Justice Dept. To Indict GOP Donor
By John Solomon
Associated Press Writer
Thursday, Aug. 3, 2000; 9:51 p.m. EDT
PHILADELPHIA �� The Justice Department has notified one of the
nation's biggest oil pipeline companies, a major GOP donor, that
it will be indicted on 5-year-old environmental charges in Texas,
officials familiar with the investigation said.
Koch Petroleum, a half-million-dollar contributor to the
Republican Party, was told it would face a criminal indictment as
early as next week, these officials told The Associated Press.
Prosecutors have told the company they will ask a grand jury to
charge Koch and as many as five of its employees with conspiring
to conceal problems in the mid-1990s concerning the monitoring of
benzene, a byproduct of oil refining that has been linked to
cancer, the officials said. They spoke only on condition of
anonymity.
The case involving Koch's Corpus Christi refinery, however,
offers several wrinkles.
Wichita, Kan.-based Koch disclosed the problems to Texas in 1995,
fixed them within months, and has been in compliance on the
benzene issue for more than four years, company officials say.
A grand jury began investigating the allegations in 1996. And
while prosecutors are investigating whether Koch filed a
misleading report that used rosy language about its benzene
levels, there is a document indicating that a state regulatory
official approved of the language in advance, according to people
who have seen it.
The case promises to open a window on the relationship between
oil companies and Texas regulators in the midst of a presidential
election in which Democrats are suggesting Gov. George W. Bush's
administration has gone easy on polluters. The Democratic Party
began running ads with the criticism this week during the GOP
convention.
House Majority Leader Dick Armey, R-Texas, on Thursday night
questioned the timing of the case. "He's concerned the timing is
so fishy, coming at a time when this administration is playing
political football with anything doing with Texas," spokeswoman
Michele Davis said.
Government officials familiar with the investigation said the
election had nothing to do with the decision, noting the case was
delayed as Koch waged an unsuccessful legal battle to keep
certain documents secret.
Those documents suggest Koch officials wanted the company's
benzene problems to be handled by Texas regulators, rather than
the Environmental Protection Agency, because they felt penalties
would be less stiff at the state level, government officials
said.
Contacted for comment Thursday, the company said it was "aware of
the government's interest." It said the dispute involves "complex
regulations and reporting requirements" and not toxic releases
that could have affected the surrounding community.
Koch employees "acted responsibly in identifying an issue,
investigating it, alerting Texas environmental officials to the
issue, and taking the steps necessary to resolve it," the company
said in a statement.
However, Texas officials say they're supporting the federal
investigation of Koch as part of a joint task force.
"The state of Texas is in lockstep with the federal government on
this investigation," said Glenn Shankle, deputy executive
director of the Texas National Resource Conservation Commission.
The company and executive David Koch have donated at least
$215,000 to the Republican Party this election, and its employees
have chipped in $27,500 to Bush's presidential bid. In addition,
the company has given $225,000 in political action committee
donations to GOP congressional candidates.
The government first pursued a criminal investigation against
Koch after a company whistleblower emerged in 1996. The sources
said the timing of the planned indictment was driven by three
facts unrelated to the election:
�The court battle over the corporate documents recently
concluded.
�An agreement between the company and the government to extend
the statute of limitations has expired.
�Justice and Koch officials have been unable to reach a plea
bargain during two years of negotiations.
A central focus of the investigation has been Koch's choice of
words in documents it filed with the government in early 1996
that declared the company "maintains continuous compliance" with
the benzene reporting requirements of the Clean Air Act � without
mentioning its earlier problems.
Company officials chose in 1996 to make the declaration based on
"its current configuration and operating conditions" � which were
repaired after extensive problems were detected in late 1995,
Texas state documents reviewed by AP show.
Koch disclosed those compliance problems months before, and
carried out a repair plan, state documents show. Koch even
invited Texas to cite it for violations and be slapped "with a
penalty," the documents state.
In addition, officials said there is documentary evidence stating
Koch officials consulted in advance "in good faith" with a Texas
state regulatory official and were told they could "reasonably"
use the language in the 1996 report and remain in compliance with
the law. That official no longer works for the agency.
Koch has had previous environmental problems. Earlier this year
it settled a case involving oil leaks in six states with a record
$35 million payment to the government. And it pleaded guilty in
Minnesota to discharging oil into streams, paying an $8 million
penalty.
The company is striving to change its image and last month won
praise for voluntarily committing to reduce ozone levels in
Corpus Christi.
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