They could go to prison.
In a case that has shocked the U.S. chemical industry, King of Prussia-based Arkema North America, its CEO, and two managers are scheduled for trial on state criminal charges in Texas next week. The focus is on their alleged roles in the explosions and fires that consumed 175 tons of volatile chemicals at its Crosby, Texas, plant in 2017, when the Houston area was swamped by 40 inches of rain from Hurricane Harvey.
Floodwaters killed power and refrigeration at the plant, leaving trailers of organic peroxides — used in making plastics — to heat, explode, and burn for days. Police on an emergency route near the plant drove into the smoke and got sick. More than 200 residents were evacuated from nearby homes, and 21 people sought treatment for chemical exposure; no deaths or serious injuries were reported.
Arkema said the storm was what insurance lawyers call an “act of God” and was not its fault. It also praised staff and emergency responders’ efforts to protect people.
But law enforcement in the nation’s petrochemical center says that the French-owned company, with yearly sales of about $10 billion and 20,000 employees around the world, should have prepared better, and that it’s time that Texas chemical company bosses were held responsible for failures that endanger workers and the public.
“Arkema knew of the dangers, withheld vital information, and unleashed harm on first responders and the community,” Kim Ogg, the elected Harris County district attorney, said last year. She spoke after a grand jury indicted Arkema and its King of Prussia-based logistics vice president, Mike Keough, on felony assault charges for “causing bodily injury to two sheriff’s deputies by withholding critical information needed by first responders.”
If convicted, the company will likely pay fines while Keough faces up to 10 years in prison. Keough and Arkema deny wrongdoing. How could Keough “assault” anyone in Texas, when he was at his office in King of Prussia as the Texas plant blew up? Arkema lawyer Rusty Hardin asked. Keough has since retired.
The indictments followed grand jury indictments in 2018 against the company, CEO Richard Rowe, and plant manager Leslie Comardelle for “recklessly” releasing dangerous chemicals in violation of Texas law. All the criminal cases will be tried together before state District Judge Belinda Hill, with opening arguments scheduled for Feb. 18.
“Responsibility for pursuing profit over the heads of innocent people rests with the leadership of Arkema,” prosecutor Ogg said when she announced the first charges. Rowe and Comardelle were released on $20,000 bond each. Rowe, a Bucknell-trained chemist, joined an Arkema predecessor in 1996 and was made CEO in 2015. Comardelle was later assigned to run an Arkema plant in Louisiana.
Ogg said Rowe and Comardelle face up to five years in prison if convicted. They are contesting the charges.
A civil suit filed against the company by the State of Texas listed 17 tons of chemicals, particulates, and gases that the company released during the fires. It noted that the local fire department had run up costs of $44,000 in dealing with the emergency and said Arkema could be subject to millions in fines but did not attempt to quantify other damages. That suit and other civil suits by neighbors and emergency workers are on hold until the criminal charges are resolved.
Criminal charges against industrial companies and bosses are rare, Ogg acknowledged.
Arkema says this case is unique.
“There has never been an indictment like this in Texas or any other state," Arkema lawyer Hardin said in a statement. The prosecutions are “an unprecedented and outrageous attempt to criminalize a natural disaster,” he added. “This is a political prosecution.” He called Arkema’s managers “heroes,” noting that Comardelle was part of a “ride-out team” that tried to keep the plant running through the floods.
The company in its own statement called the criminal charges “astonishing” and defended its record, noting that the independent U.S. Chemical Safety and Hazard Investigation Board found that Arkema had set up industry-required plans, procedures, and backup power to keep the chemicals cold so they wouldn’t explode. The company also warned emergency responders and was overwhelmed by a storm it said was likely to occur only once in 5,000 years.
The board’s official summary says that Arkema did indeed comply with the law and industry standards, and was hit hard by “unprecedented” rain.
But the board also noted that Arkema’s current employees were not told of the site’s history of floods: A past plant manager knew of worse flooding in 1994 and 2015, but his successors didn’t. Also, the company’s insurer realized that the plant lay in a flood plain, but details weren’t shared with plant staff. The board also found that Arkema didn’t meet “company or industry standards” in its planning for what to do when the power went out.
And the board called existing industry and government flood hazard guidelines inadequate because they didn’t require Arkema to elevate power sources or cables despite the flood-prone site.
The Arkema plant had also been cited in a 2016 Texas A&M University and Houston Chronicle analysis as one of the facilities most at risk of dangerous accidents in the Houston area, which has the nation’s largest petrochemical complex.
The indictment of Arkema and CEO Rowe “is legally significant” and “a deviation from the treatment of other chemical accidents in Texas,” which had not resulted in criminal prosecution of executives or companies since 2005 — even when workers died, noted Benjamin H. Patton and Mary M. Balaster, in a report to clients of Pennsylvania-based corporate law firm Reed Smith LLP.
British Petroleum (BP) — not its executives — was criminally charged in connection with a 2005 explosion at its Texas City refinery that killed 15 workers. That case was settled for $50 million.
Ogg’s office has an Environmental Crimes Division which joined Harris County sheriff’s deputies and the Houston city police Environmental Investigations Unit in preparing the case against Arkema.
Ogg was elected district attorney by voters in Houston and its suburbs in 2016, defeating incumbent Republican Devon Anderson. Ogg pledged to take a harder line against companies that pollute. She faces a primary challenge this year from a left-wing former deputy who says Ogg has not been an activist enough.
Since the charges were first filed, Harris County has approved $850,000 to hire more environmental prosecutors and investigators, according to Reed Smith’s Patton.
In the Arkema case, prosecutors say the company claimed to be monitoring chemical dangers, as the plant’s generators and batteries lost power. But investigators found the company didn’t actually track or know how fast some containers of organic peroxides were warming until they caught fire, giving emergency responders a false confidence that left them and neighbors exposed to chemicals.
The Arkema charges may be unusual in Texas, but they are also part of a larger “nationwide trend of holding companies increasingly accountable for their inadequate prevention,” including California’s criminal complaints against Pacific Gas and Electric (PG&E) for deadly fires along its power lines, Texas environmental lawyer Walter D. James III wrote in a review of the indictments for the American Bar Association.
Could charges follow other industrial disasters, such as last fall’s explosive fire that wrecked a key facility at the two-square-mile Philadelphia Energy Solutions refinery? That explosion led to its bankruptcy and 1,100 layoffs and was initially traced to an uninspected pipe that failed.
“We would absolutely consider any criminal complaints that were referred to us by an investigating body, whether from the local, state, or federal level,” said Jane Roh, spokesman for Philadelphia District Attorney Larry Krasner. But she added that such referrals from regulatory agencies around here are rare.
Chester County filed criminal charges last year against the security manager of Energy Transfer Corp., owner of the Sunoco Logistics pipeline projects in that county, Pennsylvania’s wealthiest, for illegally hiring state constables as armed guards. Officials of two guard contractors were also charged. The district attorney’s office, now run by Democrats, is continuing a criminal investigation of recent pipeline construction begun under the former Republican administration, confirmed assistant district attorney Alex Gosfield.
At the least, lawyer James wrote, charging business executives with crimes serves as a reminder: “The costs of compliance pale in comparison to the costs of enforcement.”