Koch Industries

Koch Industries

Overview
Koch Industries, Inc. (ˈkoʊk), is an American
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 private energy conglomerate
Conglomerate (company)
A conglomerate is a combination of two or more corporations engaged in entirely different businesses that fall under one corporate structure , usually involving a parent company and several subsidiaries. Often, a conglomerate is a multi-industry company...

 based in Wichita, Kansas
Wichita, Kansas
Wichita is the largest city in the U.S. state of Kansas.As of the 2010 census, the city population was 382,368. Located in south-central Kansas on the Arkansas River, Wichita is the county seat of Sedgwick County and the principal city of the Wichita metropolitan area...

, with subsidiaries involved in manufacturing, trading and investments. Koch also owns Invista
INVISTA
Invista, headquartered in Wichita, Kansas, is the world's largest integrated fiber, resin and intermediates company. DuPont originally formed the company as a subsidiary in 2003 from its textile fibers division and named it DuPont Textiles and Interiors while a permanent identity was established...

, Georgia-Pacific
Georgia-Pacific
Georgia-Pacific LLC is an American pulp and paper company based in Atlanta, Georgia, and is one of the world's leading manufacturers and distributors of tissue, pulp, paper, packaging, building products and related chemicals. As of Fall 2010, the company employed more than 40,000 people at more...

, Flint Hills Resources, Koch Pipeline, Koch Fertilizer, Koch Minerals and Matador Cattle Company. Koch companies are involved in core industries such as the manufacturing, refining
Refinery
A refinery is a production facility composed of a group of chemical engineering unit processes and unit operations refining certain materials or converting raw material into products of value.-Types of refineries:Different types of refineries are as follows:...

 and distribution
Distribution (business)
Product distribution is one of the four elements of the marketing mix. An organization or set of organizations involved in the process of making a product or service available for use or consumption by a consumer or business user.The other three parts of the marketing mix are product, pricing,...

 of petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...

, chemicals
Chemical industry
The chemical industry comprises the companies that produce industrial chemicals. Central to the modern world economy, it converts raw materials into more than 70,000 different products.-Products:...

, energy
Energy
In physics, energy is an indirectly observed quantity. It is often understood as the ability a physical system has to do work on other physical systems...

, fiber, intermediates and polymers, minerals, fertilizers, pulp and paper
Pulp and paper industry
The global pulp and paper industry is dominated by North American , northern European and East Asian countries...

, chemical technology equipment, ranching, finance
Finance
"Finance" is often defined simply as the management of money or “funds” management Modern finance, however, is a family of business activity that includes the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created...

, commodities trading, as well as other ventures and investments.
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Encyclopedia
Koch Industries, Inc. (ˈkoʊk), is an American
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 private energy conglomerate
Conglomerate (company)
A conglomerate is a combination of two or more corporations engaged in entirely different businesses that fall under one corporate structure , usually involving a parent company and several subsidiaries. Often, a conglomerate is a multi-industry company...

 based in Wichita, Kansas
Wichita, Kansas
Wichita is the largest city in the U.S. state of Kansas.As of the 2010 census, the city population was 382,368. Located in south-central Kansas on the Arkansas River, Wichita is the county seat of Sedgwick County and the principal city of the Wichita metropolitan area...

, with subsidiaries involved in manufacturing, trading and investments. Koch also owns Invista
INVISTA
Invista, headquartered in Wichita, Kansas, is the world's largest integrated fiber, resin and intermediates company. DuPont originally formed the company as a subsidiary in 2003 from its textile fibers division and named it DuPont Textiles and Interiors while a permanent identity was established...

, Georgia-Pacific
Georgia-Pacific
Georgia-Pacific LLC is an American pulp and paper company based in Atlanta, Georgia, and is one of the world's leading manufacturers and distributors of tissue, pulp, paper, packaging, building products and related chemicals. As of Fall 2010, the company employed more than 40,000 people at more...

, Flint Hills Resources, Koch Pipeline, Koch Fertilizer, Koch Minerals and Matador Cattle Company. Koch companies are involved in core industries such as the manufacturing, refining
Refinery
A refinery is a production facility composed of a group of chemical engineering unit processes and unit operations refining certain materials or converting raw material into products of value.-Types of refineries:Different types of refineries are as follows:...

 and distribution
Distribution (business)
Product distribution is one of the four elements of the marketing mix. An organization or set of organizations involved in the process of making a product or service available for use or consumption by a consumer or business user.The other three parts of the marketing mix are product, pricing,...

 of petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...

, chemicals
Chemical industry
The chemical industry comprises the companies that produce industrial chemicals. Central to the modern world economy, it converts raw materials into more than 70,000 different products.-Products:...

, energy
Energy
In physics, energy is an indirectly observed quantity. It is often understood as the ability a physical system has to do work on other physical systems...

, fiber, intermediates and polymers, minerals, fertilizers, pulp and paper
Pulp and paper industry
The global pulp and paper industry is dominated by North American , northern European and East Asian countries...

, chemical technology equipment, ranching, finance
Finance
"Finance" is often defined simply as the management of money or “funds” management Modern finance, however, is a family of business activity that includes the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created...

, commodities trading, as well as other ventures and investments. The firm employs 50,000 people in the United States and another 20,000 in 59 other countries.

In 2008, Forbes
Forbes
Forbes is an American publishing and media company. Its flagship publication, the Forbes magazine, is published biweekly. Its primary competitors in the national business magazine category are Fortune, which is also published biweekly, and Business Week...

called it the second largest privately held company
Privately held company
A privately held company or close corporation is a business company owned either by non-governmental organizations or by a relatively small number of shareholders or company members which does not offer or trade its company stock to the general public on the stock market exchanges, but rather the...

 in the United States (after Cargill
Cargill
Cargill, Incorporated is a privately held, multinational corporation based in Minnetonka, Minnesota. Founded in 1865, it is now the largest privately held corporation in the United States in terms of revenue. If it were a public company, it would rank, as of 2011, number 13 on the Fortune 500,...

) with an annual revenue of about $98 billion, down from the largest in 2006. If Koch Industries were a public company in 2007, it would rank about 16 in the Fortune 500
Fortune 500
The Fortune 500 is an annual list compiled and published by Fortune magazine that ranks the top 500 U.S. closely held and public corporations as ranked by their gross revenue after adjustments made by Fortune to exclude the impact of excise taxes companies collect. The list includes publicly and...

.

Fred C. Koch
Fred C. Koch
Fred Chase Koch was an American chemical engineer and entrepreneur who founded the oil refinery firm that later became Koch Industries, the second-largest privately-held company in the United States....

, for whom Koch Industries, Inc. is named, co-founded the company in 1940 and developed an innovative crude oil refining process. His sons, Charles G. Koch
Charles G. Koch
Charles de Ganahl Koch is co-owner, chairman of the board and chief executive officer of Koch Industries Inc., the second-largest privately held company by revenue in the United States according to a 2010 Forbes survey...

, chairman of the board and chief executive officer, and David H. Koch
David H. Koch
David Hamilton Koch is an American businessman, philanthropist, political activist, and chemical engineer. He is a co-owner and an executive vice president of Koch Industries, a conglomerate that is the second-largest privately held company in the U.S...

, executive vice president, are principal owners of the company after they bought out their brothers, Frederick
Frederick R. Koch
Frederick Robinson Koch is an American collector and philanthropist, the eldest of the four sons born to American industrialist Fred C. Koch, founder of what is now Koch Industries, and Mary Robinson Koch...

 and William
Bill Koch (businessman)
William Ingraham "Bill" Koch is an American businessman, sailor, and collector. His boat was the winner of the America's Cup in 1992. His last name is pronounced "coke." Per Forbes William Koch's net worth was $3.4 billion in 2010 on oil and other investments-Early life and business...

, for $1.1 billion in 1983. Charles and David H. Koch each own 42% of Koch Industries, and Charles has stated that the company will publicly offer shares "literally over my dead body".

Predecessor companies


In 1925, Fred C. Koch joined MIT
Massachusetts Institute of Technology
The Massachusetts Institute of Technology is a private research university located in Cambridge, Massachusetts. MIT has five schools and one college, containing a total of 32 academic departments, with a strong emphasis on scientific and technological education and research.Founded in 1861 in...

 classmate Lewis E. Winkler at an engineering firm in Wichita, Kansas
Wichita, Kansas
Wichita is the largest city in the U.S. state of Kansas.As of the 2010 census, the city population was 382,368. Located in south-central Kansas on the Arkansas River, Wichita is the county seat of Sedgwick County and the principal city of the Wichita metropolitan area...

, which was renamed the Winkler-Koch Engineering Company. In 1927 they developed a more efficient thermal cracking process for turning crude oil into gasoline. This process threatened the competitive advantage of established oil companies, which sued for patent infringement. Temporarily forced out of business in the United States, they turned to other markets, including the Soviet Union
Soviet Union
The Soviet Union , officially the Union of Soviet Socialist Republics , was a constitutionally socialist state that existed in Eurasia between 1922 and 1991....

, where Winkler-Koch built 15 cracking units between 1929 and 1932. During this time, Koch came to despise communism and Joseph Stalin
Joseph Stalin
Joseph Vissarionovich Stalin was the Premier of the Soviet Union from 6 May 1941 to 5 March 1953. He was among the Bolshevik revolutionaries who brought about the October Revolution and had held the position of first General Secretary of the Communist Party of the Soviet Union's Central Committee...

's regime. In his 1960 book, A Business Man Looks at Communism, Koch wrote that he found the USSR to be "a land of hunger, misery, and terror." According to Charles G. Koch, "Virtually every engineer he worked with [there] was purged."

In 1940, Koch joined new partners to create a new firm, the Wood River Oil and Refining Company, which is today known as Koch Industries. In 1946 the firm acquired the Rock Island refinery and crude oil gathering system near Duncan, Oklahoma
Duncan, Oklahoma
Duncan is a city in Stephens County, Oklahoma, United States. The population was 23,431 at the 2010 census. It is the county seat of Stephens County.The official birthdate of the town is considered to be when the first train arrived there on June 27, 1892...

. Wood River was later renamed the Rock Island Oil & Refining Company. Charles G. Koch joined Rock Island in 1961, having started his career at the management consulting firm Arthur D. Little
Arthur D. Little
Arthur D. Little is an international management consulting firm originally headquartered in Boston, Massachusetts, United States, and formally incorporated by that name in 1909 by Arthur Dehon Little, an MIT chemist who had discovered acetate. Arthur D. Little pioneered the concept of contracted...

. He became president in 1966 and chairman at age 32, upon his father's death the following year.

Koch Industries


The company was renamed Koch Industries in honor of Fred Koch, the year after his death. At that time, it was primarily an engineering firm with part interest in a Minnesota refinery, a crude oil-gathering system in Oklahoma, and some cattle ranches. In 1968, Charles approached Union Oil of California about buying their interest in Great Northern Oil Company and its Pine Bend Refinery
Pine Bend Refinery
The Pine Bend Refinery is the largest oil refinery in Minnesota, located in the Twin Cities suburbs of Rosemount and Inver Grove Heights next to southern split of U.S. Highway 52 and Minnesota State Highway 55. The refinery is notable for being the largest in the United States to be located in a...

 but the discussions quickly stalled after Union asked for a large premium. In 1969, Union Oil began trying to market their interest in Great Northern by telling potential buyers that Koch's controlling interest could be thwarted by currying favor with another owner, J. Howard Marshall II. When Marshall discovered this he threw his lot in with Koch, they together acquired a majority interest in the company and ultimately bought Union's interest. Ownership of Pine Bend refinery led to several new businesses and capabilities, including chemicals, fibers, polymers, asphalt and other commodities such as petroleum coke
Petroleum coke
Petroleum coke is a carbonaceous solid derived from oil refinery coker units or other cracking processes. Other coke has traditionally been derived from coal....

 and sulfur. These were followed by global commodity trading, gas liquids processing, real estate, pulp and paper, risk management and finance.

In 1970, Charles was joined at the family firm by his brother David H. Koch
David H. Koch
David Hamilton Koch is an American businessman, philanthropist, political activist, and chemical engineer. He is a co-owner and an executive vice president of Koch Industries, a conglomerate that is the second-largest privately held company in the U.S...

. Having started as a technical services manager, David became president of Koch Engineering in 1979.

Subsidiaries


Among Koch Industries' subsidiaries across various industries are:
  • Georgia-Pacific
    Georgia-Pacific
    Georgia-Pacific LLC is an American pulp and paper company based in Atlanta, Georgia, and is one of the world's leading manufacturers and distributors of tissue, pulp, paper, packaging, building products and related chemicals. As of Fall 2010, the company employed more than 40,000 people at more...

     paper and pulp company, maker of "Brawny" paper towels, "Angel Soft" toilet paper, "Mardi Gras" napkins and towels, "Quilted Northern" toilet paper and paper towels, "Dixie" paper plates, bowls, napkins and cups, "Sparkle" paper towels, and "Vanity Fair" paper napkins, bowls, plates and tablecloths. The Atlanta-based company has operations in 27 states.
  • Invista
    INVISTA
    Invista, headquartered in Wichita, Kansas, is the world's largest integrated fiber, resin and intermediates company. DuPont originally formed the company as a subsidiary in 2003 from its textile fibers division and named it DuPont Textiles and Interiors while a permanent identity was established...

    , a polymer and fibers company that makes "Stainmaster" carpet, and "Lycra" fiber, among other products.
  • Koch Pipeline Company LP, which owns and operates 4000 miles (6,437.4 km) of pipeline used to transport oil, natural gas liquids and chemicals. Its pipelines are located across Wisconsin
    Wisconsin
    Wisconsin is a U.S. state located in the north-central United States and is part of the Midwest. It is bordered by Minnesota to the west, Iowa to the southwest, Illinois to the south, Lake Michigan to the east, Michigan to the northeast, and Lake Superior to the north. Wisconsin's capital is...

    , Minnesota
    Minnesota
    Minnesota is a U.S. state located in the Midwestern United States. The twelfth largest state of the U.S., it is the twenty-first most populous, with 5.3 million residents. Minnesota was carved out of the eastern half of the Minnesota Territory and admitted to the Union as the thirty-second state...

    , Texas
    Texas
    Texas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...

    , Missouri, Iowa, Oklahoma, Louisiana, and Alberta, Canada. The firm operates offices in Wichita, Kansas
    Wichita, Kansas
    Wichita is the largest city in the U.S. state of Kansas.As of the 2010 census, the city population was 382,368. Located in south-central Kansas on the Arkansas River, Wichita is the county seat of Sedgwick County and the principal city of the Wichita metropolitan area...

    , St. Paul, Minnesota and Corpus Christi, Texas
    Corpus Christi, Texas
    Corpus Christi is a coastal city in the South Texas region of the U.S. state of Texas. The county seat of Nueces County, it also extends into Aransas, Kleberg, and San Patricio counties. The MSA population in 2008 was 416,376. The population was 305,215 at the 2010 census making it the...

    .
  • Flint Hill Resources LP, is a major refining and chemicals company based in Wichita, Kansas
    Wichita, Kansas
    Wichita is the largest city in the U.S. state of Kansas.As of the 2010 census, the city population was 382,368. Located in south-central Kansas on the Arkansas River, Wichita is the county seat of Sedgwick County and the principal city of the Wichita metropolitan area...

    . It sells products such as gasoline, diesel, jet fuel, ethanol, polymers, intermediate chemicals, base oils and asphalt. It operates oil refineries in six states. Flint Hill has chemical plants in Illinois
    Illinois
    Illinois is the fifth-most populous state of the United States of America, and is often noted for being a microcosm of the entire country. With Chicago in the northeast, small industrial cities and great agricultural productivity in central and northern Illinois, and natural resources like coal,...

    , Texas
    Texas
    Texas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...

     and Michigan
    Michigan
    Michigan is a U.S. state located in the Great Lakes Region of the United States of America. The name Michigan is the French form of the Ojibwa word mishigamaa, meaning "large water" or "large lake"....

    . The firm is also a major manufacturer of asphalt
    Asphalt
    Asphalt or , also known as bitumen, is a sticky, black and highly viscous liquid or semi-solid that is present in most crude petroleums and in some natural deposits, it is a substance classed as a pitch...

     used for paving and roofing applications. It operates 13 asphalt terminals located in six states including Alaska
    Alaska
    Alaska is the largest state in the United States by area. It is situated in the northwest extremity of the North American continent, with Canada to the east, the Arctic Ocean to the north, and the Pacific Ocean to the west and south, with Russia further west across the Bering Strait...

     (2 terminals), Wisconsin
    Wisconsin
    Wisconsin is a U.S. state located in the north-central United States and is part of the Midwest. It is bordered by Minnesota to the west, Iowa to the southwest, Illinois to the south, Lake Michigan to the east, Michigan to the northeast, and Lake Superior to the north. Wisconsin's capital is...

     (2), Iowa
    Iowa
    Iowa is a state located in the Midwestern United States, an area often referred to as the "American Heartland". It derives its name from the Ioway people, one of the many American Indian tribes that occupied the state at the time of European exploration. Iowa was a part of the French colony of New...

     (3), Minnesota
    Minnesota
    Minnesota is a U.S. state located in the Midwestern United States. The twelfth largest state of the U.S., it is the twenty-first most populous, with 5.3 million residents. Minnesota was carved out of the eastern half of the Minnesota Territory and admitted to the Union as the thirty-second state...

     (4), Nebraska
    Nebraska
    Nebraska is a state on the Great Plains of the Midwestern United States. The state's capital is Lincoln and its largest city is Omaha, on the Missouri River....

     (1), and North Dakota
    North Dakota
    North Dakota is a state located in the Midwestern region of the United States of America, along the Canadian border. The state is bordered by Canada to the north, Minnesota to the east, South Dakota to the south and Montana to the west. North Dakota is the 19th-largest state by area in the U.S....

    (1). The firm manages the purchasing of domestic crude oil from Texas and Colorado offices, has four ethanol plants across Iowa
    Iowa
    Iowa is a state located in the Midwestern United States, an area often referred to as the "American Heartland". It derives its name from the Ioway people, one of the many American Indian tribes that occupied the state at the time of European exploration. Iowa was a part of the French colony of New...

    , operates three refineries in Alaska
    Alaska
    Alaska is the largest state in the United States by area. It is situated in the northwest extremity of the North American continent, with Canada to the east, the Arctic Ocean to the north, and the Pacific Ocean to the west and south, with Russia further west across the Bering Strait...

    , Texas
    Texas
    Texas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...

    , and Minnesota
    Minnesota
    Minnesota is a U.S. state located in the Midwestern United States. The twelfth largest state of the U.S., it is the twenty-first most populous, with 5.3 million residents. Minnesota was carved out of the eastern half of the Minnesota Territory and admitted to the Union as the thirty-second state...

    , and has a refinery terminal in Alaska
    Alaska
    Alaska is the largest state in the United States by area. It is situated in the northwest extremity of the North American continent, with Canada to the east, the Arctic Ocean to the north, and the Pacific Ocean to the west and south, with Russia further west across the Bering Strait...

    . The Minnesota refinery can process 320000 barrels (50,875.9 m³) of crude a day, most of which comes from Alberta, and handles one quarter of all Tar Sands
    Tar sands
    Bituminous sands, colloquially known as oil sands or tar sands, are a type of unconventional petroleum deposit. The sands contain naturally occurring mixtures of sand, clay, water, and a dense and extremely viscous form of petroleum technically referred to as bitumen...

     crude entering the U.S. It also operates fuel terminals in Wisconsin
    Wisconsin
    Wisconsin is a U.S. state located in the north-central United States and is part of the Midwest. It is bordered by Minnesota to the west, Iowa to the southwest, Illinois to the south, Lake Michigan to the east, Michigan to the northeast, and Lake Superior to the north. Wisconsin's capital is...

     (4 locations), Texas
    Texas
    Texas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...

     (6), and one each in Iowa and Minnesota.
  • Koch Fertilizer, LLC, which is one of the world’s largest makers of nitrogen fertilizers. Koch Fertilizer owns or has interests in fertilizer plants the United States, Canada, Trinidad and Tobago
    Trinidad and Tobago
    Trinidad and Tobago officially the Republic of Trinidad and Tobago is an archipelagic state in the southern Caribbean, lying just off the coast of northeastern Venezuela and south of Grenada in the Lesser Antilles...

    , Venezuela
    Venezuela
    Venezuela , officially called the Bolivarian Republic of Venezuela , is a tropical country on the northern coast of South America. It borders Colombia to the west, Guyana to the east, and Brazil to the south...

    , and Italy
    Italy
    Italy , officially the Italian Republic languages]] under the European Charter for Regional or Minority Languages. In each of these, Italy's official name is as follows:;;;;;;;;), is a unitary parliamentary republic in South-Central Europe. To the north it borders France, Switzerland, Austria and...

    , among others. In October 2010, a plant in Venezuela was nationalized by the government.
  • Koch Agricultural Company's Matador Cattle Company division operates three ranches totaling 425000 acres (1,719.9 km²) located in Beaverhead, Montana
    Montana
    Montana is a state in the Western United States. The western third of Montana contains numerous mountain ranges. Smaller, "island ranges" are found in the central third of the state, for a total of 77 named ranges of the Rocky Mountains. This geographical fact is reflected in the state's name,...

    , Matador, Texas
    Matador, Texas
    Matador is a town in and the county seat of Motley County, Texas, United States. The population was 740 at the 2000 census. In 1891, it was established by and named for the Matador Ranch...

     and the Flint Hills
    Flint Hills
    The Flint Hills, historically known as Bluestem Pastures or Blue Stem Hills, are a band of hills in eastern Kansas stretching into north-central Oklahoma, extending from Marshall County, Kansas and Washington County, Kansas in the north to Cowley County, Kansas and Osage County, Oklahoma in the south...

     of eastern Kansas
    Kansas
    Kansas is a US state located in the Midwestern United States. It is named after the Kansas River which flows through it, which in turn was named after the Kansa Native American tribe, which inhabited the area. The tribe's name is often said to mean "people of the wind" or "people of the south...

    . There are more than 15,000 head of cattle raised on the ranches.

Environmental and safety record


From 1999 to 2003, Koch Industries was assessed "more than $400 million in fines, penalties and judgments."

Pipeline accidents


Koch Industries was fined $35 million for 300 alleged pipeline spills across six states from 1990 to 1997, adding up to 3 million USgals (11,356.2 m³) of oil. The US Government had originally proposed fining Koch $71 million to $214 million in penalties for violations of the Clean Water Act
Clean Water Act
The Clean Water Act is the primary federal law in the United States governing water pollution. Commonly abbreviated as the CWA, the act established the goals of eliminating releases of high amounts of toxic substances into water, eliminating additional water pollution by 1985, and ensuring that...

 by those spills.

Koch's Sterling butane pipeline had a leak in Lively, Texas, on August 24, 1996. Two teenagers on the way to report the leak drove into the unseen butane
Butane
Butane is a gas with the formula C4H10 that is an alkane with four carbon atoms. The term may refer to any of two structural isomers, or to a mixture of them: in the IUPAC nomenclature, however, butane refers only to the unbranched n-butane isomer; the other one being called "methylpropane" or...

 cloud, and were killed when the gas exploded and burned. The National Transportation Safety Board concluded that severe external pipeline corrosion was the cause of the failure, and recommended to Koch to improve corrosion evaluation procedures. Although Koch distributed pamphlets about safety around the pipelines, they failed to maintain an up-to-date mailing list. Only 5 out of 45 residences in the area of the accident had received pamphlets. The families of the dead had not.

In 1999, a Texas jury found that negligence had led to the rupture of the Koch pipeline that fueled the explosion killing the two teenagers, and awarded a $296 million verdict — "the largest compensatory damages judgment in a wrongful death case against a corporation in U.S. history".

In a statement released in 2010, Koch Industries responded to the criticisms in Jane Mayer's article in The New Yorker
The New Yorker
The New Yorker is an American magazine of reportage, commentary, criticism, essays, fiction, satire, cartoons and poetry published by Condé Nast...

, “Covert Operations: The Billionaire Brothers Who are Waging a War Against Obama,”


The August, 1996 pipeline accident in Texas was a tragedy. Koch accepted responsibility immediately for the incident, which is the only event of its kind in the company’s history. The thorough review conducted of this pipeline the year before the accident did not uncover any issues that posed a foreseeable threat to public safety. The bacteria-induced corrosion that caused the accident acted more quickly to damage this pipeline than had ever been documented by any industry expert. Koch’s cooperative efforts to identify the source and cause of this problem so that this knowledge could be shared throughout industry were praised by the National Transportation Safety Board, which did a two-year investigation into this incident.

Pollution and resource fines


In March 1999, Koch Petroleum Group, a Koch Industries subsidiary, pled guilty to charges that it had negligently
Negligence
Negligence is a failure to exercise the care that a reasonably prudent person would exercise in like circumstances. The area of tort law known as negligence involves harm caused by carelessness, not intentional harm.According to Jay M...

 dumped hundreds of thousands of gallons of aviation fuel
Aviation fuel
Aviation fuel is a specialized type of petroleum-based fuel used to power aircraft. It is generally of a higher quality than fuels used in less critical applications, such as heating or road transport, and often contains additives to reduce the risk of icing or explosion due to high temperatures,...

 into wetlands near the Mississippi River from its refinery in Rosemount, Minnesota
Rosemount, Minnesota
As of the census of 2000, there were 14,619 people, 4,742 households, and 3,931 families residing in the city. The population density was 434.2 people per square mile . There were 4,845 housing units at an average density of 143.9 per square mile...

, and that it had also illegally dumped a million gallons of high-ammonia
Ammonia
Ammonia is a compound of nitrogen and hydrogen with the formula . It is a colourless gas with a characteristic pungent odour. Ammonia contributes significantly to the nutritional needs of terrestrial organisms by serving as a precursor to food and fertilizers. Ammonia, either directly or...

 wastewater onto the ground and into the Mississippi River
Mississippi River
The Mississippi River is the largest river system in North America. Flowing entirely in the United States, this river rises in western Minnesota and meanders slowly southwards for to the Mississippi River Delta at the Gulf of Mexico. With its many tributaries, the Mississippi's watershed drains...

. Koch Petroleum paid the Dakota County Park System a $6 million fine and $2 million in remediation costs, and was ordered to serve three years of probation.

In 1999, a federal jury found that Koch Industries had stolen oil from government and American Indian
Indigenous peoples of the Americas
The indigenous peoples of the Americas are the pre-Columbian inhabitants of North and South America, their descendants and other ethnic groups who are identified with those peoples. Indigenous peoples are known in Canada as Aboriginal peoples, and in the United States as Native Americans...

 lands, had lied about its purchases more than 24,000 times, and was fined $553,504.

In January 2000, a Koch Industries subsidiary, Koch Pipeline, agreed to a $35 million settlement with the U.S. Justice Department
United States Department of Justice
The United States Department of Justice , is the United States federal executive department responsible for the enforcement of the law and administration of justice, equivalent to the justice or interior ministries of other countries.The Department is led by the Attorney General, who is nominated...

 and the State of Texas
Texas
Texas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...

. This settlement, including a $30 million civil fine, was incurred for the firm's three hundred oil spill
Oil spill
An oil spill is the release of a liquid petroleum hydrocarbon into the environment, especially marine areas, due to human activity, and is a form of pollution. The term is mostly used to describe marine oil spills, where oil is released into the ocean or coastal waters...

s in Texas and five other states going back to 1990. The spills resulted in more than 3 million USgals (11,356.2 m³) of crude oil leaking into ponds, lakes, streams and coastal waters.

In 2001, the company reached two settlements with the government. In April, the company reached a $20 million settlement in exchange for admitting to covering up environmental violations at its refinery in Corpus Christi, Texas
Corpus Christi, Texas
Corpus Christi is a coastal city in the South Texas region of the U.S. state of Texas. The county seat of Nueces County, it also extends into Aransas, Kleberg, and San Patricio counties. The MSA population in 2008 was 416,376. The population was 305,215 at the 2010 census making it the...

. That May, Koch Industries paid $25 million to the federal government to settle a federal lawsuit that found the company had improperly taken more oil than it had paid for from federal and Indian land.

In June 2003, the US Commerce Department fined Koch Industries subsidiary Flint Hill Resources a $200,000 civil penalty. The fine settled charges that the company exported crude petroleum from the US to Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...

 without proper US government authorization. The Commerce Department’s Bureau of Industry and Security said from July 1997 to March 1999, Koch Petroleum (later called Flint Hill Resources) committed 40 violations of Export Administration Regulations.

In 2006, Koch Industries’ subsidiary Flint Hill Resources was fined nearly $16,000 by the EPA for 10 separate violations of the Clean Air Act
Clean Air Act
A Clean Air Act is one of a number of pieces of legislation relating to the reduction of airborne contaminants, smog and air pollution in general. The use by governments to enforce clean air standards has contributed to an improvement in human health and longer life spans...

 at its Alaska oil refinery facilities, and required to spend another $60,000 on safety equipment needed to help prevent future violations.

In 2007, Koch Nitrogen's plant in Enid, Oklahoma
Enid, Oklahoma
Enid is a city in Garfield County, Oklahoma, United States. In 2010, the population was 49,379, making it the ninth largest city in Oklahoma. It is the county seat of Garfield County. Enid was founded during the opening of the Cherokee Outlet in the Land Run of 1893, and is named after Enid, a...

, was listed as the third highest company releasing toxic chemicals in Oklahoma, according to the EPA, ranking behind Perma-Fix Environmental Services in Tulsa and Weyerhaeuser Co. in Valliant. The facility produces about 10% of the US national production of anhydrous ammonia, as well as urea and UAN.

In 2010, Koch Industries was ranked 10th on the list of top US corporate air polluters, the "Toxic 100 Air Polluters", by the Political Economic Research Institute at the University of Massachusetts
University of Massachusetts
This article relates to the statewide university system. For the flagship campus often referred to as "UMass", see University of Massachusetts Amherst...

 Amherst.

Awards and certifications


According to its website, Koch Industries and its subsidiaries received 289 stewardship awards over the two years ending January 2011.

Koch Industries' headquarters in Wichita has been certified for meeting the Energy Star
Energy Star
Energy Star is an international standard for energy efficient consumer products originated in the United States of America. It was first created as a United States government program during the early 1990s, but Australia, Canada, Japan, New Zealand, Taiwan and the European Union have also adopted...

 standards for superior energy efficiency and environmental protection. it is the only Wichita office building to be so recognized. A Tulsa, Oklahoma site of the Koch-owned John Zink Company site was part of the EPA's National Environmental Performance Track program from 2003 until 2009 when the program was suspended.

In 2005, Koch's Flint Hills Resources refinery was recognized by the Environmental Protection Agency's Clean Air Awards program for reducing air emissions by 50 percent while expanding operations. The EPA has worked with Flint Hills Resources to develop "strategies for curtailing so-called 'upset' emissions, in what agency and company sources say could lead to guidance to minimize such emissions from petroleum refineries and other industrial facilities." The EPA described the process as a "model for other companies."

Koch's Matador Ranch in Texas earned the Lone Star Land Steward award for outstanding natural resource management in 2010. The Montana ranch has earned several environmental stewardship awards, including the EPA Regional Administrator's award.

In 2011, the Midway-Kansas Chapter of the American Red Cross
American Red Cross
The American Red Cross , also known as the American National Red Cross, is a volunteer-led, humanitarian organization that provides emergency assistance, disaster relief and education inside the United States. It is the designated U.S...

 awarded Koch Industries with a Corporate Excellence Award for its long-standing commitment to the humanitarian mission of Red Cross.

Legal activity



In 2008, Koch Industries discovered that the French affiliate Koch-Glitsch had violated bribery laws allegedly securing contracts in Algeria, Egypt, India, Morocco, Nigeria and Saudi Arabia. However, Ethics Compliance officer "Egorova-Farines wasn’t rewarded for bringing the illicit payments to the company’s attention. Her superiors removed her from the inquiry in August 2008 and fired her in June 2009, calling her incompetent, even after Koch’s investigators substantiated her findings. She sued Koch-Glitsch in France for wrongful termination." In response, Mark Holden, Koch Industries general counsel, said the subsidiary, Koch-Glitsch, completed its investigation and terminated the four employees involved. Egorova-Farines, however, was not fired but instead left the company to go on leave and never returned. She sued the company and lost in French court and was ordered to pay costs for bringing a frivolous case. Moreover, Holden points out that Egorova-Farines failed to bring the violations to the attention of her managers immediately, choosing instead to give the information to a manager at Koch-Glitsch who was later fired for bribery. Egorova-Farines' delay in reporting the matter cost the company another fine.

In May 2011, a Utah judge dismissed a Koch Industries lawsuit alleging that Youth For Climate Truth, in releasing a fake Koch Industries press release, had infringed on Koch Industries' trademark.

Political activity


Koch Industries has spent more than $50 million to lobby in Washington since 2006, according to the Center for Responsive Politics
Center for Responsive Politics
The Center for Responsive Politics is a non-profit, nonpartisan research group based in Washington, D.C. that tracks money in politics and the effect of money and lobbying activity on elections and public policy and maintains a public online database of its information.Their database...

.

The company has opposed the regulation of financial derivatives
Derivative (finance)
A derivative instrument is a contract between two parties that specifies conditions—in particular, dates and the resulting values of the underlying variables—under which payments, or payoffs, are to be made between the parties.Under U.S...

 and limits on greenhouse gases
Greenhouse gas
A greenhouse gas is a gas in an atmosphere that absorbs and emits radiation within the thermal infrared range. This process is the fundamental cause of the greenhouse effect. The primary greenhouse gases in the Earth's atmosphere are water vapor, carbon dioxide, methane, nitrous oxide, and ozone...

. It sponsors free market
Free market
A free market is a competitive market where prices are determined by supply and demand. However, the term is also commonly used for markets in which economic intervention and regulation by the state is limited to tax collection, and enforcement of private ownership and contracts...

 foundations and causes. According to the Center for Responsive Politics, many of Koch Industries' contributions have gone toward achieving legislation on energy
Energy
In physics, energy is an indirectly observed quantity. It is often understood as the ability a physical system has to do work on other physical systems...

 issues, defense
Military
A military is an organization authorized by its greater society to use lethal force, usually including use of weapons, in defending its country by combating actual or perceived threats. The military may have additional functions of use to its greater society, such as advancing a political agenda e.g...

 appropriations and financial regulatory reform. According to Greenpeace
Greenpeace
Greenpeace is a non-governmental environmental organization with offices in over forty countries and with an international coordinating body in Amsterdam, The Netherlands...

, the company has "had a quiet but dominant role in a high-profile national policy debate on global warming," and has out-spent ExxonMobil
ExxonMobil
Exxon Mobil Corporation or ExxonMobil, is an American multinational oil and gas corporation. It is a direct descendant of John D. Rockefeller's Standard Oil company, and was formed on November 30, 1999, by the merger of Exxon and Mobil. Its headquarters are in Irving, Texas...

 (another corporation active in fighting climate change science and legislation) in giving money to organizations fighting legislation related to climate change. "From 2005 to 2008, ExxonMobil spent $8.9 million while the Koch Industries-controlled foundations contributed $24.9 million in funding." Another Greenpeace
Greenpeace
Greenpeace is a non-governmental environmental organization with offices in over forty countries and with an international coordinating body in Amsterdam, The Netherlands...

 study states that between 1997 and 2008 Koch Industries donated nearly $48 million to groups which doubt or oppose the theory
Scientific theory
A scientific theory comprises a collection of concepts, including abstractions of observable phenomena expressed as quantifiable properties, together with rules that express relationships between observations of such concepts...

 of anthropogenic global warming. Koch Industries replied saying the Greenpeace report "distorts the environmental record of our companies."

One policy proposal to control global warming that Koch Industries has come out against is Low Carbon Fuel Standards, such as were passed in 2007 in California. According to Koch Industries, "LCFS would cripple refiners that rely on heavy crude feedstocks to provide the transportation fuels that keep America moving."

According to a critic of the Mercatus Center
Mercatus Center
The Mercatus Center at George Mason University in the United States is a non-profit market-oriented research, education, and outreach think tank affiliated with the Koch family. It works with policy experts, lobbyists, and government officials to connect academic learning and real-world practice...

 and the Kochs, the political activity by some of the Koch-supported foundations -- such as Mercatus Center
Mercatus Center
The Mercatus Center at George Mason University in the United States is a non-profit market-oriented research, education, and outreach think tank affiliated with the Koch family. It works with policy experts, lobbyists, and government officials to connect academic learning and real-world practice...

 -- helps the company financially. According to Thomas McGarity, a law professor at the University of Texas who specializes in environmental issues, “Koch has been constantly in trouble with the United States Environmental Protection Agency
United States Environmental Protection Agency
The U.S. Environmental Protection Agency is an agency of the federal government of the United States charged with protecting human health and the environment, by writing and enforcing regulations based on laws passed by Congress...

 (EPA), and Mercatus has constantly hammered" on the EPA. The founder of the Mercatus Center, Richard H. Fink
Richard H. Fink
Richard H. Fink is an American businessman and academic. He is an executive vice president of Koch Industries, the second largest privately held company in the U.S.-Education and academic career:...

, also heads Koch Industries’ lobbying operation in Washington DC. According to a study by Media Matters for America
Media Matters for America
Media Matters for America is a politically progressive media watchdog group which says it is "dedicated to comprehensively monitoring, analyzing, and correcting conservative misinformation in the U.S. media." Set up as a 501 non-profit organization, MMfA was founded in 2004 by journalist and...

, Koch Industries (and other Koch brothers-owned companies) "have benefited from nearly a $100 million in government contracts since 2000."

Koch Industries have also been active in supporting and opposing politicians, including presidents. During the US 2000 election campaign, Koch Industries spent some $900,000 to support the candidacies of George W. Bush
United States presidential election, 2000
The United States presidential election of 2000 was a contest between Republican candidate George W. Bush, then-governor of Texas and son of former president George H. W. Bush , and Democratic candidate Al Gore, then-Vice President....

 and other Republicans. It has funded opposition campaigns against programs of the Obama administration
Presidency of Barack Obama
The Presidency of Barack Obama began at noon EST on January 20, 2009 when he became the 44th President of the United States. Obama was a United States Senator from Illinois at the time of his victory over Arizona Senator John McCain in the 2008 presidential election...

 — "from health-care reform to the economic-stimulus". The Koch Industries website includes an opinion piece from the Wall Street Journal by Charles Koch, one of the company's owners, "Why Koch Industries is Speaking Out" The article states:
Because of our activism, we've been vilified by various groups. Despite this criticism, we're determined to keep contributing and standing up for those politicians, like Wisconsin Gov. Scott Walker
Scott Walker (politician)
Scott Kevin Walker is an American Republican politician who began serving as the 45th Governor of Wisconsin on January 3, 2011, after defeating Democratic candidate Tom Barrett, 52 percent to 47 percent in the November 2010 general election...

, who are taking these challenges [deficit spending by governments] seriously.

External links