Submitted by J. Dyrcz on 25 July 2011 - 10:54am
Pickens-Koch feud tests principles
By: Kenneth P. Vogel
An increasingly bitter personal rift between billionaires T. Boone Pickens and Charles and David Koch has morphed into an expensive political battle that is testing the commitment of House Republicans to the tea party principles many of them have publicly embraced.
The fight centers on legislation backed by Pickens that would grant tax breaks to the natural gas industry, and it is forcing Republican members to choose sides between a traditionally GOP-allied industry and the free-market purism of many conservatives.
The once low-profile Kochs have taken a more prominent role in their fight against the bill than on perhaps any other recent piece of legislation. And they are having some success against legislation that once appeared to have momentum.
Last month, for example, Rep. Joe Pitts (R-Pa.) withdrew his co-sponsorship of the measure after “I heard,” he said, that “T. Boone Pickens tends to stand to make a lot of money on it.” Pitts said, “I don’t want to be accused of, you know, doing some sweetheart deal for somebody.” So, he said “I decided I better get off.”
Six days later, Pitts accepted a $1,000 check from Koch PAC — part of a total of $14,000 that the PAC gave six House Republicans in the weeks after they pulled their co-sponsorships of the bill. In all, the political action committee of Koch Industries, the oil and chemical company owned by the libertarian-leaning Koch brothers has given $117,000 to Republican lawmakers who are — or have been — associated with the bill — including, it should be noted, $45,000 to 17 current co-sponsors after they added their names as co-sponsors to the bill. Other Republicans who accepted four-figure checks from Koch PAC soon after dropping off the bill included Reps. Blake Farenthold of Texas, Tim Griffin of Arkansas, John Kline of Minnesota, Steve Pearce of New Mexico and Glen Thompson of Pennsylvania.
The dispute over H.R. 1380, which would provide maximum tax breaks of $64,000 for transportation companies using natural-gas-powered trucks and $100,000 for owners of natural gas fueling stations, has been waged in unusually personal terms, presenting House members with a choice between Pickens, formerly a top Republican financier, and the Koch brothers, perhaps the most significant conservative money men today.
Pickens’s underlying argument is that government support for natural gas will create jobs, while helping wean the U.S. from oil imported from members of the Organization of Petroleum Exporting Countries, which he asserts is not a free market. The Kochs counter that such support distorts free markets and rewards “politically favored” industries.
But both the Kochs and Pickens have a financial stake in the outcome, though they have all denied that their positions are motivated by their bottom lines.
Pickens founded and owns a 40 percent stake in Clean Energy Fuels, one of the leading companies involved in building natural gas fueling stations. But his allies are quick to point out that Koch Industries could be hurt if the bill’s passage were to result in an increase in the price of natural gas, which the company uses for manufacturing, or if it diminished the demand for diesel fuel the company refines.
While a Senate version is expected to be introduced imminently, the House bill has yet to move out of committee. That’s likely due in equal parts to the political difficulty in offering tax breaks expected to cost as much as $5 billion while Congress is focused on the deficit, and also because of the campaign launched in May by prominent conservative groups — including some, supporters point out, that have received funding from the Koch brothers — that have made the issue a litmus test of sorts for Republicans.
Pickens’s team originally rolled out the bill with an impressive bipartisan roster of roughly 180 sponsors and co-sponsors, and at one point it appeared as though it could be headed for a full House vote. But under pressure from the Kochs and allied conservative groups, about 15 House Republicans have withdrawn their initial support, though lobbyists for Pickens and natural gas advocacy groups he supports have rounded up an almost equal number of bipartisan replacements.
Now Pickens appears to have made a calculated decision that he can boost his bill’s prospects by publicly attacking the Kochs — which is notable because of his past relationship with the brothers as well as their increasing clout in fiscal conservative circles.
“I know Charles Koch, known him forever it seems like, done a lot of business with him,” Pickens said in an interview last week on MSNBC. “But Charles is focused on Koch Industries. But that’s who pays him. I’m focused on America. And I’m for a plan for us, to get us off of the OPEC oil.”
In addition to apparently having done business with the Kochs, Pickens regularly attended the semi-annual conferences of major conservative donors organized by the Koch brothers, and he hired away one of the Kochs’ top public relations advisers, Jay Rosser. But a few years ago, Pickens began repositioning himself politically in the wake of his outsize role in the 2004 presidential campaign, in which he contributed $2 million to the Swift Boat Veterans group that aired brutal attack ads against Sen. John Kerry, the Democratic presidential nominee.
More recently, he has balanced his political contributions between Democrats and Republicans (his biggest contributions in the past few years have been $25,000 apiece to the Democratic and Republican governors associations). And he has focused more on clean energy evangelism, first focusing on wind energy and now natural gas, spending $82 million since the summer of 2008 promoting it as a vehicle fuel.
In the process, Pickens became a bit of a pariah in the free-market circles in which he once traveled. He stopped getting invitations to the Kochs’ summits and today some opponents of the natural gas bill grumble about his continued claims of fiscal conservatism.
Despite the aggressive personal attacks, Rosser told POLITICO, Pickens continues to “admire [Charles Koch] as a business leader and what he’s done for Koch [Industries].”
Oklahoma Rep. John Sullivan, the lead Republican sponsor of H.R. 1380, said that as recently as the past month, Pickens was reaching out to Charles Koch to talk through their divergent positions. Koch “never called back,” Sullivan said, adding, “If Mr. Koch would return his call and say, ‘I don’t like it’ for whatever reason he doesn’t like it, I think that would be the right thing to do.”
Sullivan — who along with lead Democratic sponsor Rep. John Larson of Connecticut has received a combined total of more than $15,000 in campaign contributions from Pickens and Clean Energy executives — said the personalization of the debate as a Pickens-Koch clash “is frustrating. … What it is, you’ve got two bulls in a field fighting each other, and I’m just a small pawn in the whole thing.”
Rep. Patrick Meehan (R-Pa.) — who co-sponsored the bill, co-wrote an op-ed with Pickens supporting it and held a town hall with the former oilman on the issue — said, “I don’t want to get in the middle of a fight between the Koch brothers and Boone Pickens. I look at them both as good Americans and capitalists who have tried to do what’s best for the nation.”
But in private, other supporters of the bill have gone further, suggesting that the array of small government groups that have taken up opposition to the bill does so as a result of the funding they’ve received from the Koch family and its foundations.Among the groups leading the charge, at least six — Americans for Prosperity, the American Conservative Union, American Energy Alliance, the Competitive Enterprise Institute, the 60 Plus Association and the Commonwealth Foundation – or their affiliates have received funding from the Kochs, their foundations or donor network.
The charge that either the Kochs’ opposition or that of their primary political group, Americans for Prosperity, is motivated by money “is categorically false” and “underhanded,” said Phil Kerpen, policy director for the group, which was founded and funded in part by David Koch, who continues to serve as chairman of the board of the group’s foundation.
“We take policy positions based on our free market principles,” said Kerpen, adding that the Koch brothers have nothing to do with setting the issue stances of Americans for Prosperity.
“There’s increasingly a realization among Republicans that if they want to stand for something that has appeal, they’ve got to be consistent in treating the industries that they like and the industries that they don’t like with a hands-off approach and letting the market decide,” he said. “They’re now grappling with that, and I think that’s why you’re starting to see people pull their names off this bill.”
Darren Goode and Darren Samuelsohn contributed to this report.
