Billionaire industrialists Charles and David Koch don’t often see eye to eye with youngest brother Bill.
They forced him out of their father’s oil company, Koch Industries, in 1982 after an epic power struggle that saw Bill sue his brothers and reportedly walk away with a $260 million settlement. Several years later, he sued them again, accusing them of skirting federal regulations, and he won millions more.
The brothers’ political tastes are also at odds. Whereas Charles and David funnel tens of millions of dollars to the coffers of Republican and Tea Party conservatives, Bill’s politics are harder to pin down. While he too breaks off bits of his fortune for influential leaders in the Grand Old Party, he has also bankrolled Hillary Clinton, Al Gore, Ted Kennedy and other Democrats that make him a bona fide black sheep.
Still, the brothers share many common interests. They love to spend time in Colorado and gobble up its gorgeous real estate, and they all appear to have taken a shine to U.S. Rep. Scott Tipton. The freshman congressman could be in for the fight of his political life in 2012, as state House minority leader Sal Pace is a formidable candidate in the vast and politically diverse 3rd Congressional District. Bill’s energy empire, Florida-based Oxbow Carbon & Minerals Holdings, recently gave Tipton $3,500. Last year, Charles and David’s Kansas-based Koch Industries contributed the same amount to Tipton.
The battle over coal
Oxbow Carbon is a player in the fossil fuels industry with ventures across the United States and around the world. The conglomerate specializes in mining and marketing of energy and commodities such as coal, natural gas, petroleum, metallurgical and calcined coke. Oxbow and its two affiliated companies — Gunnison Energy and Oxbow Steel International — have yearly sales in excess of $4 billion and employ $2 billion in assets, and over 1,100 highly trained workers, according to its corporate website.
One of its moneymakers is Elk Creek Mine in Somerset, Colo., which produces about 5 million tons of low-sulfur coal a year thanks to underground, state-of-the-art longwall mining technology. Trains transport the fuel to electricity generation plants and industrial applications across America.
But federal regulations that protect air, land and water are slowing the locomotives down.
Five years ago, Oxbow applied for a lease in East Elk Creek to mine 3.9 million tons of coal but its environmental review was pulled back three times to address concerns over greenhouse gas emissions. The Bureau of Land Management recently approved the project but now WildEarth Guardians and the Sierra Club are appealing the decision, resulting in headaches and marketplace uncertainty for Oxbow.
Tipton, who has been tirelessly working to undermine the authority of the Environmental Protection Agency since taking office in January, sympathizes with Oxbow. As chairman of the U.S. House Small Business Subcommittee on Agriculture, Energy and Trade, Tipton organized a hearing in Grand Junction on Monday to examine federal laws that the energy industry is finding burdensome.
“In my 30-plus years of working in the Colorado coal mining industry, at both surface and underground mines, I have never before seen such a concerted emphasis by numerous federal agencies to create additional head winds for the coal industry across such a broad spectrum of coal industry activities,” Oxbow Carbon’s environmental manager James A. Kiger testified (PDF) in Monday’s hearing.
“The Environmental Protection Agency has expressed views that, to us, indicate its desire to discontinue the use of coal as a fuel for electricity generation,” Kiger told the assembly. “The regulatory agenda appears to be pursuing this goal. Recently at a conference in Aspen, Colorado, EPA Administrator Lisa Jackson is reported as saying that natural gas is the fuel that will help transition away from coal in power plants. EPA’s regulatory agenda supports that intent.”
He stressed that if current trends continue, valuable jobs in Colorado could be lost.
“Oxbow has recently announced our intent to explore un-leased federal coal reserves in the Oak Mesa project located in the North Fork Valley of Colorado. We are hopeful we can open a new mine in less than 10 years of exploration, permitting and leasing activities,” Kiger said. “The mine could employ approximately 450 miners for over 20 years, creating millions in value to western Colorado and the nation. Meanwhile, our parent company, Oxbow Carbon has purchased an interest in a coal mine located in Columbia, South America. We are hopeful that we will not have to increasingly turn to foreign countries in our search for energy business opportunities because America has either closed its doors or made it too difficult for domestic energy development.”
A ‘bogus’ hearing?
The Checks and Balances Project contends the perils of energy regulation are overstated.
Oil and gas companies receive $15 billion in special tax breaks and Coloradans contribute over $251 million annually to such subsidies, according to the Checks and Balances Project. About 57 percent of lands leased to oil and gas companies for development are sitting idle, and the industry has yet to act on roughly 7,000 of its permits, Checks and Balances Project reported. It also pointed out that the BLM is clearing the backlog of permits not processed during the Bush administration and that for the last two years, the BLM has approved more drilling permits than applications it has received.
Meanwhile, business is booming — the top five oil and gas companies raked in $562 million in profits the first half of this year — and oil and gas activity is back to pre-recession levels, even nearing a 20-year high. Checks and Balances also says energy jobs are at a two-decade high, with 5,100 new ones in Colorado.
“While it may sound unbelievable, over the last six months the United States has exported more petroleum products than it’s imported. That includes the crude oil we import abroad and the refined gasoline and diesel we sell to neighboring countries. Experts attribute this to reduced demand for oil in the United States due to the economic downturn and increasingly fuel-efficient cars on the road,” reads a press release from the Checks and Balances Project questioning Tipton’s premise for Monday’s hearing.
Tom Kenworthy, a senior fellow for the Center for American Progress, called Tipton’s hearing “bogus.”
“Another day, another bogus House GOP hearing on how ‘excessive’ regulation of the energy industry is killing jobs and hurting consumers,” Kenworthy wrote. “If Tipton was really concerned about his Colorado constituents and their relation to the energy industry, he’d be holding a hearing based on a new investigative report by the non-profit journalism organization ProPublica, called ‘Science Lags as Health Problems Emerge Near Gas Fields,’” which includes the case of Susan Wallace-Babb, a rancher in western Colorado who says a natural gas well and liquid hydrocarbon storage tanks made her so sick that she has rashes and lesions and has to wear a respirator and goggles just to go outside.
Nothing gets the hackles up of environmentalists these days quite like a visit by Tipton.
One progressive group took out a half-page full color advertisement in the Grand Junction Sentinel over the weekend asking Tipton to justify tax breaks for oil companies while supporting cuts to Medicare. The ad calls on Tipton to return the estimated $86,000 in campaign contributions he has received from the oil and gas industry.
A spokesman for Tipton, whom Pace recently assailed as a threat to recreation-based economies, defended the congressman’s environmental record in an email to The Colorado Independent this week.
“Rep. Tipton is proud of his record of balanced conservation and responsible development of our natural resources,” Tipton press secretary Joshua Green wrote. “He has received praise for his bipartisan conservation efforts including his work on Chimney Rock. Rep. Tipton continues to work closely with Colorado’s sportsmen groups, recreationalists, water districts, and other conservationists to protect Colorado’s scenic natural beauty and ensure that future generations have access to clean air and water.”
Bear of a ranch
One little slice of heaven in Colorado the congressman may try to save is Bear Ranch.
It is the 5,000-acre paradise where Bill Koch has one of his mega homes. Situated about a dozen miles upstream from the Elk Creek Mine, it boasts spectacular views and borders the Ragged Range. There is a strip of land that runs through Koch’s property that has a public right of way. He has proposed a land swap in which he’d give the public 991 acres of land in Dinosaur National Monument and in Curecanti National Recreation Area in exchange for the 1,840 acres that bisects his property. The Crested Butte News recently reported that Koch has sweetened his offer, throwing in access to Jumbo Mountain, just outside of Paonia. Local hearings are ongoing in Delta and Gunnison counties and if an agreement is worked out, it will require an act of Congress to seal the deal.
Despite local and loud protests over lost public access, Tipton’s predecessor John Salazar, a Democrat, introduced a bill last year to get the land exchange done. But it never made it out of committee. As it turns out, Koch and Oxbow’s employees were Salazar’s biggest boosters. Collectively Koch, his wife and Oxbow donated a total of nearly $70,000 to the then-congressman’s political war chest. Sen. Mark Udall, D-Colo., and Sen. Orrin Hatch, R-Utah, co-sponsored the land exchange bill. Like Salazar, the senators also benefited from Oxbow’s generosity, although not to the same extent as Salazar.
Within weeks of taking office, Tipton pledged Bear Ranch will be on his radar.
“I know it is on our agenda to look into the federal land exchange for Bear Ranch in Gunnison County,” Tipton’s spokesperson Chris Montana told the Delta County Independent on Jan. 27. “We are going to research it a little bit more, and when we decide to move forward it’s going to be a more transparent process with more public input.”
Gunnison County isn’t the only place where Bill Koch lives the billionaire lifestyle. His primary pad is in Palm Beach, Fla., and he also owns a 15,500-square-foot spread in Aspen that used to be a lodge. It has 17 bedrooms.
His brothers Charles and David also own exclusive properties in Aspen, where they have been holding strategy meetings and fundraisers with Republican hotshots like presidential candidate Rick Perry.
The Koch brothers certainly have their differences.
But they share a zip code, and support for Tipton.