Office of the Attorney General News Release Archive


Thursday, January 13, 2000

CORNYN, GARZA ANNOUNCE $35 MILLION SETTLEMENT WITH KOCH INDUSTRIES

Largest Penalty Ever Recovered by Texas Under State Environmental Laws

AUSTIN - Texas Attorney General John Cornyn, Texas Railroad Commissioner Tony Garza, the U.S. Department of Justice (DOJ), and the U.S. Environmental Protection Agency (EPA) today announced a $35 million settlement with Koch Industries. This settlement includes the largest civil penalty ever imposed under the federal Clean Water Act in U.S. history and is believed to be the largest penalty ever recovered by the State of Texas under state environmental laws.

The case addressed the 41,000 barrels of oil spilled by Koch in Texas from 1990-1997 -- enough oil to meet the annual consumption needs of 1,900 Texans. The State of Texas will receive $17.5 million from the settlement.

"This settlement and penalty warn polluters that they cannot treat oil spills simply as the cost of doing business. I will continue to pursue polluters who threaten the health and safety of Texans," said Attorney General Cornyn.

"While I'll continue to be a strong advocate for Texas energy production, I hope today's message is clear: if you pollute Texas water, land and other natural resources, you'll pay the price," Commissioner Garza said.

Today's settlement resolves two lawsuits against Koch Industries, the second-largest privately held company in the US. The lawsuits alleged that ruptures in Koch's pipelines caused over 300 oil spills - 106 of these spills occurring in 28 Texas counties. There were an estimated 600 days of oil spills, and 41,000 barrels of crude oil were spilled in Texas. Three thousand of these barrels were spilled in Texas coastal areas. Evidence indicated the leaks resulted from a variety of preventable factors including corrosion, improper operations and lack of inspections.

Under the settlement, Koch must cleanup its oil spills addressed in the lawsuits. Additionally, the settlement directs Koch to assess all of its pipelines and repair or replace those lines found to be out of compliance. Koch also will be required to implement a pipeline leak prevention and leak detection program, a new maintenance and inspection program, and a company training program in corrosion control, maintenance and leak detection. All of these programs must be in place within 90 days. The settlement provides for an independent third-party auditor to ensure compliance with the remedial measures.

Of Texas' portion of the settlement, $6 million will be designated to the Railroad Commission's Oil-Field Cleanup Fund, $3 million to the General Land Office's Coastal Protection Fund, and $2.5 million to supplemental environmental projects administered by the Texas Natural Resource Conservation Commission (TNRCC).

The TNRCC supplemental environmental projects include:

In addition, one of the federal supplemental environmental projects includes a $1 million EPA Pipeline Safety Education Project in Texas, Oklahoma, and Kansas. This project is designed to educate the public and the regulated community about improvements to pipeline operation and maintenance which will reduce or eliminate spills.

The DOJ originally filed a lawsuit on behalf of the EPA and the U.S. Coast Guard against Koch Industries in Federal Court in Houston in April 1995. The suit alleged that Koch had violated the Federal Clean Water Act as a result of 297 oil spills from 1990 through 1995. The Texas Attorney General's office joined the Houston lawsuit in February 1997.

In July 1997, DOJ filed a lawsuit on behalf of the EPA and the U.S. Coast Guard against Koch Industries in Federal Court in Tulsa. The Texas Attorney General's Office joined the Tulsa lawsuit in October 1997 at the request of the Railroad Commission. This case involved 15 additional spills, including five in Texas.

The settlement is being filed today in the U.S. District Court for the Southern District of Texas, Houston Division.

###

You can view a map of the spill locations in Texas by going to our web site: http://www.oag.state.tx.us/newspubs/releases/2000/oil_spill_locations.gif

- 30 -


Contact Mark Heckmann, Heather Browne, or Tom Kelley at (512) 463-2050