The Nickel Report

Each year, the National Oceanic and Atmospheric Administration’s (NOAA) Climate Prediction Center puts out a forecast for the upcoming hurricane season, stressing the dangers posed by hurricanes and the need to prepare. About this time last year, Hurricane Harvey made landfall in South Texas as a Category 4 and resulted in historic flooding. The devastating aftermath of the hurricane still continues. Preparation for and responding to incidents, such as those caused by Hurricane Harvey, has become increasingly more complex and more important than ever.

Last month, a Harris County, Texas, grand jury indicted Arkema Inc., Arkema CEO Richard Rowe, and plant manager Leslie Comardelle based on allegations that, by failing to remove temperature sensitive organic peroxides from the Arkema facility in Crosby, Texas, before the arrival of rainfall and/or flooding associated with Hurricane Harvey, they recklessly caused the emission of air contaminants. The charge carries a penalty of up to five years in prison for the individuals and a fine of up to $1 million for the corporation.

Harvey’s record-breaking rainfall resulted in a loss of power at the Arkema Crosby plant, disabling refrigeration units used to safely store organic peroxides. Staff at the facility attempted to transfer the chemicals using mobile refrigeration units but were forcibly evacuated due to flooding. The remaining peroxides were left to chemically decompose, resulting in the release of contaminants. According to an investigation by the US Chemical Safety Board (CSB) available here, at least 21 people were exposed to the release on an adjacent public highway that bisected the evacuation zone established by emergency response officials. The investigation also reports there have been no long-term medical issues or deaths as a result of the event.

Flooding from Hurricane Harvey extended above the 500-year flood plain elevation according to the CSB investigation. The agency noted that Arkema's insurer identified flood risks to the Crosby facility based on a 2007 floodplain map, which placed the facility in the 100-year and 500-year floodplain. The CSB observed that this information was not widely known at the facility and that current process safety management regulations do not explicitly require this information to be compiled and maintained as part of the facility's process safety information. The CSB 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.

As devastating as Harvey was, it wasn't the first hurricane to hit the Texas Gulf Coast. Many of the primary lessons energy companies have learned came after previous storms, including Hurricanes Katrina, Rita and Ike.

The Arkema indictment continues a long running trend of the criminalization of major industrial incidents. However, there are extraordinary circumstances that make the indictments of Arkema and the two individuals exceptional. First, the release was the result of the largest flooding event in the region’s history, even beyond the measures of a 500-year flood, which some could argue is an Act of God. Second, there were zero fatalities and, generally speaking, minimal environmental harm. Despite these consideration, criminal prosecution was pursued.

Companies should consider having a legal incident response team of subject matter experts, including experts in environmental, safety, civil litigation, class action, white collar and insurance, that can go to work immediately when disaster strikes. In responding to an incident, there are immediate actions that need to take place, such as agency notification, crisis team coordination and communication to internal and external stakeholders. However, there is also a “tail” associated with almost all incidents that requires preservation of evidence, investigation, communication and incident mitigation. The sooner there are legal “boots” on the ground, the more effective both the immediate and long-term responses will be.