Kochland Page 22
At that point, “poor Karen Hall walked in,” as Estes remembered it. Hall wasn’t even supposed to be working that weekend. She just happened to pop into the office to handle some unrelated business. As luck would have it, Hall walked into the control room just as Estes was debating whether or not to flush the water from the detention ponds.
As a lead engineering supervisor, Hall should have been the resident expert on whether flushing the hydrants was illegal or not. But Hall had been studious in her efforts to avoid expertise on the matter. Ever since she became Faragher’s boss, Hall made it clear that it was Faragher who had the background and the knowledge to handle wastewater issues. Even when debates arose, such as whether or not to dump ammonia water on the ground, Hall avoided getting involved. When the issue was thrust on her that Saturday, Hall was not ready to deal with it. She vacillated, and Estes pressed her point. Estes said that they were in a crisis—there was no time to debate the legal fine points of what they were doing. The detention ponds might overflow if they did.
“I said, ‘Well, do you have a better option? If somebody has a better option, I will by all means be happy to do it,’ ” Estes later recalled to state investigators. “Our options now: [wastewater] runs to the road, erodes the road, and ends up on the ground anyway, or I direct it somewhere where there’s minimal impact. As far as I was concerned, that was the two options.”
Estes told Hall that flushing the hydrants was routine—they did it all the time.
When faced with the choice, Hall deferred to Estes. Estes was the one who worked in operations, after all. Hall was just a consultant. The process owners were in charge. “I just bowed to [Estes’s] expertise, basically . . . so I figured she knew what she was talking about,” Hall said.
Estes decided to drain the detention ponds into a low-lying wetlands area near the refinery. “We figured since there was already a pond down there and there wasn’t any, you know, wires or anything building up ice on and falling, that essentially would have the least impact of any area. It was already a wetlands area,” she said.III
This time, roughly 2.88 million gallons of polluted water were released.
* * *
When Todd Aalto was told that Estes had just drained water from the detention ponds and flushed it into nearby low-lying wetlands, it made him curious. He had never heard of anyone flushing water down to that area.
He decided to go take a look. Aalto walked along a tree line that bordered an empty field beside the oil refinery. As he did so, he witnessed a surreal work of sculpture. The fountains of water spewing from the hydrants had been expelled at such force that the water had splintered small trees and snapped their branches off. A cloud of water and mist had showered the treetops, which now sparkled with crowns of icicles. The raw power of the water was breathtaking.
* * *
Heather Faragher returned from her vacation and went into her glass-walled office. She learned that, once again, Estes and her team had opened the hydrants and sprayed ammonia-laden water out into the fields and wetlands.
The first time Faragher had heard about this, she’d been furious. But things were different now. Faragher had already spoken up. She had already told Estes, Roos, and David that flushing waters from the hydrants was possibly illegal and certainly unacceptable. Faragher had even made the case to Jim Voyles, a top lawyer in Wichita. Voyles had undercut her. What was she supposed to do now?
In early 1997, something happened in Faragher’s life that made it even more difficult to wage this fight. She became pregnant with her first child. This removed the easiest solution to her problem, which would have been to quit her job. But how could she quit now? How would she and Greg support their child?
Still, there was one thing that kept Faragher from going along with her superiors. She knew that the flushing was illegal. And by keeping her job, she was essentially participating in an illegal act.
She saw only one way to move forward. She had to report Koch’s activities to the state.
* * *
Shortly after the January 4 flushing, Heather Faragher met with Don Kriens, an official with the Minnesota Pollution Control Agency. She unburdened to him everything that happened.
Kriens was shocked at what he was hearing. He agreed with Faragher that the flushing was not permitted under state law. It was an illegal bypass and might have resulted in unreported pollution. Kriens gave Faragher unambiguous direction. He told her that Koch Industries must cease flushing the hydrants. And if Koch insisted on doing it again, the company must first notify the state.
This was simplicity. This was a solution. Heather had gone to the authorities and gotten an answer. One could have forgiven Heather Faragher for feeling relieved when she left Don Kriens’s office. It seemed that she had finally found a way out of her dilemma. The authorities had spoken, and Koch Industries would have no choice but to obey the law. Faragher had no way of knowing how wrong she was. Her problems with Koch had just begun.
* * *
When Faragher returned to the refinery, she immediately spread the message: using the hydrants to flush polluted water must cease immediately. And even if Koch was considering flushing the hydrants again, there was no question that the company must first notify the state.
Faragher sent memos to this effect to supervisors, and she personally told the news to Brian Roos, Steven David, and Karen Hall. On January 17, Faragher sent a lengthy e-mail memo detailing the issue to dozens of employees, including Karen Hall, Roos, and wastewater plant operators like Todd Aalto. She even sent the memo to the safety department employees who actually opened the hydrant nozzles.
The memo noted that Koch’s lawyers were still exploring whether they could find a way to dump water from the hydrants legally. But the memo made clear that no hydrants could be opened without prior approval from the state. The memo also acknowledged that plant employees had been approaching Faragher with ethical concerns about opening the hydrants.
This wasn’t all that Faragher did. She sent another memo laying out clear and strict guidelines for when water could be drained out of the detention ponds and sprayed on the ground. This memo stated that if more than twenty thousand gallons of water—a relatively minuscule amount—was flushed out from the hydrants, then it had to be tested first for pollutants.
The matter seemed to be settled. Heather Faragher had gotten Koch Industries back into compliance.
* * *
Now that she had informed Koch Industries’ managers about their obligations, Faragher composed a memo to send to Minnesota state regulators. She wanted to report back to Don Kriens at the MPCA to let him know that she had complied with his orders.
Faragher completed this memo, and she ended it with a clear statement that Koch would comply with the state regulators going forward.
Before she sent the letter to the state, however, she was told to send it to Jim Voyles in Wichita. He needed to edit it. When Voyles returned Faragher’s memo to her, it was almost unrecognizable. Perhaps the most salient change was at the end of the memo, the paragraph that Faragher had written to ensure that Koch would comply with state law.
Faragher had originally written:
In the future, we will contact the MPCA if we need to put water on the ground for containment or high levels of permit pollutants. We plan to formalize a policy concerning this issue after we hear back from the MPCA and review all other pertinent regulations.
Voyles deleted that entire paragraph. He had replaced it with the following:
Koch is unaware of any statutory or regulatory duty to seek approval of or to report this type of discharge unless it is to surface water, it results in the release of a contaminant in an amount exceeding a reportable quantity, or could otherwise cause pollution of the waters of the state. Nevertheless, Koch wishes to ensure that it fully complies with applicable laws, regulations, and permits, and would welcome further dialogue with the MPCA on this issue to avoid any misunderstandings.
The difference between
these two statements was stark. Faragher had written that Koch would comply with MPCA’s wishes. Voyles had written the company wasn’t aware of any legal reason to do so. And now this memo was about to be sent to the state under Faragher’s name.
That’s when Faragher decided to go above her bosses’ heads.
Koch Industries had installed a hotline that employees could use to report an ethics complaint. After reading Voyles’s edits to her memo, Faragher called it. The first man she reached seemed nonchalant about Faragher’s story. He took her name and phone number and said someone would call her back.
Eventually someone did. Years later, Faragher could not remember the name of the man who called her back. (At that time, the head of ethical compliance at Koch Industries was a lawyer named Ben Burgess.)IV Faragher spilled her story to the man on the other end of the line. She told him everything: how her legal opinion was being marginalized, how Koch was taking a legal risk by doing so, and about the troubling edits that Voyles had made on her memo to the state. Faragher even talked about the personal toll that all of this was taking on her. She was pregnant, and she was worried that the stress of all this might be hurting her baby. Faragher was having trouble sleeping—the stress was wearing on her mind and body.
After hearing her out, the man in Wichita tried to sooth Faragher. He told her that the situation would be handled. And he insinuated that her concerns might be a bit overblown. He told her, then, to focus on her own health and personal life. “He told me that I needed to be taking care of myself and my baby. ‘You’re kind of just emotional because you’re pregnant,’ ” she later recalled. “I never heard from him again.”
When the phone call ended, Faragher realized that she was on her own.
* * *
On February 18, Brian Roos sent a memo to Faragher, Steve David, and an operations manager named Jim Jacobson. The memo was labeled: “In reference to the water policy.”
The water policy in question was the one Faragher had laid out in the memo she had previously shared, based on her meeting with the MPCA. Roos informed the team that he wished he had been consulted before that policy was announced. He thought the policy was wrongheaded.
Roos was particularly bothered by the idea that Koch would need to conduct pollution tests anytime it flushed more than twenty thousand gallons of water from the hydrants. He said that these and other constraints were unreasonable.
“I believe there is more red tape here than necessary. For routine use of the fire water for cleaning and flushing, we should not be required to go through this procedure,” Roos wrote. Heather Faragher, once again, was contradicted by senior management at the refinery.
There was urgency to this issue. The ammonia loads continued to arrive at the wastewater plant in alarmingly high levels. Once again, the water was being diverted to the detention ponds, and once again the detention ponds were getting dangerously full. The outcome seemed inevitable.
* * *
Koch Industries opened the fire hydrants and spewed ammonia-laden water onto open ground on February 25, 26, and 27, and again on March 26, without seeking prior approval from the state. Two men who worked with the wastewater plant—named Charlie Chadwell and Terry Stormoen—did not understand why Koch was dumping polluted water onto open fields around the plant. They were being asked to cooperate with the practice even after they’d gotten the memo from Faragher saying that it was unethical and possibly illegal.
This was just one of many grievances among the OCAW workers at the refinery during the 1990s. It was an unusually tense time between management and the union. It wasn’t all-out war like 1972, but wounds from that period lingered. The union men felt disrespected, and the work rules seemed to give them no job security at all anymore. The Market-Based Management teachings emanating from Wichita struck them as a tidal wave of corporate lingo. In many cases, it seemed like little more than a smokescreen used to justify firing any workers that Koch didn’t want around. The OCAW employees felt like they knew plenty about running a refinery—they didn’t need to learn about property rights and process ownership. There was a brief strike in 1993, and it concluded without much of a sense that anything was accomplished.
Longtime employees like Charlie Chadwell wanted out of the company. In April of 1997, it seemed like Chadwell’s desire to quit merged neatly with a need for him to relieve his conscience about the ammonia pollution. Maybe he could do the right thing, and win a generous severance package at the same time. On April 4, Chadwell and Stormoen paid a visit to the Minnesota Pollution Control Agency. When they arrived, they told a story that was even more damning than Faragher’s. The two plant workers alleged that Koch Industries made a habit of violating state pollution laws. To prove their point, the two brought along reams of documents: operating logs and internal communication that spelled out the violations in inarguable detail. It was all there: the logs of hydrants being opened for twelve hours, the notations of workers dumping xylene and naphtha down a leaky sewer system meant to process only water with some oil in it, and other complaints about leaky tanks and pollution.
Chadwell returned to the refinery and immediately told his bosses what he had done. He wondered if they might not want to negotiate his exit from the company.
The state regulators were not very far behind Chadwell. They arrived a few days later.
* * *
On April 8, 1997, Steve David, Faragher’s boss, told her that the MPCA was going to send agents to the refinery the following day for a surprise inspection. He had been tipped off by a source at the agency.
David gave Faragher clear instructions: She could meet with the MPCA investigators when they arrived, but she could not volunteer any information to them. She was to answer their questions with as little information as possible. “Yes” or “no” answers were preferable.
The next day, the regulators showed up unannounced, just as expected.
* * *
When the state inspectors arrived, Faragher saw that Don Kriens was with them. He was the official with whom she’d met months before, the one who’d told her Koch needed to stop flushing ammonia onto the ground, or at least give the state prior notification if it did so. Koch had already violated Kriens’s command several times.
Kriens and his team of MPCA agents gathered up a small group of Koch employees, including Faragher and David. Kriens asked the Koch employees to take him on a walking tour of the refinery. He wanted to see the detention ponds and other sights.
The state inspectors noticed that Faragher was nervous. She seemed to be having a silent argument in her mind. Every time they asked her a question, even a simple question, Faragher paused. She looked as if she might be comparing different versions of scripts in her head before responding.
Kriens and his team asked Faragher if Koch had flushed ammonia onto the ground at any time besides the incident that Faragher had already reported.
Faragher said that she didn’t know. She said Koch’s safety department controlled the hydrants, not the environmental engineers. This was not true, and Kriens’s team suspected as much. The state now had evidence of several other flushing incidents.
Kriens would later ask Faragher why she’d misled him, and Faragher would not have a good answer. “I was instructed not to give you any information you didn’t ask for,” she said. She seemed almost surprised by what she had done.
The state inspectors walked down to the detention ponds to inspect them. They walked near the wooded area that had been blasted sideways by the hydrant streams. Two of Koch’s safety department employees, Gary Ista and Chris Rapp, met Kriens at the detention ponds and told him what Faragher would not: that the ponds had been drained onto land several times after the incident.
Kriens and his team turned to Steve David. They asked him if he had known about these flushing episodes. Had Koch’s environmental team been aware that this was happening?
David told them that the environmental team didn’t know about the flushing until January, when Fa
ragher reported the flushing to the state. This was not true. David also left out the fact that he and other senior managers at Koch not only knew about the flushing but had held multiple meetings discussing the issue. One of those meetings had been all the way back in November, when David and Faragher debated the issue with Koch’s senior attorney Jim Voyles.
David would later say that he hid the fact of the meetings because Voyles told him the discussions were top secret and protected by attorney-client privilege. Voyles gave David the impression that even acknowledging the meeting would violate the attorney-client privilege, which David was not authorized to do. This was not true, as David would later learn.
Kriens and his delegation walked over to an area called the coker pond, a detention pool often filled with highly polluted water. Kriens had reason to believe that the coker pond had been overflowing its banks, and he asked David if a sewer mechanism at the pond called a “sump” had recently caused the pond to overflow.
David told him no.
Faragher was visibly nervous at this point. The pond had, in fact, overflowed the previous Monday. Faragher was part of a team that was now lying to the state.
* * *
Without Steve David’s cooperation, it was extremely difficult for state investigators to figure out how much Koch Industries managers knew about the ammonia pollution. The state had piles of work logs showing that the dumping occurred. But those logs told only part of the story. It wasn’t at all clear who had ordered the pollution—who had told the safety department to open the valves. It was even unclear how often the dumping happened.