Written by The Business Journal Staff
Vice President Mike Pence turns nostalgic when he talks about growing up in small-town Columbus, Indiana, where his father helped build an empire of more than 200 gas stations that provided an upbringing on the “front row of the American dream.”
The collapse of Kiel Bros. Oil Co. in 2004 was widely publicized. Less known is that the state of Indiana — and, to a smaller extent, Kentucky and Illinois — are still on the hook for millions of dollars to clean up more than 85 contaminated sites across the three states, including underground tanks that leaked toxic chemicals into soil, streams and wells.
Indiana alone has spent at least $21 million on the cleanup thus far, or an average of about $500,000 per site, according an analysis of records by The Associated Press. And the work is nowhere near complete.
The federal government, meanwhile, plans to clean up a plume of cancer-causing solvent discovered beneath a former Kiel Bros. station that threatens drinking water near the Pence family’s hometown.
To assess the pollution costs, the AP reviewed thousands of pages of court documents, tax statements, business filings and federal financial disclosures, as well as federal and state environmental records for Indiana, Kentucky and Illinois. The total financial impact isn’t clear because Indiana officials have yet to release cost figures for 12 contaminated areas. Other records are incomplete, redacted or missing.
The public cleanup of more than 25 former Kiel Bros. sites in Kentucky and Illinois — where officials have done a better job keeping costs down — has been much less expensive, totaling about $1.7 million, according to an analysis of records obtained under each state’s public records law.
Kiel Bros. has paid for only a fraction of the overall effort. In court documents, the company cited a payment of $8.8 million in “indemnity and defense costs,” but also noted that $4.5 million of that amount came from the state.
A spokesman for Indiana’s Department of Environmental Management, which regulates gas stations, did not respond to a detailed list of questions from the AP.
Pence spokeswoman Alyssa Farah called the findings “a years old issue” that the vice president has addressed before. She did not elaborate.
In a statement, Pence’s older brother Greg Pence — who was president of Kiel Bros. when it went bankrupt and is now running for Congress as a Republican — distanced himself from the cleanup costs.
“Greg Pence has had nothing to do with Kiel Bros since 2004,” campaign spokeswoman Molly Gillaspie said.
The fact that the company stuck taxpayers with the lion’s share of the cleanup bill rankles some observers, especially in light of the family’s reputation as budget hawks critical of government spending.
The Pence family, especially Greg Pence, has “some answering in public” to do, said A. James Barnes, an environmental law professor who served in high-ranking posts at the Environmental Protection Agency under President Ronald Reagan.
Founded by businessman Carl Kiel in 1960, the company grew, and Pence’s father, Edward, rose to corporate vice president.
Mike Pence says he worked for the business — which mostly operated under the name Tobacco Road — starting at age 14. But it was his brother who took over after Edward Pence’s 1988 death and eventually became president.
By the early 2000s, Kiel Bros. was swimming in debt as industry consolidation and low gas prices sapped profit margins. The business racked up environmental fines and closed stores. In June 2004, Greg Pence resigned as the company filed for bankruptcy.
“The oil and gas industry changed rapidly in the 1990s and early 2000s, and many small, independent companies like Kiel Brothers were not able to survive,” said Gillaspie, Greg Pence’s spokeswoman.
Many of the gas stations were sold off. Some sites were abandoned.
In the immediate aftermath of the bankruptcy, the state sought about $8.4 million from the company for cleanup and fines. After a new Republican governor, Mitch Daniels, assumed office in 2005, the state dropped that claim, which had been filed under Daniels’ Democratic predecessor, Gov. Joe Kernan.
The justification for the change is a matter of debate. Citing the complexities of bankruptcy law, experts said there was no guarantee a judge would approve Indiana’s claim.
Greg Pence wasn’t out of work for long. Within months, Daniels appointed him deputy commissioner of the Department of Environmental Management, the same agency fighting Kiel Bros. in court. Pence stepped down after only a few months, however, and returned to the petroleum business.
Daniels spokesman Jim Bush said the Pence family’s political influence played no role in Greg Pence’s hire. He declined to comment on the state’s decision to drop its claim against Kiel Bros. in bankruptcy court.
For some families living near Columbus, the Kiel Bros. business left behind more than debt: They smelled oil in water drawn from private wells. Nearly three decades later, the unincorporated area known as Garden City is a federal Superfund site, a designation reserved for the nation’s most heavily polluted locations.
Investigators initially determined Kiel Bros. was the source of the oil, along with a plume of trichloroethylene detected decades ago under a gas station. The chemical called TCE is a solvent used to degrease metal parts. The EPA says the plume is drifting toward the aquifer that is Columbus’ primary source of drinking water.
State officials seesawed over whether the company was responsible for the TCE before concluding in 2002 that it was not.