Kochland Page 79
To produce the report . . . American Council for Capital Formation: This account is based on one source with direct knowledge of the matter, speaking on background, interview by author, 2017.
Koch network had funded . . . Claude Lambe Charitable Foundation: Claude Lambe Charitable Foundation, 990 Disclosure Forms with the IRS, 2006–10; Analysis of the Waxman-Markey Bill “The American Clean Energy and Security Act of 2009,” a report by the American Council for Capital Formation and the National Association of Manufacturers.
The study was announced: Erin Streeter, “State-by-State Analysis of Waxman-Markey Cap and Trade Legislation Paints Dour Picture for Nation’s Economy: NAM-ACCF Study Concludes Bill Will Cost 2.4 Million Jobs,” press release, National Association of Manufacturers, December 3, 2009.
Once the ACCF’s study was published . . . echo chamber system: Source with direct knowledge of the matter speaking on background, interview by author, 2017; “The ACCF/NAM Estimate of Waxman-Markey,” statement on the Institute for Energy Research website, August 13, 2009; Lee Fang, “Charles Koch Personally Founded Group Protecting Oil Industry Hand-Outs, Documents Reveal,” Republic Report, August 29, 2014.
After the study . . . another Koch Industries–affiliated think tank: Source with direct knowledge of the matter speaking on background, interview by author, 2017; Thomas Pyle, Lobbying Disclosure Reports, Office of the Clerk, US House of Representatives; American Energy Alliance, “Fact Sheet: AEA Radio Ad ‘Waxman-Markey Energy Tax’ ”; American Energy Alliance, “Fact Sheet: AEA TV Ad ‘Turned Off.’ ”
“It’s pretty clear the costs outweigh the benefits”: Margo Thorning, testimony to US Senate Finance Committee, “Climate Change and Jobs,” November 10, 2010, archival footage from C-Span.
Inside Koch Industries . . . a tremendous victory: Source with knowledge of reaction inside Koch Industries speaking on background, interview by author, 2017.
Koch Industries wasn’t the only company to use these tactics: Koch Industries: Secretly Funding the Climate Denial Machine.
The efforts to undermine popular support . . . were effective: Dina Cappiello, “Poll: Americans’ Belief in Global Warming Cools,” Associated Press, October 22, 2009.
Koch Industries applied yet more pressure: Lonegan, former senior Koch Industries political operative speaking on background, interviews by author, 2017.
Bob Inglis . . . challenged by one of Koch’s candidates: Bob Inglis, former senior Koch Industries political operative speaking on background, interviews by author, 2017; Koch Industries donations to Trey Gowdy taken from campaign finance disclosure reports, “Trey Gowdy for Congress,” 2010; campaign finance database, Center for Responsive Politics; Rudolph Bell, “Spartanburg Prosecutor May Challenge Inglis,” Greenville News (SC), May 24, 2009; Bell, “Critics Blast Inglis,” Greenville News (SC), September 17, 2009; Bell, “Republican Field Narrows in 4th District Race,” Greenville News (SC), July 11, 2009; “Republican Congressional Races Take Shape,” State (Columbia, SC), June 14, 2009; Radnofsky and Phillips, “As US Political Divide Widened.”
Inglis and Gowdy met . . . tent next to a highway: “Landrum Debate Part 12,” video, 6:09, uploaded to YouTube by ThomasforCongress on May 24, 2010, www.youtube.com/watch?v=O8z2XsDR2qo.
As it pressured . . . built a hard wall of “no” votes: Carbon pledge figures taken from Americans for Prosperity website: “No Climate Tax,” archived pages from 2009–10, the Internet Archive.
As Koch Industries encircled . . . passing Obamacare: Phillips, Sharp, interviews by author, 2017; Lizza, “As the World Burns.”
Bob Inglis was fighting in a primary election against Trey Gowdy: Inglis, interviews by author, 2017.
It is difficult . . . to declare its final defeat: Phillips, interviews by author, 2017; Lizza, “As the World Burns”; “Hunt for Health Compromise Continues as Deadline Looms,” National Journal’s Congress Daily, July 20, 2009.
Americans for Prosperity . . . strongest position ever: Lonegan, interviews by author, 2017.
As AFP solidified . . . change it from within: Theda Skocpol and Alexander Hertel-Fernandez, “The Koch Network and Republican Party Extremism,” Perspectives on Politics 14, no. 3 (September 2016): 681–99.
In November . . . destroyed the Democratic majority: Jeff Zeleny, “GOP Captures House, but Not Senate,” New York Times, November 2, 2010.
The magnitude of this victory was immense: Charles Lewis, Eric Holmberg, Alexia Fernandez Campbell, and Lydia Beyoud, “Koch Millions Spread Influence Through Nonprofits, Colleges,” Investigative Reporting Workshop, last modified July 1, 2013.
One of the earliest . . . Select Committee on Energy Independence and Global Warming: Phillips, Sharp, interviews by author, 2017.
In the absence . . . continued to soar: Data from Center for Climate and Energy Solutions Carbon Dioxide Emissions database, www.c2es.org/content/international-emissions; International Energy Agency, “Global Energy & CO2 Status Report,” 2017; Romm, Climate Change; carbon, parts per million in atmosphere, taken from National Oceanic and Atmospheric Administration database, accessed 2018.
After he left politics, Bob Inglis . . . climate change: Inglis, interview by author, 2017.
Charles Koch still felt threatened: Charles Koch to donors, September 24, 2010.
Security around the donor conference was intense: Former senior Koch Industries political operative speaking on background, interviews by author, 2017; Kate Zernike, “Secretive Republican Donors Are Planning Ahead,” New York Times, October 19, 2010; Rich Connell and Tom Hamburger, “Hundreds March Outside Koch Brothers’ Retreat,” Los Angeles Times, January 31, 2011; Jesse Marx, “Charles Koch to Indian Wells Donors: ‘I’m Still Here,’ ” Desert Sun (Palm Springs, CA), January 30, 2016.
The events had grown . . . since 2006: Charles Koch donor network agenda and brochure for gathering in Aspen, Colorado, June 27 and 28, 2010, “Understanding and Addressing Threats to American Free Enterprise and Prosperity.”
The publicity culminated in August of 2010: Jane Mayer, “Covert Operations,” New Yorker, August 30, 2010.
The whale . . . harpoons began to fly: Connell and Hamburger, “Hundreds March”; descriptions of protests taken from amateur video of event; Charles Koch quote taken from leaked audio from event.
“I remember talking to him . . . victims of the system”: Former Koch Industries senior political operative speaking on background, interview by author, 2017.
Charles Koch’s net worth doubled: Forbes Billionaires list, 2008–16.
CHAPTER 21: THE WAR FOR AMERICA’S BTUS
In the winter of 2010 . . . a series of business deals: Brad Razook, Tony Sementelli, interviews by author, 2018; “Koch Pipeline Company Expanding South Texas Crude Oil Pipeline Capabilities; Flint Hills Resources to Process Additional Supplies of Eagle Ford Production,” ENP Newswire, November 30, 2009.
Koch’s series of deals accelerated: Razook, Sementelli, interviews by author, 2018; “Koch Pipeline and Arrowhead Pipeline Add to South Texas Crude Oil Capacity,” ENP Newswire, September 29, 2010; “Koch Pipeline Company and NuStar Logistics Finalize Agreement on South Texas Crude Oil Pipeline Capacity to Move Eagle Ford Crude to Corpus Christi,” BusinessWire, October 18, 2010; “Koch Pipeline Company to Begin Building 16-Inch Crude Oil Pipeline in Texas,” Koch Pipeline Company online, last modified December 16, 2010; “Flint Hills Resources Adding Oil Shipping Capacity,” BusinessWire, February 17, 2011; “New Pipeline from Pettus to Corpus Christi Will Aid Eagle Ford Shale Production,” Victoria Advocate (TX), April 10, 2011.
The puzzling part . . . oil supplies that didn’t seem to exist: Eagle Ford region production and drilling rig figures taken from US Energy Information oil production database.
The wells . . . were the face of an energy revolution: Meghan L. O’Sullivan, Windfall: How the New Energy Abundance Upends Global Politics and Strengthens America’s Power (New York: Simon & Schuster, 2017), 1–107.
The first signals emerged . . .
around 2009: Razook, Sementelli, interviews by author, 2018; US natural gas production figures taken from US Energy Information gas production database.
This was the start of the fracking revolution: Michael Levi, The Power Surge: Energy, Opportunity, and the Battle for America’s Future (New York: Oxford University Press, 2013), 20–49.
The earliest waves . . . Koch’s leadership team: Feilmeier, Razook, Sementelli, interviews by author, 2013–18; US natural gas prices taken from US Energy Information gas price database.
Razook and other senior executives . . . top story of the Tower: Razook, Sementelli, interviews by author, 2018; descriptions of Flint Hills offices based on notes and photos from reporting trip, 2018.
One reason . . . fracking had been around since the 1970s: Meghan L. O’Sullivan, Windfall: How the New Energy Abundance Upends Global Politics and Strengthens America’s Power (New York: Simon & Schuster, 2017), 21–26.
In 1980 . . . tax break for natural gas supplies: Alex Trembath, Jesse Jenkins, Ted Nordhaus, and Michael Shellenberger, “Where the Shale Gas Revolution Came From: Government’s Role in the Development of Hydraulic Fracturing in Shale,” Breakthrough Institute online, last modified May 2012; Michael Shellenberger and Ted Nordhaus, “A Boom in Shale Gas? Credit the Feds,” Washington Post, December 16, 2011.
Brad Urban and his team canvassed the industry: Razook, Sementelli, interviews by author, 2018; Eagle Ford region production and figures taken from US Energy Information oil production database.
Koch Industries’ boardroom . . . Koch’s office: Razook, Sementelli, interviews by author, 2018; descriptions of boardroom taken from notes and photographs during reporting trip, 2018.
The Eagle Ford region . . . July of 2010: Eagle Ford region production and figures taken from US Energy Information oil production database; “Eagle Ford Takes Flight,” Discovery: The Quarterly Newsletter of Koch Companies, October 2011; O’Sullivan, Windfall, 1–107.
Along the Gulf Coast of Texas . . . oil refineries: Notes and photos from reporting trip to Gulf Coast and Flint Hills facility near Port Arthur, Texas, in 2016.
Nobody had built . . . since 1977: Anthony Andrews et al., Small Refineries and Oil Field Processors: Opportunities and Challenges (Washington, DC: Congressional Research Service, August 11, 2014).
The primary obstacle to building a new refinery was the Clean Air Act: “The Petroleum Industry: Mergers, Structural Change, and Antitrust Enforcement,” Federal Trade Commission Bureau of Economics, Staff Study, August 2004; Anthony Andrews and Robert Pirog, The US Oil Refining Industry: Background in Changing Markets and Fuel Policies (Washington, DC: Congressional Research Service, December 27, 2012); Andrews, et al., Small Refineries and Oil Field Processors; Robert Bradley and Thomas Tanton, “US Petroleum Refining: Let the Market Function,” Institute for Energy Research, December 19, 2005; Energy Market: Effects of Mergers and Market Concentration in the US Petroleum Industry (Washington, DC: US General Accounting Office, May 2004).
Between 1991 and 2000, there were 338 mergers: Ibid., 7; Diana L. Moss, “Competition in US Petroleum Refining and Marketing: Part 1—Industry Trends,” working paper, American Antitrust Institute, January 2007.
In 2002, there were . . . By 2012, there were only 115: The US Oil Refining Industry, 1.
Arizona Clean Fuels attempted to build: Andrews, Small Refineries and Oil Field Processors, 8; Joyce Lobeck, “3 Major Yuma-Area Projects Have Stalled, Yuma Sun (AZ), September 4, 2011; Michele Linck, “It’s No Race, but Arizona Clean Fuels Is Ahead, for Now,” Sioux City Journal (IA), September 4, 2009.
Fewer and fewer companies . . . larger and larger facilities: Andrews and Pirog, The US Oil Refining Industry: Background in Changing Markets and Fuel Policies (Washington, DC: Congressional Research Service, December 27, 2012), 4–5.
By 2004 . . . “imperfectly competitive”: Energy Market, 113–14.
By the time the Eagle Ford tsunami . . . full tilt: John R. Auers, interview by author, 2018; “US Refined Product Exports Developments, Prospects and Challenges,” presentation by John R. Auers, to 2017 EIA Energy Conference, Washington, DC, June 27, 2017, slide 6.
The bottleneck was severe . . . catastrophic price increases: Alison Sider, “Refinery Woes Stall Gasoline Price Drops,” Wall Street Journal, August 23, 2015.
In this environment . . . breathtaking: Auers, interview by author, 2018; “The Refining Cup: US ‘Trumps’ the World—but Challenges Abound,” presentation by John R. Auers, to AFPM Annual Environmental Conference, October 17, 2016, slide 19.
The profit margins fell sharply after 2011: Auers, interview by author, 2018; “The Refining Cup,” slide 19.
Koch enhanced the profitability . . . in Houston: Osbourn, interview by author, 2016; Energy Market; Moss, “Competition in US Petroleum Refining and Marketing”; Christopher Leonard, “A Blade Strikes Steel, and the Blast Shocks a Nation’s Energy System,” Bloomberg Businessweek, November 23, 2016.
Koch traded around Corpus Christi: Osbourn, Razook, Sementelli, interviews by author, 2016–18; Ben Fox Rubin, “Koch Industries to Buy PetroLogistics in $2.1 Billion Deal,” Wall Street Journal, May 28, 2014.
Obama administration failed to pass a carbon regulation bill: Michael Grunwald, The New New Deal: The Hidden Story of Change in the Obama Era (New York: Simon & Schuster, 2012); Brad Plumer, “A Closer Look at Obama’s ‘$90 Billion for Green Jobs,’ ” Washington Post, October 4, 2012.
In 2007 . . . all the BTUs consumed in America: “Primary Energy Consumption by Source,” table 1.3, US Energy Information Administration, Monthly Energy Review, January 2018; “US Primary Energy Consumption by Source and Sector, 2016,” US Energy Information Administration, Monthly Energy Review, April 2017.
Even as Koch refined . . . emerging across America: Auers, interview by author, 2018; “US Refined Product Exports Developments,” slide 13.
Like twenty-nine states . . . 10 percent of their power: Andy Marso, “Koch Works Behind Scenes on Renewable Energy Bill,” Topeka Capital-Journal (KS), February 26, 2013; Todd Wynn, “ALEC to States: Repeal Renewable Energy Mandates,” MasterResource, November 1, 2012.
Many Kansas state lawmakers were like Tom Moxley: Tom Moxley, interview by author, 2018; Alan Claus Anderson et al., The Economic Benefits of Kansas Wind Energy (Kansas City, MO: Polsinelli Shughart and Kansas Enegry Information Network, November 19, 2012).
In 2013 . . . remove the renewable-energy mandates: Moxley, interview by author, 2018; Marso, “Koch Works Behind Scenes.”
Koch’s efforts . . . push back renewable-energy subsidies: Moxley, interview by author, 2018; Attacks on Renewable Energy Standards and Net Metering Policies by Fossil Fuel Interests & Front Groups 2013–2014 (San Francisco: Energy and Policy Institute, May 2104); Juliet Eilperin, “Climate Skeptic Group Works to Reverse Renewable Energy Mandates,” Washington Post, November 24, 2012; Tim Dickinson, “The Koch Brothers’ Dirty War on Solar Power,” Rolling Stone, February 11, 2016.
ALEC’s efforts bore fruit: Moxley, interview by author, 2018; Bryan Lowry, “House OKs Ending Renewable-Energy Tax Break for Businesses,” Wichita Eagle, May 14, 2015; “Tomblin Approves Energy Act Repeal,” Associated Press, February 3, 2015.
By 2014 . . . corporate culture at Koch Industries: Notes from reporting at Koch Industries headquarters, 2013; Rhoda Miel, “Koch Buys Stake in Guardian,” Crain’s Detroit Business, October 7, 2012; “Koch Industries Acquires Guardian Industries Corp.,” press release, Guardian Industries, November 21, 2016; David Smith, “Koch Industries Called Steel Mill’s Largest Investor,” Arkansas Democrat-Gazette, February 2, 2013; Andrea Murphy, “Weiss Family to Take American Greetings Private with Help from the Koch Brothers,” Forbes, April 1, 2013; “Molex Incorporated Agrees to be Acquired by Koch Industries, Inc. for $38.50 Per Share in Cash,” press release, Molex Inc., September 9, 2013.
The sense of mastery . . . expanded and renovated the company headquarters: Notes, photos, and video from reporting trips at Koch Industries hea
dquarters, 2013, 2015, 2018; “Koch Industries, Inc., Announces Plans to Expand Wichita Headquarters,” press release, Koch Industries, December 13, 2012; Daniel McCoy, “Koch Industries Unveils Expansion,” Wichita Business Journal, June 17, 2015.
CHAPTER 22: THE EDUCATION OF CHASE KOCH
When he was a young boy, Chase Koch might have seemed unteachable: Chase Koch, interview by author, 2018; “Charles Koch: On Parenthood,” Koch Industries video, June 15, 2017.
Those plans . . . the first day Chase Koch was born: Hall, interviews by author, 2018.
Charles and his wife . . . in their children: Chase Koch, Hall, interviews by author, 2018; “Charles Koch: On Parenthood,” Koch Industries video, June 15, 2017.
Things weren’t as easy for Elizabeth: Elizabeth Koch, “The World Tour Compatibility Test: Back in Tokyo, Part 1,” Smith Memoirville, March 30, 2007; “The World Tour Compatibility Test: Back in Tokyo, Part 2,” Smith Memoirville, April 17, 2007; “The World Tour Compatibility Test: Back in Tokyo, Grand Finale,” Smith Memoirville, May 3, 2007.
Every year . . . sent out as a Christmas card to Koch Industries employees: Charles and Liz Koch family Christmas card, undated. Inscription reads: “My family joins me in wishing you all the joys of the holiday season throughout the year.” Signed by Charles Koch; Elizabeth Koch, “World Tour Compatibility Test, Grand Finale.”
Spending time . . . Chase Koch’s life: Chase Koch, interview by author, 2018.
By the time he was in middle school . . . difficult to sustain: Ibid.
“Aristotle taught . . . use your natural ability”: Note from Charles Koch to Chase Koch, undated.
Chase enrolled . . . Wichita Collegiate School: Chase Koch, interview by author, 2018. Descriptions of Wichita Collegiate School based on notes from reporting trips at the school, 2013, 2018.