The Kochs and Keystone XL

InsideClimate fails to make its case about brothers’ interest in the pipeline—but it should keep trying

Koch Industries, a giant oil and energy conglomerate, has InsideClimate News, a four-year-old online news startup, in its crosshairs.

In October, the company launched an online ad campaign via Google, Facebook, and its website (which rebuts coverage it finds unsatisfactory) claiming that InsideClimate “misleads readers and asserts outright falsehoods” about Koch’s interest in the proposed Keystone XL pipeline. The pipeline would transport crude oil from the tar sands of Alberta, Canada, to Gulf Coast refineries in the US, and has drawn vigorous opposition from environmentalists. Koch’s ads feature a jaundiced image InsideClimate’s founder and publisher, David Sassoon, calling him the “activist/owner” of the site. Sassoon calls the ads “media intimidation.”

It is not the first time that Koch Industries—one of the largest private companies in the country—has targeted a news outlet. In recent months, the company has employed a nearly identical strategy to criticize reporting by Bloomberg News and the Center for Public Integrity. InsideClimate’s battle with the firm is more complicated than a hackneyed David-and-Goliath story, however, revealing both the strengths and weaknesses of a young news site trying to prove its mettle.

Round One

The saga began with an investigative article by Sassoon that InsideClimate News (then called SolveClimate News) published last February. Based on publicly available records, the site reported that “Koch Industries is already responsible for close to 25 percent of the oil sands crude that is imported into the United States, and is well-positioned to benefit from increasing Canadian oil imports.”

Koch Industries owns an Alberta-based subsidiary called Flint Hills Resources Canada LP, whose website says it is “among Canada’s largest crude oil purchasers, shippers, and exporters.” According to InsideClimate, it “supplies about 250,000 barrels of tar sands oil a day to a heavy oil refinery in Minnesota, also owned by the Koch brothers,” and “operates a crude oil terminal in Hardisty, Alberta, the starting point of the proposed Keystone XL pipeline.”

“Although the pipeline, if approved, would increase the supply of oil reaching the U.S., a 2009 market analysis conducted by TransCanada, builder of the pipeline, forecast higher prices,” InsideClimate reported. “The analysis, which TransCanada conducted as part of its Canadian permit application, projected that prices would increase about $3 per barrel as a result of the pipeline,” putting at least a $2 billion in Canadian oil producers’ pockets.

“Given its deep involvement in the Canadian petroleum industry, the Koch brothers’ operation stands to snare some of the windfall,” Sassoon concluded.

Reuters and other major outlets syndicated the article, which eventually caught the attention of Representative Henry Waxman. His staff contacted Koch Industries to ask about its role in the Keystone XL pipeline and Canadian tar sands. It did not receive satisfactory answers, however, so the California Democrat sent a letter to leaders of the House Energy and Commerce Committee in May urging them “to request documents from Koch Industries related to the company’s interest in Canadian tar sands and the extent to which it will benefit if the Keystone XL pipeline is constructed.”

In the letter, Waxman described his staff’s interaction with the company:

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. They also stated that the company neither supports nor opposes the legislation we will be considering next week.

However, Koch’s representatives refused to answer questions about Koch’s activities or interests in the Canadian tar sands. They refused to confirm or deny reports that the company is developing tar sand projects. They also refused to say whether Koch Industries owns—through a wholly owned subsidiary—a terminal involved in the tar sands business.

There appears to be a significant discrepancy between the published reports that Koch Industries would be “big winners” if the pipeline is approved and the statement of the Koch representatives that the pipeline has “nothing to do” with Koch’s businesses. We do not presume that Koch’s representations are inaccurate. But we were dismayed by the company’s lack of candor in responding to staff’s questions and believe additional inquiry is warranted.

Five days later, InsideClimate News ran an article by Elizabeth McGowan headlined, “Koch Bros. Accused of Stonewalling Congress on Their Keystone XL Pipeline Interest.” When Reuters carried that piece, too, the company decided it was time to go on the offensive.

Phillip Ellender, whom Politico called “the Koch brothers’ enforcer” in a June profile, sent an e-mail to the wire service’s managing editor, Jack Reernick in May, which began:

For the second time in recent weeks, Reuters has permitted an agenda-driven advocacy organization, SolveClimate [referring to InsideClimate’s original name], to run an article on your news agency about Koch Industries that is factually inaccurate and beneath Reuters’ standards.

The letter went on to say that Koch had no financial stake in Keystone XL, that it was not a proposed shipper or customer of oil delivered by the pipeline, and that it had taken no position on the legislative proposal to construct the pipeline. It also called InsideClimate “a self-described advocacy organization, which is also easily discerned from the articles since they are littered with opinionated assertions about what it thinks the administration and Congress ought to do or not do.”

Richard Baum, Reuters’s general manager for New York and Canada replied:

We take feeds from several news organizations on the condition that they uphold Reuters standards. We’re satisfied that SolveClimate, which is a news organization, meets those. I have in particular checked that they contact companies for comment. SolveClimate says they have tried to get comment from you repeatedly without success.

Baum added that it was Reuters’s policy to direct complaints about “third-party content” to those who supplied it.

Ellender wrote back expressing dismay at Baum’s response. A few days later, according to the account laid out at, he followed up with another e-mail that laid out a variety of specific complaints about Sassoon. They included Sassoon’s ownership of Science First, Inc., which Sassoon once described on his LinkedIn page as a “communications consulting practice devoted to helping organizations working in the public interest to advance their agendas”; the fact that Science First received funding from The Energy Foundation (which supports actions to address climate change); and the fact that Sassoon had written a report for Greenpeace and what Ellender described as “advocacy articles” for The Huffington Post and National Geographic.

“Mr. Sassoon seems to have an active financial relationship with numerous groups that he is reporting on in your pages—and yet he is being presented to Reuters readers as an objective, legitimate news source,” Ellender concluded. “He also takes grants from advocacy groups with the explicit goal of helping advance their environmental agenda—a fact that is being obscured from Reuters readers.”

Baum rejected nearly all of Ellender’s contentions, writing that Sassoon had assured him that since began publishing stories from SolveClimate in 2010, neither Sassoon nor Science First had been involved in any business other than SolveClimate, and that Science First “is a shell company he uses exclusively as the legal entity of SolveClimate.” Baum pointed out that The Energy Foundation described its grant to SolveClimate as supporting “objective, nonpartisan reporting of climate and energy issues in 2010 midterms.”

With regard to Sassoon’s other writings, Baum said the work for Greenpeace and The Huffington Post predated his relationship with Reuters:

Mr Sassoon says that in-between that period and the start of the relationship he decided to focus his work exclusively on building up SolveClimate as a non-partisan organization. I think he made a subsequent misstep with the National Geographic blog post that you mention, but not a fatal one. The post was published this year and concerns an activist who at the time was awaiting trial, not convicted. It was an interesting story covered by many media outlets. This post was not written in a form that would have been published on, but then of course it wasn’t.

The question for us is, does it significantly undermine our confidence in his ability to run a non-partisan news organization? The answer is no. All journalists engaged in non-partisan reporting must be able to leave their personal political views at their front door when they go to work. Our confidence that Mr. Sassoon’s staff do that remains and has been strengthened by his recent appointment of a new executive editor. [In September, CJR wrote about InsideClimate’s decision to hire Susan White, a former senior editor at ProPublica.]

Ellender was displeased, vowing that, “To the extent that coverage by SolveClimate about us appears on Reuters, we intend to point out the conflicts of interest and also that Reuters is apparently tolerating them. And when that coverage is inaccurate or slanted, we will take all necessary action, including alerting readers that the reporting is unreliable and agenda-driven.”

Round Two

Ellender carried through on his promise. On October 5, InsideClimate and its syndication partners ran an article by Stacy Feldman, which revealed that Flint Hills Resources, Koch’s Alberta-based subsidiary, had told Canadian regulators in 2009 that it had “a direct and substantial interest in the application” to build Keystone XL.

Canada’s National Energy Board was holding hearings that led to its 2010 approval of its portion of the pipeline. Flint Hills Resources applied for and won what is known as “intervener status” in the hearings, stating that because it was “among Canada’s largest crude oil purchasers, shippers and exporters, coordinating supply for its refinery in Pine Bend, Minnesota … [it had] “a direct and substantial interest in the application” to build the pipeline.

On Capitol Hill, the article prompted Waxman, whose first request that the Energy and Commerce Committee investigate Koch’s interest in Keystone XL was rebuffed, to repeat his plea. “There appears to be a direct contradiction between what Koch representatives told me and the assertion by a Koch subsidiary that it ‘has a direct and substantial interest’ in the Keystone XL pipeline,” he wrote in a letter to committee leaders. Koch Industries fired back almost immediately in a post at, which read:

We have detailed publicly on numerous occasions (and to InsideClimate directly) why Flint Hills Resources Canada LP, a Koch subsidiary, applied for “intervener” status with the Canadian National Energy Board. An intervener in a NEB proceeding is entitled to gain access to information about the progress of a particular matter, in this case the “application” concerning the Keystone XL Pipeline project. Many others also applied and were granted intervener status in exactly the same way — including individual citizens, members of various First Nation groups, businesses, and environmental activists similar to Mr. Sassoon and InsideClimate.

… When a party applies to be an intervener, they formally state that they have an “interest” in the application that is being considered. That use of the word “interest” means, by first definition, curious or paying attention. But InsideClimate distorts that meaning as if it meant a financial interest or stake — a secondary but altogether different meaning of the word.

Around the same time that posted this missive, Koch launched its Google and Facebook ad campaign against Sassoon and InsideClimate.

Split Decision

Do Koch’s actions amount to media intimidation? Yes and no. InsideClimate deserves immense credit for digging where no other news outlet thought to dig. It exhibited the kind of dogged, investigative instinct that is too often lacking these days among its peers in the “mainstream media,” drawing Congressional attention in the process. But it failed to make its case.

The assertion in Sassoon’s February article that the Koch brothers are “positioned to be big winners” if the pipeline is approved is based on two pieces of circumstantial evidence: Koch’s role as a major player in Canadian oil industry and the 2009 market analysis that Keystone XL would drive up oil prices. That doesn’t mean he’s wrong. In fact, he’s probably right that Koch will benefit financially if the pipeline is built. But believing that and proving it—and establishing that Koch will benefit in a way that really matters—are two different things and it’s a distinction that gets to the heart of the standards of good journalism.

InsideClimate never made it clear who wrote the “market analysis” or what it was. Sassoon’s story, which linked to an Associated Press article that mentioned it, says it was “conducted by” TransCanada, while Feldman’s piece says it was “conducted for” TransCanada. In fact, the market analysis was part of the application to build and operate Keystone XL that TransCanada submitted to Canada’s National Energy Board in February 2009, and the original document is available in the board’s database. InsideClimate misrepresents what that document says in a small, but significant, way.

Sassoon reported that the estimated price spike crude would send at least $2 billion “from American consumers to Canadian and multinational oil interests.” What it actually says is that the spike would increase the revenue of the Canadian producing industry.

Feldman was clear about this in her piece, but tacked on another sentence that is problematic: “But the entire industry—including the refineries and shipping businesses where Koch Industries has concentrated its efforts—would also profit.” Feldman supports the statement with a quote from Danielle Droitsch, a senior adviser to the Natural Resources Defense Council, an environmental organization, saying that, “Keystone XL is about the whole industry.” That may be true in some senses, but it’s still a generalization. The idea that there will be no losers in the oil industry—that everybody will profit—is implausible.

And even if the entire oil industry is “well positioned” to benefit from Keystone XL’s approval, the question becomes, why focus on Koch? This was an issue that Waxman faced on Capitol Hill. When House Republicans rebuffed his request to investigate Koch, “he offered to expand his investigation to include all energy companies that might benefit from Keystone XL so as not to single out Koch,” InsideClimate reported.

The news site’s justification for the special attention was that if the Obama administration approves the project, the president could unwittingly help his adversaries. A quarter of Sassoon’s February article was devoted to rehashing the Koch brothers’ “war” on Obama and, according to the third paragraph:

What’s been left out of the ferocious debate over the pipeline, however, is the prospect that if president Obama allows a permit for the Keystone XL to be granted, he would be handing a big victory and great financial opportunity to Charles and David Koch, his bitterest political enemies and among the most powerful opponents of his clean economy agenda.

It is true that the Koch brothers have been huge boosters of conservative politicians and opponents of liberal ones. They are also, as InsideClimate pointed out, “the most powerful opponents of his clean economy agenda,” so it makes sense to investigate their interest in Keystone XL. But without proof that the company will profit directly or inordinately from the pipeline—or more specific information about the “victory and opportunity” it would confer—the political frame seems weak.

The evidence that Feldman presented in her October article—Flint Hills Resources’ statement that it had “direct and substantial interest in the application” to build pipeline—did little to help InsideClimate’s case. The application for “intervener status” was newsworthy because it contradicted Koch’s statement to Waxman that Keystone XL had “nothing to do with any of our businesses.” Yet the contradiction was mild, and Feldman’s article was remiss for not explaining the relatively innocuous context of what it means to be an “intervener,” that the language Koch used is fairly standard, and the fact that groups like the Sierra Club also applied for, and received, intervener status.

These quibbles notwithstanding, Koch’s suggestion to Reuters (via Ellender’s e-mails) and to readers (via the online ad campaign) that InsideClimate News is a deceptive advocacy site that ought to be abandoned is spurious and unwarranted, and Reuters should be commended for defending the integrity of its content partner.

The shortcomings in InsideClimate’s work are those of a young news site flexing new muscles in effort to establish itself as a major contributor to American journalism. And journalism it is. There are no correctable mistakes in InsideClimate’s work. The flaws in its articles are errors of omission, tone, and tenor. They should be remedied in future coverage, but InsideClimate should also keep pursuing its investigative instincts.

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Curtis Brainard writes on science and environment reporting. Follow him on Twitter @cbrainard.