On Friday, August 3, 2018, a Texas grand jury indicted Arkema Inc., Arkema CEO Richard Rowe, and plant manager Leslie Comardelle based on allegations that these defendants were responsible for a release of air contaminants resulting from an organic peroxide decomposition release and fire at their facility in Crosby, TX, during Hurricane Harvey. The hurricane, which resulted in historic rainfall and flooding in South Texas between August 25 and September 2, 2017, caused a loss of power at the Arkema Crosby plant that disabled refrigeration units storing organic peroxides. Despite efforts by company employees to relocate the chemicals in mobile refrigerated units, flooding forced the evacuation of the Arkema plant and resulted in the loss of cooling and eventual decomposition and release of the peroxides. According to an investigation by the U.S. Chemical Safety Board (CSB), 21 individuals sought medical attention as a result of exposure to fumes on a public highway adjacent to the plant that emergency officials initially decided to keep open, although there were no documented fatalities or long-term medical issues associated with the incident.
In the indictment’s press release, Harris County district attorney Kim Ogg stated,
Companies don’t make decisions, people do. Responsibility for pursuing profit over the health of innocent people rests with the leadership of Arkema. Indictments against corporations are rare. Those who poison our environment will be prosecuted when the evidence justifies it.
The district attorney’s allegations assert that Arkema and its officers “recklessly” violated the Texas Water Code, specifically section 7.182(a), which states:
A person commits an offense if the person recklessly, with respect to the person’s conduct, emits an air contaminant that places another person in imminent danger of death or serious bodily injury, unless the emission is made in strict compliance with Chapter 382, Health and Safety Code, or a permit, variance, or order issued or a rule adopted by the commission.
The press release associated with the indictment references the CSB investigation and report relating to the Arkema incident. For the past five years, prosecutors have sought to use the work of CSB investigators to support indictments over the objection of the CSB, which does not have direct enforcement authority. It is not clear whether CSB investigation notes or interview records were sought or used by the district attorney in this case. However, the CSB investigation report of the Arkema incident is publically available and key findings included:
- Arkema had multiple safety systems in place to prevent the release of organic peroxide products; however, flooding was not considered in the process hazard analysis (PHA) as a common mode of failure to protect against. Companies need to ensure there are not common modes of failure in their layers of protection.
- Arkema Crosby facility employees, other than a past facility manager, appeared to be unaware of flood risks to the facility even though some portions of the facility are in the 100-year floodplain and the remaining areas of the site are in the 500-year floodplain. Although federal process safety regulations require companies to compile relevant process safety information, the regulations do not specifically identify flood insurance maps and related studies as required. The CSB investigation revealed that other companies also might be unaware of the potential for flood risks to create process safety hazards at their facilities if flood-related information is not typically compiled or assessed in required safety analyses.
- The Arkema team that performed the low-temperature-warehouse PHA for the Crosby facility did not document any flooding risk. Had the Arkema PHA assessed flooding, the limited industry guidance on flooding would likely have been insufficient to provide specific or sufficiently conservative levels of action to protect against the hazards posed by the flooding during Hurricane Harvey. Even without this assessment, however, the Crosby facility appears to have had sufficient safeguards in place to prevent loss of refrigeration in the low-temperature warehouses for a 100-year flooding event.
- Although the Arkema Crosby facility had a history of flooding over the past 40 years, long-term employees could not recall floodwater rising above two feet before Hurricane Harvey. As a result, Arkema did not consider flooding of its safety systems to be a credible risk.
The CSB investigation report goes on to praise the “positive actions taken by Arkema post-incident” relating to the conducting of flooding site surveys as a basis for its recommendations to the chemical manufacturing industry.
The indictment of Arkema as well as its CEO and plant manager is legally significant because it represents an effort on the part of a local authority to criminally prosecute a chemical corporation and its individual officers for a process safety incident that involved no fatalities or widely publicized environmental harm and that occurred as a direct result of the largest flooding event in the region’s history, which has been characterized as a greater than 500-year flood event. This is a deviation from the treatment of other chemical accidents in Texas in recent years, none of which has resulted in criminal prosecution of the company or its leadership since 2005, even when an incident resulted in injuries or fatalities. Prosecutors may be holding companies to a new higher standard if Arkema’s response to this natural disaster represents reckless behavior in their view.
The Texas Water Code allows penalties of up to $250,000 or five years’ imprisonment or both for an individual and up to $500,000 for a person not an individual.
A judge set bond for both Rowe and Comardelle at $20,000.
A link to the CSB investigation report relating to the Arkema incident can be found here.
Client Alert 2018-168
