have been using secretive and deceptive funding in Arizona to run television advertisements attacking "greedy" owners of rooftop solar panels – but their effort has thus far backfired, as local journalists have exposed the funding scam.

Even though the Koch-funded forces recently scored a partial (and almost certainly temporary) victory in Ohio, where the legislature voted to put a hold on the state's renewable-portfolio standard and study the issue for two years, it's clear that the attack on solar energy is too little, too late. Last year, the Edison Electric Institute warned the utility industry that it had waited too long to respond to the sharp cost declines and growing popularity of solar: "At the point when utility investors become focused on these new risks and start to witness significant customer- and earnings-erosion trends, they will respond to these challenges. But, by then, it may be too late to repair the utility business model."

The most seductive argument deployed by the Koch brothers and their allies is that those who use rooftop solar electricity and benefit from the net-metering policies are "free riders" – that is, they are allegedly not paying their share of the maintenance costs for the infrastructure of the old utility model, including the grid itself. This deceptive message, especially when coupled with campaign contributions, has persuaded some legislators to support the proposed new taxes on solar panels.

But the argument ignores two important realities facing the electric utilities: First, most of the excess solar electricity is supplied by owners of solar cells during peak-load hours of the day, when the grid's capacity is most stressed – thereby alleviating the pressure to add expensive new coal- or gas-fired generating capacity. But here's the rub: What saves money for their customers cuts into the growth of their profits and depresses their stock prices. As is often the case, the real conflict is between the public interest and the special interest.

The second reality ignored by the Koch brothers is the one they least like to discuss, the one they spend so much money trying to obfuscate with their hired "merchants of doubt." You want to talk about the uncompensated use of infrastructure? What about sewage infrastructure for 98 million tons per day of gaseous, heat-trapping waste that is daily released into our skies, threatening the future of human civilization? Is it acceptable to use the thin shell of atmosphere surrounding our planet as an open sewer? Free of charge? Really?...

http://www.rollingstone.com/politics/news/the-turning-point-new-hope-for-the-climate-20140618?print=true

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ifg.org

http://kochcash.org/koch-cash-analysis-2/billionaires-carbon-bomb/

http://kochcash.org/wp-content/uploads/2013/07/Embargo_Report.pdf

2 mil acres tar sand

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sons of wichita

http://www.motherjones.com/politics/2014/05/koch-brothers-family-history-sons-of-wichita

http://www.prwatch.org/node/12490

The "charitable" wing of David Koch's Americans for Prosperity has dropped nearly $900,000 on ads to boost Wisconsin Governor Scott Walker's reelection campaign, just days after polls showed Walker tied with his Democratic challenger, Mary Burke.

Incredibly, whomever provided the funding for the ads -- whether it was David Koch himself or a collection of deep-pocketed donors -- can write-off the expenses as a charitable contribution, just like a donation to a neighborhood church or the American Red Cross.

The latest ads from the 501(c)(3) Americans for Prosperity Foundation recycle the "It's Working" message that it first pushed in 2011 and 2012, when Walker faced a recall election sparked by his controversial bill to strangle public sector unions in the state. AFP spent around $2.9 million on those ads, which it aired along with another 501(c)(3), the MacIver Institute, a State Policy Network affiliate. (AFP also used the "It's Working" messaging for five ads it ran in the 2013 Douglas County, Colorado school board race).

Overall, AFP's 501(c)(4) and 501(c)(3) wings together spent $10 million in Wisconsin during Walker's 2012 recall election (and sent 75 paid staffers to the state), and other Koch-backed groups, like Coalition for American Valuesand Wisconsin Club for Growth, spent milllions more.

Like the 2011-2012 "It's Working" ads, AFP's don't explicitly mention Walker, but tout Walker's policies, praising the "strong leadership in Madison" and describing Walker's collective bargaining restrictions as "the right thing to do."

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• Koch Br:{others Exposed: The Chilling New Documentary Republicans Don’t Want You to See:(style="color:#336699;"):}:
• Behind the Koch Brothers: New Book Spills the Secrets of Nation’s Most Powerful & Private Dynasty

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AlterNet [1] / By Steven Rosenfeld [2]

11 Things The Koch Brothers Don't Want You To Know, From Robert Greenwald's Newly Updated Documentary

May 19, 2014 |

The mega-billionaire brothers, David and Charles Koch, stand apart in the world of Republicans.

In 2012, their network of hardcore libertarian political donors spent $400 million on negative campaign ads intended to destroy government safety nets and defeat Democrats. They want to repeal Obamacare, dismantle labor unions, repeal any environmental law protecting clean water and air, roll back voting rights, privatize Social Security, stop a minimum wage increase and more. They don't care about destroying the checks and balances in American democracy to get their way.

In an updated documentary by Robert Greenwald’s Brave New Films, Koch Brothers Exposed: 2014 Edition [3], we learn many things the Kochs don't want you to know, from the origin of their radical agenda to other issues they’ve championed that haven’t made the national news, such as resegregating public schools.

Here are 11 things the Kochs don't want you to know about them.

1. The family's $100 billion fortune comes mostly from a massive network of oil and gas pipelines, and investments in other polluting industries like paper and plastics. The brothers inherited the seed money for their holdings from their father Fred Koch, who made his first fortune building oil pipelines for the Russian dictator Joseph Stalin in the 1930s. Back in the states, Fred Koch supported racial segregation and white supremacist groups like the John Birch Society.

2. Koch Industries is the second largest privately held company in America, worth upwards of $80 billion. It is one of the country’s top 15 polluters, responsible for more than 300 oil spills. It has paid over $100 million in fines and been found guilty by a federal jury of stealing oil from Native American lands.

3. The Kochs have invested multi-millions in more than 85 right-wing organizations over the years to push an anti-government, libertarian agenda. Many local Tea Party chapters were fronts for Americans for Prosperity, one of their groups. Another big recipient, ALEC, or the American Legislative Exchange Council, drafts bills and talking points that Republican officials cite again and again. In the 2012 presidential election cycle, the Koch’s right-wing donor network spent $400 million on electioneering.

4. The brothers work to create legal decisions to empower their efforts. They brought two U.S. Supreme Court Justices, Antonin Scalia and Clarence Thomas, to give speeches at their invitation-only gatherings for libertarian industrialists. That was before the Court issued itsCitizens Unitedruling, gutting federal laws that restricted the kinds of outside campaigns they bankroll. They funded groups that filed thousands of pages of legal briefs to attack those election laws. After the Court threw out federal campaign restrictions in 2010—a ruling they help to write—the Kochs began to spend unprecedented sums to sway elections.

5. Americans for Prosperity led a successful takeover of the school board in Wake County, North Carolina in 2009, which then ended student busing to resegregate high schools. They resurrected the coded rhetoric of the old South, using terms like “forced busing” and “neighborhood schools.” After hundreds of students were sent to other schools, the uproar was so great the AFP slate was voted out two years later, but not before the kids experienced racism and prejudice.

6. As donors to higher education, the Kochs have designed grant agreements with more than 150 colleges and universities where they restrict academic freedom by exerting control over who gets hired. The programs they fund present only their views in class, curricula and in their research. They promote pro-business, libertarian inquiry, which does not allow the facts and results to lead to their own conclusions. Faculties at many universities have protested these donations and threats to academic freedom.

7. AFP was one of the lead groups in Wisconsin, encouraging Republican Gov. Scott Walker to revoke collective bargaining agreements with public employees—except for police and firefighters, who tend to support the GOP and law-and-order politicians. Through national legal advocacy groups like ALEC, they have introduced scores of reactionary anti-union bills in dozens of states.

8. Other Koch-funded efforts include the Republican national effort to unduly police the voting process to discourage young people, minorities and senior from casting ballots. The reactionary voting rights bills they have introduced in dozens of states impose stricter voter ID requirements, which do not prevent people from registering to vote but will keep them from getting a ballot if they cannot present specific paperwork. AFP and other Koch-funded groups, such as True The Vote, have recruited and trained mostly white poll watchers to challenge the credentials of mostly non-white voters, creating a climate of fear and intimidation around voting.

9. The Koch brothers make $13 million a day from their investments, but they want to eliminate minimum wage laws and oppose any increases. People earning the federal minimum wage earn about $60 a day. A minimum wage worker would have to work almost 700 years to earn what the Kochs make in a day. (Koch-funded politicians have proposed 67 bills in 25 states to reduce the minimum wage.)

10. The Koch brothers want to destroy the most popular government program of all, Social Security, by funding right-wing think tanks that spread misinformation about Social Security's long-term financial health, claiming it will not survive. They want people to invest their retirement savings on Wall Street, which is riskier and would earn billions in fees for investment firms. They want to raise the retirement age for Social Security to 70, which would especially penalize blue-collar workers who do manual labor, as their bodies wear out more quickly than white-collar workers.

11. The Koch brothers' massive investments and holdings are literally killing the planet, because their primary business is transporting gas and oil. That includes the Canadian oil tar sands, which is the dirtiest source of fossil fuel on earth. If these sands are developed for the U.S. or Chinese markets, it would be the biggest carbon bomb in decades, hastening the progress of global climate change.

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http://www.nytimes.com/2014/04/27/opinion/sunday/the-koch-attack-on-solar-energy.html?_r=1

At long last, the Koch brothers and their conservative allies in state government have found a new tax they can support. Naturally it’s a tax on something the country needs: solar energy panels.

For the last few months, the Kochs and other big polluters have been spending heavily to fight incentives for renewable energy, which have been adopted by most states. They particularly dislike state laws that allow homeowners with solar panels to sell power they don’t need back to electric utilities. So they’ve been pushing legislatures to impose a surtax on this increasingly popular practice, hoping to make installing solar panels on houses less attractive.

Oklahoma lawmakers recently approved such a surcharge at the behest of the American Legislative Exchange Council, the conservative group that often dictates bills to Republican statehouses and receives financing from the utility industry and fossil-fuel producers, including the Kochs. As The Los Angeles Times reported recently, the Kochs and ALEC have made similar efforts in other states, though they were beaten back by solar advocates in Kansas and the surtax was reduced to $5 a month in Arizona.

But the Big Carbon advocates aren’t giving up. The same group is trying to repeal or freeze Ohio’s requirement that 12.5 percent of the state’s electric power come from renewable sources like solar and wind by 2025. Twenty-nine states have established similar standards that call for 10 percent or more in renewable power. These states can now anticipate well-financed campaigns to eliminate these targets or scale them back.

The coal producers’ motivation is clear: They see solar and wind energy as a long-term threat to their businesses. That might seem distant at the moment, when nearly 40 percent of the nation’s electricity is still generated by coal, and when less than 1 percent of power customers have solar arrays. (It is slightly higher in California and Hawaii.) But given new regulations on power-plant emissions of mercury and other pollutants, and the urgent need to reduce global warming emissions, the future clearly lies with renewable energy. In 2013, 29 percent of newly installed generation capacity came from solar, compared with 10 percent in 2012.

Renewables are good for economic as well as environmental reasons, as most states know. (More than 143,000 now work in the solar industry.) Currently, 43 states require utilities to buy excess power generated by consumers with solar arrays. This practice, known as net metering, essentially runs electric meters backward when power flows from rooftop solar panels into the grid, giving consumers a credit for the power they generate but don’t use.

tom durkin 22 days ago

The Kochs own so many politicians, and such large astroturf and fake "committees", that we should tax ownership of politicians & such...

Deborah 26 days ago

The best refute to these mendacious propaganda is to get one solar topped house in each Red state neighborhood. The word on benefits will...

Mike 26 days ago

The Koch brothers - real patriots those conservatives propping up America's foreign dependency. Let's not forget the arguments pro and con...

The utilities hate this requirement, for obvious reasons. A report by the Edison Electric Institute, the lobbying arm of the power industry, says this kind of law will put “a squeeze on profitability,” and warns that if state incentives are not rolled back, “it may be too late to repair the utility business model.”

Since that’s an unsympathetic argument, the utilities have devised another: Solar expansion, they claim, will actually hurt consumers. The Arizona Public Service Company, the state’s largest utility, funneled large sums through a Koch operative to a nonprofit group that ran an ad claiming net metering would hurt older people on fixed incomes by raising electric rates. The ad tried to link the requirement to President Obama. Another Koch ad likens the renewable-energy requirement to health care reform, the ultimate insult in that world. “Like Obamacare, it’s another government mandate we can’t afford,” the narrator says.

That line might appeal to Tea Partiers, but it’s deliberately misleading. This campaign is really about the profits of Koch Carbon and the utilities, which to its organizers is much more important than clean air and the consequences of climate change.

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primer infographic

http://grist.org/article/infographic-the-koch-bros-getting-richer-while-the-world-burns/

http://grist.org/list/half-of-voters-have-no-idea-who-the-koch-brothers-are-so-heres-a-quick-and-dirty-primer/

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So far in the 2014 election cycle, “Americans for Prosperity,” the Koch brother’s political front group, has aired more than 17,000 broadcast TV commercials, compared with only 2,100 aired by Republican Party groups.

"Americans for Prosperity" has also been outspending top Democratic super PACs in nearly all of the Senate races Republicans are targeting this year. In seven of the nine races the difference in total spending is at least two-to-one [2]and Democratic super PACs have had virtually no air presence in five of the nine states.

The Kochs have spawned several imitators. Through the end of February, four of the top five contributors to 2014 super-PACs are now giving money to political operations they themselves created, according to the Center for Responsive Politics.

For example, billionaire TD Ameritrade founder Joe Ricketts and his son, Todd, co-owner of the Chicago Cubs, have their own $25 million political operation called “Ending Spending.” The group is now investing heavily in TV ads against Republican Representative Walter Jones in a North Carolina primary (they blame Jones for too often voting with Obama).

Their ad attacking Democratic New Hampshire Senator Jeanne Shaheen for supporting Obama’s health-care law has become a template for similar ads funded by the Koch’s “Americans for Prosperity” in Senate races across the country.

When billionaires supplant political parties, candidates are beholden directly to the billionaires. And if and when those candidates win election, the billionaires will be completely in charge. 

At this very moment, Casino magnate Sheldon Adelson (worth an estimated $37.9 billion) is busy interviewing potential Republican candidates whom he might fund, in what’s being called the “Sheldon Primary.”

“Certainly the ‘Sheldon Primary’ is an important primary for any Republican running for president,” says [3]Ari Fleischer, former White House press secretary under President George W. Bush. “It goes without saying that anybody running for the Republican nomination would want to have Sheldon at his side.”

The new billionaire political bosses aren’t limited to Republicans. Democratic-leaning billionaires Tom Steyer, a former hedge-fund manager, and former New York Mayor Michael Bloomberg, have also created their own political groups. But even if the two sides were equal, billionaires squaring off against each other isn’t remotely a democracy.

In his much-talked-about new book, “Capital in the Twenty-First Century,” economist Thomas Piketty explains why the rich have become steadily richer while the share of national income going to wages continues to drop. He shows that when wealth is concentrated in relatively few hands, and the income generated by that wealth grows more rapidly than the overall economy – as has been the case in the United States and many other advanced economies for years – the richest receive almost all the income growth.

Logically, this leads to greater and greater concentrations of income and wealth in the future – dynastic fortunes that are handed down from generation to generation, as they were prior to the twentieth century in much of the world.  

The trend was reversed temporarily in the twentieth century by the Great Depression, two terrible wars, the development of the modern welfare state, and strong labor unions. But Piketty is justifiably concerned about the future.

A new gilded age is starting to look a lot like the old one. The only way to stop this is through concerted political action. Yet the only large-scale political action we’re witnessing is that of Charles and David Koch, and their billionaire imitators...robt r alternet