Ranking Members Waxman and Rush Request Koch Industries Witness at Keystone XL Pipeline Hearing

Jan 23, 2012

Today Energy and Commerce Committee Ranking Member Henry A. Waxman and Energy and Power Subcommittee Ranking Member Bobby L. Rush sent a letter to Energy and Commerce Committee Chairman Fred Upton and Energy and Power Subcommittee Chairman Ed Whitfield urging them to invite a representative from Koch Industries to testify at Wednesday’s hearing on H.R. 3548, legislation that would transfer authority to approve the Keystone XL pipeline to FERC.  In the letter the members wrote: “We believe the growing questions about the impact of the Keystone XL pipeline on Koch should be resolved before any votes are taken on legislation to promote the construction of the pipeline.”

The full text of the letter is below.

January 23, 2012

The Honorable Fred Upton
Chairman
Energy and Commerce Committee
U.S. House of Representatives
2125 Rayburn House Office Building
Washington, D.C. 20515 

The Honorable Ed Whitfield
Chairman
Subcommittee on Energy and Power
U.S. House of Representatives
2125 Rayburn House Office Building
Washington, D.C. 20515 

Dear Chairman Upton and Chairman Whitfield:

We are writing to request that you invite a representative of Koch Industries to testify on Wednesday on H.R. 3548, legislation that would direct the Federal Energy Regulatory Commission to approve the Keystone XL pipeline.  If this is not feasible, we request that you schedule another day of hearings prior to marking up H.R. 3548.  We make this request so that Committee members can understand whether Koch is positioned to be a “big winner” if the pipeline is approved, as some news accounts have reported.

On May 20, 2011, we wrote you to request that the Committee investigate the link between Koch and the Keystone XL pipeline.  In our letter, we cited a Reuters article that reported that Charles and David Koch, the owners of Koch Industries, are “positioned to be big winners if Keystone XL pipeline is approved” and would receive “great financial opportunity.”[1] We also cited reports that Koch’s Pine Bend Refinery in Minnesota currently processes roughly 25% of the tar sands fuel imports to the United States;[2] that Koch owns Flint Hills Resources, LLP, in Calgary, Canada, which is “among Canada's largest crude oil purchasers, shippers and exporters";[3] that Flint Hills Resources operates a crude oil terminal in Hardisty, Alberta, where the Keystone XL pipeline will begin;[4] that Koch Industries has both proposed and produced tar sands projects in the province and is a tar sands project developer;[5] and that Koch's Corpus Christi refinery is positioned near the end of the proposed Keystone XL pipeline and would be a potential buyer for the tar sands crude shipped through the pipeline.[6]

At the time, Koch representatives categorically denied any interest in the Keystone XL pipeline.  As we described in our letter, our staff spoke with representatives of the company on May 19, 2011.  In that conversation, the Koch representatives said that the Keystone XL pipeline has “nothing to do with any of our businesses” and that Koch had “no financial interest” in the pipeline. Philip Ellender, the President for Government and Public Affairs, at Koch Companies Public Sector, LLC, subsequently wrote:  “We have stated publicly and repeatedly, including last week when questioned by the staff of Congressman Waxman, that we have no financial stake in the pipeline … and we are not a party to its design or construction. We are not a proposed shipper or customer of oil delivered by this pipeline.”[7]

The Koch denials were apparently persuasive to Chairman Upton. When the Committee held a hearing on May 23, 2011, on the Keystone XL pipeline, the Chairman dismissed the evidence of a link between Koch and the pipeline, asserting in his statement:  “what we ... heard ... last week is the outrageous accusation from the minority that this pipeline deserves even greater scrutiny because one company might or might not benefit from its construction. This blatant political sideshow is simply a distraction that, in the end, underscores the desperation of those who want to stand in the way of this common-sense project.”[8]

In October 2011, Rep. Waxman wrote to you when he learned that the statements Koch representatives made to staff are directly contradicted in legal papers that the Koch Industries subsidiary Flint Hill Resources Canada filed with the Canadian government.[9]  In 2009, Canada's National Energy Board held hearings on TransCanada’s application to construct and operate the Keystone XL pipeline.[10]  Flint Hills Resources Canada, which is owned by Koch Industries, filed an application with the National Energy Board for intervenor status in the hearings.[11]  In its application for intervenor status, Flint Hills Resources stated:

Flint Hills Resources Canada LLP ("Flint Hills") is among Canada's largest crude oil purchasers, shippers and exporters, coordinating supply for its refinery in Pine Bend, Minnesota. Consequently, Flint Hills has a direct and substantial interest in the application.[12]

The National Energy Board granted Flint Hills intervenor status.[13] Under the Board’s regulations, a company must have “business interest” in a project to be granted this status.[14]

On January 18, 2012, President Obama rejected the permit application for Keystone.  The advocacy group Americans for Prosperity responded by announcing that it would launch a pressure campaign to reverse the decision.[15]  Americans for Prosperity is founded by oil billionaire David Koch, owner in significant part of Koch Industries.[16]

These facts raise serious questions about the veracity of the denials given to the Committee by Koch.  We believe the growing questions about the impact of the Keystone XL pipeline on Koch should be resolved before any votes are taken on legislation to promote the construction of the pipeline.  That is why we are asking you to invite a representative from Koch Industries to testify on the upcoming hearing on H.R. 3548.  If the timing of the hearing does not allow sufficient time to include a representative from Koch to appear, we request that you schedule another hearing prior to consideration of the legislation.

We also believe that the Committee should hear testimony from other affected stakeholders, including the Department of Interior and the U.S. Army Corps of Engineers.

Thank you for consideration of our request. 

Sincerely,

Henry A. Waxman
Ranking Member

Bobby L. Rush
Ranking Member
Subcommittee on Energy and Power


[1] Reuters, Koch Brothers Positioned To Be Big Winners If Keystone XL Pipeline Is Approved  (Feb. 10, 2011) (online at http://www.reuters.com/article/2011/02/10/idUS292515702420110210).

[2] Id.

[3] Website, Flint Hill Resources, History (accessed on May 19, 2011) (online at http://www.fhr.com/about/history.aspx).

[4]Website, Flint Hill Resources, Canada (accessed on May 19, 2011) (online at http://www.fhr.com/refining/canada.aspx).

[5] Government of Alberta, Alberta’s Oil Sands Projects and Upgraders (Jan. 2011); Oil Sands Developers Group, Oil Sands Project List (Jan. 2011).

[6] U.S. Department of State, Supplemental Draft Environmental Impact Statement, Keystone XL Project, Applicant for Presidential Permit:  TransCanada Keystone Pipeline. LP, 3-176 (Apr. 22, 2011).

[7] Letter from Phillip Ellender, President, Government and Public Affairs, Koch Companies Public Sector, LLC to Mr. Jack Reerink, Managing Editor, Reuters (May 27, 2011) (online at: http: //www.kochfacts.com/kf/reuters-misleads-readers-on-koch-industries-and-the-keystone-xl-pipeline-we-respond/).

[8] House Committee on Energy and Commerce, Opening Statement of Chairman Fred Upton, Hearing on the American Energy Initiative - Day 8, 112th Cong. (May 23, 2011) (as prepared for the record) (online at: http://republicans.energycommerce.house.gov/Media/file/Hearings/Energy/0...).

[9] Letter from Rep. Henry A. Waxman to Rep. Fred Upton, Chair, House Energy and Commerce Committee, and Rep. Ed Whitfield, Chair, House Energy and Power Subcommittee (Oct. 18, 2011).

[10] National Energy Board, National Energy Board Approves Keystone XL Pipeline Project (Mar. 11 , 2011) (news release) (online at: http://www.neb.gc.ca/clf-nsi/rthnb/nwsrls/2010/nwsrls06-eng.html).

[11] Application for Intervenor Status (May 19, 2009).

[12] Id.

[13] Koch company declared 'substantial  interest' in Keystone XL pipeline, InsideClimate News (Oct. 5, 2011) (online at: http://insideclimatenews.org/news/20111004/koch-brothcrs-koch-industries...).

[14] Koch company declared 'substantial interest' in Keystone XL pipeline, InsideClimate News (Oct. 5, 2011) (quoting National Energy Board spokeswoman) (online at: http://insideclimatenews.org/news/20111004/koch-brothcrs-koch-industries...).

[15] Website, Americans for Prosperity, Statement on President Obama’s Decision to Block the Keystone Pipeline (Accessed on Jan. 20, 2012) (available online at http://www.americansforprosperity.org/011912-statement-president-obama%E...).

[16] See, e.g., Covert Operations; The billionaire brothers who are waging a war against Obama, New Yorker (Aug. 30, 2010) (online at: http://www.newyorker.com/reporting/2010/08/30/100830fa_fact_mayer).