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Friday September 29, 2000

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Grand jury indicts oil pipeline co.

By The Associated Press

WASHINGTON - A federal grand jury yesterday indicted one of the nation's biggest oil pipeline companies, alleging it violated environmental laws at one of its Texas plants in a case involving a pollutant linked to cancer.

The indictment in Texas charges Koch Industries Inc., its subsidiary Koch Petroleum Group and four employees with 97 felonies for problems with the pollutant benzene at a Corpus Christi, Texas, plant dating to 1995.

The company self-disclosed the problems to Texas regulators, but the indictment alleges the company engaged in a conspiracy and made false statements to Texas officials.

"Companies that produce dangerous pollutants simply cannot focus on profit and efficiency at the expense of a community's health," Assistant Attorney General Lois Schiffer said in announcing the indictment.

Though Koch has been one of the Republican Party's most generous donors, the administration of Texas Gov. George W. Bush joined in the investigation and hailed the indictment.

"The Texas Natural Resource Conservation Commission takes very seriously its responsibility to enforce all environmental laws to protect public health and the environment" commission executive director Jeff Saitas said.

The indictment charges Koch with violating the Clean Air Act by among other things failing to install required emission control devices in 1995 at its Corpus Christi refinery, and using a device to destroy benzene fumes that could not handle the high levels routed to it.

The Justice Department said the anti-pollution device "would often shut down for extended periods of time." As a result, the refinery "intentionally vented large amounts of untreated benzene fumes directly to the atmosphere," the department alleged.

The government also alleged the company didn'' report the violations properly.

Benzene is a byproduct of the oil refining process that has been linked to cancer and has been considered a hazardous air pollutant by the federal government since 1977.

The Associated Press first reported last month that the government was pursuing the indictment against Koch, a half-million-dollar donor to the GOP.

In addition to the company, four employees were also charged by the grand jury, including a former plant manager, a company lawyer, a vice president who oversaw the plant and one of the environmental engineers.

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 have said.

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.

A central focus of the investigation was 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.

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 this summer won praise for voluntarily committing to reduce ozone levels in Corpus Christi.