Kochland Read online

  This book was only possible because of the guidance, leadership, and tireless support of my editor, Priscilla Painton. She has been unwavering even as the years stretched on and one deadline after another passed by. At every step, I relied on Priscilla’s judgment, her ethics, her patience, and her amazing eye for the right word. I am so grateful that we have editors like Priscilla to keep this important work alive. I am also grateful to the entire team at Simon & Schuster for their support. Jonathan Karp gave me great insight and pushed me to ask the right questions early on. Sophia Jimenez and Megan Hogan were vital teammates. Dana Trocker and Larry Hughes have been invaluable, over many years, in helping me communicate these ideas to a broader audience. Samantha Hoback and her team did a miraculous job of improving and polishing up this manuscript under deadline. Edward Klaris and Alexia Bedat at Klaris Law are the best kind of allies a reporter can have: smart, hardworking attorneys who are committed to upholding press freedom. Their rigorous review and feedback made this book much stronger.

  My agents, Lauren Sharp and David Kuhn, are the best I could hope for. They are diligent, honest in their critiques, and always willing to put in the extra hours to improve the work. They instantly supported the idea for Kochland, even in the face of long odds in the market. I couldn’t navigate this business without them.

  When I conceived the idea of writing Kochland in late 2011, two people came along at just the right moment and helped transform my life as a writer: Steve Coll and Andrés Martinez. They gave me a fellowship at the New America Foundation, and I am grateful every day for the opportunity they provided. I can never repay the gift, but I will keep trying. Thank you. This book wouldn’t have happened if you didn’t give me that break.

  At New America, I was assisted over several years by the most remarkable people. Becky Shafer contributed in countless ways, as a friend and colleague, from researching oil refineries and the EPA’s “new source review” process to helping me navigate archival research. Kirsten Berg is one of the most exceptional and diligent reporters I have ever worked with. She unearthed mountains of files on Koch Industries that I never would have found, illuminating everything from US oil policy in the 1970s to Cayman Islands tax schemes in the 2000s. I am so grateful for her help, from the earliest days of the book until the end. Rachel White was a tireless champion for New America and for my work—I won’t ever forget it. Jeff and Cal Leonard were incredibly generous and supportive.

  My time at New America was possible thanks to support from the 11th Hour Project of the Schmidt Family Foundation, a nonprofit foundation based in Palo Alto. The foundation funded my work through the new model of nonprofit journalism—providing money to an institution that, like a newsroom, allows reporters to pursue their work without outside interference or influence. In this regard, the team at 11th Hour has been a dream. They hold a long-term view and a visceral understanding of the importance of independent journalism. No one at the 11th Hour Project saw any material for this book as I prepared it, tried to influence it in any way, or sought to steer my inquiries in the slightest degree. I deeply appreciate the total independence. I am so grateful to the leadership team at 11th Hour: Wendy Schmidt, Amy Rao, and Joseph Sciortino. I am deeply indebted to Sarah Bell, an incredible person and an incredible ally. Thank you so much for all the hard work, the support, and the patience. I am also so grateful for the help from Ellyn Peabody, Michael Roberts, Christina Vrachnos, Lauren Davis, Jamie Dean, Melody Gonzales, and Jake Mogan. It has been a joy to know all of you. I am particularly grateful to the other grantees of the 11th Hour project whom I have had the chance to meet—I am inspired by your idealism, your iconoclasm, and your efforts to make the world a better place.

  At just the moment when I needed it most, I was given a lifeline from the J. Anthony Lukas Work-In-Progress award in 2017. I am so grateful that such an award exists. Books are vitally important to our public debate, and writing books isn’t possible without grants like the Lukas prize. Thank you for being there to give writers hope and support. Thank you to Jonathan Alter and Ann Marie Lipinski. I am indebted to the prize judges: John Duff, Martha Levin, and Sarah Toubourg. I will not forget that you gave me a chance to complete this book. Thank you so much for your vote of confidence before this book was even finished.

  At New America, I benefited tremendously to learn from a lot of people who are way smarter than I am. Lina Khan, Sabeel Rahman, Yascha Mounk, Mark Schmitt, and Michael Lind were generous with their time, helping me talk over history and political economics. I learned so much from them. Lee Drutman, one of the best political scientists of our time, taught me about lobbying and threw in something more: while talking in the file room one day, he came up with the title for this book. I wanted to call it The Republic of Koch, and he told me the real title was Kochland. Thanks for saving me. Barry Lynn, as always, is a great teacher about corporate power and monopolies. Konstantin Kakaes is an incredible guy to help clarify your thinking and demolish weak arguments. Phil Longman, a fantastic student of history, helped me work through so many ideas on this book and always helped me to see the bigger picture. Jesse Eisinger was a great reminder of how real reporters should conduct themselves. He also read through the early chapters of this book and gave me invaluable feedback. Rania Abouzeid is inspiring in her bravery and her skill. Azmat Khan has been so remarkably kind and always pushes me to be better through her example. Anand Gopal, my first friend at New America, had better not quit writing books because he does it better than almost anyone and we are counting on him. Gabriel Sherman taught me so much about reporting and persistence, and I often relied on his advice and example. Alex Holt is such a sharp mind and a great sounding board and friend. Chayenne Polimédio helped me think through the politics. Josh Freedman was generous with his time and brilliance and was invaluable in helping me think about America’s political system. Fuzz Hogan, Lauren McCarthy, and Cathy Bryan were wonderful friends and advisors who made it all work. Peter Bergen was a tremendous support as head of the fellows program and always kept his eye on the big picture. Albert Ford was always ready with a smile and a great question. Awista Ayub was a gracious supporter and colleague. Rebecca A. and Laura K. were so kind and so generous in helping me see what I missed—I owe you so much. Louie Palu is a great friend and inspiration. Sue Bencuya rigorously fact-checked this book and was invaluable in correcting errors and clarifying the language. Thank you.

  Steve LeVine has been an incredible friend and mentor since I arrived in Washington. Steve generously read through an early version of this book and helped me make it better throughout. His own books and his advice are signposts that show the right way, and I benefited immensely from his wisdom. I will keep trying to follow the path.

  I am so grateful for my friend and mentor William T. Vollmann. While I was writing this book, Bill gave me an invaluable piece of advice and a benediction. The advice: “Don’t let Koch Industries, or your editor, push you around.” The benediction: “It makes me happy when you work every day.”

  I am gratified that Seymour Hersh humored me and gave advice. He kept asking me why I wanted to hang around, and the real answer is that it makes me feel better to know that there are reporters like him in the business—I am trying to watch and learn.

  As I reported this book, I was lucky to work with great editors at newspapers and magazines who helped me publish work that furthered my inquiries into Koch. Brian O’Keefe at Fortune magazine gave me the all-important chance to write my first profile of Koch Industries. He was not just smart and incisive, but also steadfast when Koch pushed back. I am so grateful to have worked with him. Romesh Ratnesar, Brad Wieners, Jeremy Keehn, and Matthew Philips at Bloomberg Businessweek have been incredible to work with—thank you so much for your support. Andy Serwer at Yahoo! Finance gave me the chance to write about Koch and land an interview with Charles Koch, for which I am forever grateful. Kelly Johnson at the Washington Post was a joy to work with, and she masterfully shaped the story on Georgia-Pacific.

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sp; Pete, Tina, and the Farrelly boys were incredible hosts who gave me shelter and kinship in Portland, Oregon, during my long reporting trips there. Thank you! You made a lonely job fun.

  Jane Mayer and Daniel Schulman are two fantastic reporters who preceded me in writing books about the Koch brothers. One could question why another book was needed, but I hope that I brought something new to the public domain. I am so grateful for the kind support they gave me as I was working on this.

  After I left New America in 2017, I was so lucky to find a home (once again) at the University of Missouri School of Journalism, where we hope to open doors for more books and more reporters. I am so grateful for the support of Dean David Kurpius, who has his eyes on the future. Thank you so much to Randy Picht for your guidance, help, leadership, and support. Shannon Burke-Kranzberg has been tireless in her efforts and essential to making the idea real. Randall Smith hatched the idea and brought me in—thank you, neighbor. Mark Horvit has been a tireless ally and a great inspiration, and Earnest Perry has been a vital leader, even if he still scares me a little bit because he used to be my editor. Thank you so much to Colin Kilpatrick and Martha Pickens for the countless hours you’ve invested to make this happen. Sky Chadde and Uliana Pavlova at Missouri helped me research Koch’s Fertilizer business and political activities, respectively. They were both tireless reporters and I look forward to seeing what’s next.

  All of my people in Kansas City have been there for me the whole time, even though I have been away. I can honestly say that I miss you every day. Thank you so much to the Robertsons, the Leonards, the Launders, the Spradleys, the Kienes, the Fogels, the Zimmers, the Eckels, the Wolbachs, the Dickeys, the Mauros, the Moores, and to all the other families who made me who I am. From the bottom of my heart: thank you. To all my friends in St. Louis: the Andreses, the Diekempers, the Riches, the Dobsons, the Higdons, the Lanes, the Wolfs, and the Berzons: I am really sorry that we had to leave. Saying good-bye to you was one of the hardest things I’ve ever had to do. I haven’t gotten over it.

  They say you can’t pick your in-laws, so I guess I was just extremely lucky. John and Joan Miller have been the best, most supportive parents-in-law that a person could have. They have helped this project from the beginning, and made it better along the way through their questions, comments, and perspectives. Thank you. And thanks to Claire, Drew, and Mary Ellen for all the happy times when we got to take a break.

  David, Blythe, and Mom: I owe you everything. I don’t know how to say it except: thank you.

  Dad: I hope you like this book. You were there at my desk the whole time.

  Josie: There’s a reason you’re always the first person to read what I write. I don’t just trust your judgment—I can’t manage without it. You have been with me through seven punishing years of ups and downs on this project. While we were raising a family, you also helped me navigate the punishing terrain of the journalism business, where almost nothing can be counted on. I know I can always count on you. Without you, none of it is possible.

  And to the kids: all of it is for you.

  APPENDIX

  Alphabetical Directory of Significant Characters in Kochland

  Antrich, Darrell. Former electricity trader for Koch Energy Trading. Antrich was involved in Koch’s “parking” trades during the energy crisis in California in 2000.

  Ballen, Ken. Attorney hired by the US Senate to investigate Koch’s theft of oil in Indian reservations during the 1980s. Ballen uncovered extensive evidence of the theft and referred it to the US Attorney’s office in Oklahoma City.

  Barnard, Don. Labor negotiator for Georgia-Pacific. He represented the company in drawn-out negotiations that were among the first after Koch Industries purchased Georgia-Pacific.

  Beckett, Melissa. Koch Industries commodities trader. Beckett traded gasoline and fuel products, learning the “contango storage play” and other strategies. She later shifted to the Koch Energy Trading desk, where she traded megawatt-hours in the California market. She finally went to the fertilizer trading group, where she worked for Chase Koch.

  Bingel, Kelly. Democratic lobbyist who represented Koch Industries as it sought to derail the cap-and-trade bill in 2010.

  Brady, Maria. Tea Party activist from Boiling Springs, South Carolina. Brady became politically active after receiving a revelation from God. Her group helped unseat Republican Congressman Bob Inglis. Her Tea Party chapter’s efforts were promoted by Americans for Prosperity.

  Bucknum, Gary. Former local labor union president at the Inlandboatmen’s Union, or IBU, at Georgia-Pacific’s warehouse in Portland, Oregon. Bucknum didn’t work for Georgia-Pacific but joined the union from a different company it represented. He joined in 2008, at the same time as Steve Hammond. Bucknum negotiated one drawn-out negotiation against Georgia-Pacific and did not seek reelection. Also known as “Gary the Anarchist.”

  Cordes, Don. Koch Industries’ general counsel throughout the 1980s and 1990s. During that time, he was vice president of legal and the corporate affairs chief legal officer. He joined the company’s board of directors in 1996. Cordes was Charles Koch’s legal advisor as the US Senate investigated Koch’s oil theft in Oklahoma and as Bill Koch waged a multiyear legal war against Charles Koch.

  David, Steve. Manager of environmental engineering at the Pine Bend refinery in the mid-1990s. Oversaw the work of whistle-blower Heather Faragher during the period when Pine Bend released ammonia into the surrounding environment.

  Davis, Gray. Governor of California during the electricity crisis of 2000. The crisis ended Davis’s political career.

  Dodge, Brian. Local labor union president at the Inlandboatmen’s Union, or IBU, at Georgia-Pacific’s warehouse in Portland, Oregon. Dodge was Steve Hammond’s boss and was elected to the position after his predecessor, Gary Bucknum, resigned. Dodge negotiated multiple labor contracts with Koch Industries but felt that he had no leverage. Also known as “the Dodger.”

  Dubose, Phil. Longtime Koch employee who joined the company in 1968. Dubose spent many years as an oil gauger, collecting oil for Koch’s pipeline system. Dubose used the Koch method of oil collection, in which he intentionally mismeasured the oil supplies for Koch’s benefit.

  Ebell, Myron. Scholar with the Competitive Enterprise Institute, a think tank funded by Koch Industries and other energy companies. Ebell has spoken out against “climate hysteria” and regulatory efforts to reduce greenhouse gas emissions. Ebell led transition efforts at the EPA for the Trump administration.

  Ellender, Philip. President and CEO of Koch Industries’ lobbying office, called Koch Companies Public Sector. Ellender began as a lobbyist in Louisiana and transferred later to Washington, DC. He was unusual among lobbyists because of his embrace of Koch’s MBM theories. He was known as a “Wichita guy,” rather than a Washington guy. Helped lead Koch’s lobbying efforts to derail the cap-and-trade bill in 2010.

  Elroy, James. Special agent of the FBI, based in Oklahoma. He was the primary FBI investigator into Koch’s oil theft in Oklahoma, surveilling the company’s employees. Elroy later assisted the US Attorney’s office in Oklahoma City as it investigated the theft. After leaving the FBI, Elroy was employed by Bill Koch as Koch pursued a civil suit against Koch Industries for oil theft.

  Estes, Ruth. Assistant safety chief at the Pine Bend refinery in the mid-1990s, intimately involved in decision-making around the release of ammonia into the environment.

  Feilmeier, Steve. Chief financial officer of Koch Industries from the mid-2000s until present day. Feilmeier held that position during many of Koch’s major acquisitions and helped train Chase Koch when Chase joined the company after college.

  Franklin, Cris. Koch Industries trader. Franklin began in Koch’s pipeline division, helping design software systems to manage complex gas flows. He later shifted to trading financial products. He was on a financial products trading desk during the crash of 2008.

  Franzen, David. Warehouse worker at G
eorgia-Pacific’s warehouse in Portland, Oregon. Longtime member of the Inlandboatmen’s Union, or IBU. He was on the committee that negotiated a labor contract with Georgia-Pacific, and believed that doing so forever tainted his reputation with managers. He was known as something of a brawler.

  Hall, Bradley. Longtime Koch Industries employee who joined the firm in 1975. Hall rose up through the ranks of finance and deal making at Koch, eventually running the corporate development group, which evaluated potential acquisitions. He later became CFO of Koch Supply & Trading before leaving the company in 2004.

  Hammerschmidt, Joseph. Militant leader of the OCAW labor union at the Pine Bend refinery who led the strike against Koch in 1972.

  Hammond, Steve. Union official with the Inlandboatmen’s Union, or IBU, at Georgia-Pacific’s warehouse in Portland, Oregon. Hammond was from Portland and worked at the warehouse since graduating from high school. He ran for election as a union leader after his work life at the warehouse became increasingly miserable. Hammond was the deputy negotiator in several contract negotiations with Koch, each one less successful than the last. He retired in 2016, after negotiating a contract that was deeply dissatisfying to the union members. Also known as “the Hammer.”

  Hanna, Bill. Former president of Koch Industries during the late 1980s and a close associate of Charles Koch’s.

  Hannan, Jim. Koch Industries executive who joined the company in 1998 as a finance executive. Hannan later joined a deal-making group and was instrumental in the Georgia-Pacific acquisition, the largest in Koch’s history. He joined Georgia-Pacific and became CEO of the company. He was later promoted to CEO of Koch Enterprises, a large division of the company that includes Georgia-Pacific, Invista, Molex, and other assets. He is seen as a candidate to become CEO after Charles Koch leaves the company.