Politics

06.13.14

Koch Brothers Unveil New Strategy at Big Donor Retreat

The Koch brothers’ financial network is planning on spending almost $300 million in the 2014 election, including a new anti-environment effort.

In the face of expanding energy regulations, stepped-up Democratic attacks and the ongoing fight over Obamacare, the billionaire Koch brothers and scores of wealthy allies have set an initial 2014 fundraising target of $290 million which should boost GOP candidates and support dozens of conservative groups—including a new energy initiative with what looks like a deregulatory, pro-consumer spin, The Daily Beast has learned.

This weekend, at a posh California resort near Laguna Beach, energy is expected to be among the topics as Charles and David Koch and their extensive donor network hold a semiannual fundraising and policy seminar. Political allies including Sen. Marco Rubio of Florida and libertarian political scientist Charles Murray are slated to speak, according to conservatives familiar with the Koch network.

The energy initiative is being created under the umbrella of the largest Koch network nonprofit in apparent response to a number of developments: the commitment by liberal billionaire Tom Steyer to steer $100 million into ads in several states to make climate change a priority issue in the elections; numerous setbacks at the state level where Koch network backed advocacy groups have been fighting against renewable energy standards; and the new EPA regulations to curb carbon dioxide emissions from power plants.

The meeting will cap a frenetic fundraising season for the conservative donor network. This year the Koch network not only hosted a similar January conference, but several smaller gatherings in Palm Springs, Newport Beach, St. Louis, and other locales to attract new donors, according to an email from Koch fundraising honcho Kevin Gentry obtained by The Daily Beast In his email, Gentry called the Palm Springs event— which drew some 50 wealthy conservatives in March —a “highly successful recruitment reception” and encouraged other veteran donors to get involved by holding local gatherings in their areas.

Koch network operatives also have held periodic conference calls—sometimes with members of Congress on the line—to update loyal check writers on various issues and keep them in the fold, say conservative sources.

Now, hitting the $290 million goal seems within reach: almost $170 million of that total was pledged at the last big Koch donor seminar in January this year, say two conservative sources. The hefty haul will help fund a mix of politically active nonprofits like the Koch-backed Americans for Prosperity, and a newer outfit called the Libre Initiative that’s aimed at appealing to Hispanics with a small government, free-market message. AFP alone is expected to spend upwards of $125 million this year on a variety of political and advocacy projects including air and ground operations, according to Politico.

By comparison, in the 2012 presidential cycle, the Koch donor network raised more than $400 million to help underwrite 17 politically active nonprofit groups—including AFP and Libre Initiative— according to The Washington Post.

A few Koch network-backed nonprofit groups including AFP have long fought against climate change regulations, a carbon tax, and subsidies for renewable energy. But lately, the Koch universe seem to be facing bigger energy threats stemming from Washington, state governments and big liberal checkbooks.

The new energy initiative is the handiwork of Freedom Partners Chamber of Commerce, the Koch network’s central fundraising hub, which was established in late 2011 as a trade group, according to an email to the group’s members from Gentry. In 2012, the fledgling group —which claims some 200 members who each kick in at least $100,000 yearly— funneled over $230 million dollars to numerous other non-profits in the Koch ecosystem according to the group’s 2012 tax returns.

In an April 1 missive, Gentry invited Freedom Partners members to join an upcoming conference call about a “significant new Freedom Partners initiative” which he touted as one that would “drive the national narrative around energy and the tremendous benefits of reliable affordable energy for all Americans, especially for the less fortunate.” The email indicated that discussions about the energy project began last summer at another Koch donor event in New Mexico, which drew outgoing House Majority Leader Eric Cantor and Rep. Paul Ryan among others.

Gentry’s email stressed that liberal donors, led by hedge fund billionaire Tom Steyer, have plans to spend as much as $100 million on climate change issues and ads to make it a top-tier issue in the election. He noted that environmental groups had recently run a $5 million “clean energy” ad blitz in Iowa, Michigan, and North Carolina, all of which are considered “focus” states for Freedom Partners and among the states where Americans for Prosperity has spent over $35 million on attack ads against Democratic Senate candidates on Obamacare.

In a chagrined-sounding PS, Gentry opined that the “new multi million dollar campaign by environmentalists is arguably an effort to distract from the failures of Obamacare. But you and I know energy is a critically important issue for the United States.”

The details and scope of the new energy initiative, which has not been announced, aren’t clear yet, but it’s expected to cost in the seven figures and be a topic at the Koch donor conference this weekend— especially in light of the Obama administration’s newly unveiled EPA regulations to curb carbon emissions from mostly coal fired power plants. Two sources familiar with Koch donor world told The Daily Beast that a new nonprofit group is being formed to help run the new energy initiative. Neither spokesmen for Freedom Partners or Koch Industries responded to requests for comment about the new initiative or fundraising efforts this year.

The Koch brothers combined net worth exceeds $80 billion, according to Forbes magazine, and is derived from their control of Koch Industries, the eponymous energy and manufacturing conglomerate

Based on Gentry’s email and recent energy drives by other Koch network groups, the initiative is likely to mix a minimalist regulatory and free-market message with a pro-consumer spin.

On its website, Freedom Partners explains its energy policy goals very broadly as “increasing access to affordable energy that helps societies-businesses, families and especially the poor—prosper and thrive.” It says that the role of federal government is to “administer smart and safe environmental regulations” but argues that too often there’s a lack of transparency and that “unsound science” is used to justify decisions without weighing costs versus benefits.

The new energy initiative may partly stem from setbacks in many states where advocacy groups funded by the Koch network like Americans for Prosperity and allies have been waging mostly uphill battles to roll back renewable energy standards. In these fights the conservative nonprofits have often portrayed renewable mandates as very expensive for consumers, a point that’s frequently been rebutted by independent groups.

Even in Kansas, the home of Koch Industries, the Koch-backed advocacy network failed to repeal the state’s renewable standards, which were enacted in 2009 Under Kansas’ Renewable Portfolio Standard, 20 percent of the state’s electricity is supposed to come from renewables by the year 2020.

The Kansas fight suggests part of the strategy that Koch-linked groups are expected to pursue to broaden their message and try to appeal to consumers. Alan Cobb, a former lobbyist for the company who also did stints with AFP and Freedom Partners, was hired this spring by the newly created Kansas Senior Consumer Alliance, which sent thousands of postcards to elderly citizens criticizing the renewable standards. The postcards, with pictures of worried-looking seniors opening their mail, said that there had been 15 rate hikes since 2009 when the renewable standards were enacted and urged seniors to contact their representatives to protest them.

A state commission has found less than 2 percent of recent rate increases can be attributed to the renewable standards.

Groups backed by the Koch network in several other states have also been rebuffed in their drives against renewables. But in late May, in a rare victory, Ohio Governor John Kasich signed off on a two-year freeze on the Buckeye State’s renewable energy and energy efficiency requirements.

On the 2014 electoral front, other Koch donor supported non-profit groups like the American Energy Alliance (AEA)  have poured funds into ads targeting Democrats in close Senate and House races, knocking their opposition to building the Keystone XL pipeline. In May, the AEA spent over $400,000 on ads in Colorado attacking Sen. Mark Udall for his stance opposing the Keystone pipeline.  AEA, which is run by former Koch Industries lobbyist Tom Pyle, has also been fighting to end wind energy subsidies.  Last year, Congress ended a two-decade old tax credit for wind energy companies after vigorous lobbying by Koch-backed groups including AEA and AFP. This year, the groups have continued to fight against attempts to revive the credit.

The fight over climate change took a personal twist this spring when Tom Steyer challenged the Koch brothers to a debate about the issue and whether more regulations are needed to curb man-made pollution.  The Koch brothers turned down the invitation. In an email to a local Kansas paper, Koch spokesperson Melissa Cohlmia explained “we are not experts on climate change.”

The Koch seminar this weekend is scheduled to feature a speech by Sen. Marco Rubio (R-FL), who last month sparked a small firestorm when he said that “I don’t believe that “human activity is causing these dramatic changes in our climate the way these scientists are portraying it.” Rubio, whose view is contradicted by many scientific studies showing that carbon dioxide emissions have accelerated global warming, added that he thinks proposed laws to deal with climate change “will only wreck our economy.” Rubio’s position should get a warm reception among the libertarian leaning donors at the conference.