Koch Industries Amassed 150 Penalties for State Environmental Violations in 20 States

In every state where Koch Industries and its subsidiaries have a facility, state regulators have fined the company for environmental regulatory violations, a new study shows.

The study conducted by Good Jobs First, documents 150 separate penalties for environmental regulatory and civil violations paid by Koch over the past 20 years, representing actions by all 20 states with Koch industrial or manufacturing facilities.

Koch, a diversified conglomerate with oil, gas, chemical, fertilizer, paper and wood products and other operations, had the sixth most state actions out of 50,000 cases included in the study.  

"The oil and gas industry accounts for far more in penalties that any other sector of the economy, with $8.2 billion in (state) fines and settlements since 2000. Utilities and other power generation firms rank second among industries with a total of $6 billion," the new analysis shows.

The actions against Koch are for violations of state laws regulating air and water pollution, hazardous waste, and solid waste.

Between 2019 and 2020, Koch was hit with fines or penalties 17 times in ten states.

The largest settlement was for $850,000 with the Illinois Attorney General. 

"The Attorney General's office filed a complaint in May 2014 after a system malfunction at the Flint Hills (a Koch subsidiary) facility caused 56,000 pounds of styrene, a hazardous air pollutant, to be released into the air. Additionally, more than 2,000 pounds of liquid styrene was dumped onto the ground and threatened the Illinois River."

Styrene is a highly volatile used in a wide variety of plastics, rubber, and packaging, and is a known carcinogen.

Perhaps reflecting the large number of Koch operations in the state, Texas led the states in the two years with seven environmental settlements.

Over the past two years, two Koch subsidiaries had the most state settlements: Flint Hills Resources, largely at its Illinois plant and the refinery and other facilities in Port Arthur, Texas; and Georgia-Pacific, the wood products and paper subsidiary, at its plants around the U.S. Combined, they had almost 100 settlements with states, of the 150 settlements for the parent company overall.

In 2019 and 2020, Koch's Georgia-Pacific incurred nine of Koch's 17 state enforcement actions in eight states. Many of the actions were for the polluting of area rivers and lakes with wastewater and solid waste. 

Even with the installation of pollution abatement equipment, there are still spills and accidents. In December 2019, for example, the state of Oregon, while praising the company for installing equipment to control treated wastewater, also fined it $27,000 for discharging that wastewater in locations not covered by its state-issued permit when the equipment failed.

Five of the 17 recent state actions were in Texas at plants run by its Motiva and Invista chemical and synthetic materials manufacturing facilities. At its Port Arthur Motiva facility, the company was fined for the illegal discharge of thousands of pounds of benzene. Long-term exposure to benzene can cause leukemia and other cancers.

Good Jobs First previously looked at federal environmental agencies and the U.S. Department of Justice, finding Koch Industries had 228 federal regulatory or civil actions against it, for a total of 378 settlements over the past 20 years at both the federal and state level. The total penalties assessed by federal authorities was just over $800 million, and state penalties and fines were a total of $23 million.

"The states share responsibility with the federal government for enforcing major laws such as the Clean Air Act and the Clean Water Act. The U.S.EPA tends to handle the larger cases – especially those involving multiple facilities – out of its national or regional offices, so the federal penalty totals tend to be higher," Phil Mattera, co-author of the Good Jobs First study, noted. "The states handle more of the specific offenses at individual facilities."

"What's significant for Koch Industries is the number of state actions – 150 – the sixth highest total among all large companies," Mattera said. "This shows that its operations are committing violations over and over again at many locations around the country. Koch is among only ten big corporations that have paid environmental penalties in 20 or more states."

Koch has an environmental program and has reduced air emissions, toxic waste, and solid waste over the last decade. Nonetheless, just state actions against Koch have averaged eight separate settlements over each of the last 10 years, with no indication of a decline in violations. This could mean that the company and state agency air and water monitoring has improved, or it could be because of illegal releases or equipment failures.

According to Forbes, Koch is the largest private company in the U.S., with an estimated 2019 revenue of $115 billion. Charles Koch and the heirs of his recently deceased brother, David, each own 42 percent of the company. In 2020, Charles was estimated to be worth between $38 billion and $46 billion.