James C. McKay, the independent counsel named to investigate allegations that former assistant attorney general Theodore B. Olson gave false testimony to Congress in 1983, has resigned to avoid the appearance of a conflict of interest, a federal appeals court panel said yesterday.
The court named Alexia Morrison, former chief litigation counsel at the Securities and Exchange Commission's Enforcement Division, to take over the investigation. Morrison, a partner in the Washington firm of Seidler & Berlin, was working as McKay's deputy. She is the first woman to be named as an independent counsel.
Morrison, who has a reputation as a tough prosecutor, spent eight years as an assistant U.S. attorney here before she went to the SEC in 1981. She left the SEC last September.
The three-judge panel said McKay resigned Wednesday because, prior to his April 24 appointment, "advice had been given by another member of his firm in an area that might be considered to create the appearance of a conflict of interest." McKay has been a trial lawyer with the firm of Covington & Burling here for 29 years.
The investigation focuses on whether Olson, former head of the Justice Department's Office of Legal Counsel, gave false testimony to Congress about the administration's withholding of documents relating to enforcement activities at the Environmental Protection Agency. Olson is now an attorney in the Washington office of Gibson, Dunn & Crutcher, the Los Angeles firm of former attorney general William French Smith.
The special court panel, formed under the Ethics in Government Act, released a statement by McKay that said:
"While I have no actual conflict of interest in connection with this investigation, the appearance of a conflict of interest conceivably may exist because of advice given by another member of my firm in an area which might ne considered to have a relationship to this investgation.
"Although I did not participate in any way in such representation. I feel that I must, nevertheless, resign as independent counsel to avoid even the appearance of a conflict of interest."
Neither McKay nor the court provided any further detail on the incident that led to the resignation.
The House Judiciary Committee, in a 1,300-page report earlier this year, said that Olson and other administration officials misled Congress, a federal court and President Reagan during the 1983 confrontation between Congress and the administration over the EPA documents.
Several congressional committees were investigating allegations of mismanagement and political favoritism in the EPA's "Superfund" toxic waste cleanup program, and Olson's advice that the documents be withheld on grounds of executive privilege helped generate the confrontation that led to the resignation of Anne M. Burford as EPA administrator.