Louisiana Environmental Justice Groups Oppose $6 Million Subsidy for Koch Methanol Plant Expansion

On October 11, St. James Parish in Louisiana approved giving Koch Industries an 80% property tax break on a $150-million expansion of its local methanol plant, which will save the company $5.9 million over the next decade.

In 2019, the conglomerate owned by billionaire Charles Koch acquired a majority stake in the plant in a joint venture with the Chinese company Yuhuang Chemical Industries. The expansion will allow production to increase by 25%, which comes at the cost of significantly increased emissions of greenhouse gas and particulates. 

In 2021, Koch Methanol St. James also received a tax break worth $7.7 million for its initial construction, which began in 2017. The new upgrades to the plant call for 400 temporary construction workers, but will ultimately add only two permanent jobs to the 150-person workforce.

At the October parish council meeting, members of the local faith-based environmental justice group Rise St. James spoke out against the new tax break, pointing out that the plant has not delivered on the benefits promised to the community and instead exacerbates the impacts of climate change and obstructs local traffic with its freight trains. “Koch has provided little in the way of economic benefit while adding hundreds of tons per year of harmful air pollutants,” said Shamell Lavigne, the group’s chief operating officer.

Anne Rolfes, director of another environmental group, Louisiana Bucket Brigade, told the Center for Media and Democracy (CMD) that the exemption and expansion are not “done deals” and that her group “is keeping all of its options open” in opposing the plan. 

“The agency is captured by industry, … controlled by industry, [and] is not protecting the people,” Rolfes said in reference to state regulators. “Koch doesn’t have to lobby or campaign because reverence for this industry is so deeply baked into our government.”

A CMD review of state campaign finance filings confirms that Koch did not make any contributions to parish council elected officials in recent years. In addition, Koch Industries never threatened to abandon the methanol expansion in St. James if it didn’t get the new tax break.

Methanol is used in the process of manufacturing plastics, carpet, plywood, and fuels. It also emits nitrous oxide, toxic particulates, and greenhouse gasses. Koch still needs approval of the air and water permits required for a 25% increase in methanol production at the St. James facility. 

In its revised environmental assessment statement filed with the state, Koch claims to meet all state and federal air and water quality standards, and to test for and mitigate emissions that impact the quality of local air and water. Since methanol is a known carcinogen, the company admits in its assessment that it cannot measure the cancer risk for residents living in the vicinity of the plant because air and water pollution from so many other industrial facilities impact their health as well. 

Since the St. James plant began operating in late 2020, the Federal Railroad Administration issued $25,000 in penalties in 2021 and 2022 for four separate safety violations. The plant relies on railroads both to receive the materials it needs to operate and to deliver the methanol it produces to distributors.

Koch Basks in Subsidies

According to the Subsidy Tracker compiled by the nonpartisan database Good Jobs First, Koch received almost $130 million from Louisiana in local and state tax breaks and credits since 2008. 

CMD also recently reported that even though Koch aggressively lobbied against President Biden’s Inflation Reduction Act (IRA), the company simultaneously invested in a major solar equipment and production company and bought another solar firm outright. These companies now benefit from IRA provisions that allow for 30% tax credits for investments in many solar technologies.

Similarly, Koch Industries receives large subsidies for its oil and gas operations due to the oil depletion allowance, which permits oil companies to depreciate their assets for tax purposes faster than can any other businesses. The conglomerate also benefits from the cheap royalty fees it pays when leasing federal land for drilling. 

Good Jobs First reports that Koch and its subsidiaries (such as Georgia Pacific) have received almost $669 million in local and state tax breaks and subsidies since 1990, not including the many tax breaks or subsidies received by startups funded by Koch’s private equity arm, Koch Disruptive Technologies.

According to Forbes, David Koch’s widow Julia Koch is worth $59.8 billion and Charles Koch is worth $54.5. The second largest private company in the U.S. after Cargill, Koch Industries had $125 billion in revenue in 2022.

Environmental Racism

Located on an 85-mile strip between New Orleans and Baton Rouge, Koch Methanol St. James shares an area known as “Cancer Alley” with 200 other industrial plants. Chronic air pollution and releases of toxins in this area have led to some of the highest cancer rates among Black and poor residents anywhere in the nation.

Last March, Rise St. James teamed up with two other environmental justice groups, Inclusive Louisiana and Mt. Triumph Baptist Church, to file a federal lawsuit that would slow or stop the construction of new fossil fuel and chemical plants in St. James Parish. 

The lawsuit contends that decades of land use policies by the parish council and its planning board have caused dozens of polluting plants to be disproportionately located in and near Black neighborhoods in violation of the residents’ constitutional right to equal protection from the government. 

While no new facilities have been built in the majority white communities in St. James Parish over the past 46 years, new projects continue to be approved in the majority Black districts, the lawsuit contends.

The Tulane Environmental Law Center represents Rise St. James in the lawsuit, while the Center for Constitutional Rights represents the other two groups.

In September 2022, grassroots opposition by these groups and the Louisiana Bucket Brigade prevented the parish council from approving the addition of another plant operated by South Louisiana Methanol (SLM).