How the Koch Machine Quietly Pushed for the Dakota Access Pipeline and Stands to Profit

onApr 8, 2017 @ 04:59 PDT

Quietly and behind the scenes, a front group funded by the Koch family fortune has lobbied and advocated for the soon-to-be-operating Dakota Access pipeline, a project in which a Koch subsidiary stands to profit.

A DeSmog investigation reveals that the group, the 60 Plus Association, pushed in recent months for Dakota Access both on the state and federal level. In Iowa, which the pipeline bisects, 60 Plus advocated on the project’s behalf in front of the Iowa Utilities Board, which ultimately gave pipeline owner Energy Transfer Partners the permit it needed. And 60 Plus has lobbied for the pipeline nationally as well.

Ultimately, the profits from Dakota Access will be seen by Koch subsidiary Flint Hills Resources. The finding by DeSmog comes just days before Dakota Access will officially open for business.

Koch Bakken Pipeline

Before Energy Transfer Partners proposed Dakota Access, Koch Industries proposed its own pipeline to carry crude obtained via hydraulic fracturing (“fracking”) from the Bakken Shale to Gulf of Mexico–based refinery markets. Koch Industries called off the proposal for that pipeline, the Dakota Express pipeline, in January 2014, merely months before the Dakota Access pipeline project debuted in June 2014.

When Koch introduced Dakota Express the year before, the company said it was exploring plans to connect to a then-proposed and now-nixed pipeline owned by Enbridge, the Eastern Gulf Crude Access pipeline, which would have brought Bakken oil to refineries in the Gulf of Mexico. Enbridge is now an equity co-owner of Dakota Access LLC, the joint venture company owned in a majority stake by Energy Transfer Partners.

Prior to proposing Dakota Express, Koch Industries subsidiary Flint Hills Resources in 2011 signed a contract with the COLT Hub, a Bakken Shale-based offloading terminal and storage site then co-owned by Rangeland Energy.

“Today the COLT Hub serves as a point of liquidity for the distribution of Bakken crude oil throughout North American markets by providing customers with crude oil storage and connectivity to the BNSF Railway Company and various inbound and outbound pipeline systems,” explains Rangeland’s website. Its website also details that Flint Hills — a giant in the oil and gas industry refining market — was among its clients.

“The COLT Hub aggregates crude oil produced in Williams and McKenzie counties by pipeline and truck; provides crude oil handling, on-site blending and storage services through on-site tankage; and access to multiple downstream crude oil markets through pipeline and unit train loading capabilities.”

A U.S. Securities and Exchange Commission (SEC) filing submitted by the private equity firm Crestwood Equity explains that the COLT Hub actually connects directly to Dakota Access.

“The COLT Hub is connected to the Meadowlark Midstream Company, LLC and Hiland Partners, LP (Hiland) crude oil gathering systems and the Dakota Access Pipeline (DAPL) interstate pipeline system at the COLT terminal, and the Enbridge Energy Partners, L.P. and Tesoro Corporation (Tesoro) interstate pipeline systems at Dry Fork,” the form details.

“Moreover, because the COLT Hub and our Arrow system will each interconnect with the DAPL interstate system, our Bakken crude oil assets will become even more integrated and offer customers greater service options when the DAPL interstate pipeline system is placed in service.”

Flint Hills also discussed the importance of the Hub to its business bottom line in a press release announcing the deal.

“We’re very pleased to join forces with Rangeland to improve our position in North Dakota,” Brad Razook, Flint Hills Resources president and CEO, said in the release. “Rangeland’s state-of-the-art facility will greatly enhance our ability to serve our customers in the Williston Basin.”

Reaction to Standing Rock

60 Plus’s advocacy for Dakota Access appears to have kicked into a new gear just as the protest movement against the pipeline swelled in September 2016 near the Standing Rock Sioux Reservation in Cannon Ball, North Dakota. During that month, it deployed its chairman, Jim Martin, to begin federal lobbying for Dakota Access and to write an article supporting the pipeline for the business and politics publication Morning Consult.

Image credit: U.S. House of Representatives, Office of the Clerk

“Whether it’s heating or cooling your home or putting gas in your car, the cheaper the energy, the more economically stable your checkbook will be,” wrote Martin. “The 60 Plus Association’s 5.5 million members know this all too well. This is why as an organization that champions free enterprise and who have championed energy issues for seniors before, we strongly support the Dakota Access pipeline.”

In his article, Martin cited the protests in his piece as a rationale for 60 Plus’s entrance into advocating for the pipeline.

“Unfortunately, the completion of the Dakota Access pipeline is threatened by the ongoing protest,” Martin wrote. “A small, yet vocal minority, much of which refused to engage during the orderly process, is resorting to dangerous tactics to stop this project.”

60 Plus in Iowa

The 60 Plus Association, created as a pro-privatization alternative to the American Association of Retired Persons (AARP), also hired legal counsel to advocate for Dakota Access during the pipeline’s contentious state-level permitting process in Iowa in 2015. Its vice president, Matthew Kandrach, also testified on behalf of the pipeline before the Iowa Utilities Board.

Image credit: Iowa Utilities Board

“The Dakota Access Pipeline Project is important to seniors for several reasons. High energy prices are disproportionately impacting America’s low and fixed-income senior citizens today — citizens that often have limited financial resources with which to meet their needs,” Kandrach told the Iowa Utilities Board in September 2015. “By helping the United States to better capitalize upon its growing domestic energy resources — and affordably transport these resources to market — the Dakota Access Pipeline will help to foster stability within energy markets nationwide, and improve the availability of affordable American produced crude oil.”

What Kandrach didn’t mention in his testimony was what was perhaps the most important detail: Dakota Access appears poised to line the pocketbooks of Koch Industries, which funnels millions of dollars to his own employer.

Main image: The Dakota Access pipeline construction in central Iowa. Credit: Carl Wycoff, CC BY 2.0

By Steve Horn

Steve Horn is the owner of the consultancy Horn Communications & Research Services, which provides public relations, content writing, and investigative research work products to a wide range of nonprofit and for-profit clients across the world. He is an investigative reporter on the climate beat for over a decade and former Research Fellow for DeSmog.