“It’s a big victory.” That’s Americans for Prosperity President Tim Phillips’s assessment of the omnibus budget legislation that lifts the oil export ban and delivers a number of other big wins for Charles and David Koch.
The $1.1-trillion budget deal is chock-full of Koch agenda items, dutifully packed in by their bought-and-paid-for Koch candidates and shepherded through by their speaker of the House, Paul Ryan. The biggest win for Charles and David is the bill’s provision to lift the oil export ban — something the two billionaires have spent the last forty years lobbying for. Yes, since 1975. And despite what they’ve claimed over the years, it was not a selfless, ideological campaign. One of their employees admitted just this week that lifting the ban would be good for their business.
Other omnibus gifts for the Kochs include:
- An EPA budget freeze. (More pollution, less oversight.)
- A provision blocking new political spending disclosure requirements. (This one doesn’t require an explanation.)
- An extended and expanded research tax credit. (The Kochs have R&D interests.)
- A measure that slashes the top tax rate for corporate income that comes from timber sales. (Georgia Pacific is a Koch subsidiary.)
- A delay of a tax on medical device manufacturers. (The Kochs own a medical device supplier.)
- A provision blocking the EPA’s “waters of the U.S.” rule. (Again: More pollution, less oversight.)
- And the list goes on…
All in all, not a bad early-Christmas haul for Charles and David from their congressional stooges.
Background:
Oil Export Ban
The Spending Bill Lifted The Ban On Crude Oil Exports. According to The Washington Post, “The spending bill also would lift the 40-year ban on crude oil exports. In exchange for allowing this provision, Democrats secured the extension of tax breaks for wind and solar energy producers for five years.” [The Washington Post, 12/16/15]
Koch Industries Supported Lifting The Ban On Crude Oil Exports
Koch Supply & Trading Chief Information Officer Rob Short On Lifting The Oil Export Ban: “Koch Industries In General Supports Open Markets And I Think We Would Like To See No Export Bans.” According to Bloomberg Business, “Koch Industries has advocated lifting the U.S. ban on crude exports. ‘Koch Industries in general supports open markets and I think we would like to see no export bans’ for U.S. crude oil, Short said. ‘I know we are looking for opportunities to export.’” [Bloomberg Business, 12/10/15]
Koch Industries Lobbyist Phillip Ellender: “We Hope Congress Will Still Consider Lifting The Crude Export Ban On Its Own Merits, But Not By Burdening Society With Continuing Subsides And Corporate Welfare.” According to Politico, “‘We hope Congress will still consider lifting the crude export ban on its own merits, but not by burdening society with continuing subsides and corporate welfare,’ Koch lobbyist Phillip Ellender wrote to lawmakers last week. The letter is viewed with major skepticism among liberal Democrats, who privately wonder whether Republicans are willing to break with the companies run by the billionaire conservative brothers David and Charles Koch.” [Politico, 12/3/15]
Research & Experimentation Credit
The Tax Bill Permanently Extended The Research And Experimentation Credit. According to The Washington Post, The tax bill would permanently extend nearly two dozen tax breaks for businesses and individuals while temporarily extending others. […] The credits being permanently extended include: […] An expanded research and experimentation credit;” [The Washington Post, 12/16/15]
- The Permanent Extension Was A “A Victory For Corporate Lobbies.” According to The New York Times, “POLITICS BEHIND IT Making the research and development credit permanent is a victory for corporate lobbies that have said for years their companies cannot plan long-term research projects for fear that the credit would expire. Both parties would have done it long ago except for the cost.” [The New York Times, 12/16/15]
- The Tax Credit Was Expected To Cost $113.2 Billion In Its First Decade. According to The New York Times, “WHAT IT IS The research and development tax credit, long in existence but always threatened with extinction, consists of several credits, which give businesses tax breaks for research expenses. COST $113.2 billion in the first decade.” [The New York Times,12/16/15]
Koch Industries Has Multiple Research And Development Companies
Koch Agronomic Services
A Subsidiary Of Koch Agronomic Services Announced That It Has Purchased “The Biological Research And Development Business Of Mendel Biotechnology.” According to a press release from Koch Agronomic, “A subsidiary of Koch Agronomic Services, LLC (KAS), announced today that it has purchased the biological research and development business of Mendel Biotechnology, Inc. The business will operate as Mendel Biological Solutions and will continue to be based in Hayward, Calif. Mendel’s biological research and development team focuses on biological crop solutions which increase crop yield potential through the use of naturally derived products. The acquisition establishes a new biological platform for KAS, furthering its commitment to develop innovative technologies that satisfy evolving needs of the agricultural industry.” [Koch Agronomic Press Release, 12/4/14]
Georgia Pacific
Georgia Pacific Had A Research And Development Group Called The Innovations Institute. According to the Atlanta Journal and Constitution, “[Georgia-Pacific’s senior vice president of packaging, sales and logistics Christian] Fischer also oversees the Innovations Institute, where Georgia-Pacific literally thinks outside the box for clients including competitor Procter & Gamble, maker of Bounty paper towels. Researchers and engineers design — and redesign — boxes and packaging, then test and dissect them. At the institute in Norcross, researchers and engineers design boxes that will help retailers track their goods using radio-frequency tags. They’ve also engineered a recyclable but moisture-resistant box for fruits and vegetables.” [Atlanta Journal and Constitution, 6/19/05]
Molex
“More Than 1,500 Molex Employees Work In Global Research And Development Labs.”According to Discovery Newsletter via Kochind.com, “More than 1,500 Molex employees work in global research and development labs devising new products, many of which become patented. It introduced 229 new products in 2012. Like Koch Industries, Molex has also grown through acquisitions, including California-based Affinity Medical.” [KochInd.com, January 2014]
- Molex Is A Subsidiary Of Koch Industries. According to Lexis Nexis Company Dossier, Molex is a subsidiary of the parent company Koch Industries. [Lexis Nexis Company Search, “Molex,” Viewed 8/5/15]
John Zink Hamworthy Combustion
John Zink Hamworthy Combustion Has Been Involved In Research And Development.According to JZHC, “John Zink Hamworthy Combustion’s International Research and Development Test Centers, located in Tulsa, Oklahoma, Luxembourg and Poole, England […] put theory into practice. Our R&D centers employ diverse engineering specialties, cutting-edge tools, instrumentation, creative problem-solving and industrial-scale testing to develop a whole new generation of clean combustion technologies. We also measure performance in a near real-world setting under real-world conditions.” [JZHC website johnzink.com/services, Accessed 7/29/15]
- JZHC Was A Subsidiary of Koch Technology Group. According to JZHC, “John Zink Hamworthy Combustion, is a subsidiary of Koch Chemical Technology Group, LLC (KCTG). Together with its parent, Koch Industries, Inc. and affiliated companies, KCTG comprises one of the largest private companies in the world.” [JZHC website johnzink.com/careers, Accessed7/29/15]
Americans For Prosperity Supported Making The Research And Development Credit Permanent
AFP: “While Some Tax Breaks Such As The Research And Development Credit Have Garnered Broad Support For Encouraging American Innovation, Passing Tax Credits Just Weeks Before They Expire Is A Poor Way To Inspire American Ingenuity.” According to an article from AFP, “While some tax breaks such as the Research and Development credit have garnered broad support for encouraging American innovation, passing tax credits just weeks before they expire is a poor way to inspire American ingenuity.” [AmericansForProsperity.com, 12/5/14]
EPA Budget Freeze
The Spending Bill Kept The Environmental Protection Agency (EPA) Budget Flat.According to The Hill, “Congressional leaders have agreed to keep Environmental Protection Agency (EPA) funding flat in 2016 and Republicans have yielded in their fight to block agency rulemaking through the spending process. Under the omnibus budget deal released early Wednesday morning, the EPA is funded at $8.1 billion in 2016, a level lower than it was in 2010 but on par with 2015. […]At the time, Republicans also looked to use the spending bill to block a slate of new EPA rules — including the Obama administration’s climate rule for power plans and another redefining which waterways the federal government can regulate — but those provisions were also left out of the final spending deal.” [The Hill, 12/16/15]
- “The Bill Keeps Agency Staffing Levels At Their Lowest Level Since 1989.” According to The Hill, “The bill keeps agency staffing levels at their lowest level since 1989.” [The Hill,12/16/15]
Koch Industries Has Been Repeatedly Fined By The EPA For Environmental Actions
“Since The Late 1990s, Koch Companies Have Repeatedly Found Themselves In The Crosshairs Of The EPA For Various Environmental Violations. On Numerous Occasions They Were Forced To Pay Hefty Fines And Settlements And Change Their Practices As A Result Of EPA And Justice Department Action.” According to PolitiFact, “Since the late 1990s, Koch companies have repeatedly found themselves in the crosshairs of the EPA for various environmental violations. On numerous occasions they were forced to pay hefty fines and settlements and change their practices as a result of EPA and Justice Department action.” [PolitiFact, 4/4/14]
AFP Advocated For Curtailment Of The EPA
Phillips: “Congress Should Curtail The EPA’s Actions And Empower States, Not The Federal Government, To Protect The Environment In A Way That Serves Their Unique Interests And Natural Resources.” According to an opinion by AFP President Tim Phillips in The Hill, “Congress should curtail the EPA’s actions and empower states, not the federal government, to protect the environment in a way that serves their unique interests and natural resources. Congress should also recognize that innovations in technology and energy generation, not government mandates, are the best long-term solution to future environmental improvement. Such innovation won’t happen if the Obama administration’s energy policies survive.” [Tim Phillips – Hill, 11/16/14]
The Spending Bill Cut Funding From The IRS Enforcement Division. According to ThinkProgress, “The deal also cuts funding for the IRS enforcement division. That team has absorbed huge cuts over the past three years. Today’s deal cuts another $25 million from last year’s enforcement budget, leaving the 2016 budget for auditing returns and pursuing crooks almost half a billion dollars below what it was in 2013. Cutting enforcement doesn’t save money, of course, because every dollar the IRS spends on enforcement yields several dollars in revenue that wouldn’t have been collected otherwise.” [ThinkProgress, 12/16/15]
Political Spending Disclosure
The Spending Bill Blocked Attempts By The Securities And Exchange Commission “To Require Companies That Receive Federal Contracts To Disclose Their Dark-Money Contributions To Political Organization.” According to ThinkProgress, “A pair of provisions in the legislation will stymie any hope of action in 2016 to bring transparency or limits to secret corporate political spending. Section 735 would block any attempt by the Securities and Exchange Commission to require companies that receive federal contracts to disclose their dark-money contributions to political organizations.” [ThinkProgress, 12/16/15]
The Spending Bill Blocked The IRS From Formalizing Rules Reigning In 501(C)(4) Social Welfare Non-Profits. According to ThinkProgress, “A pair of provisions in the legislation will stymie any hope of action in 2016 to bring transparency or limits to secret corporate political spending. […] Section 127 will prohibit the Internal Revenue Service (IRS) from acting in 2016 to formalize proposed rules to reign in political groups that avoid disclosing their funding by masquerading as tax-exempt 501(c)(4) ‘social welfare’ non-profits.” [ThinkProgress, 12/16/15]
The Koch Network Spends Millions In Dark Money
The Kochs Were “Best Known For The Network Of Nonprofits They Operate And Raise Money For That Do Not Disclose Their Donors.” According to The Huffington Post, “But Koch and his brother are best known for the network of nonprofits they operate and raise money for that do not disclose their donors. These include grant distribution hubs like Freedom Partners Chamber of Commerce, Center to Protect Patient Rights and TC4 Trust. The three groups have distributed more than $450 million in grants to other nonprofits, many of them active in elections, since 2009, according to nonprofit tax forms compiled by the Center for Responsive Politics. Freedom Partners Chamber of Commerce, a 501(c)(6) trade association that hosts the Koch brothers’ annual donor summit, is currently the only hub that remains operational and is still affiliated with the Koch brothers.” [The Huffington Post, 10/12/15]
OpenSecrets Headline: “At Least 1 In 4 Dark Money Dollars In 2012 Had Koch Links.”[OpenSecrets.org, 12/3/13]
“Active Financing” Exemption
The Spending Bill Included A Permanent Extension Of The “Active Financing” Exemption. According to The Hill, “Congress’s top tax writers late Tuesday night unveiled a $622 billion tax bill after weeks of negotiations. The 233-page bill cements a host of tax breaks for individuals and businesses, with both parties scoring policy wins. […] A number of business tax breaks are extended without an expiration date, including the research and development tax credit, the increased maximum amount that businesses can immediately expense for property described in section 179 of the tax code, and the ‘active financing exception,’ which allows companies to avoid paying taxes on certain income earned overseas.” [The Hill,12/16/15]
- The Active Financing Exemption Allowed “Financial Companies To Defer Taxes Paid On Interest And Dividends Earned Overseas Unless They Bring The Income Back To The United States.” According to The New York Times, “WHAT IT IS The ‘active financing’ exemption, which dates to 1990, would permanently allow financial companies to defer taxes paid on interest and dividends earned overseas unless they bring the income back to the United States.” [The New York Times, 12/16/15]
Koch Industries Has A Web Of International Corporations To Avoid Taxes
Luxembourg Restructuring
Koch Industries “Created Tangles Of Interlocking Corporations In Luxembourg That May Have Helped Them Slash The Taxes They Pay In The U.S. And Europe.” According to the International Consortium of Investigative Journalists, “A new leak of confidential documents expands the list of big companies seeking secret tax deals in Luxembourg, exposing tax-saving maneuvers by American entertainment icon The Walt Disney Co., politically controversial Koch Industries Inc. and 33 other companies. Disney and Koch Industries, a U.S.-based energy and chemical conglomerate, both created tangles of interlocking corporations in Luxembourg that may have helped them slash the taxes they pay in the U.S. and Europe, according to the documents obtained by the International Consortium of Investigative Journalists.” [International Consortium of Investigative Journalists, 12/9/14]
- Koch Industries’ “Project Snow” Sought To Restructure INVISTA And Centralize Its Cash Flow Into Luxembourg. According to The Irish Times, “One of the largest privately-owned businesses in the US, Koch Industries, is among the multinationals whose dealings are covered in the latest batch of leaked documents concerning structures in Luxembourg. […]The documents, prepared by Ernst & Young, describe ‘Project Snow,’ a 26-step restructuring of Invista designed to simplify the company’s structure, centralise its cash flow into Luxembourg, and pay down debt, according to the document.” [The Irish Times, 12/10/14]
Koch Supply & Trading
Koch Supply & Trading Had About 500 Traders Globally With Trading Floors In Houston, Manhattan, London, Geneva, Singapore, And Wichita, Kansas. According to Bloomberg Business, “The industrial conglomerate’s supply and trading unit has about 500 traders globally; the number has stayed at similar levels for the past five-to-six years, he said. In the U.S., the primary trading floors are in Houston, Manhattan and Wichita, Kansas. The unit also has trading floors in London, Geneva and Singapore. The desks, which are connected with each other by instant messaging to video conferencing, will trade anything that goes in and out of a refinery; natural gas and power primarily in Europe; and a large metals trading business in London, Short said. Koch trades liquefied natural gas globally and is watching U.S. LNG exports for opportunities, he said.” [Bloomberg Business, 12/10/15]
- Koch Industries Was Working To Open A Commodities Trading Desk In Shanghai.According to Bloomberg Business, “Koch Industries Inc. is working to open a commodities trading desk in Shanghai to take advantage of opportunities in China.” [Bloomberg Business,12/10/15]
KS&T Engaged In Trading And Marketing Physical Energy Products For Commercial And Financial Commodity Business In The United States And Internationally. According to Bloomberg Business, “Koch Supply & Trading, LP engages in trading and marketing physical energy products for commercial and financial commodity businesses in the United States and internationally. It offers crude oil, natural gas, LNG and emission allowances, and related commodities; ethanol and chemicals; NGLs, olefins, and resins, including ethane, propane, butane, natural gasoline, ethylene, propylene, polyethylene, and polypropylene; industrial metals, such as aluminum, aluminum alloys, copper, tin, zinc, nickel, lead, molybdenum, and cobalt; fuel surcharges; swaps and options on tanker and container rates; energy derivatives and metals groups risk management products; and financial instruments, which include currencies and interest rates.” [Bloomberg Business, Accessed 8/4/15]
Timber
The Tax Bill Benefited Investors In Timberland. According to The New York Times, “The tax measure also includes a number of provisions that would benefit specific industries or regions, including auto racetrack owners, cider makers and investors in timberlands.” [The New York Times, 12/16/15]
- The Provision Reduced “The Top Tax Rate Paid By Certain Corporations On Profits From The Sale Of Timber That Has Been Held For More Than 15 Years;” It Was Projected To Cost $35 Million In 2016-2017. According to The New York Times, “A Tree Falls WHAT IT IS The complicated provision reduces the top tax rate paid by certain corporations on profits from the sale of timber that has been held for more than 15 years. COST $35 million in 2016-17.” [The New York Times, 12/16/15]
Georgia Pacific Produces Paper Products And Building Materials From Harvested Timber
Georgia-Pacific LLC Is One Of The World’s Leading Manufacturers And Distributors Of Tissue, Pulp, Paper, Toilet And Paper Towel Dispensers, Packaging, Building Products And Related Chemicals. – [Georgia Pacific website, gp.com/products, Accessed 7/22/15]
- Georgia Pacific Produced Building And Construction Materials Including Plywood, Oriented Strand Board, Gypsum Products And Lumber. According to Georgia Pacific, “The building products business is North America’s No. 1 producer of wood panels – namely plywood and oriented strand board – and is a leading producer of gypsum products and lumber. Georgia-Pacific is also a major supplier to large do-it-yourself warehouse retailers.” [Georgia Pacific website, gp.com/products, Accessed 7/22/15]
Medical Device Tax Delay
The Tax Measure Delayed A Tax On Medical Device Manufacturers Until 2017. According to The Washington Post, “The tax break package would cost about $650 billion and extend around 50 credits for businesses and individuals while also delaying until 2017 a tax on medical device manufacturers.” [The Washington Post, 12/16/15]
Koch Industries Owned Medical Device Supplier Protek Medical Ltd. Through Their Molex Subsidiary[AB1]
Molex Announced It Is Acquiring Protek Medical Ltd. “A Company Specialised In Supplying Custom Solutions For Medical Device Manufacturers In The Medical Industry.” According to a press release from Molex, “Interconnect solutions provider, Molex Incorporated is acquiring ProTek Medical Ltd. A company specialised in supplying custom solutions for medical device manufacturers in the medical industry. ‘This strategic acquisition broadens the scope of our integrated medical solution offerings and significantly strengthens our medical device design, manufacturing, and test capabilities,’ according to Tim Ruff, senior vice president of business development and corporate strategy, Molex.” [Molex Press Release,5/19/15]
Molex Is A Subsidiary Of Koch Industries. According to Lexis Nexis Company Dossier, Molex is a subsidiary of the parent company Koch Industries. [Lexis Nexis Company Search, “Molex,” Viewed 8/5/15]
Waters of The United States Rule Repeal
The Republican Budget Proposal “Included Efforts To Scuttle An Environmental Rule Expanding Federal Oversight Over Domestic Waterways.” According to The New York Times, “The Republican proposals included efforts to scuttle an environmental rule expanding federal oversight over domestic waterways, new rules on conflicts of interest for financial advisers handling retirement funds and a labor provision that would have made it more difficult for employees of fast-food restaurants to join unions.” [The New York Times, 12/16/15]
The Rule, Known As “Waters Of The United States,” Was Successfully Defended.According to Slate, “In terms of energy and the environment, Democrats won multiyear extensions of critical tax credits for solar and wind energy production. They successfully nixed a rider that would have blocked the Environmental Protection Agency’s proposed ‘waters of the United States’ rule that would expand its jurisdiction against polluters under the Clean Water Act.” [Slate, 12/16/15]
AFP Opposed The Waters of The United States Rule
AFP VP Of Government Affairs Brent Gardner On The Waters Of The United States Rule: “The Economic Pain That This Rule Will Inflict Will Stifle Job Growth And Prevent Future Economic Development.” According to a letter written by AFP Vice President of Government Affairs Brent Gardner to U.S. Representatives, “Appropriation bills give Congress the opportunity to remove funding for problematic programs while preserving transparency. One such opportunity is defunding the Administration’s harmful Waters of the United States (WOTUS) rule in the Department of the Interior, Environment, and Related Agencies Appropriations Act (H.R. 2822). The rule will expand the federal government’s authority to regulate private land across the country and force landowners and employers to navigate a labyrinth of regulations. Such regulation includes massive permitting costs that will harm farmers, job creators, and family budgets. The economic pain that this rule will inflict will stifle job growth and prevent future economic development.” [AmericansForProsperity.org/article,7/20/15]
- Gardner: The Appropriations Process Gives Congress The “Opportunity” To Defund The Administration’s “Harmful” Waters Of The United States Rule. According to a letter written by AFP Vice President of Government Affairs Brent Gardner to U.S. Representatives, “Appropriation bills give Congress the opportunity to remove funding for problematic programs while preserving transparency. One such opportunity is defunding the Administration’s harmful Waters of the United States (WOTUS) rule in the Department of the Interior, Environment, and Related Agencies Appropriations Act (H.R. 2822).” [AmericansForProsperity.org/article,7/20/15]
Business Equipment & Software Tax Credit
The Tax Bill Permanently Extend The “Section 179 Business Expensing, Which Allows Businesses To Fully Deduct The Price Of Equipment And Software Investments.”According to The Washington Post, “According to The Washington Post, The tax bill would permanently extend nearly two dozen tax breaks for businesses and individuals while temporarily extending others. […] The credits being permanently extended include: […] Section 179 business expensing, which allows businesses to fully deduct the price of equipment and software investments;” [The Washington Post, 12/16/15]
The Koch Subsidiary John Zink Hamworthy Combustion Produces Combustion Equipment For Numerous Industries
John Zink Hamworthy Combustion Produced Industrial Burners And Flares. According to Popular Mechanics, “It’s the headquarters of John Zink Hamworthy, a combustion company that makes industrial burners and flares that can shoot flames eighty to a hundred feet into the air.” [Popular Mechanics, 10/9/15]
John Zink Hamworthy Combustion Produced Equipment For Numerous Industries Including Biofuels, Automobile Manufacturing, Food Processing, Pulp And Paper, And Waste Management. According to John Zink Hamworthy Combustion, “Emissions-control and clean-air systems offered by John Zink Hamworthy Combustion perform vital functions in the world’s most demanding industries—from hydrocarbon and chemical processing, to biofuels, automobile manufacturing, food processing, pulp and paper, waste management, and many more. Combining practical problem solving with creative innovation, our people are driven to push the boundaries of our legacy achievements to develop a clean generation of combustion products that address the challenges of our clients and an environmentally conscious world.” [John Zink Hamworthy Combustion, Accessed 12/17/15]
- John Zink Hamworthy Combustion Was A Subsidiary of Koch Technology Group.According to JZHC, “John Zink Hamworthy Combustion, is a subsidiary of Koch Chemical Technology Group, LLC (KCTG). Together with its parent, Koch Industries, Inc. and affiliated companies, KCTG comprises one of the largest private companies in the world.” [JZHC websitejohnzink.com/careers, Accessed 7/29/15]
Natural Gas Excise Tax Credit
The Tax Bill Would Resurrect The “$0.50/Gallon Alternative Fuels Excise Tax Credit, Which Covers Compressed Natural Gas, Liquefied Natural Gas, Propane Autogas And Other Alternative Transportation Fuels.” According to NGTNews, “As with the July bill, this newest iteration of a tax extenders package would resurrect the federal $0.50/gallon alternative fuels excise tax credit, which covers compressed natural gas, liquefied natural gas, propane autogas and other alternative transportation fuels. The package would also extend the alternative vehicle refueling property subsidy, which provides a tax credit covering up to 30% of the cost of infrastructure installation.” [NGTNews, 12/16/15]
Koch Industries Trades Natural Gas Pipeline Capacity
Koch Industries Moved Up 21 Spots To Rank 8th On The Capacity Center’s Ranking Of “Natural Gas Pipeline Capacity Traders By Volume.” According to NGI’s Daily Gas Price Index, “The latest ranking of the top 20 natural gas pipeline capacity traders by volume from Capacity Center includes an upset in the top position as well as the departure of seven companies from the ranking. […]This year saw much jockeying as several companies dramatically increased capacity trading to move up in the ranks of the top 100 to earn a spot in the Top 20. Koch Industries moved up 21 places to No. 8; ConocoPhillips moved up 19 places to No. 12; Noble Energy Inc. moved up 32 places to No. 13; BNP Paribas moved up 46 places to No. 14; EDF Trading moved up nine places to No. 15; and Texla moved up 18 places to No. 16.” [NGI’s Daily Gas Price Index, 12/2/15]