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1. The Enforcement Bureau of the Federal Communications Commission and
Koch Industries, Inc. hereby enter into this Consent Decree for the
purpose of resolving the Enforcement Bureau's investigation of
compliance by Koch Industries, Inc., and entities of which Koch
Industries, Inc. is the ultimate parent company, with Section 1.17 of
the Commission's rules, 47 C.F.R. S 1.17.
2. For purposes of this Consent Decree, the following definitions shall
a. "Act" means the Communications Act of 1934, as amended, 47 U.S.C.
S 151 et seq.
b. "Adopting Order" means an order of the Bureau, adopting this
Consent Decree, without any modifications adverse to Koch.
c. "Any" shall be construed to include the word "all," and the word
"all" shall be construed to include the word "any." Additionally,
the word "or" shall be construed to include the word "and," and
the word "and" shall be construed to include the word "or." The
word "each" shall be construed to include the word "every," and
the word "every" shall be construed to include the word "each."
d. "Bureau" means the FCC's Enforcement Bureau.
e. "Commission" or "FCC" means the Federal Communications
f. "Effective Date" means the date on which the Bureau releases the
g. "Final Order" means that, with respect to the Adopting Order: (1)
no request for stay or similar request is pending, no stay is in
effect, the Adopting Order has not been vacated, reversed, set
aside, annulled or suspended, and any deadline for filing such
request that may be designated by statute or regulation has
passed; (2) no timely petition for rehearing or reconsideration
of the Adopting Order, or protest of any kind, is pending before
the FCC and the time for filing any such petition or protest is
passed; (3) the FCC does not have the Adopting Order under
reconsideration or review on its own motion and the time for such
reconsideration or review has passed; and (4) the Adopting Order
is not under judicial review, there is no notice of appeal or
other application for judicial review pending, and the deadline
for filing such notice of appeal or other application for
judicial review has passed.
h. "Inquiry" means the Bureau's investigation, which commenced with
the issuance of a letter of inquiry, dated September 7, 2005,
from the Bureau to Koch, relating to whether Koch and/or Koch
Companies failed to disclose the existence of felony convictions
in license applications filed with the Commission, in violation
of Section 1.17 of the Commission's rules, 47 C.F.R. S 1.17.
i. "Koch" means Koch Industries, Inc., and any affiliate, parent
company, wholly or partially owned subsidiary of it (including,
but not limited to: Flint Hills Resources Alaska, LLC; Flint
Hills Resources, LP; Koch Petroleum Group; Brunswick Cellulose,
Inc.; Diamond-Koch, LP; Gulf Pipeline South Company, LP; Invista
S.A.R.L.; K D S Promix, LLC; KCBX Terminals Company; Koch
Business Solutions, LP; Koch Carbon, LLC; Koch Materials Company,
Inc.; Koch Nitrogen Company; Koch Performance Asphalt Co.; Koch
Pipeline Company, LP; Koch-Glitsch, LP; Kosa; Kosa
Corporation-Spartanburg Plant; Leaf River Cellulose, LLC; Matador
Cattle Company; Old Augusta Railroad, LLC; Purina Mills, Inc.;
and Invista, Inc.), and all owners, including but not limited to,
officers, directors, and partners of the foregoing.
j. "Koch Companies" means entities of which Koch is the ultimate
parent company, including those referenced in paragraph 2(i),
k. "Parties" means the Bureau and Koch.
3. Koch is a large privately-held corporation with hundreds of separate
subsidiaries and affiliates involved in diverse businesses, including
petroleum, chemicals, minerals, fertilizers, paper, ranching, and
financial services. None of the Koch Companies is a media company or
provides communications services to the public. Approximately 25 Koch
Companies hold FCC-regulated licenses, all of which are used for
internal communications incidental to the companies' principal
4. Koch and/or Koch Companies were convicted of felonies in state or
federal court on three occasions. Section 1.17 of the Commission's
rules, 47 C.F.R. S 1.17, requires truthful and accurate statements to
the Commission, including such statements in response to questions in
license applications which inquire whether the applicant or a party
thereto has ever been convicted of a felony in state or federal court.
5. The Parties acknowledge that any forfeiture proceeding that might
result from the Inquiry would be time consuming and require
substantial expenditure of public and private resources. In order to
conserve such resources, to resolve the Inquiry, and to promote
compliance by Koch with Section 1.17 of the Commission's rules, the
Parties are entering into this Consent Decree, in consideration of the
mutual commitments made herein.
6. The Parties agree that the provisions of this Consent Decree shall be
subject to approval by the Bureau, by incorporation of such provisions
by reference in an Adopting Order.
7. The Parties agree that this Consent Decree shall become effective on
the date on which the Bureau releases the Adopting Order. Upon
release, the Adopting Order and this Consent Decree shall have the
same force and effect as any other order of the Commission, and any
violation of the terms of this Consent Decree shall constitute a
violation of a Commission order, entitling the Commission, or the
Bureau pursuant to delegated authority, to exercise any rights and
remedies attendant to the enforcement of a Commission order.
8. Koch acknowledges that the Commission has jurisdiction to enforce 47
9. Koch acknowledges that in various license applications filed with the
Commission since January 1, 2005, Koch Companies responded in the
negative regarding whether the applicant to the application or any
party thereto had ever been convicted of a felony in state or federal
court. Koch further acknowledges that such representations to the
Commission may not have been accurate, given Koch's prior felony
10. The Bureau acknowledges that it commenced its Inquiry upon discovering
that a Koch Company had filed with the Commission several license
applications in 2005 that properly disclosed a prior felony conviction
and several other license applications that did not disclose such
information. Based on Koch's internal review of its past application
filings conducted after commencement of the Inquiry, Koch asserts that
any inaccurate statements in its applications appear to have been
11. As part of the Adopting Order, the Bureau shall terminate the Inquiry.
From and after the Effective Date, in the absence of new information
not previously disclosed to the Bureau by Koch, the Bureau shall not,
either on its own motion or in response to any petition, third-party
objection, complaint, or other information, initiate any inquiries,
investigations, forfeiture proceedings, hearings, or other actions,
formal or informal, against Koch for alleged or suspected violations
of 47 C.F.R. S 1.17.
12. Koch represents that it has conducted a thorough review of its
application procedures and developed a comprehensive Compliance Plan
to ensure its future compliance with 47 C.F.R. S 1.17. A summary of
Koch's Compliance Plan is attached hereto. Koch agrees to implement
its Compliance Plan, to the extent it has not already done so, within
thirty (30) days of the Effective Date and to keep such Compliance
Plan in effect for two (2) years after the Effective Date.
13. Within five (5) business days after the Adopting Order becomes a Final
Order, Koch shall make a voluntary contribution to the United States
Treasury in the amount of seventy-five thousand dollars ($75,000). The
payment shall be made by check or similar instrument, payable to the
order of the Federal Communications Commission. The payment shall
include the Acct. No. and FRN No. appearing on the Adopting Order.
Payment by check or money order may be mailed to Federal
Communications Commission, P.O. Box 358340, Pittsburgh, PA 15251-8340.
Payment by overnight mail may be sent to Mellon Bank /LB 358340, 500
Ross Street, Room 1540670, Pittsburgh, PA 15251. Payment by wire
transfer may be made to ABA Number 043000261, receiving bank Mellon
Bank, and account number 911-6106.
14. Koch waives any and all rights it may have to seek administrative or
judicial reconsideration, review, appeal or stay, or to otherwise
challenge or contest the validity of this Consent Decree and the
Adopting Order, provided no modifications are made to the Consent
Decree adverse to Koch. If the Bureau, the Commission or the United
States acting on its behalf, brings a judicial action to enforce the
terms of the Adopting Order or this Consent Decree, or both, Koch will
not contest the validity of this Consent Decree or of the Adopting
Order. If Koch brings a judicial action to enforce the terms of the
Adopting Order or this Consent Decree, or both, neither the Commission
nor the United States will contest the validity of this Consent Decree
or of the Adopting Order.
15. The Parties agree that this Consent Decree and Koch's voluntary
contribution are for settlement purposes only and do not constitute an
admission, denial, adverse finding, adverse final action, adverse
adjudication on the merits, or waiver of legal rights except as
otherwise expressly set forth herein.
16. In the event that this Consent Decree is rendered invalid in any court
of competent jurisdiction, it shall become null and void and may not
be used in any manner in any legal proceeding.
17. Koch agrees to waive any claims they may otherwise have under the
Equal Access to Justice Act, 5 U.S.C. S 504 and 47 C.F.R. S 1.1501 et
seq., relating to the matters addressed in this Consent Decree.
18. Koch and the Bureau each represents and warrants to the other that it
has full power and authority to enter into this Consent Decree.
19. This Consent Decree may be executed in counterparts.
FEDERAL COMMUNICATIONS COMMISSION
By: ________/S/__________________ Date: ____March 21, 2006_____
Kris A. Monteith, Chief
KOCH INDUSTRIES, INC.
By: _________/S/___________________ Date: ____March 9, 2006_______
Mark Holden, Senior Vice President
and General Counsel
SUMMARY OF COMPLIANCE PLAN
The Koch Companies are designing and implementing a compliance system in
connection with the filing of FCC license applications, as more
specifically described below.
1. Leadership and Management Commitment. Each Koch Company that holds an
FCC license will designate a Compliance System Owner ("CSO") for its
license applications. The CSO will be responsible for the design,
implementation, and continuous improvement of the system to ensure
accuracy in the filing of license applications.
2. Employee Ownership. Only those employees who are authorized by the CSO
and their supervisor will be permitted to complete FCC license
applications. These employees will receive specialized training, as
further described below.
3. Training. All current and future employees who are authorized to
complete FCC license applications will be provided with training that
describes the Commission's rules regarding truthful statements and the
obligation to maintain the accuracy and completeness of any application,
as well as the resources that must be used in order to assure accuracy and
completeness. All current and future employees who may come into contact
with FCC licensing procedures, but who are not expected to complete FCC
license applications, will be provided with general awareness training
that is designed to ensure that license applications are directed to the
employees who have received the specific training. Both types of training
will include instructions directing the employees to promptly report all
possible or suspected instances of non-compliance with 47 C.F.R. S 1.17 to
the CSO. Both types of training will include an admonition as to the
individual consequences of intentional non-compliance, which will result
in disciplinary action, up to and including termination of employment, as
well as the channels for reporting non-compliance, which will include a
toll-free, anonymous hotline. Records of all training will be maintained.
4. Risk Assessment and Change Management. The CSO and business leaders
within the Koch Companies will be responsible for monitoring and
responding to changes in the business that may impact this compliance
system. Examples of such changes could include the resignation or
redeployment of employees who have received specialized training in
license applications, the acquisition of new businesses that results in
the need to transfer licenses, or changes in the Commission's regulations.
5. Reports of Non-Compliance to the Commission. Any and all instances of
non-compliance with 47 C.F.R. S 1.17 coming to the attention of the CSO
will be reported in writing by the CSO to the Chief, Investigations and
Hearings Division, Enforcement Bureau, Federal Communications Commission
within 30 calendar days, and all documents relating thereto will be
retained by the CSO and provided to the Commission upon request.
6. Continuous Improvement. The CSO and business leaders will be
responsible for making an annual assessment of the compliance system to
confirm (a) that the system is being used by those officers and employees
whose actions may impact the company's compliance with Commission
regulations, and (b) that the system is effective in ensuring accuracy and
completeness in license applications. Any shortcomings in the system
detected through these annual assessments will promptly be addressed.
Federal Communications Commission DA 06-617
Federal Communications Commission DA 04-3260