September 20, 2019

Adapting Business for Climate Change Risk

Mary Ellen Ternes

Hurricane Harvey hit the Houston/Crosby area on August 24, 2017, with a record 39 inches of precipitation over the following six-day period, and 17.54 inches on August 27, 2017 alone.  Throughout the storm, the U.S. Coast Guard’s National Response Center received 102 reports of releases of oil or hazardous chemicals.  These releases are reported to the NRC where they are not otherwise authorized by permit, thus potentially constituting permit violations, as well as statutory and regulation violations, and possibly also facts that could potentially support claims of negligence, nuisance and trespass. If the facts point to reckless disregard, criminal claims may result.  One of the most high-profile litigation matters to arise from Hurricane Harvey was the chemical fire and associated releases from the Arkema facility in Crosby, Texas. Chemical process facilities such as Arkema’s, located along the coast in the path of hurricanes and other extreme weather events, are uniquely vulnerable to impacts from such events. Despite compliance with applicable hazard assessment and mitigation requirements specifically applicable to such facilities, these facilities may still present risks during extreme weather events.

During Hurricane Harvey, as reported by the United States Chemical Safety and Hazardous Investigation Board (CSB), Arkema flooded and lost power resulting in chemical product degradation, over-pressurization, accelerating decomposition and fire lasting four days, with road closures, evacuation of over 200 residents for over a week, and 21 people seeking medical attention.  The CSB investigated, pursuant to its express statutory authority to investigate accidental releases resulting in a fatality, serious injury or substantial property damages, provided by CAA § 112(r)(6)(C)(i), codified at 42 U.S.C. § 7412(r)(6)(C)(i).

As discussed below, several complaints have been filed against Arkema as a result of this event. Through the litigation process, Arkema will have an opportunity to articulate its positions and defenses to all the recent allegations. However, regarding the CSB findings, “No part of the conclusions, findings, or recommendations of the Board relating to any accidental release or the investigation thereof shall be admitted as evidence or used in any action or suit for damages arising out of any matter mentioned in such report.” 42 U.S.C.§ 7412(r)(6)(G).

Specifically, the CSB Arkema Report addressed the sequence of events experienced by the Arkema facility during Hurricane Harvey in August 2017, including loss of power, flooding of emergency generators, loss of emergency generator power, loss of refrigeration (required to keep Arkema’s organic peroxides from decomposing), self-accelerating decomposition of organic peroxide due to loss of refrigeration, resulting fumes and then fire, closed roads, evacuations and persons seeking medical attention.  See Final Report, Arkema Inc. Chemical Plant Fire (May 24, 2018), Completed Investigations of the United States Chemical Safety and Hazardous Investigation Board (C.S.B.), https://www.csb.gov/arkema-inc-chemical-plant-fire/. (CSB Arkema Report).

The facts and resulting litigation are a compelling “lessons learned,” while the CSB final report is a great illustration of climate change adaptation concepts for chemical process plants, particularly post-Harvey.  Also, within the context of EPA’s enforcement initiatives, inspection history and implementation of the RMP, the report puts similarly-situated facilities on notice regarding possible litigation risks, including citizen suit potential.

According to the CSB Arkema Report, Arkema did complete a CAA § 112(r) RMP for two chemicals managed at its facility, but did not consider the organic peroxides (i.e., the chemicals that needed to be refrigerated), to be subject to these requirements.  Additionally, according to the CSB, Arkema completed the Process Hazard Assessment (PHA) portion of its RMP for the low temperature warehouse where the organic peroxides were stored, but did not expressly consider flooding.

Regarding PHAs, a question for industry has been: to what degree must, or should, chemical process plants contemplate external events, such as the risk of increasing storm force, duration and precipitation, in fulfilling their chemical plant safety process hazard assessment, where the potential external events are considered to be rare, extremely rare or unlikely, considering the possible harm should they occur?  The CSB Arkema Report provides valuable insights and recommendations on that issue.

With Arkema, the CSB focused on flood risk, expressly because Arkema’s common mode failure was flooding. The CSB Arkema Report recognizes that the CAA § 112(r) RMPs should evaluate “whether a process is vulnerable to damage caused by external events, such as … floods, high winds, and evaluate the potential consequences if such events damaged the integrity of the process” considering “reasonably anticipated external events” utilizing “recognized and generally accepted good engineering practices (RAGAGEP).” Focusing on Arkema’s flood risk, while also recognizing “effective guidance from consensus industry codes and standards is lacking with respect to flood risk,” The CSB found that flood risk could be analyzed under the existing terms of the existing regulatory structure, despite lack of express requirements. CSB Arkema Report, § 7.1.1.2. EPA Risk Management Program, ¶¶ 238-240. The CSB Arkema Report implies that analysis of these reasonably anticipated external events should at least consider the degree of actual historical impact, as well as competent available studies, such as flood insurance reports, rather than rely on employees’ recollections.  According to the CSB, Arkema’s insurer showed the nearby Adlong Ditch to be a flood hazard, and the facility itself is located in either the 100-year or 500-year floodplain.  Again, per the CSB, Arkema’s PHA for its organic peroxide storage “loss of refrigeration” risk assessment did not discuss flooding, though it did consider power loss.  Arkema’s safeguards against loss of power each failed due to flooding.

The CSB Arkema Report’s specific recommendations include, among others, that the American Institute of Chemical Engineers Center for Chemical Process Safety (CCPS) develop broad and comprehensive guidance to help companies assess risk from extreme weather events, covering common mode failures, facility susceptibility and involving sufficient expertise, including engineers, to ensure risk assessments and process hazard analyses are sufficiently robust. Report, § 15.4.  Thus, while the findings of the American Chemistry Council’s recent Summary Report, Hurricane Harvey Forum:  Lessons Learned, American Chemistry Council (Mar. 5, 2018), https://www.americanchemistry.com/Hurricane-Harvey-Summary-Report.pdf, is generally helpful, the CSB Arkema Report adds engineering considerations for implementing RAGAGEP in risk management planning, and recommends specific action by CCPS.

While in Arkema’s case, the CSB focused on the actual historical impacts of  flooding in the area around the facility, other facilities operating other processes may need to review other external factors, including risks arising from the unprecedented swings in barometric pressure, wind speeds of straight-line wind gusts, water infrastructure interruption, and more.  Hurricane Harvey set records across the board, Eric S. Blake, David A. Zelinsky, National Hurricane Center Tropical Cyclone Report, Hurricane Harvey (AL092017) (May 9, 2018), https://www.nhc.noaa.gov/data/tcr/A:092017_Harvey.pdf, which can now be considered unprecedented external factors with new historical impacts of record.  Thus, even where facilities are not located in flood plains and otherwise have no data indicating flooding as a risk, facilities may want to consider whether their PHAs sufficiently address risks from external factors such as those other records recently set by Hurricane Harvey.  Also, given that 40 C.F.R. § 68.36 requires RMP revisions within six months if “any aspect of the stationary source might increase or decrease the distance to an off-site consequence endpoint by a factor of two or more,” facilities may want to consider whether the unprecedented conditions experienced in Hurricane Harvey could impact this analysis potentially triggering revisions. Because citizen groups are increasingly stepping in to fill enforcement gaps, and the CSB Arkema Report should be considered by impacted facilities in litigation risk analysis.

On September 2, 2017, seven civil plaintiffs, including first responders and homeowners adjacent to the Arkema facility, filed a civil suit against Arkema in Harris County, Texas district court.  The Plaintiffs alleged claims seeking damages against Arkema, Inc. as well as Arkema representatives Richard Rennard, Richard P. Rowe and Andrew Burdett. Plaintiffs alleged three causes of action including negligence, gross negligence and negligence per se, for failing to: properly store chemicals, have proper procedures for backup refrigeration of chemicals, have adequate procedures in place to protect the safety and welfare of the community in the event of a catastrophe, to provide the public and first responders accurate information on the chemicals at risk of exploding, to implement procedures put in place by Arkema, Inc. as well as governmental agencies regarding the handling of chemicals, and to adequately prepare for a major flood event, having had the knowledge that such an event was foreseeable. The case was removed to the United States District Court for the Southern District of Texas in October 2017 and has since added more parties and more causes of action. On May 15, 2018, Plaintiffs filed their Third Amended Complaint, adding 135 more individual plaintiffs (now numbering 142), two more corporate defendants, and adding nine more causes of action to the original three, including: negligent misrepresentation, nuisance, trespass, conversion, intentional infliction of emotional distress, assault, fraud by non-disclosure, common law fraud and strict liability. Graves, et al., v. Arkema, Inc., Plaintiffs’ Third Amended Complaint, U.S. Dist. Ct. (S. Dist. TX, Houston Div.) (4:17-cv-03068).

This civil case is developing, and many others have been filed, including a class action lawsuit, Wheeler et al. v. Arkema France S.A. et al, filed about the same time as Graves, as well as many individual cases filed in March 2019 in the Federal District Court for the Southern District of Texas.  It will be some time before there will be any decisions. However, note that in this first civil case, the Plaintiffs have specifically and carefully alleged facts to support their negligence causes of action, including the scope of reasonable care and the foreseeability of facts relevant to both causation as well as resulting harm. Plaintiffs’ alleged that: “Arkema failed to heed the warnings and ignored the foreseeable consequences of failing to prepare”; that Arkema’s plans failed to “call for isolating hazardous materials from high wind or water – two very common hazards of any hurricane or tropical storm that could foreseeably and regularly hit the gulf coast”; and that Arkema failed “to adequately prepare for a major flood event having had the knowledge that such an event was foreseeable.”

The State of Texas filed separate criminal charges against Richard Rowe, the President and CEO of Arkema, Leslie Comardelle, the Crosby, TX Plant Manager, and Arkema, Inc. By August 2018, these charges became criminal indictments by the Harris County grand jury. The State of Texas v. Richard P. Rowe, Case No. 160031101010-3, Harris County District Court, Texas, No. 339; The State of Texas v. Leslie Comardelle, Case No. 160031201010-3, Harris County District Court, Texas, No. 339; and The State of Texas v. Arkema, Inc., Case No. 201776961, Harris County District Court, Texas, No. 157 (transferred from Court 339 to 157, as “other civil”). The allegations against the CEO and Plant Manager include “Reckless Emission of an Air Contaminant F3,” caused by:

failing to remove temperature sensitive organic peroxides from the Arkema facility…before the arrival of rainfall and/or flooding associated with Hurricane Harvey, recklessly caused the emission of an air contaminant, namely organic peroxides and/or byproducts of organic peroxides and/or petroleum distillates and/or soot and/or particulate matter on or about 8/31/2017 thereby placing persons in imminent danger of death or serious bodily injury, and said release was not in strict compliance with Chapter 382 of the Health and Safety Code or a permit variance or order issued or rule adopted by the TCEQ.

These cases are developing and have not yet reached resolution, though additional charges for felony “assault public servant” was announced on April 10, 2019. See The State of Texas v. Arkema Inc., Case No. 16276251919-3.

Watch this litigation space and the Environmental Committee for future programming.

Mary Ellen Ternes

ABA BLS Environmental Committee Chair, 2017-2019

Ms. Ternes, B.E. (ChE), J.D., is a partner with Earth & Water Law, LLC in Oklahoma City, Oklahoma. This article is adapted from a previous Ternes article published by ABA SEER’s Natural Resources & Environment, which Ternes serves as a member of the editorial board of.  She may be reached at Maryellen.ternes@earthandwatergroup.com.