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UPDATE: Freedom Industries Executives Plead Guilty to Criminal Charges for West Virginia Chemical Leak

Wednesday, August 19, 2015 11:43
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UPDATE (8/19/2015): Former Freedom Industries President Gary Southern and another former Freedom president and owner Dennis Farrell entered guilty pleas at the U.S. District Court for the Southern District of West Virginia today over their roles in the January 2014 chemical spill.

Southern pleaded guilty to violating the Clean Water Act, negligently discharging refuse matter in violation of the Refuse Act and failing to have a pollution prevention plan. Farrell pleaded guilty to violating the Refuse Act and failing to complete a pollution prevention plan. Prosecutors will reportedly drop 12 bankruptcy fraud charges against Southern under a plea agreement.

Southern could face up to three years in federal prison and is scheduled to be sentenced in December. In addition to Southern and Farrell, four other former Freedom Industries former owners and senior officials have plead guilty to criminal charges and will also be sentenced in December to up to one year in prison.

The criminal charges against these corporate executives and officials underscore the importance of holding company officials personally accountable for deliberately operating their business in an unsafe manner.      

UPDATE (12/9/2014): The FBI has filed criminal charges against Freedom Industries President Gary Southern for allegedly making false statements regarding January’s chemical spill into the Elk River. The FBI’s complaint charges Southern with bankruptcy fraud, making a false oath in a bankruptcy proceeding, and wire fraud. According to the complaint, “Shortly after the leak and discharge of MCHM into the Elk River was discovered on January 9, 2014, Southern engaged in a pattern of deceitful behavior, which included numerous false and/or fraudulent statements about his role at Freedom, his role in the sale of Freedom to Chemstream, and his knowledge about conditions at the Etowah Facility.” If Southern is found guilty on all counts, he could be sentenced to up to 30 years in prison.

UPDATE (2/14/2014): Freedom Industries has revised its estimated amount of crude MCHM and PPH that spilled into the Elk River to 10,000 gallons, according to an update posted on the West Virginia Department of Environmental Protection's website Jan. 27.  Statements given by department officials explain that the revised estimate is based on what has been reported by Freedom Industries; the department has not yet confirmed those calculations.  

. . . . 

On Jan. 9, a major chemical spill occurred at a storage facility owned and operated by Freedom Industries when a failed above-ground storage tank leaked into the Elk River in West Virginia. Located only 1.5 miles upstream of a major public water system, the spill contaminated the drinking water supply of over 300,000 residents in nine downstream counties.

Like the many chemical incidents that have occurred in the past, the question that lingers is: how do we prevent similar incidents from happening in the future? This latest incident highlights the fact that our existing federal and state chemical safety standards are failing to protect American families and communities. We need to ensure that the chemicals used in industrial processes and consumer products have been adequately tested for human health effects, facilities that store toxic chemicals are carefully monitored and regularly inspected to ensure they are following safety standards and procedures, and state and local bodies that issue permits and make siting decisions about facilities that manufacture, process, or store toxic chemicals are fully aware of the risks to local communities.

Limited Data on the Public Health Effects of the Leaked Chemicals

Immediately following the spill, public interest and environmental advocates focused on collecting and disseminating information to the public on the potential public health risks of exposure to the “licorice-smelling” chemical, known as crude 4-methylcyclohexanemethanol (MCHM), that contaminated the water supply, but their searches revealed little information. Apparently, little research on the human health impacts of exposure to or ingestion of this chemical has been done because it is excluded from oversight under the Toxic Substances Control Act of 1976 (TSCA), our nation's primary ‒ and outdated ‒ chemical safety law. MCHM was one of approximately 62,000 chemicals in use when TSCA was enacted, so it was “grandfathered” into continued use without having to show it did not have harmful effects on human health.

Several days later, Freedom Industries reported a second chemical called “PPH” had also been stored in the leaking tank. (This chemical has been identified as a mixture of two other products.) More toxicity data has been located for these two chemical products than for MCHM, according to Senior Scientist Richard Denison of the Environmental Defense Fund, but it is not clear why Freedom Industries added the mixture to the storage tank.

Shortly after the spill, West Virginia’s American Water issued a warning to nine counties not to use the water supply. The Centers for Disease Control and Prevention (CDC) subsequently determined a “safe” level of MCHM in drinking water of 1 part per million (ppm), or about one drop per 13 gallons of water, though out of “an abundance of caution” recommended that the West Virginia Department of Health and Human Resources advise pregnant women not to drink the water until the chemical could not be detected in the water supply. Jennifer Sass of the Natural Resources Defense Council (NRDC) argues for a lower safety level – only 0.025 ppm; she recommends this lower value be used “not only for pregnant women, but also for nursing mothers, infants (especially those drinking formula made with tap water), young children, the elderly, and people with chronic illnesses.”

In fact, the reason we have disagreement about safe exposure levels and so little scientific testing to rely on is because since TSCA was passed, the U.S. Environmental Protection Agency (EPA) has only completed assessments of the health hazards of about 200 chemicals, out of the more than 83,000 chemical substances that are included in the TSCA Inventory. Because so little research has been done on MCHM, the legally required material safety data sheet (MSDS) prepared by the chemical manufacturer contained very little information.

A bill to reform TSCA, called the Chemical Safety Improvement Act (CSIA), is currently under consideration in the Senate Environment and Public Works Committee, chaired by Sen. Barbara Boxer (D-CA). While everyone agrees TSCA is not working, there is no agreement on the way forward. CSIA would not improve the health and safety protections missing from current law; in fact, nothing in the current bill would have prevented the Elk River spill.

State Oversight of Chemical Storage Facilities Lacking in West Virginia

State oversight of laws and regulations for onsite monitoring, inspections, permitting and planning, and preventive assessments is notoriously lax in West Virginia.

Site Monitoring and Inspections

West Virginia has no state law or regulation that requires monitoring or inspections of chemical storage facilities like Freedom Industries. State officials initially said that the site had not been inspected since 1991, but the West Virginia Department of Environmental Protection (DEP) has amended this statement and now says that DEP officials inspected the air and soil quality at the site after the property was sold and converted from a tank farm that stored gasoline into a chemical storage facility in 2001, according to The New York Times.

But the inspectors did not examine the storage tanks at the site. State officials explained that because Freedom Industries is just a chemical storage facility and not a chemical processing facility, no inspection was required. However, the Freedom Industries website describes the Etowah River Terminal, where the spill occurred, this way: “….Etowah River Terminal can process large volumes of chemical rapidly, and cost effectively.” Whether the state lacked authority to inspect the site or had the authority and simply failed to do so, the important point is that no inspection took place. Better monitoring might have helped to prevent the spill.

Only after the West Virginia DEP received a complaint about an odor near the facility did inspectors from the agency visit the Freedom Industries site. Upon finding that between 5,000 and 7,500 gallons of MCHM leaked into the Elk River from an above-ground storage tank, the department issued an order citing violations of the state's Water Pollution Control Act and Groundwater Protection Act and mandating Freedom Industries empty several additional storage tanks.

Permitting and Planning

The Freedom Industries facility was only required to have a general storm water runoff permit, which is administered by the West Virginia Department of Environmental Protection in accordance with Clean Water Act requirements. This general permit allows for discharges of storm water associated with industrial activity and is intended to apply to activities with minimal environmental impact. Companies with general permits are required to prepare a spill prevention plan and groundwater pollution prevention plan covering those chemicals and submit this plan to the state DEP. The permit also requires the company to immediately report any spills.

Although Freedom Industries had a general storm water permit, vague language in the Clean Water Act makes it unclear whether the facility must have any precautionary plan in place since it did not anticipate regular toxic discharges. Moreover, although Freedom Industries was required to report the spill to the state, the chemical is not on the list that requires the federal EPA to be notified when a spill occurs.

Freedom Industries was also not required to provide detailed reporting under a 2008 federal law requiring companies to register the chemicals stored with West Virginia's Division of Homeland Security. The law also mandates an emergency planning committee develop an emergency plan for “extremely hazardous” chemicals. Freedom Industries reported it was storing MCHM in accordance with the law. But because MCHM is categorized as an immediate (acute) hazard rather than an “extremely hazardous” material, the information was never shared with the Kanawha Putnam Emergency Planning Committee that develops local emergency response plans.

Source Water Assessments

Under the Safe Drinking Water Act, states are required to perform source water assessments for every major public water system and share the results with the public. Each state must establish a Source Water Assessment Program (SWAP) and have it approved by the EPA. The SWAP must map source water protection areas, conduct an inventory of potential sources of contamination within those areas, determine the susceptibility of public water systems to contamination sources, and release the results of these findings to the public. This information allows communities within a state to better identify risks and to develop priorities for protecting their drinking water.

West Virginia last performed a source water assessment 11 years ago, and its safety plan has not been updated since. The assessment showed that the location of the Freedom Industries facility is within a “zone of critical concern,” which “warrants a more detailed inventory and management due to its proximity to the surface intake and susceptibility to potential contaminants.” However, as Bloomberg Businessweek reporter Mark Drajem writes, “There's no sign [the assessment] was updated to account for Freedom Industries Inc., which bought and converted the facility from storing gasoline to storing MCHM.” Although the assessment recommended that the nearby public water system collect information on the risks from nearby sources of contamination, it appears no authority acted on this recommendation.

Preventing Future Public Health Disasters

In the wake of the Freedom Industries spill, the state and federal governments are considering legislative action. Only days after the spill made national headlines, Governor Earl Ray Tomblin (D) of West Virginia announced that he is partnering with the secretary of the state DEP to develop recommendations to avoid similar leaks in the future. Legislation was introduced in the state as well, but the Charleston Gazette writes that as currently written, the bill will do little to prevent similar incidents in the future. At the federal level, West Virginia Sens. Joe Manchin (D) and Jay Rockefeller (D) have also agreed on a proposal that would require inspections of above-ground storage facilities and require companies to develop emergency response plans.

This is a reversal for Tomblin and Manchin, both of whom have historically opposed regulation of the coal industry. Just a day prior to the spill, Tomblin said in his State of the State address that he would “never back down from the EPA.” And Manchin has voiced opposition to EPA's Clean Water Act rules that protect our nation's waterways from mountaintop mining. Even after the spill, Tomblin tried to shift the blame away from the state's unregulated and dirty coal industry, saying, “This was not a coal company incident. This was a chemical company incident.” (Since MCHM is used to “clean coal”, this is incorrect.)

In fact, for a new oversight standard to be issued in West Virginia, the state legislature must approve anything developed by the DEP. This means that legislators with their own political agendas have an opportunity to delay or entirely reject important safeguards that agency experts have determined are necessary to protect public health and the environment. Legislation proposed in the U.S. Congress, the REINS Act, which Manchin has co-sponsored in the past and which we have regularly criticized, would inflict this type of review on federal agencies. This process makes health and safety regulations subject to political concerns rather than sound science.

While corporate actors, like Freedom Industries, who behave irresponsibly should be fined and held accountable for the damages their behavior caused, we must also hold accountable our elected lawmakers for failing to develop and enforce the safeguards that would have prevented such an incident from occurring in the first place. Unfortunately, Freedom Industries has already filed for bankruptcy in an apparent attempt to avoid being held accountable for its actions.

Editor's note: This article was originally published on Jan. 28, 2014 with the title  ”Almost Heaven? West Virginia Contamination Highlights Long-standing Problems with Chemical Oversight in U.S.”


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