INDIANAPOLIS -- An Indianapolis-based oil recycling company is fighting back against claims it dumped thousands of gallons of untreated waste into the city sewer system, even as two employees admit their guilt.

The U.S. Attorney's office has filed suit against two former managers at Ecological System Inc. alleging they dumped nearly 300,000 gallons of oil-based products in February 2009, turning many area driveways and back yards black, 6News' Rafael Sanchez reported.

The company released a statement on Wednesday expressing disappointment with the two former employees, but saying that its plant was not the source of the pollutants.

"(Excess rainwater) was released over an eight hour period. ESI sampled the water being discharged and there was no oil in it. The action was widely known throughout our company and we have answered the EPA's questions about the event," the statement read.

The statement comes as Mark R. Snow and Michael R. Milem are both expected to plead guilty in an agreement with the government, admitting guilt in the incident.

Milem's attorney, Larry Champion, told 6News that his client "admits to assisting in improperly and unlawfully discharging untreated material into the public water system."

Federal regulators also claim that between 2001 and 2006, ESI employees misled the city by sending it samples with the lowest amounts or concentrations of pollutants.

ESI also said in its release that it had no knowledge of that allegation.

The city has requested the company pay $982,000 for clean up and repairs. Officials said ESI's permit is currently under review.

More Information: Ecological System Inc. Statement