September 20, 2019

Climate Change Consequences in the Here and Now: Arkema, Inc. and Hurricane Harvey

Walter D. James, III

On August, 3, 2018, Arkema (a French chemical company), Richard Rowe (Arkema CEO) and Leslie Comardelle (Arkema’s plant manager), were indicted by a Harris County grand jury for the reckless emission of an air contaminant in violation of the Texas Water Code.  Prison time and hefty fines are at stake.

The Arkema facility is located in Crosby, Texas (east and north of Houston, Texas).  During Hurricane Harvey, the facility was flooded during the historic rainfall as Hurricane Harvey stalled over the area.  The rain was of biblical proportions with significant and widespread flooding, all of which caused the plant to lose its main power and backup power which caused the failure of the facility’s refrigeration system.  The loss of the refrigeration system caused the organic peroxides to decompose, sparking multiple fires and explosions at the facility.  Approximately 200 people were evacuated and twenty-one people, including rescue personnel, were treated for chemical exposure.  Over the course of the storm, Hurricane Harvey killed 68 people and flooded over 300,000 structures.  Over 40,000 people were forced to evacuate their homes. 

The U.S. Chemical Safety Board ("CSB") conducted an investigation following the incident and published its report in May 2018 (“Report”).  The article written by Mary Ellen Ternes, “Adapting Business for Climate Change Risk,” also published in this edition of the Environmental Committee newsletter, reviews the Report in detail.  Significantly, the CSB noted that Arkema's insurer identified flood risks to the Crosby facility based on a 2007 floodplain map and that the flood risk information was not widely known at the facility.  And, interestingly, regulations do not explicitly require this information to be compiled and maintained as part of the facility's process safety information.  Another interesting finding was that the facility’s safeguards all shared loss of power as common failure mode.  The CSB Report did acknowledge, however, that even if Arkema had fully appreciated the flooding risk, industry standards would not have provided sufficient or actionable flood prevention guidance.  In fact, the volume and duration of rain that fell in the area around the chemical plant had a probability of occurring once every 5,000 to 20,000 years. 

Could Arkema been better prepared for Hurricane Harvey and its after-effects?  Perhaps.  Was industry as a whole prepared?  No.  Interestingly, the United States Environmental Protection Agency has not criminally investigated Arkema to the point of indictment.  And interestingly, the TCEQ was not involved in the investigation either.  The investigation was solely that of the Harris County Sheriff’s Office, the Houston Police Department’s Environmental Investigations Unit, and the Harris County District Attorney’s Office Environmental Crimes Division.  “‘As the hurricane approached, Arkema was more concerned about production and profit than people,’ said Alexander Forrest, chief of the Environmental Crimes Division at the Harris County District Attorney’s Office.”  Statement of Kim Ogg, August 3, 2018, https://app.dao.hctx.net/arkema-indicted-toxic-cloud .    

Some critics assert that the Arkema indictment is nothing more than political grandstanding, pointing to the fact that the Houston Police Department’s Environmental Investigations Unit generates more money in fines than all of the other enforcement programs.  They also highlight instances in which the Houston Police Department’s Environmental Investigations Unit has been found to be less than truthful.  See State v. Bell, Cause Nos. 1238939 and 1238940, Findings of Fact and Conclusions of Law, August 3, 2010.  This indictment continues a trend that began shortly after the September 11, 2001, terror attacks: the criminalization of industrial accidents. 

Some of the key findings in the CSB Report might be considered to support the notion of political grandstanding: 

  • 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 as a common mode of failure to protect against.
  • Arkema employees, other than a past facility manager, were 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.
  • The Arkema team that performed the low-temperature warehouse process hazard analysis for the facility did not document any flooding risk.  Even with a flooding risk, the facility appeared to have had sufficient safeguards in place to prevent loss of refrigeration in the low-temperature warehouses for a 100-year flooding event.
  • Although Arkema had a history of flooding over the past 40 years, long-term employees could not recall floodwater rising above two feet at any time before Hurricane Harvey.  Arkema did not consider flooding of its safety systems to be a credible risk.

The CSB Report does praise the 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.

It is also of some significance as it is a local authority prosecuting a company and its individual officers for a process safety incident that itself involved no fatalities or widely publicized environmental harm[1] and that occurred as a direct result of an act of God, the largest flooding event in the region’s history.  The indictment is also a deviation from what has taken place after other chemical accidents in Texas in recent years.  There have been no indictments since 2005, even when an incident resulted in injuries or fatalities. 

Another overlay that could be viewed as potentially pointing to political grandstanding is a provision of the Texas Water Code.  Section 7.203 of the Texas Water Code requires a peace officer investigating an alleged environmental violation by a person who holds a permit from the TCEQ to refer the case to the commission before a criminal prosecution can begin.  Tex. Water Code Ann. § 7.203 (Vernon 2010).  In other words, before a peace officer may refer an alleged criminal environmental violation to a prosecuting attorney for criminal prosecution, the peace officer must notify the TCEQ in writing for the TCEQ to determine whether civil or administrative duties will adequately and appropriately address the violations.  Id.  A peace officer must follow this procedure anytime the alleged criminal environmental violations involve a person, or an employee of a person, who holds a permit issued by the TCEQ and the activity constituting a violation is related to the activity for which the permit was issued.  Id.  Publicly available accounts have failed to reveal whether this procedure was followed.        

Prior to the indictments, Arkema and others have been civilly sued under classic toxic tort theories.  Graves et al. v. Arkema, Inc., et al., U.S. District Court for the Southern District of Texas, Houston Division, Civil Action No. 4:17-CV-03038, May 15, 2018. The counts include negligence, gross negligence, negligence per se, negligent misrepresentation, nuisance, trespass, conversion, intentional infliction of emotional distress, assault, fraud by non-disclosure, common law fraud, and strict liability.  There is not a specific amount of damages sought; however, by the listing of the types of damages, the plaintiffs very likely seek to recover sums beyond the jurisdictional limits. 

In one interesting twist, the civil suit includes as a defendant the consulting firm Arkema used to undertake the sampling and monitoring during the events leading to and after the plant exploded.  This twist will add a layer of technical complexity to the discovery and trial (if it gets that far).

Many other civil complaints, including a class action, have been filed relating to the events at the Arkema plant following Hurricane Harvey. Arkema has moved to consolidate the cases and has filed motions to dismiss most of the claims.  All of the civil proceedings are stayed until the criminal claims are resolved.

All in all, the old adage is true here – an ounce of prevention is well worth the pound of cure.  And, as I tell clients, the costs of compliance pale in comparison to the costs of enforcement.

[1] In April 2019, Harris County filed additional charges against Arkema and its principals for alleged failure to provide adequate information required for the safety of emergency responders. 

Walter D. James, III

Walter D. James, III practices environmental law in Texas, focusing on civil and criminal enforcement, administrative, remediation and cost allocation/recovery and group representation aspects of environmental law.  http://jamespllc.com/