Justice Dept. To Indict GOP Donor
     When is Cheney's Turn?
PHILADELPHIA (AP) - Federal prosecutors have informed a major Republican
donor they will seek an indictment this month alleging environmental crimes
in Texas that date back five years, officials familiar with the investigation said.

The case against Koch Petroleum promises to open a window on the relationship
between oil companies and Texas regulators amid an election in which
Democrats are suggesting Gov. George W. Bush's administration has gone
easy on polluters.

Koch, based in Wichita, Kan., was informed in the last few weeks that a grand
jury will be asked to indict the company and up to five employees as early as
next week, the officials told The Associated Press.

Prosecutors have told the company it will be accused of conspiring to conceal
problems at its Corpus Christi, Texas, refinery in the mid-1990s with the
monitoring of benzene, the officials said, speaking on condition of anonymity.
Benzene is a byproduct of oil refining that has been linked to cancer.

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.

Company officials said they disclosed the problems to Texas in 1995, fixed
them within months, and have been in compliance on the benzene issue for more
than four years.

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.

A grand jury began investigating the allegations in 1996. And while
prosecutors are studying 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 the language in advance, according
to people who have seen it.

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.

Texas officials support the federal investigation. ``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.

Koch and its top 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:

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 has been Koch's choice of words in documents it filed with the
government in 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 state.

Koch disclosed those compliance problems months before, and carried out a
repair plan, the documents say. Koch even invited Texas to cite it for
violations and be slapped ``with a penalty,'' the documents state.

In addition, officials said there is a document suggesting 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.

AP-NY-08-04-00 0121EDT

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