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Trouble at Plutoniumville

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When Boeing acquired a division of Rockwell International last year, it also acquired Rockwell's controversial 1992 plea agreement that settled a lengthy investigation into environmental crimes at the Rocky Flats nuclear-weapons plant. But now Boeing executives are considering withdrawing that guilty plea--if the judge will let them.

Late last month, a Boeing attorney told U.S. District Judge Richard Matsch that Rockwell executives were "coerced" into agreeing to the '92 plea, in part because of fraudulent statements made by Department of Justice officials handling talks to settle the case.

Attorney Christopher Koenigs told Matsch that Boeing executives are assessing whether to ask the judge to set aside the plea agreement and are "seriously considering" doing so. If such a request is made and granted, it would reopen the criminal probe of environmental crimes at Rocky Flats that first came to public attention in 1989, after a dramatic FBI raid of the plant.

The 1992 plea, in which officials of what was then a division of Rockwell International pled the company guilty to ten counts of violating federal environmental laws, required that Rockwell pay an $18.5 million fine, hailed by Justice officials as the second largest environmental fine collected by the federal government. But environmentalists denounced the deal, pointing out that the fine was smaller than the bonuses Rockwell had been paid for running the plant, a Department of Energy facility that manufactured plutonium triggers for nuclear weapons.

The settlement was also criticized by members of the grand jury that had been empaneled in August 1989 to hear evidence in the case. Jurors ultimately approved indictments of five Rockwell employees, as well as three DOE officials, but then-U.S. Attorney Michael Norton refused to prosecute the individuals and instead settled with Rockwell. Although the grand jurors protested the settlement and even wrote a report outlining their investigation, Judge Sherman Finesilver signed off on the settlement in June 1992. Finesilver has since retired from the federal bench, and the case landed in Matsch's courtroom.

Boeing North American, Boeing's aerospace division based in Seal Beach, California, last year acquired the Rockwell division that managed the Rocky Flats plant from 1975 to 1990--and with that acquisition, also inherited the plea deal that Rockwell officials had agreed to in order to settle the environmental-crimes case.

Revocation of the plea agreement could expose Rockwell employees to individual indictment--but it could also help Boeing fend off charges in two civil suits in which it faces potential judgments totaling $580 million.

Koenigs revealed Boeing's deliberations during a late-September pre-trial hearing on a lawsuit in which a former Rockwell employee, Jim Stone, and Justice officials accuse Rockwell of making false statements to federal regulators while it was managing Rocky Flats. Although some of the original claims have been dropped since Stone first filed suit in July 1989, a month after the FBI raid, the company could still be liable for up to $200 million if Stone prevails. (The Justice Department joined Stone's suit last year.)

Koenigs had asked Judge Matsch to keep Boeing's deliberations sealed from public view. After Matsch brushed aside that request, the attorney reluctantly discussed Boeing's current view of the '92 plea deal. Rockwell executives were deliberately misled by Justice officials, Koenigs told the court. Those Justice officials repeatedly told Rockwell that some of its employees faced indictment if the case wasn't settled, Koenigs said, when, with one exception, none of the prosecutors on the case favored indicting any of the individuals. And, Koenigs charged, Justice officials entered into a secret deal with their DOE counterparts, agreeing not to indict any DOE employees if DOE agreed not to reimburse Rockwell for the cost of any fine--even though Rockwell's contract with DOE appeared to require such reimbursement.

"They realized they'd look ridiculous" if taxpayers reimbursed Rockwell for any fine, Koenigs said; Rockwell accepted non-reimbursement as a condition of the settlement. But as a result of Justice's deal with DOE, Koenigs told the judge, DOE employees in effect were granted immunity from any future criminal charges stemming from their role managing the plant, regardless of what the evidence showed.

In fact, although the grand jurors had approved indictments against three DOE officials, prosecutors rejected them, claiming that the employees' actions had been part of the department's "culture" and that it would be unfair to hold individual employees accountable.

But the decision not to indict DOE officials is now critical to the civil litigation against Boeing, because the plaintiffs are seeking to use admissions Rockwell made in the plea agreement. The company's defense, Koenigs said, is that whatever Rockwell employees did at Rocky Flats, they did with the knowledge and approval of DOE officials.

Koenigs told Matsch that Boeing executives base their conclusions regarding the conduct of Justice officials during the settlement talks on "recently obtained evidence," although the only evidence he cited during the court hearing was from the 1993 report of a congressional subcommittee that criticized Justice's handling of the case. That report does reveal information about the talks between Justice and DOE officials, but at the September hearing, Justice Department attorney Joel Hesch disputed Koenigs's charge that there was anything improper about those discussions.

"There's nothing to hide here," Hesch told Matsch.
Boeing also faces the potential of a stiff financial penalty in a class-action lawsuit filed by neighbors of the plant. That suit charges Rockwell, Dow Chemical--which managed Rocky Flats before Rockwell--and DOE with damaging the property values of 10,000 of the plant's neighbors. The plaintiffs are seeking at least $380 million, plus an unspecified amount that would go to creating a program to monitor the health of 40,000 nearby residents.

The plaintiffs in that case charge that plant operations resulted in off-site releases of hazardous materials that threaten their health. Attorneys for the neighbors have asked U.S. District Judge John Kane for summary judgment on the portions of their suit based on the admissions Rockwell made in the '92 plea; that motion is pending.

Although no trial date has been set in the class-action suit, Jim Stone's case against Rockwell is set for trial on February 8, 1998. Judge Matsch has given Boeing officials until October 20 to decide whether they want to try to back out of Rockwell's original guilty plea.

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