Arcadian Corporation

Read the official release (oshrc.gov)

Plain-English summary

A pressurized urea reactor exploded at Arcadian's fertilizer plant after corrosive material breached its stainless steel liner and damaged the load-bearing carbon steel layers. The Commission found that Arcadian and its industry recognized the danger of continuing to operate a leaking reactor and that employees faced serious harm from flying debris, heat, chemicals, and toxic gases. Shutting down after a leak, keeping the weep-hole detection system clear, and performing adequate inspections were feasible ways to reduce the hazard. The Commission found the violation willful because management knew that leaks warned of liner breaches but continued operating after leak indications in January and June 1992 without a reasonable factual basis. It affirmed the general-duty-clause violation and assessed a $50,000 penalty.

Decision snapshot

• Cited standard(s): 29 U.S.C. § 654(a)(1)
• Outcome: The willful general-duty-clause violation was affirmed with a $50,000 penalty.
• Key point: Continuing to operate a high-pressure reactor after recognized leak warnings, without a reasonable basis for discounting them, can constitute willful disregard of employee safety.

Full text (OSHRC public release)

Arcadian Corporation, Docket No. 97-0628

Walter, J. David
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EN-US
X-NONE
X-NONE

SECRETARY OF
LABOR,

Complainant,

v.

OSHRC
Docket No. 93-0628

ARCADIAN
CORPORATION,

Respondent.

DECISION

Before: RAILTON, Chairman; ROGERS and STEPHENS,
Commissioners.

BY THE COMMISSION:

On July 28, 1992, a pressurized urea
reactor exploded after normal working hours at Arcadian Corporation’s
(“Arcadian’s”) fertilizer plant in Lake Charles, Louisiana, destroying the
facility. Following an investigation of the explosion, on January 27, 1993, the
Secretary of Labor (“Secretary”) issued several citations to Arcadian. At issue before us is a single
allegation that Arcadian willfully violated section 5(a)(1) of the Occupational
Safety and Health Act (“the Act”), 29 U.S.C. § 654(a)(1), (the “General Duty Clause”), by
exposing employees to the hazard of being struck by flying debris, suffering
heat and chemical burns, and asphyxiation by toxic gasses by the reactor’s
explosion caused by Arcadian’s improper operation of the reactor. The citation
identified three methods of abating the cited hazard: (a) shutting down the
reactor upon the previous detection of leaks in the vessel’s lining; (b)
implementing an adequate program to ensure that the reactor’s leak detection
system was properly monitored; and ©) assuring that critical welds were
performed according to industry standards and design specifications. The judge
treated each of these three methods of abatement as separate hazards. He found
that (a) and (b) were willful violations, ©) was a serious violation, and
assessed the $50,000 proposed penalty. We conclude that the judge erred in
finding that the three cited methods of abatement were themselves separate
hazards. For the reasons set out below, we find that the record establishes
that Arcadian’s employees were exposed to serious injuries presented by the
improper operation of the reactor and that Arcadian willfully violated section
5(a)(1) by failing to abate that hazard.

I. Does the record support the judge’s findings that
Arcadian violated section 5(a)(1) of the Act?

A. Background - Urea Reactor
Design and Operation

The reactor was approximately 90 feet
tall and 6 feet in diameter and had a capacity of 1836 cubic feet. The reactor
was constructed of four 20-foot high cylindrical sections stacked on top of
each other, circumferentially welded together as well as to top and bottom
“heads” on either end of the reactor. The weld joining the lowest section to
the bottom head was designated C-1 and the weld between the top section to the
upper head was designated C-9. The three intermediate section welds were
designated C-3, C-5 and C-7.

Urea was created inside the reactor
vessel by introducing a mixed stream of ammonia and carbon dioxide into the
bottom of the reactor at a pressure of approximately 2750-2865 psig (pounds per
square inch gauge) and at a temperature of approximately 340-375̊ Fahrenheit.
The pressure on the mixed stream forced it upwards through the reactor
where it was further mixed by “trays,” attached by “tray clips” to various
points inside the reactor. The mixed stream formed ammonium carbamate, an
intermediate stage in urea synthesis. Urea would then be separated out of the
ammonium carbamate.

Ammonium carbamate is highly corrosive,
especially to carbon steel. To contain the corrosive material as well as the
heat and pressure involved in creating urea, the reactor had a wall
approximately 4 ¼ inches thick, consisting of a corrosion-resistant stainless
steel inner lining surrounded by 14 layers of carbon steel, of which
the outer 13 layers were used for “design stress.” Between the stainless steel
liner and the innermost layer of the carbon steel liner was an open space, or
“annulus,” which extended from the top to the bottom of the reactor. The
reactor was constructed with 24 “weep holes” that ran from the outside of the
reactor through the layers of carbon steel and terminated at the annulus. They
were composed of a low alloy steel, similar to the carbon steel wrapped outer
layers, and were installed 120 degrees apart from each other, with three
located 22 inches above the C-1 weld, three located 22 inches below the C-9
weld, and three located 22 inches both above and below the C-3, C-5 and C-7
welds. The weep holes had an inside diameter of approximately 3/8 of an inch
and an outside diameter of ½ an inch. In the event of a breach of the inner
stainless steel liner, the reactor’s contents would leak out and pass through
the weep holes, thereby providing an early warning that a potentially
catastrophic condition was developing.

The urea manufacturing process was
monitored by three sets of operators. The A operators’ were responsible for
monitoring the pressure and temperature inside the reactor from the control
room board. The A operators also looked at the control room operator’s logbook
to see what the preceding shift had written, and wrote in the logbook any
significant events that occurred on their watch. They also spoke about the
reactor’s operation with their replacement at the shift change. The only duties
the B operators had was to make observations at the lower deck level and the
feed lines that went into the reactor. The C operators’ responsibilities
included checking the reactor’s weep holes on an hourly basis. If a C operator
saw the reactor’s contents coming out of a weep hole, the standard operating
procedure was to notify the A operator and the reactor would eventually be shut
down. C operators were also responsible for flushing out the affected weep hole
with a steam lance to make sure it did not become plugged. Arcadian Urea Area
Supervisor Richard Bartley was the supervisor for the A, B and C operators.

B. June 1989 leak

The urea reactor had been shut down
because of a leaking weep hole as recently as 1989, when Olin Mathieson Company
(“Olin”) owned the plant. On June 23, 1989, the urea plant was shut down after
leaks were observed in two weep holes, approximately sixty feet from the bottom
of the reactor. Operator David Sittig, who had discovered the leak, testified
that urea was “blowing out roughly about a foot, foot and a half at the time it
was first discovered.” He described the leaking material as being whitish in
color. Operator Thomas Chapman stated that the leak was “simply an emission of
corroded rust colored material from a weep hole” that was “spitting out at a
relatively low rate.” Operator Cleveland Harris described the leak as being a
“white substance” that was coming out in “little spurts.”

Sittig notified the lead operator,
Mickey Sullivan, who also observed the leak. Sullivan then called urea unit
superintendent Dana Baham. Baham described the leak as being
“brownish-white-red looking, an off color looking urea.” He described the
stream as “much the same as you would expect to see if somebody was holding a
water hose with a constricted nozzle at that point on the reactor, going out”
and that it was streaming out approximately 10 to 15 feet. Baham reviewed the
reactor drawings and determined that there had been a breach of the liner, and
within one hour of discovering the leak decided that the reactor should be shut
down. When asked at the hearing “[w]hat was the basis on which you made your
decision in 1989 to instruct Mr. Sullivan to begin shutting down the reactor,”
Baham replied: “I had been around this business long enough to know that a leak
detection system or a weep hole system was a telltale system of something that
told you you had a problem, a breach of the liner. So on that basis, that was the
thing to do.”

Within a day after the shutdown, Olin
assembled a team to begin planning a response to the leak. The team shut the
plant down, decontaminated it and cooled it to allow them to enter the reactor.
Olin chose an Austrian firm, Schoeller-Bleckmann, to repair the reactor. Two
representatives from Schoeller-Bleckmann, Peter Stuckler and Johann Pesak,
arrived on June 30. After an extensive investigation, Stuckler and Pesak
determined that although the liner was thin in the C-5 weld area, it was repairable.
That same day, Pesak and Stuckler left but returned later to supervise Olin’s
employees as they performed the repairs.

During the 1989 repairs, stainless steel
filler patches were welded flush into the reactor’s liner in the area of the
C-3, C-5 and C-7 circumferential welds where portions of the original liner had
been cut away. The filler patches were tack welded to keep them in place.
Overlay patches were placed on the inner wall of the liner adjacent to the
filler patches. The overlay patches were seal welded to keep the contents of
the reactor from escaping. Three more weep holes were added; two along the C-5
weld and one in the C-7 weld area. They were welded to the carbon steel, not
the stainless steel liner, and would monitor the space between the carbon steel
wraps and the stainless steel liner. A total of 8 patches were installed, and
all the tray clips were replaced. The repairs passed an ammonia leak test under
Stamicarbon specifications, which showed that the reactor was not leaking. In
addition, Olin established through an air pressure test that all the weep holes
were clear of any blockage. Olin also performed dye penetrant testing of each
weld as well as a hydrostatic test, both of which are non-destructive methods
of determining whether the lining and welds were porous. Through these tests
they determined that there were no leaks. The work was completed on August 16,
1989.

C. Arcadian’s purchase of the
reactor

That same month, Arcadian purchased from
Olin the urea and ammonia facilities that were located within Olin’s Lake
Charles complex. In September of 1989, Arcadian shut down the facility to
address production problems in the ammonia unit and perform “minor maintenance”
in the urea unit. The reactor was also shut down for maintenance repairs or
revisions. Such shut downs were known as “turnarounds.” There were two later
turnarounds, one in early 1990 and another in February 1991. Arcadian
personnel, including Baham and Bartley, entered the reactor only during the
third turnaround in 1991, when they checked the thickness of the stainless
steel liner. Baham and Bartley determined that there had been virtually no
change in liner thickness based on their measurements compared to the ones made
in 1989.

D. January 3, 1992 leak

On December 31, 1991, minor problems in
Arcadian’s ammonia plant forced both the ammonia and urea plants to shut down.
Both plants were restarted on January 2, 1992. At approximately 1:00 AM on
January 3, 1992, operators Dick Richardson, David Baham (Dana Baham’s first
cousin), and Bill Brunkhardt noticed a small brown blob of urea hanging from a
weep hole in the area of the C-7 weld on the northeast side of the reactor.
Richardson, who described it as having “a milky color with a rusty color in
it,” stated that it was approximately five inches long and two inches around
and hung from the weep hole like an icicle. They showed it to A operator Mary
Poullard-Smith. Poullard-Smith called Dana Baham at home and informed him of
the blob. Dana Baham instructed the operators to check and clean out the weep
holes. Richardson and David Baham found material in another weep hole to the
northwest in addition to the one where the extrusion was found. Richardson
steamed out the C-7 weep hole in order to clear it, but did not recall steaming
the northwest weep hole. After steaming the weep holes, Dana Baham was informed
by David Baham, Richardson, and Bill Brunkhardt that the weep holes that they
had steamed were clear, although David Baham did not believe that the other weep
holes on the south side and around the head of the reactor were clear. Baham
told the operators to continue monitoring the weep holes for further emissions
and Poullard-Smith wrote down in the log book per Dana Baham’s instructions:
“Note: There may be a possible hole in reactor, so please pay close attention
to the weep hole above [valve] PCV 4 per Dana Baham.”

Because no more material came from the
weepholes that night, Dana Baham believed that the material had not come from a
leak in the reactor liner but instead came from residual material from the 1989
leak. He believed that reactor shutdowns and startups created “temperature and
pressure cycles” which squeezed the stainless steel lining to the
pressure-bearing outer layers and that this action eventually forced the
material out of the weepholes. Baham believed that it did not signify a breach
in the liner because a breach would have caused a steady stream of material
from the weep holes as it did with the breach in 1989.

On the night he was notified of the
leak, Dana Baham telephoned his supervisor, Plant Manager Ernest Elsbury, at
home and told him of the situation. Although Elsbury’s first reaction was that
it was a leak and that a shut down was required, Dana Baham told Elsbury that
he believed that the extruded material came from material left behind from the
1989 repairs and that while it had leaked earlier, it was not leaking at the
time of their conversation. Elsbury decided to keep the reactor running but to
continue monitoring because “Dana’s reasoning and logic was sound and this
probably was material that had been trapped behind the liner.” He further
testified, “we did not know that it had come from the weep hole and the weep
hole was not leaking.” Elsbury did not think that he was risking the safety of
employees in the plant “[b]ecause this reactor wasn’t supposed to fail” since
“[i]t had wraps and it was build in a specific way. That’s how it kept it from
failing.” At the daily morning meeting conducted by Elsbury and his staff the
following Monday, Dana Baham told of the discovery of the blob and the
decisions taken. No one at the meeting disagreed with Dana Baham’s decision to
continue operations. When Richard Bartley, the urea area supervisor, returned
from his vacation, he reviewed the operator’s logbook and talked to the
operators. He did not remember anyone saying that the blob was found on a weep
hole and never saw the blob itself.

E.
June 14, 1992 leak

On Sunday, June 14, 1992, at about 6:00
pm, operators Chapman, Sullivan and Poullard-Smith discovered a leak from a
weep hole in the C-5 weld area, near the center of the reactor. Poullard-Smith
described the leak as “a flow of white liquid coming out of that weep hole, and
as it came out, it was fizzling.” She claimed that “[i]t wasn’t spraying out”
but that it was a “stream that was blowing out.” Sullivan and Poullard-Smith
called Dana Baham at home about the leak. Poullard-Smith testified that Baham
said he would look at it when he came in on Monday morning. Sullivan wrote in
the logbook: “Weep hole leaking on reactor at 4th floor level (blowing bubbles)
informed Dana of situation.”

Richard Bartley was informed of the leak
when he arrived at the unit on Monday morning shortly before 6:00 a.m. When he
went to investigate, he found that the tube contained a “white crystal
material” and noted that “every once in a while you could see a small bubble.”
He flushed out the weep hole with a steam lance and left. When he returned “a
little bit later,” he saw that the tube again contained more material. He
rodded out the tube again with the steam lance and flushed it out until it came
out the other leak detection tube. Bartley thought the reactor should be shut
down, so he went down to the control room, held the night shift over, and told
the operators to begin reducing production levels in preparation for the
shutdown. Bartley then drove to the administration building to discuss the leak
with Dana Baham.

Bartley believed that the one of the
1989 welds had failed. He told Baham that he believed that the reactor needed
to be shut down, but Baham persuaded him that it was not necessary. Based on
his review of drawings of the reactor, Baham determined that the leak came from
inside the reactor through a leak detection tube from the C-5 area repaired in
1989. Baham showed his journal of the 1989 repairs as well as drawings, repair
and reactor data to Bartley. He explained to Bartley his belief that the
overlay patch had a fillet weld that had a pinhole-sized leak that was filling
the space between the stainless steel overlay and filler patches. He believed
that the leak was not in contact with carbon steel because a seal welding of
the flush patch protected the carbon steel outer shell. They agreed that the
material leaking from the weep hole was not in contact with the carbon steel
shell and that it was not necessary to shut down the reactor.

Baham’s
recommendation to Bartley was that while the current leak required observation,
the reactor was safe and there was no need to immediately shut it down. Baham
believed that if the leak was in contact with carbon steel, there would have
been a reddish discoloration in the discharge. He assumed that the leak was not
in contact with the carbon steel liner because he thought that the insert patch
at C-5 was full seal welded, and that the leak detection tube went through the
carbon steel and was welded to the liner insert patch so that it monitored only
the space between the two stainless steel liners.

Bartley’s response to the leak was based
on his belief that it was not in contact with the reactor’s carbon steel
layers. According to Bartley, if he knew that the leak detection tube that was
leaking the reactor’s contents did not monitor the space between the two
stainless steel patches, but instead monitored the annulus between the carbon
steel layer and the inner stainless steel layer, just like the older weep
holes, he would have shut down the reactor.
Bartley testified that if the leak had been coming out of one of the originally
installed weep holes, he would have shut the reactor down. He also stated that
if he had known the patch was actually tack welded and not full seal welded, he
would have realized that the reactor’s contents could have been in contact with
the carbon steel and Bartley would have shut down the reactor. Baham agreed
that if the patch was not full seal welded, the reactor’s contents would
migrate into the carbon steel area “just the same way it did in 1989.”

Later that morning, Baham also explained
to Elsbury why he thought it was safe to continue using the reactor. After his
meeting with Baham, Bartley went to the urea operators and explained to them
that they believed the C-5 insert patch was full seal welded. Bartley and the
operators decided that they had to wash out the leak detection tube every
shift. They then brought the reactor back up to production rates. They planned
to make repairs in the area of the C-5 weld during the next scheduled
turnaround. Bartley believed that the next turnaround would be in the fall of
1992, but he discovered after the accident that the next turnaround was pushed
back to 1993. At the hearing, Bartley was unable to find anything in Baham’s
journal to show that the patch was full seal welded or that the tube that was
installed was welded to the liner. Bartley could not remember what he and Baham
read that led them to conclude that the leak was not coming in contact with the
carbon steel lining and that it was safe to operate the reactor.

F. July 28, 1992 explosion

According to A operator Poullard-Smith,
“[e]verything was running very well” on the night of the explosion. The
explosion occurred at approximately 7:20 p.m. Subsequent investigations
commissioned by Arcadian and the Secretary determined that the explosion
resulted from the failure of the tray clip weld joint and liner above the C-7
circumferential weld in the northeast quadrant of the reactor due to stress
corrosion cracking and weld toe corrosion. Once the stainless steel liner was
penetrated, the carbamate corroded the carbon steel layers. Two weep holes in
the northeast quadrant above and below the C-7 weld were completely obstructed
with corrosion and process products.

G. The citation

Following the investigation of the
explosion, the Secretary cited Arcadian for violating section 5(a)(1) of the
Act, alleging that it:

. . . did not furnish
employment and a place of employment . . . which was free from recognized
hazards that were causing or likely to cause serious physical harm to employees
in that there was a catastrophic failure/explosion in a pressure vessel
containing liquified Carbon Dioxide (CO2), Ammonia (NH3), Ammonium Carbamate,
and urea, under 2850 psig of pressure at a temperature of 370 degrees
Fahrenheit, exposing them to; being crushed/stuck by flying/falling debris
and/or, heat/chemical burns and/or, asphyxiation/toxic gases.

The citation stated that three
“conditions contributed to the existence of this hazard:” (1) not shutting down
the reactor upon the detection of leaks; (2) improperly monitoring the reactor
for leaks; and (3) inadequately inspecting, repairing, or maintaining the
vessel’s liner.

H. Discussion

In order to prove a violation of section
5(a)(1), the Secretary must show that a condition or activity in the workplace
presented a hazard, that the employer or its industry recognized this hazard,
that the hazard was likely to cause death or serious physical harm, and that a
feasible and effective means existed to eliminate or materially reduce the
hazard. Pelron Corp ., 12 BNA OSHC 1833, 1835, 1986-87 CCH OSHD ¶ 27,605,
p. 35,871 (No. 82-388, 1986).

(1.) Definition of the Hazard

A hazard must be defined in a way that
apprises the employer of its obligations, and identifies conditions or
practices over which the employer can reasonably be expected to exercise
control. Pelron , 12 BNA OSHC at 1835, 1986-87 CCH OSHD at p. 35,872.
The Secretary identified the hazard as
the potential of a catastrophic failure of the reactor vessel as operated by
Arcadian, and identified three conditions over which Arcadian could reasonably
be expected to exercise control. The judge, however, determined that the three
conditions the citation identified as contributing to the hazard were separate
hazards, and that Arcadian was “being cited for failing to take recognized
precautions that would have reduced the risk of catastrophic failure/explosion,
whether or not those precautions would have prevented the failure/explosion
which occurred on July 29, 1992.”

The judge erred as a conceptual matter
in holding that the three separate hazards were created by the failure of the
employer to utilize the three abatement methods identified by the Secretary.
The hazard is not defined in terms of the absence of a particular abatement
method. Morrison-Knudsen Co./ Yonkers Contracting Co. , 16 BNA OSHC 1105,
1121-22, 1993-95 CCH OSHD ¶30,048, p.41,279 (No. 88-572, 1993)(hazard was
excessive levels of airborne lead being generated by ongoing bridge demolition
work, not absence of protective clothing). A hazard is defined “in terms of the
physical agents that could injure employees rather than the means of
abatement.” Chevron Oil Co., 11 BNA OSHC 1329, 1331, n.6, 1983-84 CCH
OSHD ¶ 26,507, p.33,722, n.6 (No. 10799, 1983).

In Kelly Springfield Tire Co ., 10
BNA OSHC 1970, 1974, 1982 CCH OSHD ¶ 26,223, p.33,113 (No. 78-4555, 1982), aff’d,
729 F.2d 317 (5th Cir. 1984), the Commission found that the workplace was not
free of a recognized hazard in that the “dust collection system was not
operated or maintained in such a way as to protect employees from the danger of
an explosion caused by the combination of oxygen, a combustible dust, and an
ignition source in the enclosed space.” Here, the Secretary has alleged that
the urea reactor was not operated or maintained in a manner to protect
employees from the danger of explosion caused by urea leaks that could erode
the lining of the pressure vessel. That was the hazard in this case. The
adequacy of the employer’s work practices to reduce the risk of, or prevent the
occurrence of, the hazard is a separate issue from the question of how the
recognized hazard is defined. Wiley Organics, Inc., 17 BNA OSHC 1587,
1592-93, 1995-97 CCH OSHD ¶ 31,035, p.43,276 (No. 91-3275, 1996), aff’d
without published opinion, 124 F.3d 201 (6th Cir. 1997).

Arcadian recognizes that “stating a
hazard in terms of the absence of abatement is, of course, error,” but claims
that the Secretary “insisted” on this formulation. Arcadian does not cite to
and we are unable to find in the record any evidence that the Secretary had
“insisted” on this formulation, but even if she had, the Commission does not
have to adopt it. The Commission may define the hazard itself. See, e.g., Davey
Tree Expert Co ., 11 BNA OSHC 1898, 1899, 1983-84 CCH OSHD ¶ 26,852,
p.34,399 (No. 77-2350, 1984) (Commission defined hazard after determining
Secretary’s definition is too broad). Nor do we find any merit in Arcadian’s
claim that the record must also prove industry recognition and employer knowledge
that the absence of the pleaded abatement measure posed the hazard of the
catastrophic failure. The Secretary’s burden of proving a general duty clause
violation has not changed. The Secretary establishes a violation by showing
that the employer failed to free its workplace of a recognized hazard and that
there exists feasible methods to abate or materially reduce the hazard.

(2.) Hazard Recognition

“A hazard may be recognized by either
the individual employer itself or its industry.” Wiley Organics, Inc.,
17 BNA OSHC at 1591, 1995-97 CCH OSHD at p.43,275. The record supports the
judge’s finding of Arcadian’s recognition of the hazard. Arcadian argues that
the reactor’s explosion was a “freakish, unprecedented occurrence” in that no
Stamicarbon-designed reactors like this one had ever failed and that failures
of other reactors were “virtually unheard of.” See National Realty &
Constr. Co. v. OSHRC , 489 F.2d 1257, 1265 n.33 (D. C. Cir. 1973) (“If
evidence is presented that a practice could eventuate in serious physical harm
upon other than a freakish or utterly implausible concurrence of circumstances,
the Commission’s expert determination of likelihood should be accorded
considerable deference by the courts.”) However, the Commission has held that
it is the hazard, not the specific incident that resulted in injury or might
have resulted in injury, that is the relevant consideration in determining the
existence of a recognized hazard. Kelly Springfield Tire Co ., 10 BNA
OSHC at 1973, 1982 CCH OSHD at p. 33,113. Thus, even if the reactor had not
exploded, whether employees were exposed to the hazard of an improperly
operated reactor could still be before us. Moreover, “[t]he goal of the Act is
to prevent the first accident, not to serve as a source of consolation for the
first victim or his survivors.” Mineral Industries & Heavy Constr. Group
v. OSHRC , 639 F.2d 1289, 1294 (5th Cir. 1981); see also McLaughlin v.
Union Oil Co., 869 F.2d 1039, 1045 (7th Cir. 1989)(court rejected argument
that pressure vessel explosion was a “freak accident” based on judge’s factual
determination that hazard of hydrogen stress corrosion cracking in a vessel was
widely recognized even though no rupture or explosion had occurred before).

We find that the record does not support
Arcadian’s contention that it reasonably believed the urea reactor could not
fail. Arcadian does not dispute that the industry practice is to shut down a
reactor once a leak is detected, but argues that the practice “stems not from
fear of failure, but the fear that, without a shutdown, the liner could be
damaged, risking a long and costly repair.” Arcadian argues that, prior to the
explosion, plant manager Ernie Elsbury had not read or heard of a urea reactor
rupturing, and believed that a rupture would only result in expensive repairs,
and that urea unit superintendent Dana Baham was not aware of any catastrophic
failure of a urea reactor. However, the record shows that other Arcadian
managers were aware of reactor ruptures and the hazard they posed to employees.
Urea operator Sittig testified that operator supervisor Richard Bartley told
him that “[t]he only thing you have to worry about is if that reactor ever
leaks or if it ever blows up. You won’t be here to tell about it.” Sittig and
Bartley discussed an explosion that happened overseas either right before or
right after the 1989 reactor leak, and Bartley told him that a reactor had
exploded and leveled everything within 200 square yards. Bartley had heard of
the rupture of a urea reactor in South America. Bartley also knew that a pressure release from the reactor could
cause damage to equipment and personnel, and was aware that anhydrous ammonia,
contained in the urea reactor, was an inhalation hazard, which could cause
chemical burns or, in sufficient quantities, death. Arcadian Reliability and
Engineering Manager Ed Anderson knew prior to working with Arcadian in 1990
that the components of a urea reaction can be corrosive to stainless steel as
well as carbon steel. Anderson was aware of a stainless steel lined multilayer
urea reactor that failed in 1976 in Chattanooga, Tennessee, where ammonia was
released and the reactor had to be scrapped. He was also aware of failures in
South Africa and Columbia.

Arcadian also relies on brochures from
the manufacturer of the reactor, CB&I, to establish that the reactor’s
failure could not reasonably be anticipated. However, neither document states
that the carbon steel walls could withstand corrosion. Instead respondent’s
exhibit 18 states that “[s]hould a fracture occur in any layer, the load is
shifted to the other layers.” Respondent’s exhibit 171 states: “If a leak
should develop in the inner shell through exposure to corrosive elements or
other operating conditions beyond the designed capability, the fluid would be safely
vented for immediate detection and corrective action - before a serious failure
could occur.”

Arcadian claims that “there is no
evidence that Stamicarbon . . .ever warned the industry that employee safety
would be at risk from not shutting down because a reactor could fail
catastrophically.” This claim is undercut by Government Exhibit 104, a copy of
a Stamicarbon Leak Detection specification, obtained as part of a document
request from Arcadian. While it does not state that the reactor could fail catastrophically,
the specification does state that the carbon steel “must not come into contact
with the corrosive medium inside the vessel” because it “causes serious
corrosion of the carbon steel, so that a hazardous situation would arise.” It
also states that the urea from inside the vessel “tends to crystallize and to
block the leak-detection system. Then the carbamate cannot dissociate any
longer and the carbon steel vessel wall will corrode with all the hazardous
consequences this has.”

Arcadian cites to the testimony of the
Secretary’s experts LeVine and Terence Lynch to support its argument. LeVine
was a fire protection, and later, a loss prevention manager for Olin, the
company that sold the facility to Arcadian. Arcadian claims that LeVine did not
write or recommend procedures directing operators to shut down the reactor if a
leak appeared in a weep hole but LeVine testified that Olin had always followed
“from day one” the instruction that the reactor is to be shut down if a leak
appeared through the weep holes. While Arcadian also claims that Lynch’s former
employer, CIL, operated a titanium-lined urea reactor with leaks for three
years, Lynch testified that when a leak was detected, they did not continue
operating the reactor vessel but instead shut it down to repair it. Arcadian’s
claim that the reactor was returned to service even though the source of the
leak had not been determined is misleading at best. Lynch’s testimony and his
report submitted into evidence show that, although CIL could not pinpoint the
exact source of the leak, CIL repaired the general area of the lining that the
leak was emanating from. Lynch testified that they continued operating their
vessel because, “based on our inspection procedures and monitoring, we were not
concerned we were going to blow it up.”

The Secretary also presented testimony
from experts on similar pressure vessels used in industries other than urea
manufacturing recognize that, to prevent an explosion, a pressure vessel must
be shut down whenever a leak is detected. Arcadian challenges the relevancy of
this “recognition” since it was not specific to the urea manufacturing
industry. This claim is without merit. Where a practice is plainly recognized
as hazardous in one industry, the Commission may infer recognition in the
industry in question. Kelly Springfield Tire Co. v. Donovan , 729 F.2d
317 (5th Cir. 1984). As was discussed, supra , the Secretary introduced
several exhibits as well as expert testimony demonstrating that those
knowledgeable about the operation of similar pressure vessels not only
recognize that leaking vessels may explode, but also that leaking pressure
vessels must be shut down and examined to determine the source of the leak.

Lynch testified that any operator of a
urea reactor should recognize the inherent hazards associated with any pressure
vessel. Specifically, if the pressure-containing outer shell becomes corroded
from a leak in the inner liner, it may no longer be able to contain its
pressurized contents, and a sudden release of energy and the contents of the
vessel may result. Lynch’s testimony was seconded by Dr. Grelecki, who
testified that, based on his experience evaluating between 15 to 20 accidents
involving high pressure vessels, members of the urea industry do, or should,
recognize the explosive potential of a multi-layer reactor solely on the basis
of the physics and chemistry involved. Similarly, LeVine testified that, prior
to the 1992 explosion, ruptures of multi-layered pressure vessels had been
discussed in at least three seminars of the American Institute of Chemical
Engineers (A.I.Ch.E). LeVine testified that he and others in the field
recognized the rupture hazard based on available literature published in
Ammonia Plant Safety. Arcadian admits that it is a member of the A.I.Ch.E.,
attends its Ammonia Symposium and Annual Safety Meetings, and maintains copies
of Ammonia Plant Safety on file.

Significantly, Arcadian contends that a
leak does not suggest that a pressure vessel is compromised unless it involves
the forceful ejection of urea. This contention fails to consider urea unit
superintendent Baham’s testimony that “if you’ve got a weep hole problem, then
you need to shut the urea reactor down.” See Willful discussion in
Section III, infra. It also overlooks the fact that several weep holes
were plugged and nonfunctional. Other weep holes were not accessible without
use of a ladder, and Arcadian never advised its operators to check whether
those weep holes were clear. Arcadian’s failure to properly maintain the weep
holes essentially disabled the very system designed to provide warning of
potential vessel failure. Certainly, having failed to ensure the integrity of
the weep holes, Arcadian cannot now be heard to argue that there was no
recognized hazard due to the failure of the weep holes to forcefully eject
urea.

In sum, we find that the record clearly
shows that Arcadian, through a number of key management officials, recognized
the hazard presented by the improperly operated urea reactor. The record also
establishes industry recognition of the same hazard.

(3.) Harm

There is no question that the hazard of
the pressure vessel explosion caused serious physical harm. Arcadian employees
Poullard-Smith and Sittig required hospitalization for several days due to
their injuries. See Morrison-Knudsen Co./ Yonkers Contracting Co ., 16
BNA OSHC at 1122, 1993-95 CCH OSHD at p.41,279 (“When evaluating whether the
hazard presented a likelihood of serious physical harm, we do not inquire
into whether the absence of the abatement method was what presented the
likelihood; we remain focused on the hazard alone, and a hazard is likely to
cause serious physical harm if the likely consequences of employee exposure
would be serious physical harm”(emphasis original)).

Arcadian’s arguments to the contrary are
completely lacking in merit. Arcadian’s claims that the general duty clause
speaks of “hazards” likely to cause serious harm, not “accidents.” Here,
however, the accident and hazard are the same: the explosion of the leaking
urea reactor. The Secretary denies Arcadian's argument that she is reading the
“likely to cause” factor out of the general duty
clause, noting that she is following the Commission's precedent in Waldon
Healthcare Center , 16 BNA OSHC 1052, 1060, 1993-95 CCH OSHD ¶ 30,021, p.
41,153 (No. 89-2804, 1993) that, if an accident occurs, the results are likely
to cause death or serious physical harm. Arcadian responds that the Secretary's
approach would eliminate the “significant risk” element of a hazard that the
Commission explained in Kastalon, Inc. , 12 BNA OSHC 1928, 1932, 1986-87
CCH OSHD ¶27,643, p.35,974 (No. 79-3561, 1986)(consolidated). In Kastalon ,
the employees were exposed to a chemical identified as “MOCA,” a probable human
carcinogen. The Commission found that the Secretary did not establish that the
employees were exposed to a significant risk of harm because the record did not
establish the exposure levels that presented a cancer risk. Here, however,
there is no question of exposure level. As the Commission noted in Waldon:

No one questions
whether an explosion, fire, or 20-foot fall can injure employees, i.e., whether
these events, if they occur, pose a significant risk of causing death or
serious physical harm. The question in those cases usually involves whether the
hazard exists, i.e., whether the conditions that exist in the workplace can
lead to the hazardous event.

Waldon , 16 BNA OSHC at 1060, n.5, 1993-95 CCH OSHD at
p.41,153, n.5.

The Secretary notes that the Fifth
Circuit has already rejected Arcadian's argument that the Secretary must prove
a “significant risk” of a catastrophe in Kelly Springfield Tire Co. v.
Donovan , 729 F.2d 317, 322-25 (5th Cir. 1984). Arcadian claims that “in
light of subsequent legal developments and upon reconsideration, the Fifth
Circuit will no longer follow that decision, ” but fails to provide us with any
support for this extraordinary claim.

(4.) Feasibility of proposed
abatement measures

“The Secretary must specify the proposed
abatement measures and demonstrate both that the measures are capable of being
put into effect and that they would be effective in materially reducing the
incidence of the hazard.” Beverly , 19 BNA OSHC at 1190, 2000 CCH OSHD at
p.48,981. Feasible means of abatement are established if “conscientious
experts, familiar with the industry” would prescribe those means and methods to
eliminate or materially reduce the recognized hazard. Pepperidge Farm, Inc .,
17 BNA OSHC 1993, 2032, 1995-97 CCH OSHD ¶ 31,301, p. 44,014 (No. 89-0265,
1997), citing National Realty & Constr. Co. v. OSHRC , 489 F.2d 1257
(D.C. Cir. 1973). “[T]he Secretary need only show that the abatement method
would materially reduce the hazard, not that it would eliminate the hazard. The
Secretary is therefore not required to show that the abatement method’s absence
was the sole likely cause of the serious physical harm.” Morrison-Knudsen ,
16 BNA OSHC at 1122, 1993-95 CCH OSHD at p. 41,279 (emphasis original). There
were three methods of abatement identified by the Secretary, which we will
discuss in turn.

a. Shutting down the reactor upon the detection of
leaks

Shutting down the reactor was a feasible
method of materially reducing the hazard. It is undisputed that Arcadian and
the fertilizer industry recognized the feasibility of shutting down a urea
reactor until the source of the leak was identified, and it was Arcadian’s
policy to shut down a leaking reactor. Arcadian argues that shutting down the
reactor after the June leak would not have materially reduced the explosion
hazard because an inspection of the liner at the level where the leak appeared,
C-5, was not where the leak was occurring. Rather, the
C-5 leak actually reflected corrosion products from the C-7 level, which was
determined after the explosion to be the locus of the failure. Yet, Arcadian
has not shown why the search for the leak would have been limited to the C-5
level. The focus is on abating the recognized hazard, which may not have
prevented the incident that resulted in the injury. See Kelly Springfield
Tire Co ., 10 BNA OSHC at 1973, 1982 CCH OSHD at p. 33,113 (“it is the
hazard, not the specific incident that resulted in injury . . . that is the
relevant consideration in determining the existence of a recognized hazard”).
Moreover, if the source of the leak was not found at the C-5 level, it is
reasonable to suppose that the inspection of the reactor would have been
expanded, given the manner in which the weep holes accessed the annulus, the
open space between the carbon steel outer liner and the stainless steel liner.
For it was possible that a leak in the stainless steel liner might not be able
to exit at the closest weep hole (possibly clogged due to corrosion) and would
therefore migrate in the open space and exit through another weep hole.

b. Implementing an adequate monitoring system to
detect leaks

The judge determined that the Secretary
failed to establish that the use of manometers to detect escaping gases would
materially reduce the hazard, noting that “no evidence was introduced to show
that escaping ammonia gases caused such damage [to the vessel], or that a gas
leak would develop into a hazardous product leak so quickly that detection of a
leak at the gaseous stage was essential to employee safety,” or that Arcadian’s
industry recognized that anything more than the visual monitoring system it
employed was required. He also found that the Secretary failed to establish
that the visual inspection of the weep holes via platforms was necessary for
the safe operation of the reactor. The judge found that Arcadian’s weep hole
monitoring system was adequate and provided notice that the reactor was
leaking, and that a uniform recording system would not materially reduce the
hazard since “industry practice is to shut down any pressure vessel upon
detection of a leak, such leaks should be reported and acted on immediately,
rendering record keeping largely irrelevant.” However, the judge found that
ensuring that the leak detection system’s weep holes were clear of obstruction
would materially abate the hazard because “failure of the leak detection system
may lead to corrosion of such vessel’s outer shell and the eventual
catastrophic failure of the vessel.” Based on Lynch’s testimony, the API Pressure
Vessel Code 510, Stamicarbon specifications and safety literature in the
industry, the judge found that “the industry recognized the need to ascertain
that all weep holes are open and in communication with each other on a regular
basis.” He found that the record establishes
that the weep hole system should be inspected during turnarounds and upon the
detection of a leak, by forcing steam through the weep holes, to assure that
leaking urea has not crystallized in the annulus, and that all weep holes are
clear. The last time the weep hole system was tested was following the repairs
in 1989, and no similar test was conducted during Arcadian’s 1991 inspection of
the vessel or following either the January or June 1992 leaks.

The record supports the judge’s
findings. The Secretary has not challenged the judge’s determination that the
use of manometers to detect escaping gases, platforms to inspect the weep
holes, or the adequacy of Arcadian’s monitoring program would not materially
reduce the hazard. Arcadian does not challenge the judge’s finding that it was
feasible to inspect the weep holes to confirm that they were clear of
obstruction in order to maintain the functionality of the weep hole system.
Clearly, the weep hole system must be functional in order to detect the
presence of leaks.

c. Conduct adequate inspection, maintenance, and repairs
of the liner

The judge found that annual inspections
were required for Arcadian’s reactor because the reactor’s liner was
approaching retirement thickness. He also found, based on Lynch’s
testimony, that the urea industry recognizes that the non-destructive dye
penetrant testing on repair welds to determine if they are improper or
inadequate is necessary due to the corrosive nature of urea production.
Arcadian challenges the need for annual inspections, noting that Stamicarbon
recommended a two-year interval in May 6, 1988. After the 1989 repair, however,
Schoeller-Bleckmann’s final report recommended that the reactor be inspected
“one year latest.” The judge found that “[i]t is undisputed that regular
inspection of a urea reactor is performed to determine whether corrosion has
occurred, which might allow the product to penetrate the stainless steel liner
and reach the carbon steel shell.”

The record supports the judge’s
findings. Arcadian does not challenge the feasibility of using non-destructive
dye penetrant testing on critical welds. We therefore find that the Secretary
has established feasibility of the proposed abatement measures.

(5.) Do the judge’s findings
contravene section 9(c) of the Act?

Arcadian argues that it cannot be cited
for the “discrete actions” it took during the 1991 reactor repair because the
citation is barred by the six month statute of limitations set forth in Section
9(c) of the Act. The claim is without merit. The Secretary did not cite
Arcadian for discrete actions taken in 1991 but for a violation that was still
occurring “on or about July 28, 1992.” The 1991 repair work began the period of
the alleged noncompliance, but it did not end there. The record shows that
Arcadian continued to operate the vessel in an allegedly unsafe manner. The
Secretary may cite an uncorrected violation six months from the date the
Secretary discovers, or reasonably should have discovered, the facts necessary
to issue the citation. Kaspar Electroplating Corp., 16 BNA OSHC 1517,
1519, 1993-95 CCH OSHD ¶ 30,303, p.41,755 (No. 90-2866, 1993), citing
Johnson Controls, Inc. , 15 BNA OSHC 2132, 2136, 1991-93 CCH OSHD ¶ 29,953,
p.40,965 (No. 89-2614, 1993); see also General Dynamics Corp., Electric Boat
Div. , 15 BNA OSHC 2122, 2127, 1991-93 CCH OSHD ¶ 29,952, p.40,956 (No.
87-1195, 1993) The Secretary discovered the general duty clause violation at
the time of the explosion on July 28, 1992, and cited it within six months of
that event.

II. Whether Section 5(a)(1) Was Preempted By the
Process Safety Management Standard.

Finally, Arcadian argues that it cannot be cited for
violating section 5(a)(1) because coverage of the condition cited here was
preempted by 29 C.F.R. § 1910.119(j) of the Process Safety Management (“PSM”)
standard. The PSM standard, which governs the
management of hazards associated with processes using highly hazardous
chemicals, was issued by OSHA as a final rule on February 24, 1992, with an
initial effective date of May 26, 1992. 57 Fed. Reg. 6356 (Feb. 24, 1992).
After the final rule was published, OSHA “received a number of requests asking
OSHA to reconsider the 90-day effective date for certain provisions in the standard”
and “received petitions requesting an administrative stay of certain provisions
of the final rule,” including paragraph (j). According to OSHA, the
petitioners claimed that more time was needed because of the rule’s extensive
written program requirements. 57 Fed. Reg. 23060 (June 1, 1992). While OSHA
decided that no extension of time was warranted for some of the paragraphs, it
found that more time was necessary to evaluate the compliance date petitions
for four of the paragraphs, including paragraph (j). Effective May 27, 1992,
one day after the original effective date of the standard, OSHA granted an
“administrative stay” of the four paragraphs until August 26, 1992, in order to
evaluate the merits of the petitions. It requested public comment on whether
OSHA needed to further stay the compliance dates of those provisions. Id.
OSHA expected “that employers will continue to expedite their efforts to fully
comply with all of the provisions of the standard” in spite of the stay, but
stressed that “during the stay of paragraph[ ] . . . (j), OSHA will continue to
protect employees exposed to highly hazardous chemicals in their workplace by
using the general duty clause of the Occupational Safety and Health Act of
1970.” Id . The stay did not affect settlement agreements in effect at
the time of the stay as well as pending enforcement actions. Id . On
August 26, 1992, OSHA decided that the original compliance date of May 26, 1992
was feasible and that an extended administrative stay of the paragraphs was
“neither necessary nor appropriate.” It announced that the PSM paragraphs would
be effective again on August 27, 1992. 57 Fed. Reg. 38600 (August 26, 1992).
The reactor at issue exploded while the stay was in effect. Arcadian claims
that the administrative stay was not legally effective because it was not
accomplished through the notice and comment rulemaking procedures of the
Administrative Procedure Act (“APA”) and, therefore, that the PSM standard was
in effect at the time of the explosion. We discern little basis for Arcadian's
claim.

If we were to view the stay order
delaying implementation of the PSM standard as an amendment to the standard and
thus a substantive, not procedural, rule, as Arcadian argues, the record shows
that the Secretary had “good cause” under section 553(b)(B) for not providing
notice-and-comment prior to issuing the stay. Generally, “[t]he mere existence of
deadlines for agency action . . . [can] not in itself constitute good cause for
a [section] 553(b)(B) exception.” United States Steel Corp. v. EPA, 595
F.2d 207, 213 (5 th Cir. 1979). Thus, the Secretary cannot rely on
the fact that the standard was soon to go into effect as an excuse for not
proceeding with notice and comment rulemaking procedures. In this case,
however, it does not appear that it was the deadline for agency action that
motivated the Secretary to issue the stay without notice and comment rulemaking
since the stay was issued after the standard had already gone into effect. As
discussed in the June 1, 1992 notice, the Secretary issued the 90-day
administrative stay of a standard that went into effect one day earlier to
investigate several petitioners’ requests for additional time to comply with
the PSM standard’s provisions. Compare Council of the Southern Mountains,
Inc. v. Donovan, 653 F.2d 573, 580-582 (D.C. Cir. 1981)(Secretary had “good
cause” to dispense with notice-and-comment in deferring implementation of
regulations where agency was not being intentionally dilatory and rule’s
implementation date deferred for relatively short period of time). Furthermore, to hold that section
5(a)(1) was inapplicable during the stay period would suggest that employees
were totally unprotected from the cited hazard during the stay period, since
any attempt by the Secretary to enforce the stayed standard would certainly
have resulted in serious notice problems to employers.

Even if we were to find that the
Secretary failed to comply with the APA’s notice-and-comment requirements, we
would find any error to be harmless. See Natural Resources Defense Counsel v. EPA , 725
F.2d 761, 767 (D.C. Cir. 1984)(unnecessary to address extent to which agencies
possess general equitable power to stay regulations where no party has alleged
sufficient injury from the stay at issue to guarantee that an actual
controversy exists); U. S. Steel Corp. v. EPA , 595 F.2d at 215 (doctrine
of harmless error where the agency failed to comply with the APA requirement of
pre-promulgation notice-and-comment is to be used only when a mistake of the
administrative body does not prejudice a party).

Arcadian claims that it was prejudiced
by being held under the general duty clause to a higher standard than what the
PSM standard would require. The employer relies upon the judge’s finding that
Arcadian violated the general duty clause by not performing in 1991 dye
penetrant testing on repair welds made inside the reactor, the Secretary’s endorsement
of that finding, and the Secretary’s assertion that the API 510 Pressure Vessel
Inspection Code was binding on Arcadian. However, Arcadian does not explain why
the use of dye penetrant testing or the application of API 510 could not fit
within 29 C.F.R. § 1910.119(j)(4)(ii)’s requirement that the inspection and
testing of pressure vessels should “follow recognized and generally accepted
good engineering practice.” Arcadian claims that “in adopting Paragraph (j),
the Secretary decided expressly to not require employers to follow particular
codes and standards.” However, in the preamble to the PSM standard, the
Secretary states that the intent “is to make sure that process equipment is
inspected and tested properly, and that the inspections and tests are performed
on accordance with appropriate codes and standards.” 57 Fed. Reg. at 6390. The
use of dye penetrant testing and of API 510 could thus be permitted under the
PSM standard if they are found to be “appropriate.” We therefore reject
Arcadian’s claims regarding the stay. We find nothing in the record to indicate
that she acted improperly, or that Arcadian was in any way prejudiced or
injured as the result of the course the Secretary chose.

Arcadian makes several minor arguments
that may be quickly resolved. It notes that section 6(b)(4) of the Act
prohibits the Secretary from delaying a standard’s effective date for more than
90 days, and claims that the stay stretched the PSM standard’s effective date
to 180 days. However, the Secretary was technically in compliance because the
full standard was in effect for one day, May 26, 1992, before the stay was
scheduled to begin. Arcadian also claims that the stay “was merely an
administrative decision to forebear from enforcement.” The notice of the stay
does not mention that the Secretary intended to forebear from enforcement but
instead clearly states that she would “continue to protect employees exposed to
highly hazardous chemicals in their workplace by using the general duty clause”
of the Act. 57 Fed. Reg. 23060. Arcadian further argues that the PSM standard
became an “advisory standard” as a result of the stay and that therefore the
PSM standard still preempted section 5(a)(1). An example of an advisory
standard is one in which the word “should” is used instead of the word “shall.”
It is not required for an employer to follow an advisory standard. See,
e.g., Farthing & Weidman, Inc ., 11 BNA OSHC 1069, 1070, 1983-84 CCH
OSHD ¶26,389, p.33,490 (No. 78-5366, 1982); A.Prokosch & Sons Sheet
Metal , 8 BNA OSHC 2077, 2080-81, 1980 CCH OSHD ¶ 24,840, pp. 30,628-29 (No.
76-406, 1980). Here, the stay did not change the language of the PSM standard.
The PSM standard remained a mandatory one.

III. Does the record support a finding the the
violation was wilful?

A willful violation is one committed
“with intentional, knowing or voluntary disregard for the requirements of the
Act or with plain indifference to employee safety.” Williams Enterp., Inc .,
13 BNA OSHC 1249, 1256, 1986-87 CCH OSHD ¶ 27,893, p. 36,589 (No. 85-355,
1987). “[I]t is well settled that the Secretary has a more stringent and more
difficult burden of proof to show willfulness where the employer is charged
with a violation of section 5(a)(1) than she does where failure to comply with
a specific standard is concerned.” Eric K. Ho , 20 BNA OSHC 1361, 1378,
2002 CCH OSHD ¶ 32,692, pp. 51,587-88 (No. 98-1645, 2003)(consolidated), petitions
for review filed , No. 03-60958 (5th Cir. Nov. 14, 2003), No. 03-61004 (5th
Cir. Nov. 28, 2003). “The Secretary must not only show that the employer had
knowledge that a hazardous condition existed but must also adduce evidence that
the employer intentionally disregarded or was indifferent to employee safety
with respect to the hazard in question.” Ho , citing General Dynamics
Land Systems Div., Inc ., 15 BNA OSHC 1275, 1287, 1991-93 CCH OSHD ¶ 29,467,
p. 39,759 (No. 83-1293, 1991), aff'd without published opinion , 985 F.2d
560 (6th Cir. 1993).

In finding willfulness, the judge noted that he had the opportunity
to observe the demeanor of supervisors Baham and Bartley for several weeks, and
that his “observations and evaluation of their answers indicate that they were
indeed sincere in their belief that they acted responsibly in this case.” The
judge also rejected the Secretary’s argument that Arcadian kept the reactor
running because it was attempting to make as much urea as possible at the time
of the leaks in order to take advantage of a good market price. The judge found
that Arcadian’s “management, Baham especially, had a genuine concern for the
safety of their co-workers.”

However, the judge found that Arcadian’s
management exhibited “plain indifference” in its failure to follow the industry
practice of shutting down the R-2 reactor upon the detection of a leak in the
vessel’s liner. The judge found that Baham and Bartley were “unreasonable” in
attributing twice in a six month period weep hole discharges to sources other
than leaks from the liner, and that they “should have assumed” that the weep
hole discharges actually indicated one or more leaks. The judge also found that
Arcadian “was unreasonable in relying on Baham and Bartley’s steam test of the
C-5 leak detection tubes, which they believed established that those weep holes
were not intended to monitor the annulus or communicate with the other weep
holes.” The judge found that Arcadian’s failure to investigate the “obvious
alternative” that adjacent weep holes were clogged constituted “plain
indifference where, as here, the evidence clearly establishes that the entire
leak detection system had not been tested since 1989.” The judge noted the
industry’s recognition of the need to ascertain the functioning of leak
detection systems. The judge found that these factors, and his “instinct based
on over 18 years as a Commission judge,” “tipped the scales in favor of the
Secretary on the issue of plain indifference to employee safety.”

We agree that Arcadian’s conduct was willful. However,
we base our willful finding on somewhat different reasoning. We conclude that
Arcadian consciously disregarded a known duty with respect to the hazard in
question and was plainly indifferent to employee safety.

The record shows that Arcadian knew, through its
management, that the purpose of the weep hole system was to warn that the urea
reactor’s stainless steel lining was breached, and that the consequences of a
breach would likely be death or serious physical harm to its employees; yet it
disregarded the January and June 1992 leaks and continued to operate the
reactor. Plant Manager Ernie Elsbury knew that the reactor’s outer wraps were
layered and that the reactor was designed to indicate a leak by material coming
out of its weep holes before the layers were corroded. He testified that “[i]f
you had a leak on a weep hole, that meant you had a breach in the liner” and
that if the liner was not intact, “you ran the risk that the carbamate could
get in contact with the carbon steel in the vessel” and that “you would
eventually eat up all the wraps.” He also testified that it was the wraps that
kept the reactor from exploding. However, Elsbury believed that the
reactor would not get to that point because the carbamate “would be squirting
out the weep holes,” although he did not know that the weep holes could become
clogged. Reliability and Engineering Manager Ed Anderson knew that the components
of a urea reaction could be corrosive to stainless steel as well as carbon
steel, that there was a risk of failure from continued corrosion of the carbon
steel walls of the multilayer pressure vessel, and that the failure could be
catastrophic.

Urea Unit Superintendent Dana Baham, in somewhat
confusing testimony, agreed that he said in his sworn statement to OSHA that
“there was a standard operating procedure that said, ‘If you’ve got a weep hole
problem, then you need to shut the urea reactor down’” and that the operators
“operated and they have to operate it according to that procedure.” At the hearing, he stated that he was
“not sure what they were taught, but that is definitely an understanding of the
operators.” However, Baham testified at the hearing that the standard operating
procedure was “for one operator to see it, that operator to report to another
operator, the A Operator. If the A Operator felt it necessary to shut down the
plant, he would have shut it down. If he felt that he should report to a
supervisor, he would report to a supervisor and then take the appropriate
action.” Baham claimed he did not know, prior to the 1992 accident, that a
pressure vessel could come apart and fragment, but that it was “not something
that I thought about.” In answering why the reactor was shut down in 1989,
Baham stated: “I had been around this business long enough to know that a leak
detection system or a weep hole system was a telltale system of something that
told you you had a problem, a breach of the liner. So on that basis, that was
the thing to do.” He agreed that if the C-5 filler patch was not full seal
welded, the reactor’s contents would migrate into the carbon steel “just the
same way it did in 1989.” He also knew that the liner was approaching the end of its
useful life. Baham wrote that after the June leak, he knew that the liner would
have to be replaced in 1993 “based upon our observations of possible liner
problems around the C-5 weld in June of 1992.”

Urea Area Supervisor Richard Bartley knew prior to
June 14, 1992 (the date of the June leak), that “if we had a leak coming out of
the weep holes, we would have looked at it and made plans to shut it down. . .
. I think when you had something, it was serious.” He “knew a leak of carbamate
out of the reactor could damage the carbon steel,” that the weep holes on the
reactor were for detecting leaks, and that leaks should be detected as soon as
possible. He knew that a pressure release from the reactor could cause damage
to equipment and personnel, and was aware that anhydrous ammonia, contained in
the urea reactor, was an inhalation hazard, which could cause chemical burns
or, in sufficient quantities, death. In addition, he considered the temperature
of the material inside the reactor (370 degrees) to be hazardous. He knew that
in 1989, after the repairs were completed, all the weep holes were in
communication with each other. He knew that urea could solidify in the annulus,
and that solidification may make detection of the leak eventually impossible.
He personally used condensate during the June leak to free blockage in leak
detection tubes, and understood that they used steam during the January leak.
Urea Operator David Sittig testified that Bartley told him that “[t]he only
thing you have to worry about is if that reactor ever leaks or if it ever blows
up. You won’t be here to tell about it.”

The January and June leaks were warnings to Arcadian’s
management that a breach had occurred but Arcadian continued to operate the
reactor. In 1989, when Olin owned the plant, the same supervisors shut down the
plant when a stream of urea came from a leak detection tube because, as Baham
acknowledged, it signaled that there was a breach. This evidence establishes a
willful state of mind because Arcadian knew that the leaks were warnings that
breaches had occurred and could result in a range of extremely hazardous
conditions yet deliberately and consciously chose not to address the warnings. AJP
Constr., Inc. v. Secretary of Labor , 357 F.3d 70, 75 (D.C. Cir. 2004).

The circumstances here are unlike those in McLaughlin
v. Union Oil Co., 869 F.2d 1039, 1047 (7th Cir. 1989), aff’g in
pertinent part, 13 BNA OSHC 1673 (digest), 1987-90 CCH OSHD ¶ 28,155
(digest)(No. 85-111, 1988)(ALJ), where the Seventh Circuit determined that the
employer’s failure to perform a more thorough inspection of a pressure reactor
was negligent rather than willful. The court noted that there had never been
either a serious accident of the cited pressure vessel because of hydrogen
stress corrosion cracking (the cause of the vessel’s rupture), “and while it
was careless to suppose that such accidents could not or would not happen, or
that the heat-affected zone around a weld was somehow immune from hydrogen
stress corrosion cracking, OSHA utterly failed to prove that Union Oil was more
than careless.” Id. However, Union Oil did not involve a series
of warnings well in advance of the rupture. In that case, there was no warning
of the breach, indicated by a vapor cloud originating from a crack in the side
of the vessel, until the afternoon the reactor exploded as they attempted to
shut it down. 869 F.2d at 1043-44. Here, also, Arcadian had no program to check
and keep clear its weep hole warning system. Instead, it consciously ignored
the warnings and deliberately failed to shut down the reactor. This conscious
disregard of Arcadian’s duty under section 5(a)(1) of the Act establishes a prima
facie case of willfulness.

“[W]illfulness will be obviated by a good faith,
albeit mistaken, belief that particular conduct is permissible.” Froedtert
Memorial Lutheran Hospital, Inc., 20 BNA OSHC 1500, 1510, 2003 CCH OSHD ¶
32,703, p. 51,737 (No. 97-1839, 2004)(citations omitted). Good faith is a
question of fact. A.J. McNulty & Co. v. Sec’y of Labor , 283 F.3d
328, 338 (D.C. Cir. 2002) The record establishes that Arcadian did not have a
good faith basis for its decision not to treat the January and June leaks as
warnings and essentially ignore them instead. The record supports the judge’s
finding that Baham and Bartley were unreasonable in attributing weep hole
discharges twice in a six-month period to sources other than leaks from the
liner. Indeed, their behavior was reckless. Arcadian has not adduced any
evidence to support Baham’s theory that the January leak was of material
remaining from the previous repair, or that the June leak was material being
vented from between two sealed patches. Indeed, for the January leak, if the
material had remnants from the previous repair, by all accounts it would have
been corroding the carbon steel since 1989. Moreover, we have no explanation
why the material would come out after remaining trapped for years. The June
leak was fresh material and no action was taken on the first leak for five
months. For the June leak, the record contradicts Baham’s belief and shows that
the filler patch was tack welded and not seal welded. The record also shows
that the leak detection tube went to the annulus not through the filler patch.
There is no explanation for Baham’s misinformation on these facts. While
Bartley testified that Arcadian would have shut down the reactor after the June
leak if the leak had come out of one of the original weep holes, or if they
knew that the patch was actually tack welded, or if they knew that the “leak
detection tubes” actually monitored the annulus just like the older weep holes,
Respondent’s management was factually incorrect regarding two of the three
shut-down scenarios. Absent any evidence that Arcadian had a good faith basis
for concluding that the leaks were caused by anything other than a breach, its
failure to shut down the reactor demonstrates a reckless disregard of employee
safety. See Tampa Shipyard, Inc ., 15 BNA OSHC 1533, 1540, 1991-93 CCH
OSHD ¶ 29617, p. 40,103 (86-360, 1992)(consolidated) (Tampa’s practice of
attempting crane lifts with the crane’s rollers coming off its turntable,
indicating a severe overload of the crane, was “reckless” and a willful
violation of section 5(a)(1)). Arcadian knew that the purpose of the weep holes was to warn of a
breach of the reactor lining and that such a breach, left unchecked, could
ultimately result in a catastrophic failure of the reactor. Their decision to
treat the weep hole leaks as something other than warnings of a hazardous
breach without any reasonable basis in fact and, essentially, ignore them was
the equivalent of gambling with employee safety and was, indeed, reckless. L.E. Myers Co. ,
16 BNA OSHC 1037, 1047, 1993-95 CCH OSHD ¶ 30,016, p.41,134 (No. 90-945,
1993)(violation willful where the crew “gambled” that it could maintain proper
clearance without insulating power lines).

IV.
Penalty

Section 17(j) of the Act, 29 U.S.C. § 666(j), requires
that in assessing penalties, due consideration shall be given to the size of the
employer’s business, the gravity of the violation, good faith, and the
employer’s history of violations. Generally, the gravity of a violation is
principal factor in penalty assessment. Trinity Industries, Inc ., 15 BNA
OSHC 1481, 1483, 1991-93 CCH OSHD ¶ 29,582, p. 40,033 (No. 88-2691, 1992).
Gravity “depends on such matters as the number of employees exposed, the
duration of the exposure, the precautions taken against injury, and the
likelihood that any injury would result.” J.A. Jones Constr. Co., 15 BNA
OSHC 2201, 2214, 1991-93 CCH OSHD ¶ 29,964, p.41,033 (No. 87-2059, 1993).

The judge assessed the proposed penalty of $50,000. He
found that the gravity was high because 87 employees were in danger of serious
harm or death. He did not give Arcadian credit for size because it was a large
company with over 250 employees. He did not give credit for history because of
Arcadian’s “significant history of prior OSHA violations,” as discussed by
OSHA’s Deputy Director of the Directorate of Compliance Programs H. Berrien
Zettler and OSHA petrochemical safety engineer Mark Briggs. The judge did not
give good faith credit because he found that items 1(a) and 1(b) were willful.
However, the judge noted that the Secretary reduced the proposed penalty from
$70,000 to $50,000 because there were no fatalities, the number of injuries was
relatively low, and the employer was developing plans to come into compliance
with OSHA’s PSM standard.

We find that the record supports the $50,000 penalty
assessed by the judge. To support its argument for a lower penalty, Arcadian
argues that the likelihood of an accident was low, that they took precautions
to prevent damage to the reactor, and, while not disputing that it had over 250
employees, noted that there were about 150 employees at this plant. As
discussed previously, however, it appears that the likelihood of an accident
from not shutting down the leaking reactor was great and that Arcadian’s
precautions taken were minimal. While Arcadian claims that 150 employees
“cannot be considered large,” it does not dispute that a total over 250
employees may be considered large. The Commission has considered employees at
other worksites in determining employer size. See, e.g., Merchant’s Masonry,
Inc. , 17 BNA OSHA 1005, 1006-07, 1993-95 CCH OSHD ¶ 30,635, p.42,444 (No.
92-424, 1994).

ORDER

Accordingly, we affirm a willful violation of section
5(a)(1) of the Act and assess a penalty of $50,000.

/s/_____

W.
Scott Railton

Chairman

/s/_____

Thomasina
V. Rogers

Commissioner

/s/_____

James
M. Stephens

Dated: September 30,
2004                                                 Commissioner

SECRETARY OF LABOR,

Complainant,

v.

OSHRC DOCKET NO. 93-0628

ARCADIAN CORPORATION,

Respondent.

APPEARANCES:

For
the Complainant:

Mary E. Witherow, Esq., Daniel Curran, Esq., Michael
Olvera, Esq., Nancy B. Carpentier, Esq., U.S. Department of Labor, Office of
the Solicitor, Dallas, Texas

For
the Respondent: 

Stephen C. Yohay, Esq., Pamela Reiman, Esq.,
McDermott, Will and Emery, Washington, D. C.

Of
Counsel:

Kessen
& Dyer Smith

Before:
           Administrative
Law Judge: Stanley M. Schwartz

DECISION AND
ORDER

This
proceeding arises under the Occupational Safety and Health Act of 1970 (29
U.S.C. Section 651 et seq. ; hereafter called the “Act”).

Respondent,
Arcadian Corporation ( Arcadian), at all times
relevant to this action maintained a place of business at I-10
West, Lake Charles, Louisiana where it was engaged in the
manufacture of agricultural fertilizer. Respondent admits it is an employer
engaged in a business affecting commerce and is subject to the requirements of
the Act.

On
July 28, 1992 a pressure vessel, or R-2 Reactor, involved in the manufacture of
urea at Arcadian’s Lake Charles work site exploded, injuring six Arcadian
employees as well as four employees of other companies in the area and over 90
private citizens. The citations in this matter, alleging violations of the Act
together with proposed penalties, were issued on January 27, 1993 as a result
of an inspection by the Occupational Safety and Health
Administration (OSHA) of Arcadian’s Lake Charles work site
following the incident. By filing a timely notice of contest Arcadian
brought this proceeding before the Occupational Safety and Health Review
Commission (Commission).

Prior
to the hearing in this matter, pursuant to Arcadian’ motion for summary
judgment, the undersigned severed, and vacated items 2 through 87 of citation 2
( See; this judge’s Orders of February 25, 1994 [ aff’d. & remanded
in Arcadian Corp., 17 BNA OSHC 1345 (No. 93-3270, 1995)], and
November 30, 1995). On October 4, 1994 through July 13, 1995, a hearing was
held in Lake Charles, Louisiana. A partial settlement agreement, settling all but item 1 of citation 2,
was filed by the parties prior to the start of the hearing. That settlement
agreement is hereby approved and incorporated herein by reference. Citation 2,
item 1 is, therefore, the sole matter remaining at issue in this matter. The
parties have submitted briefs and this matter is now ready for disposition.

The
Citation

Willful
citation 2, item 1 alleges:

Section 5(a)(1) of the
Occupational Safety and Health Act of 1970: The employer did not furnish
employment and a place of employment to Mary Poullard Smith which was free from
recognized hazards that were causing or likely to cause serious physical harm
to employees in that there was a catastrophic failure/explosion in a pressure
vessel containing liquefied Carbon Dioxide (CO2), Ammonia (NH3), Ammonium
Carbamate, and urea, under 2850 psig of pressure at a temperature of 370
degrees Fahrenheit, exposing them to; being crushed/struck by flying/falling
debris and/or, asphyxiation/toxic gases. The following conditions contributed
to the existence of this hazard:

(a)       On
or about July 28, 1992, the urea manufacturing operation utilizing a pressure
vessel (R-2 Reactor) was not shut down upon previous detection of leaks in the
liner of the vessel.

Feasible abatement methods to
correct this condition may include, but are not limited to, shutting the reactor
down upon detection of a leak, and identifying the location/cause of the leak
by, e.g., radiographic examination of the vessel walls.

(b)       On
or about July 28, 1992, management had not implemented an adequate program to
ensure that the R-2 vessel’s leak detection system (weep holes and leak
detection holes) was properly monitored for leaks of decomposition gases (CO2
and ammonia) or leaking product (ammonia carbamate).

1.         Inconsistent
record keeping and review practices were used by employees involved in the
inspection of the R-2 vessel’s leak detection system.

2.         Means
to thoroughly inspect each element of the leak detection system so as to detect
escaping gases, leaking product, or a clogged weep hole/leak detection hole,
had not been provided.

Feasible abatement methods to
correct this condition may include, but are not limited to, 1) installing
manometers on each weep hole/leak detection hole to automatically detect
escaping gases; 2) constructing sufficient platforms around the R-2 Reactor to
allow direct employee access to all of the weep holes/leak detection holes; 3)
implementing appropriate administrative controls to ensure that operators inspect
each weep hole/leak detection hole on a periodic basis for conditions
indicating a possible leak in the vessel liner, and that operators document the
findings of the inspection on a consistent basis using a uniform recording
system; 4) drilling/rodding/steaming out clogged weep holes/leak detection
holes to ensure that the leak detection system functions according to its
design criteria, i.e., that the weep holes/leak detection holes communicate
freely to the vessel liner.

(c)       On
or about July 28, 1992, the Arcadian Corporation operated a pressure vessel
(R-2 Reactor) utilizing a stainless steel liner that had been
improperly/inadequately repaired, inspected, and maintained.

Feasible abatement methods to
correct this condition may include, but are not limited to, complying with
appropriate industry codes such as API 510, ASME, Volume VIII, to ensure that
critical welds on the pressure vessel are performed according to design
specifications, meet industry standards, and are subject to, e.g., non-destructive
testing methods prior to the vessel’s return to service.

Alleged Violation of §5(a)(1)

Section
5(a)(1) of the Act provides that :

(a) Each employer (1) shall
furnish to each of his employees employment and a place of employment which are
free from recognized hazards that are causing or are likely to cause death or
serious physical harm to his employees; . . ..”

In
order to prove a violation of section 5(a)(1) of the Act, the Secretary must
show that: (1) a condition or activity in the workplace presented a hazard to
an employee, (2) the hazard was recognized, (3) the hazard was likely to cause
death or serious physical harm, and (4) a feasible means existed to eliminate
or materially reduce the hazard. The evidence must show that the employer knew,
or with the exercise of reasonable diligence could have known, of the violative
conditions. Tampa Shipyards, Inc. , 15 BNA OSHC 1533, 1991-93 CCH OSHD
¶29,617 (Nos. 86-360, 86-469, 1992).

Preemption

As
a threshold issue, Arcadian argues that 5(a)(1) of the Act is preempted because
applicable standards specifically addressing the cited conditions were
promulgated under the Process Safety Management Standard at 29 CFR
§1920.119(j), implementation of which was stayed by the Secretary until August
26, 1992. See , 57 Fed. Reg. 23060 (June 1, 1992). The stated purpose of
the stay of the process safety standard was to allow the Secretary to determine
the feasibility of achieving compliance by the effective date of the standard.

The
purpose of §5(a)(1) is to provide protection against recognized hazards where
no duty under a specific standard exists. Con Agra, Inc. , 11 BNA OSHC
1141, 1983 CCH OSHD ¶26,420 (No. 79-1146, 1983). The proposed process safety
standards are evidence that process safety hazards are recognized. Clearly
Arcadian had no duty to comply with the process safety standard during the stay
of those standards. Arcadian’s contention that the stay of the process safety
standard also abrogated its §5(a)(1) duty to protect its employees from the
hazards addressed there, however, would lead to an untenable result. Employees
would be deprived of any protection from the group of hazards specifically
recognized by those standards during the pendency of the stay.

Moreover,
the Secretary’s prima facie burden in a §5(a)(1) case includes a showing
that feasible means to materially eliminate or reduce the hazard, thus
obviating the problem addressed by the June 1992 stay.

I
find, therefore, that the stay of the proposed process safety standards does
not act to preempt §5(a)(1) here.

Definition
of The Hazard(s)

Arcadian
also argues that the citation, as formulated, improperly denotes the July 28,
1992 catastrophic failure/explosion of Arcadian’s R-2 Reactor as the “hazard”
against which it failed to protect. Arcadian maintains that the Secretary’s
refusal to amend the language of the citation is fatal to the Secretary’s case
because the citation, as worded, alleges that Arcadian actually knew that the
R-2 reactor was going to explode and failed to take appropriate action.
Arcadian maintains therefore, that the citation thus fails to apprise Arcadian
of its obligations, or to identify conditions or practices over which it could
reasonably have been expected to exercise control, citing Pelron Corp., 12
BNA OSHC 1833, 1986 CCH OSHD ¶27,605 (No. 82-388, 1986) .

The
undersigned judge disagrees. The language in the citation is sufficiently broad
so as to place Arcadian on notice that it was being cited for failing to take
recognized precautions that would have reduced the risk of catastrophic
failure/explosion, whether or not those precautions would have prevented the
failure/explosion which occurred on July 28, 1992. Those precautions are set
out in detail in the citation, as prescribed by the Commission in Pelron .
In addition Complainant’s counsel clarified its position prior to the hearing
in opening statements (Tr. 40-72). The mere fact that the citation here is couched
in terms of the specific incident which brought about the OSHA inspection and
citation did not deprive Arcadian of notice, either of the issues against which
it was required to defend, or of the conduct expected of it by OSHA.

Finally,
it has long been the position of the Commission that in a general duty clause
case it is the hazardous condition, not the specific incident that resulted in
injury, that is relevant in determining the existence of a recognized hazard. Waste
Management of Palm Beach, 17 BNA OSHC 1308, 1309 (No. 93-128, 1995), citing,
Kelly Springfield Tire Co., 10 BNA OSHC 1970, 1982 CCH OSHD ¶26,223 (No.
78-4555, 1982).

In
light of the long line of Commission cases dealing with the way a 5(a)(1)
hazard is defined, as well as Complainant’s own description of its case, it
would have been unreasonable for Arcadian to rely on its narrow reading of the
citation. The fact that Arcadian fully tried the relevant issues subject to a
continuing objection demonstrates that it was able to identify and address the
hazards named by the Secretary. The hazards postulated by the Secretary, and
which will be addressed here are:

(a)       Arcadian’s
failure to shut down its urea manufacturing operation (R-2 Reactor) upon its
detection of leaks in the pressure vessel;

(b)Arcadian’s failure to
implement an adequate monitoring system for the detection of leaks;

(c)       Arcadian’s
failure to conduct adequate inspection, maintenance and repairs;

all of which
conditions/practices exposed Arcadian’s employees is the potential catastrophic
failure of its pressure vessel (R-2 Reactor) .

Citation
1(a)

ISSUES

Arcadian
does not seriously dispute the necessity of shutting down a pressure vessel
such as its R-2 reactor upon the detection of leaks. Arcadian maintains,
however, that it did not know, nor with the exercise of reasonable diligence
could it have known, that its R-2 reactor was leaking prior to the July 28,
1992 explosion, or that the failure of the R-2 vessel would pose a serious
hazard to its employees. Arcadian also argues that the Secretary failed to
prove that shutting down the reactor would have eliminated or materially
reduced the cited hazard.

FACTS

The
R-2 Reactor . The R-2 vessel which is the subject of this action
was a stainless steel lined multilayered pressure vessel approximately 90 feet
tall and 6 feet in diameter with a capacity of 1836 cubic feet. The reactor
consisted of an outer shell composed of 14 layers of carbon steel and a
stainless steel liner. The carbon steel shell was constructed of four shell
sections, each 19' 9-3/4" wide, welded together between a top and bottom
head. The stainless steel liner was attached only at the top and bottom heads
and was ½" thick. In the vessel, carbon dioxide, ammonia and water were combined
under pressure to produce urea, a fertilizer. As designed and operated the
vessel maintained an interior pressure of approximately 2750 to 2865 psig at
340-375° Fahrenheit (Tr. 119, 143, 197-99; Exh. G-83, pp. I-4, I-5, G-125, pp.
3-4).

Mahesh
Madhani, a metallurgic failure investigator (Tr. 2800-20, 2693-94) has been
involved in 1000 failure investigations, including investigations involving the
analysis of corrosion in austenitic (corrosive resistant) steel (Tr. 2810).
Madhani testified, without contradiction, that the July 1992 explosion of the
R-2 vessel resulted from the failure of the clip weld-joint and liner above the
C-7 circumferential weld in the northeast quadrant. Carbamate penetrated through the liner,
corroding seven layers of carbon steel plates until the remaining six wraps
could not withstand the service pressure and failed (Tr. 2729, 2846-48; Exh.
G-263, p. 12). Accord , testimony of Richard B. Setterlund, with
Metallurgical Consultants, Inc., who was hired by Arcadian to conduct an
investigation into the cause of the R-2 reactor failure (Tr. 2345; Exh. G-125,
p. 104).

Failure
to Shut Down Reactor Upon Detection of Leaks

Hazard
Recognition . It is uncontested that the purpose of the
corrosion-resistant stainless steel liner in the R-2 reactor was to protect the
carbon steel shell from contact with carbamate, a highly corrosive substance
which is a by-product of the urea production process (Tr. 1869-71, Larry
Schell, urea superintendent with Olin Corporation , Exh. G-104, p.2). Arcadian was well aware that if leakage occurred
in the corrosion-resistant lining, the corrosive carbamate would contact the
carbon steel and rapidly corrode the vessel’s outer shell (Tr. 2204, Arcadian’s
urea area supervisor, Richard Bartley). It is uncontested that upon detection
of a leak in the lining, the vessel should be shut down (Tr. 2307-08, Bartley;
9215-16, Arcadian’s urea unit superintendent, Dana Baham). On June 23, 1989
Dana Baham, who was then employed by Olin Corporation, ordered the R-2 reactor
shut down within an hour of being informed that the reactor had developed a
leak (Tr. 491, 660-61, 9205-11).

Dr.
Richard LeVine was the fire protection manager responsible for chemical loss prevention
and fire protection engineering at Olin Corporation between 1956 and 1986 (Tr.
3900). In 1964 and 1965 LeVine performed a hazard evaluation of the urea
operation (Tr. 3907-09). LeVine, a chemical engineer, and president of Chemical
Hazard Evaluation Consultants Inc. (Tr. 3893-94), testified that the
necessity of shutting down a pressure vessel such as the R-2 reactor upon the
detection of a leak was recognized by him and other safety professionals in the
industry at the time he worked for Olin (Tr. 3909, 3915-16, 3939-41). LeVine
pointed to industry publications such as Complainant’s Exh. 184, “Repairing
Titanium-Lined Urea Reactors,” by Clark and Dunmore, in Ammonia Plant Safety ,
1975, Vol. 18, p. 99, which states:

It is well known that if a
liner leaks, whether it is silver, austenitic steel, titanium, or any other
metal, corrosion of the base steel by the urea melt can be very rapid. Standard
practice with vessels having loose liners is to have a number of weep holes
through the pressure shell so that liner leaks can be detected. To avoid
damage, a reactor should be brought off line within a day after a leak starts.

. . . No time should be spent
in arguing whether it is a false alarm; the reactor should be brought off line
immediately.

Knowledge
of a Hazardous Condition

Arcadian’s
Leak Detection System . In order to detect leaks in the R-2 vessel’s
liner, 24 tubes accessing the annulus between the liner and the carbon steel shell, or “weep holes,” were
installed 120° apart above and below each of the circumferential welds (Tr.
276-278, 2151, 2355, 2514-16, 2355; Exh. G-125, p. 47, G-240, G-241). During repairs
made in 1989, stainless steel filler patches were welded flush into the R-2
reactor’s liner in the area of the C-5 and C-7 circumferential welds where
portions of the original liner had been cut away; an overlay patch was full
seal welded over the filler patches on the inside of the liner wall (Tr.
1297-99; Exh. G-49). Two additional weep holes, also referred to as leak
detection tubes, were added to the reactor’s outer shell in the area of the C-5
weld to monitor the repair patch; a third leak detection tube was added at a
similar repair in the C-7 weld area (Tr. 2152-53). Setterlund examined the leak
detection tube at the C-7 weld, and testified that the only differences between
the original weep holes and the 1989 leak detection tubes were the material the
tubes were made of (stainless in 1989 vs. low alloy steel in the original
construction), and the way the tubes were welded into the outer shell (Tr.
2358-60, 2376). Both the weep holes and the leak detection holes monitored the
annulus between the outer shell and the liner (Tr. 2445).

Under
normal conditions, material coming out of the weep holes indicates that
carbamate has gotten through the liner (Tr. 1871; Exh. G-104).

The
January 1992 Event . At or about 1:00 a.m. on January 3, 1992, R-2
operators, Dick Richardson, David Baham, and Bill Brunkhardt noted a small
brown blob of urea hanging from a weep hole in the area of the C-7 weld (Tr.
361-64, 962-63). Dana Baham was notified at home; Baham testified that he left
instructions for the operators to check the other weep holes at that time (Tr.
9829). Richardson and David Baham testified that upon examination of the other
weep holes in the area, they found material in a weep hole to the northwest, as
well as in the weep hole where the extrusion was found (Tr. 363-64, 963). Dana
Baham was informed, and he instructed the operators to go up and steam out the
weep holes (Tr. 366, 9830). Richardson steamed out the C-7 weep hole, but did
not recall steaming the one to the northwest; David Baham testified that they
attempted to clean that hole out as well, but had trouble reaching it (Tr.
376-78, 1029-39, 4111-12). The operators nonetheless informed Dana Baham that
the holes were clear (Tr. 378, 963-64, 9837). Baham told the operators to
continue monitoring the weep holes for further emissions, and to call if
anything abnormal happened (Tr. 378-79, 9847).

Baham
recognized that the extrusion of urea from a weep hole indicated a possible
hole in the reactors liner (Tr. 9846; Exh. G-28, Operator’s log for January 3,
1992, p.4). Baham concluded, however, that if there had been a leak in the
vessel’s liner a stream of urea, ammonia and CO 2 would have come out of the weep hole, as it did in June
of 1989, prior to the 1989 shut down and repair of the reactor (Tr. 9838-39).
Based on the fact that no further material came from the weep hole after it was
steamed (Tr. 7087), Baham decided that the extruded urea had not come from a
leak in the reactor liner, but had been trapped, undetected, in the annulus
during the 1989 leak, and that during various shut downs and start ups had been
squeezed between the liner and the vessel’s outer shell, traveling radially and
vertically within the annulus until, following the latest shut down on December
31, 1991, the hardened urea was expelled through the weep hole (Tr. 9839-44).

The
subsequent accident investigation revealed that a long standing leak at the C-7
weld was responsible for the failure of the R-2 reactor (Tr. 11268-69)

The
Secretary’s Experts . James Foster, a management consultant to the
nitrogenous fertilizer industry, has 25 years of experience in the management
of nitrogen fertilizer facilities (Tr. 3253-3305; Exh. G-131). Foster testified
that Dana Baham’s conclusions with regards to the January 1992 urea extrusion
were unreasonable. Foster opined that, though possible, it was highly
improbable that material trapped at the C-5 level in 1989 would be forced
upwards 17 to 18 feet, to be extruded 2-1/2 years after the fact (Tr. 3326-27).
Foster noted that the annulus of the R-2 reactor had been flushed and found
clear following the 1989 repairs prior to being put back into service (Tr.
3326; Exh. G-131). Kevin LeDoux, an Olin engineer involved in the 1989 repairs,
testified that he kept a daytime log of the progress on the repairs for Dana
Baham (Tr. 1476-77). LeDoux stated that when the liner was ground out for
patching in 1989 the annulus was checked, both visually and with compressed
air, to assure that there was no product remaining in the space between the
liner and the outer shell; no product was found (Tr. 1632). LeDoux testified
that Baham was made aware of their findings (1632-34).

Terence
Lynch, a consultant with Fertilizer Technology Group, has been in the
fertilizer industry since 1965 (Tr. 4144, 4155-67). From that time until 1990
Lynch worked as a works chemist, technical superintendent, and research and
technical manager at CIL, an ammonia and urea manufacturing facility (Tr.
4156-67, 4219-21). Lynch stated in his report on the urea reactor failure that
old urea left behind the liner would decompose into cyanuric acid, ammelide
ammeline, and possibly melamine; all of which chemicals are extremely hard and
have a melting or decomposition temperature above the working temperature of
the R-2 reactor (Exh. G-132, p. 16). Lynch opined that recently leaked urea and
ammonia carbamate would be soft and more likely to extrude (Exh. G-132, p. 16).
Lynch testified that a urea extrusion indicates the possibility of a leak, and
that the accepted procedure is to shut down (Tr. 4404).

The
June 1992 Event . On June 14, 1992 Charles Chapman, Mickey Sullivan and
Mary Poullard Smith, the R-2 operators on duty, discovered a leak from a weep
hole in the area of the C-5 weld (Tr. 495, 576-80). Mary Poullard Smith
described the leak as a flow of white liquid, “fizzling” as it came out of the
weep hole (Tr. 583). Poullard and Sullivan stated that they called Dana Baham
at home to inform him of the leak (Tr. 496). Poullard testified that Baham left
no instructions for the operators telling her that he would look at the leak
when he came in the next day (Tr. 496, 584-85).

Baham
testified that he had no distinct memory of his reaction to the leak until the
next morning when he arrived at the office the following day and began
reviewing drawings of the reactor to ascertain the location of the leak (Tr.
9974). Baham determined that the leak was located in the area of one of the
1989 repairs (Tr. 9878). Richard Bartley then appeared at Baham’s office,
having learned of the leak. Bartley testified that he first assumed that one of
the 1989 welds had failed (Tr. 2266-67). Together he and Baham reviewed Baham’s
journal documenting the 1989 repairs (2260-61). Baham and Bartley came to the
conclusion that the material leaking from the weep hole was not in contact with
the carbon steel shell and that it was not necessary to shut down the R-2
Reactor (Tr. 2262, 9876, 9879-83). The leaking weep hole was one that had been
installed in 1989, and Baham and Bartley believed that it was not in
communication with the annulus, but solely with the space between the filler
patch and overlay patch. Baham believed that only the overlay patch was
leaking, and that because both patches were full seal welded the leaking
product was entering the space between the seals and being shunted directly to
the outside through the weep hole tube without contacting the carbon steel
shell (Tr. 2264, 9881, 9891; Exh. R-169). Bartley testified that if the leak
had been coming from any of the weep holes other than the two added in 1989,
the reactor would have been shut down (Tr. 2263-64).

Baham
testified that his conclusions were supported by the absence of any reddish
discoloration in the discharge, which would have indicated corrosion of the
carbon steel (Tr. 9899-9901, 10187). In addition, Bartley testified that when
he used a steam lance to flush out the leaking weep hole, the steam came out
the other weep hole in the C-5 patch (Tr. 2256-57). Baham believed that the
communication of the two weep holes added in 1989 proved that the space between
the two patches was closed off (Tr. 9911-9913, 10217-18).

Based
on Baham’s and Bartley’s conclusions, the R-2 operators were instructed to
bring the reactor back up to production rates, and to monitor the leak, which
continued until the July 28 explosion, for color changes (Tr. 347, 2295, 2301,
7111-12, 9910-13; Exh. G-28, June 22, 1992). No other plant personnel, including
the plant manager, Ernie Elsbury, and the head of reliability and maintenance
engineering, Ed Anderson, conducted an independent investigation of the leak,
relying on Baham’s evaluation of the situation (Tr. 2623-28, 7784-87).

The
record does not reflect what Baham and Bartley saw in Baham’s journal which led
them to believe the weep hole tube was welded through both the carbon steel
shell and the filler patch, or that the filler patch was full seam welded,
closing off the space between the two patches (Tr. 2280-81, 2290). The journal
was rendered unreadable as a result of the July 28th explosion (Exh. G-56;
Respondent’s post-hearing brief, fn.159). Loose in Baham’s journal, however,
was the repair proposal from Schoeller-Bleckmann, the maintenance contractor
performing the 1989 repairs (Exh. G-57). The proposal states that the filler
patches were to be tack welded, which would allow the passage of material
between the annulus and the space between the patch (Tr. 2264, Exh. G-57, p.
15-16).

The
final report from Schoeller-Bleckmann, containing repair specifications, was
also in Bartley’s files on the R-2 reactor, and was available to Arcadian (Tr.
2109, 2119; Exh. G-60). The report was not consulted between the time the leak
was discovered and the July 28 explosion (Tr. 2289, 8417). As in the proposal,
the specifications call for tack welds around the filler patch (Tr. 2291-93;
Exh. G-60, p. 33, 37). A photograph of the completed C-7 weld, contained in the
report, shows the tack welding around the filler patch (Tr. 2895, 2912; Exh.
256, 293).

The
specifications call for, and photographs of the C-7 filler patch show a hole
drilled into the patch as part of the leak detection system (Exh. R-162, G-60,
p. 33). Setterlund testified that all the patches had holes (Tr. 2505). Nothing
in the specifications calls for the leak detection tubes to be welded into the
holes in the filler patches, however, and Setterlund testified that the leak
detection tube at C-7 was not welded to the insert patch, but terminated just
short of the hole drilled in the patch (Tr. 2404, 2445, 2499, 2897). Baham
admitted that he did not see tubes pushed through the holes at the C-5 weld, or
see the tubes welded to the flush patches (Tr. 10063; Exh. G-60).

Foster
agreed that the clear or whitish color of the fluid leaking from the weep hole
indicates no corrosion was taking place in the space between the two patches at
the C-5 weld; however, he stated that if urea was escaping through the tack welding
on the C-5 patch it would not have been shunted out through that weep hole and
would have corroded the carbon steel shell without affecting the color of the
discharge at the C-5 weep hole (Tr. 3425-34; See, testimony of M.
Madhani, pp. 3153-54, Exh. G-275 pp. 135, G-276 pp 1066).

Finally,
and as noted above, when a weep hole check was performed at the completion of
the 1989 repairs, all weep holes, including the newly added holes, were found
to be in communication with each other (Tr. 1462-64). LeDoux testified that
Bartley was present during the weep hole testing, and Baham was informed of the
results of the test (Tr. 1465; See , testimony of Bartley in accord (Tr.
2160-64).

Potential
for Catastrophic Failure of the Pressure Vessel

Arcadian
maintains that it reasonably believed that its R-2 reactor was designed so that
it could not fail, or, alternatively, that its industry did not recognize that
the failure of a pressure vessel such as its urea reactor presented a hazard
which was likely to cause serious harm to employees. Complainant maintains that
both the nitrogenous fertilizer industry and Arcadian itself recognized the
potential for catastrophic failure/explosion in any multi-layer pressure vessel
in urea service.    

The
Evidence. Ernie Elsbury, Arcadian’s plant manager, testified that prior
to the July 28, 1992 explosion, he was unaware of any urea reactor ruptures
(Tr. 7044-45) Elsbury stated that he believed the R-2 reactor was so designed
that failure could be averted with early detection of problems; in the event of
vessel failure, long and costly repairs would be the only result (Tr. 7041,
7089-90, 7507-08). Dana Baham also testified that he had never heard of any
incidents involving the rupture of a urea reactor prior to July 28, 1992 (Tr.
9203-04).

In
support of Elsbury and Baham’s testimony, Respondent introduced brochures from
the manufacturer of the R-2 vessel, Chicago Bridge and Iron (CB&I), which
state:

. . .[M]ultiple layers not
only resist initiation of failures, but also serve to prevent propagation into
adjacent layers. Should a fracture occur in any layer, the load is shifted to
the other layers without compounding or magnifying the force.. . .Since the
operating pressure is well below the bursting pressure, the possibility of
catastrophic failure is almost inconceivable. (Exh. R-18).

The inner shell is pressure
tight. The load bearing layers are vented to the outside. If a leak should
develop in the inner shell through exposure to corrosive elements or other
operating conditions beyond the designed capability, the fluid would be safely
vented for immediate detection and corrective action--before a serious failure
could occur. (Exh. R-171).

Dr.
Richard LeVine testified that prior to the 1992 explosion, ruptures of
multi-layered pressure vessels had been discussed in at least three seminars of
the American Institute of Chemical Engineers (A.I.Ch.E.), which were attended
by engineers and operators of ammonia plants and related facilities, including
urea plants (Tr. 3923-25, 3932, 3943; Exh. G-130). Dr. LeVine stated that he
and others in the field recognized the rupture hazard based on the available
literature, including: “Materials and Corrosion Problems in Urea Plants” by
P.E.Krystow, in Ammonia Plant Safety, 1971, Vol. 13 [“If excessive
carbamate melt should leak out of the wrapped vessel reactor due to failure of
the inner titanium layer, serious corrosion and possible rupture of the vessel can
occur.”] (Tr. 3934; Exh. G-183, p. 97); “Urea Reactor Failure” by Jojima, in Ammonia
Plant Safety , 1979, Vol. 21 discussing the 1977 explosion of a urea
reactor in Columbia.

Arcadian
admits it is a member of the Ammonia Symposium and Annual Safety Meetings by
AIChE and maintains copies of Ammonia Plant Safety on file (Exh. G-181,
G-182).

Terence
Lynch testified that, as was customary for urea manufacturers, he attended
meetings of the ANPSG [Ammonium Nitrate Pollution Study Group]; a
representative from Arcadian, Ahmad Hujaber has attended for approximately 10
years (Tr. 4179-81). As a member of the industry, Lynch also attended ammonia
safety symposium sponsored by the AIChE and received their publications (Tr.
4224-29). Lynch testified that Jojima’s paper “Urea Reactor Failure” which
details the 1977 failure of a urea reactor in Columbia, and which was presented
at the 1978 AIChE symposium (Exh. G-189) was also presented at the ANSPG during
that time period (Tr. 4230, 4269). Lynch understood that in the Columbian
incident the reactor’s outer shell corroded until it wouldn’t support the
vessel pressure and exploded. Thirty-three people were killed by the ammonia
fumes released (Tr. 4271).

At
an ANPSG meeting in 1978 Lynch also became aware of an incident involving a
multi-layered urea reactor operated by CF Industries, in which a leak developed
in the liner, corroding the shell. When the shell could no longer sustain the
interior pressure, the contents of the reactor were “ejected,” through the head
of the reactor (Tr. 4260-4264; Exh. G-186).

Lynch
testified that the publications of Trevor Kletz on process safety are
considered authoritative in the urea industry (Tr. 4284-86). Kletz, in What
Went Wrong; Case Histories of Process Plant Disasters , Second Edition,
relates the failure of a multi-wall vessel in an ammonia plant. The vessel
disintegrated 10 days after developing a gas leak, causing extensive damage.

The report on the incident
states: “Our reading of the literature led us to believe that as long as the
leaking gas could be relieved through the weep holes, it would be safe to
operate the equipment. . . . Consensus at the time supported our conclusion.
But after the explosion, there was some dispute over exactly what was said and
what was meant. Knowing what we know now, there can be no other course in the
future than to shut down operations in the event of a leak from a weep hole
under similar circumstances. (Exh. 187, p. 133).

Lynch
testified that even if ignorant of prior reported incidents, the operator of a
urea reactor should recognize the inherent hazards associated with any pressure
vessel. If the pressure containing outer shell becomes corroded from a leak in
the inner liner, it may no longer be able to contain its pressurized contents,
and a sudden release of energy and of the contents of the vessel may result
(Tr. 4325-4332).

The
testimony of Dr. Chester Greleki, a chemist and president of Hazards Research
Corporation (Tr. 4934, 4940-43), agrees with that of Lynch. Greleki testified,
based on his experience evaluating between 15 to 20 accidents involving high
pressure vessels (Tr. 4977), that members of the urea industry do, or should,
recognize the explosive potential of a multi layer urea reactor solely on the
basis of the physics and chemistry involved (Tr. 5076; Exh. G-133, p.2).

Arcadian’s
reliability and engineering manager, Ed Anderson, was employed by CF Industries
between 1973 and 1984 as a process project engineer, manager of engineering and
plant manager (Tr.2559, 2573). Anderson was familiar with the 1976 urea reactor
failure at CF Industries (Tr. 2568, 2642). Anderson testified that ammonia
carbamate was released due to the failure, and that the reactor had to be
scrapped afterwards (Tr. 2661-63). Anderson was aware, prior to the July 28,
1992 explosion, of two other urea reactor failures, in South Africa, and
Columbia, but stated that he was not familiar with the details (Tr. 2664-69).
Anderson admitted, however, that catastrophic failure of a multilayered pressure
vessel was a possibility (Tr. 2669).

Richard
Bartley testified that he had heard about the rupture of a urea reactor in
South America, but maintained that he did not know people were killed (Tr.
2306-07). Bartley admitted, however, that he was aware that a pressure release
from the R-2 reactor could cause damage to equipment and personnel (Tr.
2314-15). Bartley also was aware that anhydrous ammonia, contained within the
urea reactor, is an inhalation hazard, can cause chemical burns, and in sufficient
quantities, death (Tr. 2308-10).

ANALYSIS

Recognition that the Hazard
was Likely to Cause Harm

In
this case it is undisputed that both the industry and Arcadian itself
recognized the need to shut down a multi-layer pressure vessel once a leak is
detected in its liner in order to protect the outer shell from corrosion.
Arcadian argues only that the Secretary failed to prove it or its industry
recognized that failure to shut down a leaking reactor would could result in catastrophic
failure, or harm to employees. Arcadian maintains that its management
reasonably believed, based on the assurances of the manufacturer, that the
multi-lined R-2 vessel could not fail catastrophically. Arcadian further argues
that Complainant’s witnesses were unqualified to render an opinion on industry
recognition, and that their testimony, as well as the literature they relied
upon in forming those opinions, should be discounted.

The
C B & I Brochures . The record does not support Arcadian’s contention
that it reasonably believed its R-2 vessel could not fail. Even when read in
the light most favorable to Arcadian, the brochures from C B & I do not
claim that its vessels cannot fail; Respondent’s Exh. R-18 states only that
such vessels do not fail under expected operating conditions. The passage
referred to by Arcadian in Exh. R-171 indicates, nonetheless, that “serious
failure” of a vessel could occur if corrosion is not detected, and corrective
action taken. Arcadian should have known, based on the C B & I brochures,
that the safety of such vessels is not absolute, but is dependent on retaining
the integrity of the outer shell. Plant Manager Elsbury’s testimony establishes
that this was, in fact, his understanding.

Industry
Literature . Arcadian contends that the articles introduced to show
industry recognition of a potential for catastrophic failure, including Exhs.
G-183, G-184, G-186, G-187, and G-188 are hearsay, and were erroneously
admitted into evidence. Arcadian contends that the articles do not meet the
criteria for “learned treatises” and therefore should not have been admitted
pursuant to the exception provided in Rule 803(18) .

Arcadian’s
contention is unpersuasive merit as the articles are relied upon by Complainant
to establish industry recognition of, rather than the truth of, the statements
contained therein. Industry recognition is an operative legal fact with
independent legal significance. Operative legal facts may be established
without the underlying facts being true. 2 S. S ALTZBURG ,
M. M ARTIN , F EDERAL
R ULES O F
E VIDENCE M ANUAL
at 139 (5th Ed. 1990). The articles were not submitted for a hearsay purpose,
and therefore are not hearsay. As non-hearsay, they need not come within an
exception to the hearsay rule and were properly admitted. Alternatively, they
are also admissible under Rule 803(18) if considered hearsay, as "learned
treatises".

Complainant’s
Witnesses . Arcadian argues that the testimony of Complainant’s
witnesses should be discounted because none, with the exception of Lynch had
experience in the urea manufacturing industry. Arcadian objects to Lynch’s
testimony on the grounds that his experience was with reactors and processes
different than that used by Arcadian. Arcadian maintains that these witnesses
offered testimony on matters far beyond their expertise, which was improperly
admitted.

The
undersigned finds that Drs. LeVine and Grelecki, though not experts in urea
manufacturing, are, by means of their education, training and experience,
qualified safety experts familiar with pressure vessels, and are qualified to
offer opinion testimony as to the fire and explosion hazards known to be
associated with such vessels.

Both
Foster and Lynch’s extensive experience in the fertilizer industry amply
qualify them to testify to the industry’s recognition of those hazards.

The
described testimony was properly admitted pursuant to Rule 702 .

Conclusions .
The testimony and industry literature amply demonstrate that the nitrogenous
fertilizer industry recognized the hazard described in citation 1(a), failure
to shut down a multilayered pressure vessel upon detection of a leak in the
liner of the vessel. The undersigned is convinced that neither the differences
in multi-layer pressure vessels nor the specific chemical processes involved in
the production of urea affect either the explosion or toxic chemical hazards
associated with those vessels. Failure to abate such hazard was known to
increase the likelihood of corrosion and failure of the vessel’s pressure
bearing outer shell. The record demonstrates that corrosion in a pressure
vessel’s shell presents a hazard likely to cause death or serious physical
harm, either from the explosive rupture of the vessel or from its release of
toxic gases. Furthermore, the evidence establishes that publications from the
manufacturer put Arcadian on notice of the danger of vessel failure due to
undetected corrosion, and that members of Arcadian’s management, Ed Anderson
and Richard Bartley were actually aware of the possibility that the contents of
the R-2 vessel could be released in the event of a reactor failure, exposing
employees to toxic gases.

The
Secretary has established that Arcadian had both constructive and actual
knowledge that the cited hazard was likely to cause death or serious
harm. 

Knowledge of the Existence of
the Hazardous Condition

The
extrusion of urea from the C-7 weep hole in January 1992, as well as the steady
stream of product from the C-5 weep hole in June 1992, provided Arcadian with
ample evidence that the liner of its R-2 reactor was leaking in one or more places.
It is found that Baham’s and Bartley’s attribution, twice in a six month
period, of weep hole discharges to sources other than leaks was unreasonable.
Leak detection was the sole function of the weep holes. In the absence of clear
evidence to the contrary, Baham and Bartley should have assumed, that
discharges from the weep holes did, in fact, indicate one or more leaks.
Arcadian could not produce the portion of Baham’s records relied upon by Baham
and Bartley, nor could those individuals adequately explain what in those
records made them believe that the weep holes at the C-5 weld were different
than the other weep holes, monitoring the space between the two repair patches
at C-5 rather than the annulus. Additional written records, which were readily available
to them, and which contradicted their theory were never consulted.

It
was further unreasonable for Arcadian to rely on the absence of discharge from
other weep holes without ascertaining that those weep holes were open, as
discussed at length in the following section on citation 1(b).

Finally,
it was unreasonable for Baham to rely on the absence of corrosion byproducts in
urea stream.  Under other possible scenarios, a clear urea stream could be
flowing from the tube while, as noted by Foster, additional leaking urea might
remain inside the shell, corroding the carbon steel. The test of good faith for
these purposes is an objective one -- whether the employer's belief concerning
a factual matter, or concerning the interpretation of a standard, was
reasonable under the circumstances. Calang Corp. , 14 BNA OSHC 1789,
1987-90 CCH OSHD ¶29,080 (No. 85-319, 1990). Baham’s failure to consider other
possible scenarios militates against any finding that the theory enunciated at
trial was held in good faith.

Feasibility of Proposed
Abatement Measures

Arcadian
argues that Complainant failed to prove that the suggested means of abatement
were feasible, because it was not shown that shutting down the reactor would
have eliminated or materially reduced the cited hazard. Arcadian argues that
shutting down the reactor and conducting an examination of the weld in the C-5
area would not have revealed the corrosion at the C-7 level, which caused the
R-2 reactor failure. Arcadian maintains that such examination, therefore, would
not have provided any useful abatement of the hazard.

The
undersigned has already ruled that the Secretary need not establish the cause
of the July 28 explosion in order to establish his case (Tr. 11202-03).
Likewise Complainant need not show that Arcadian’s employment of the suggested
abatement measures would have prevented the July 28 accident. See; Waste
Management of Palm Beach, supra. [Specific incident that resulted in injury
not relevant to hazard determination]. In determining feasibility, the question is whether such precautions
are recognized by "knowledgeable persons familiar with the industry as
necessary and valuable steps for a sound safety program in the particular
circumstances existing at the employer's worksite." Cerro Metal
Products Division, Marmon Group, Inc., 12 BNA OSHC 1821, ¶27,579 (No.
78-5159, 1986).

The
record establishes that knowledgeable persons in the industry would have shut
down a urea reactor in the circumstances described during these proceedings
until the source of the leak was identified. The violation at citation 1(a) has
been established.

Citation
1(b)

ISSUES

Citation
1(b) charges Arcadian with: [1] failing to keep consistent records documenting
the results of its leak detection monitoring; and [2] with failing to
adequately inspect its weep hole system for evidence of escaping gas and/or
leaking product, and to assure that the weep holes remained open and in
communication with each other.

The
citation lists four methods of abatement: 1) installing manometers to
automatically detect escaping gases; 2) constructing platforms to allow
employee access to all of the weep holes; 3) implementing appropriate
administrative controls and a uniform recording system to operator inspections
of the weep holes; 4) ensuring that the leak detection system functions
according to its design criteria, i.e., communicates freely to the vessel
liner.

Arcadian
maintains that Complainant failed to prove that the nitrogenous fertilizer
industry recognized a hazard associated with Arcadian’s method of monitoring
the weep hole system, or that the R-2 reactor’s weep holes were clogged at the
time of the July 1992 explosion.

FACTS

Monitoring
of Weep Holes/Record keeping Practices . Weep holes were visually
monitored for leaking product by the R-2 reactor C operators as part of their
hourly inspections of the reactor (Tr. 145, 326, 536-37, 1197, 1012). If the C
operator did not observe any discharge or emission from a weep hole on his
rounds, he was to check or otherwise mark the “R-2 weep holes clear” column of
the operator’s #3 Reading Sheet, which was located in the control room (Exh.
2216; Exh. G-29). Where an emission or discharge was noted, the operator was to
leave the column blank (Tr. 2216). If the operator was too busy to check the
weep holes, he or she might write “too busy” or “busy” in that column. (Tr.
2216). Sometimes the operators used a dash mark instead of a check, or instead
of leaving the column blank (Tr. 2217; Exh. G-29)

Inspection
of Weep Hole System . The weep hole leak detection system on Arcadian’s
R-2 reactor was checked for proper functioning, i.e. communication
between weep holes, following completion of the 1989 repairs (Tr. 2208-09).
Richard Bartley testified that was the only time such tests were performed (Tr.
2164, 2209). Bartley and Baham did not ensure the communication of the weep
holes during their inspection of the reactor in February of 1991 (Tr. 2218,
8328). Nor was the communication of the system checked following Baham’s
January 1992 determination that residual material from the 1989 repairs had
been trapped between the liner and the carbon steel shell (Tr. 2252).

Weep
holes on the northeast side of the reactor were accessible from the platform
and stairs on the reactor (Tr. 369, 839). The eight weep holes on the south, or
back side were not accessible, but were monitored from the ground (Tr. 354,
367-70, 839). On the south, operators could see the weep hole openings, but
could not see down the tube (Tr. 1077-78, 2215). Bartley testified that
operators could get to within two feet of the closest weep holes, six to eight
feet of those further away (Tr. 2214). Bartley admitted that it is impossible
to tell from a visual check alone whether the 1/4" weep holes are clear
(Tr. 2214).

During
the accident investigation Setterlund, Arcadian’s metallurgist, found that the
northeast weep holes above and below the C-7 weld were plugged, as was the
northwest weep hole below the C-7 weld and the leak detection tube installed at
the C-7 weld in 1989 (Tr. 2378-79; Exh. G-125, p. 99)

Recognition
of a Hazard/Monitoring & Record keeping . Stamicarbon recommends
that leaks be detected early, at the non-corrosive gaseous stage (Exh. G-104,
p.2, G-108, G-112). Terence Lynch testified that the most common continuous
monitoring system (also recommended by Stamicarbon), consist of tubes run,
either collectively or individually, from weep holes to either a chemical
indicator or to a vat of oil (Tr. 4448; Exh. G-104, G-108, G-112). The chemical
indicators would change color if ammonia was detected, bubbles would form in
the oil if gas was present (Tr. 4448). Lynch testified that he had recommended
the installation of an electronic device which, when placed in each weep hole,
continuously measured the conductance of the space and emitted a signal picked
up by an instrument in the control room (Tr. 4444). If conductance increased
somewhere in the reactor, an alarm would sound, alerting the operator to
visually locate the problem (Tr. 4445). Lynch testified that in his opinion,
continuous monitoring is superior to visual monitoring, in that gaseous leaks
could be detected in the early stages (Tr. 4439).

Lynch,
however, was also familiar with facilities where visual inspections were used,
and testified that the continuous monitoring system he described was no longer
in use, but had been discontinued against his recommendation (Tr. 4441, 4446).

Foster
testified that he believed the norm in the industry in 1992 was to monitor weep
holes visually once every hour (Tr. 3408-09). Hourly observations were then
entered into a log (Tr. 3514). Foster stated that the monitoring system
Arcadian used was the same as was used in the plants where he worked (Tr.
3384).

Recognition
of a Hazard/Inspection of Weep Hole System . Bartley testified that
following the 1982 turnaround on the R-2 reactor, during his employment with
Olin Corporation, he received a copy of a Stamicarbon inspection report which
stated that “checks for proper functioning of the weep holes have not been as
careful as they ought to be” on the R-2 reactor (Tr. 2098; Exh. G-36, p.3). The
report references Stamicarbon Specification 5869, Leak Detection System (Exh.
G-36,. p. 3). The current specification for the Stamicarbon Leak Detection
System, 58696, states that the first and main requirement for a reliable leak
detection system is free passage from any possible leak to a weep hole (Exh.
G-104, p. 3). Stamicarbon specifications make clear that where no continuous
gas detection system is in place to detect small leaks some urea may pass
undetected into the annulus, where it may crystallize and block the weep holes
(Exh. G-104, p. 2).

An
April 26, 1983 letter from Stamicarbon regarding the R-2 reactor’s leak
detection system notes the importance of maintaining the system in order to
prevent “considerable damage” to the carbon steel shell, and states that “[t]he
leak detection holes should be checked for blockage and proper functioning
during turnaround . . . by applying air pressure. . . to one of the leak
detection holes in a section and establishing if air emerges from the other
leak detection holes in that section.” The letter goes on to note that if
blockage is found it must be removed (Tr. 2202; Exh. G-109).

Terence
Lynch testified that it is the custom and practice in the nitrogenous
fertilizer industry to assure that weep holes in pressure vessels are kept
clear by forcing steam through the entire weep hole system, and/or by drilling
out the weep holes on a regular basis (Tr. 4344-46, 4426, 4435-36). In his
written report Lynch’s points out that inspection procedures established by the
American Petroleum Institute’s Pressure Vessel Code 510 require confirmation
that weep holes are open (Exh. G-132, p. 18). The API’s Pressure Vessel Code
510 Maintenance, Inspection, Rating, Repair, and Alteration, §3.6 Inspection
of Parts , Seventh Edition, March 1992, which states in relevant part:
“Normally weep holes in reinforcing plates should remain open to provide visual
evidence of leakage. . ..” (Exh. G-198).

Arcadian
recognized API 510 as an industry standard (Tr. 7621, Exh. G-72). In May, 1992
Arcadian issued internal inspection guidelines which required inspection of the
R-2 reactor every 5 years in accordance with the API 510 guidelines (Exh. G-71,
p.3).

Chandrasekaran
and Dhume’s “Urea Reactor Titanium Leak”, in Fertilizer News,
September 1975, (G-185), and Jojima’s “Urea Reactor Failure,” in Ammonia
Plant Safety , Vol. 21, 1979 (Exh. G-188) both recommend regular inspection
of the weep hole system. Chandrasekaran and Dhume report that following
detection of a leak, and subsequent shut down and repair, weep holes should be
flushed to ascertain that all are clear (Exh. G-185, p. 45). Jojima states that
plugged weep holes were a “significant factor” contributing to the catastrophic
failure of the Columbian reactor, and that to minimize the risk of such
accidents, weep holes should always be kept open (Exh. G-188, p. 117).

Finally,
James Foster testified that if Arcadian had set up scaffolding for access to
all the weep holes, the clogged weep holes would have been detected (Tr.
3326-28; Exh. G-131, p. 11). Foster was familiar with facilities in which the
only weep hole access was by ladder (Tr. 4442).

ANALYSIS

As
noted above, citation 1(b) charges Arcadian with both failing to adequately
monitor the weep hole system for leaks and/or to properly record its
observations, and failing to inspect its weep hole system to assure that the
system continued to function as intended.

As
discussed more fully below, I find that Complainant failed to establish either
that Arcadian’s leak monitoring or Record keeping practices constituted a
recognized hazard, or that the Secretary’s suggested abatement methods were
recognized within the industry as necessary and valuable steps for a sound
safety program in the particular circumstances existing at this worksite. See,
Cerro Metal Products; supra. I find that Arcadian’s failure to assure that
its weep hole system remained clear and functioning did constitute a recognized
hazard, and that such hazard would have been materially reduced by utilization
of the abatement measures set forth by the Secretary.

Items
1(b)[1] and (b)[2] (1) and (3) Monitoring/Record keeping . The record
does not establish either that the early recognition of gaseous ammonia leaks
in an R-2 reactor is necessary to ensure a safe workplace for employees working
in or around the pressure vessel or that Arcadian’s method of visually
monitoring the R-2's weep holes on an hourly basis posed a serious hazard, or was
contrary to recognized safety practices in the industry.

While
the record shows that leaking product from the urea vessel may corrode the
vessel wall and lead to the catastrophic failure of the vessel, no evidence was
introduced which showed that escaping ammonia gases caused such damage, or that
a gas leak would develop into a hazardous product leak so quickly that
detection of a leak at the gaseous stage was essential to employee safety.
Complainant failed to introduce evidence of a single employer actually
utilizing continuous monitoring of its pressure vessels for ammonia gases.

Significantly,
in its brief, Complainant admits that a visual monitoring system is not
inherently defective, arguing only that an automated continuous monitoring
system (manometers) would be “more effective,” in that it would eliminate the
possibility of human error (Secretary’s post hearing brief, p. 123). This is
insufficient to meet Complainant’s burden under §5(a)(1); to establish a
violation of that standard, Complainant must show both that Arcadian’s
monitoring system posed a hazard likely to cause death or serious physical
harm, and that the employer’s industry recognized the Complainant’s suggested
abatement as a necessary safety precaution .

Nor
does the record support Complainant’s contention that inconsistent record
keeping poses a recognized hazard. In fact the record fails to reveal any
connection between record keeping and employee safety. If, as discussed in item
1(a) above, industry practice is to shut down any pressure vessel upon
detection of a leak, such leaks should be reported and acted on immediately,
rendering record keeping largely irrelevant.

Finally,
it is clear that Arcadian’s weep hole monitoring system was adequate to, and
did, provide Arcadian with evidence that its R-2 reactor was leaking.
Arcadian’s failure to act on that information is a separate issue, and is
addressed in item 1(a).

Items
1(b)2 and (4) Inspection of the Weep Hole System . Contrary to
Arcadian’s assertion, it is not necessary that Complainant prove the weep holes
in Arcadian’s R-2 were blocked at the time of the explosion, to establish the
cited violation. Rather the issues are whether clogged weep holes are recognized
as a hazardous condition, and whether Arcadian took such precautions as are
recognized as necessary by safety experts in the nitrogenous fertilizer
industry to prevent such a hazard. See, Cerro Metal Products, supra.

The
record does establish that both Arcadian and the nitrogenous fertilizer
industry recognized that failure to keep a pressure vessel’s weep holes clear
and in communication with each other posed a hazard, in that the failure of the
of the leak detection system may lead to corrosion of such vessel’s outer shell
and the eventual catastrophic failure of the vessel. Arcadian presented no
evidence to the contrary; nor does it argue otherwise in its brief.

The
Secretary failed to show that the abatement measure named at 1(b)(2), visual
inspection of the weep hole system via platforms, is recognized as necessary
for the safe operation of a urea reactor. There is no evidence that platforms
affording direct access to weep holes for visual inspections are in use or are
recommended by safety experts anywhere in the nitrogenous fertilizer industry
outside this proceeding.

However,
based on the testimony of Terence Lynch, the API Pressure Vessel Code 510,
Stamicarbon specifications and safety literature in the industry, I find that
the industry recognized the need to ascertain that all weep holes are open and
in communication with each other on a regular basis. The record establishes
that, at a minimum, the weep hole system should be inspected during turnarounds
and upon the detection of a leak, by forcing steam through the weep holes, to
assure that leaking urea has not crystallized in the annulus, and that all weep
holes are clear, and communicating with each other. It is undisputed that the
weep hole system of Arcadian’s R-2 reactor was last tested following repairs
conducted in 1989. No similar test was performed during Arcadian’s 1991
inspection of the vessel, or following the detection of a leak in either
January or June of 1992. The only test which was performed at that time
established that the weep holes at C-5 were not in communication with
other weep holes in the section.
          The Secretary has,
therefore, established the violation alleged at 1(b)2, in that Arcadian
failed to take steps at the R-2 vessel’s turnaround, and once a leak was
detected, to ensure that its leak detection system was functioning according to
its design criteria.

Citation 1(c)

ISSUES

The
final item alleges that Arcadian’s R-2 reactor was improperly and/or
inadequately repaired, inspected, and maintained. The citation states that
Arcadian should have complied with the API 510, ASME, Volume VIII, which
requires that critical welds on pressure vessels are performed according to
design specifications, meet industry standards, and are subjected to
non-destructive testing methods prior to the vessel’s return to service.

Arcadian
maintains that it cannot be held responsible for repairs made to the R-2
reactor prior to its ownership of the pressure vessel. Complainant does not
dispute Arcadian’s contention but argues that Arcadian is nonetheless responsible for its failure to
discover any improper or inadequate welds during its later inspections
(Complainant’s post-hearing brief at p. 132, fn. 78). The sole issue for
determination, therefore, is the adequacy of Arcadian’s inspection of the
pressure vessel.

Complainant
maintains that Arcadian’s inspection of the R-2 reactor was defective in that:
1) inspections were not performed at least annually; 2) the 1991 inspection was
not performed by qualified personnel; and 3) inspectors failed to properly
inspect the vessel so as to identify defects in the reactor’s lining during the
1991 inspection.

FACTS

Inspection
interval. It is undisputed that regular inspection of a urea reactor is
performed to determine whether corrosion has occurred, which might allow the
product to penetrate the stainless steel liner, and reach the carbon steel
shell ( See; testimony of Anderson, p. 2582).

Complainant
points to no published industry standards indicating that Arcadian’s R-2 vessel
should have been inspected sooner than its actual inspection date in 1991.
Section 4.3 of the API 510 Pressure Vessel Inspection Code recommends
that vessels having an estimated safe operating life of less than 4 years be
inspected no less than every two years (Exh. C-198). The Secretary’s proposed
Process Safety Management Standard ¶(j)(3)(iii) allows the employer to
determine the frequency of inspection based on applicable codes, manufacturer’s
recommendations and the operator’s experience. See; 55 Fed. Reg. 29150,
pp. 29156, 29165.

The
R-2 reactor historically had been inspected at one to three year intervals, in
1973, 1976, 1977, 1987, 1980, 1982, 1984, 1987, 1988 and 1989 (Exh. G-31
through G-39, G-50). On May 6th, 1988, following the 1988 inspection by R.
Koster of Stamicarbon, reinspection after about two years was recommended (Exh.
G-39, ARCA0000013214). At that time
Koster calculated the remaining life of the reactor at 5 years on stream time;
Baham testified that Koster’s 5 year estimate was the basis for Arcadian’s
long-term capital planning (Tr. 9777; Exh. G-39, ACLC0000000895 ).

On
May 31, 1988, however, Ronald Allen, an inspection specialist from the Hartford
Steam Boiler Inspection and Insurance Company, in an accident prevention
report, recommended that “close visual inspection and wall thickness
measurements be taken annually” because of the corroded condition of the
reactor and the anticipated need for additional weld repairs in the future (Tr.
3949-50; Exh. G-169, OL-009806 ). The
Hartford recommendations were circulated to Olin urea personnel, including E.
R. Elsbury and R. Bartley, and were accepted by both (Tr. 3950-51; Exh. G-170).
Extensive repairs were indeed undertaken in 1989, and upon their completion,
Schoeller-Bleckman made its written recommendation that the R-2 reactor be inspected
again after “one year latest” (Tr. 2169; Exh. G-49, G-50, p.4).

Lynch
testified that it is the custom within the industry to follow the
recommendations of the last inspector, because of the inspector’s familiarity
with corrosion rates, and the expected remaining life of the liner (Tr.
4350-51). Lynch also stated that after extensive repairs are performed on a
pressure vessel, it is the practice to inspect the vessel within 12 calendar
months of start up, here September, 1990 (Tr. 4353-57). Finally, Lynch
testified that it was the practice within the industry to annually inspect
pressure vessels of the age of Arcadian’s R-2 reactor (Tr. 4348-50).

Bartley
testified that after the 1989 repairs, the R-2 reactor was next inspected in
February, 1991, during the first scheduled turnaround for the vessel which
followed a year’s actual running time (Tr. 2171-72). Baham testified that the
R-2 reactor’s on stream time between the 1989 repairs and the 1991 inspection
was 14 months (Tr. 9666). Baham testified that he believed the 1991 inspection
was timely based on the running time elapsed since the last inspection (Tr.
9664-65).

Greleki
testified that on-stream time may properly be used for scheduling reactor
inspections if the reactor was shut down for a continuous period, i.e. several
months; however, if the reactor is shut down repeatedly for short periods, it
is the same as continuous operation, and inspection periods should be based on
elapsed calendar time (Tr. 5121-22; accord , testimony of Foster, Tr.
3471-73). LeVine stated that the R-2 reactor was a continuous operation vessel;
he opined that Schoeller-Bleckman intended that the reactor be inspected in a
calendar year (Tr. 4014). Arcadian’s records for 1989 and 1991 (records for
1990 were reported lost) do not indicate any shut downs of several months, the
longest shut down recalled by Baham was of approximately a month’s duration
(Tr. 9663; Exh. G-84A).

Baham
also testified that in response to recommendations made in January 1990 by a
chemical engineering consultant Arcadian had improved passivation (the
introduction of air which reacts with the liner to form a protective layer of
nickel or chrome oxide), and reduced the operating temperature in the reactor
(Tr. 9165-66, 9179-9181, 9570; Exh. R-163). Because of the modifications made
in the operating procedures for the R-2 reactor which he believed would
eliminate or minimize corrosion in the reactor, Baham testified that the 1991
inspection was timely (Tr. 9564-65).

Qualification
of the Inspectors. The Secretary maintains that the applicable code
governing the R-2 pressure vessel inspection is the API 510--Pressure Vessel
Inspection Code, which provides:

SECTION 2--OWNER-USER INSPECTION ORGANIZATION

2.1 General An owner or user of pressure
vessels who controls the frequency of the inspections of his pressure vessels
or the maintenance of them is responsible for the functions of an authorized
inspection agency, as stated in the provisions of this inspection code. This
owner-user inspection organization may also control activities relating to the
maintenance inspection, rating, repair, and alteration of these pressure
vessels.

2.2 API Authorized Pressure Vessel Inspector
Qualification and Certification An API authorized inspector employed
by or under contract to and under the direction of an owner-user inspection
organization shall be educated and experienced. His education and experience,
when combined, shall be equal to at least one of the following:

a. A degree in engineering plus 1 year of
experience in the design, construction, repair, operation, or inspection of
boilers or pressure vessels.

b. A 2-year certificate in engineering or
technology from a technical college plus 2 years of experience in the design,
construction, repair, operation, or inspection of boilers or pressure vessels.

c. The equivalent of a high school education
plus 3 years of experience in the construction, repair, operation, or
inspection of boilers or pressure vessels.

In addition, the API authorized pressure vessel
inspector shall be certified by an agency as provided in this code. (See
Appendix B)

Appendix
B states that an inspector applicant must score 70 percent on an examination
testing his knowledge of the content of the API 510 and applicable portions of
Sections V, VIII, and IX of the ASME Boiler and Pressure Vessel Code (Exh.
G-198).

LeVine
testified that the API and virtually identical National Board Inspection Code
(NBIC)(Exh. G-199, p. 96-97) are recognized as the standard for the inspection
of pressure vessels in the loss prevention industry and in the industries it
insures, including urea manufacturers such as Olin (Tr. 3944-46). Though
Louisiana has not adopted the API 510; there is no pressure vessel code as a
matter of state law in Louisiana (Tr. 4032-33), the procedures outlined in the
API and NBIC were the industry standard (Tr. 3946). Arcadian was aware that the
API and NBIC were considered industry standard by both its insurers and by
OSHA. In a 1992 settlement agreement, Arcadian agreed to adopt a pressure
vessel inspection program in accordance with the provisions of the API 510 as a
result of citations received at its LaPlatte, Nebraska site (Exh. G-103, Settlement Agreement p. 2). A May 28, 1991
memorandum circulated to all plant managers, including Ernie Elsbury, stated
that the inspection procedures outlined in the API 510 and the NBIC should be
accepted at all Arcadian facilities (Exh. G-72, G-103).

Lynch
admitted that Baham met the listed requirements for education and experience
under the API 510. Lynch testified that a pressure vessel inspector should have
prior experience with the vessel being inspected, and understand the processes,
including operating temperatures and pressures, that go on in the vessel; the
inspector should be familiar with the mechanisms of corrosion (Tr. 4653-54).
Complainant’s witness, LeVine, testified that Stamicarbon personnel, who were
deemed qualified by Complainant, were not certified (Tr. 4111).

Lynch
believed that Baham was not qualified to inspect the R-2 vessel, however,
because he was not part of an independent owner-user inspection department, but
was mainly responsible for plant production (Tr. 4655-56). Appendix D of the
NBIC states, inter alia , that it is essential that Owner-User inspectors
be “independent of persons responsible for plant production” (Exh. G-199, p.
217). Dr. Grelecki testified that safety decisions should be made by persons
whose primary interest is in the safety of the reactor and who have no interest
in production (Tr. 5005, 5163). Ed Anderson testified that although the head of
production was included on the inspection team at C.F. Industries, their
reactor was also inspected by maintenance personnel including a welding
supervisor; an outside contractor took thickness readings (Exh. 2574-80).
Inspections were not done solely by production personnel (Tr. 2581). Terry Esthay,
who has been doing turnarounds since 1971, testified that, in his experience,
inspections are normally done by internal inspection people not connected with
production (Tr. 8804-08). However, both Schell and Baham testified that it was
the practice of Olin to have its production personnel conduct reactor
inspections, calling in Stamicarbon only if problems were detected (Tr. 1872,
1890, 8019-24, 8977-79)

Baham
admitted that he was not certified under the API code (Tr. 10137), but stated
that he was qualified to perform the 1991 R-2 inspection based on his
experience in inspecting pressure vessels since 1978, and upon his witnessing
countless welds on pipe and plate (Tr. 9000-33; 9699). Baham also testified
that he was familiar with the urea reactor and its corrosion history, as well
as urea processes (Tr. 9699-9700), and corrosion calculation (Tr. 2077).

Bartley
testified that he was not trained in welding or metallurgy, and was unfamiliar
with the calculation of corrosion rates, and of the R-2 vessel’s retirement
thickness (Tr. 2129, 2218-19). Bartley stated that he was not an authorized
inspector under API 510, and was not qualified to be a pressure vessel
inspector (Tr. 2219, 8322-23).

Adequacy
of the Inspection. The API 510 code, § 3.5 Defect Inspection requires:

The parts of the vessel that should be inspected
most carefully depend on the type of vessel and its operating conditions. The
API authorized pressure vessel inspector should be familiar with the operating
conditions of the vessel and with the causes and characteristics of potential
defects and deterioration.. . .Vessels shall be examined for visual indications
of distortion.. . .Careful visual examination is the most important and the
most universally accepted method of inspection. Other methods that may be used
to supplement visual inspection include magnetic-particle examination for
cracks and other elongated discontinuities in magnetic materials; florescent or
dye-penetrant examination for disclosing cracks, porosity, or pin holes. . .
radiographic examination, ultrasonic thickness measurement and flaw detection;
eddy current examination; metallographic examination; acoustic emission
testing; hammer testing while not under pressure, and pressure testing. . . .

Lynch
testified that both visual inspection and non-destructive testing is required
under the API 510 code and is the custom and practice of the urea manufacturing
industry (Tr. 4358; Exh. 132, p. 7). Lynch stated that because of the corrosive
nature of urea manufacturing process, non-destructive dye penetrant examination
is standard within the industry in addition to visual examination (Tr. 4358,
4662-70). Standard practice includes taking measurements of the thickness of
the liner to calculate the corrosion rate and remaining life of the liner (Tr.
4359; Exh. G-132, p. 5-6).

Bartley
testified that during the 1991 inspection, he visually examined the liner, and
specifically looked at all the each tray clip and overlay welds, as well as
each circumferential and longitudinal weld seam (Tr. 8329-31). Bartley stated
that all the weld seams were shiny; there was no undercutting, and all the tray
clips were in good shape (Tr. 8333). Baham stated that he inspected the color
and texture of the lining, and examined it for deformities (Tr. 9678). He
testified that he examined each weld for undercutting, corrosion, and pitting
(Tr. 9679). Baham stated that he detected virtually no change in the liner’s
condition since the 1989 repairs (Tr. 9695). Bartley and Baham noted their
observations in their equipment inspection report (Exh. G-68).

Baham
testified that prior to entering the R-2 reactor in 1991 he reviewed the
thickness measurements taken in the course of the 1989 repairs, in order to
take measurements in the same manner and locations as the measurements were
taken then (Tr. 9723; Exh. G-53, G-69). He and Bartley entered the vessel through a 20 inch diameter flange on
the top of the liner (Tr. 9717). Upon reaching the bottom of the vessel they
located the intersection of the circumferential and the longitudinal weld in
the bottom can (Tr. 9717-18). Baham measured the thickness of the liner above
the circumferential weld at C-1 and above and below the welds at C-2 through
C-8, using the weld as a reference point (Tr. 9720-21, 9728). Measurements were
also taken on either side of the longitudinal welds (Tr. 9728). Baham stated
that he took the measurements within a few inches of each other; Bartley
transcribed (Tr. 9728). In addition to duplicating the 1989 measurements, Baham
and Bartley also measured the thickness of the bottom head and the patches
which were installed in 1989 (Tr. 9724-25). Baham specifically testified that
measurements were taken above and below the C-7 circumferential weld and on
either side of the longitudinal welds which intersected C-7 (Tr. 9766). See
also Bartley’s testimony (Tr. 8352-8365; Exh. G-68, G-69).

Their
measurement technique differed from that used in 1989 in that some of the 1989
measurements were taken using an ultrasound, while they used a permascope (Tr.
9724). The ultrasound measures the thickness of the liner, while the permascope
measures the distance from the inside of the liner to the inside of the carbon
steel sheath, including any void between the two, so long as the void does not
exceed 500 thousandths of an inch (Tr. 9762-63). Baham testified that the
permascope provides more useful data, in that its measurements will tell the
inspector when the liner needs to be removed to identify an unexplained void in
the annulus (Tr. 9764). While Albert Bernson, a welding engineer (Exh. G-129),
testified that the permascope was not appropriate for determining thickness
(Tr. 3742-43), Complainant’s other witnesses, Foster, LeVine and Grelecki all
admitted that the permascope would provide the necessary thickness information
(Tr. 3423-24, 3958, 4016-18, 5127-28). Both ultrasound and permascope readings
were utilized by Olin in inspecting the R-2 vessel ( See 1987 and 1988
records, Permascope, Exh. G-38, G-39).

The
1991 measurements for each location were statistically compared to those taken
in 1989; at which point Baham found that there was no noticeable difference
between the two readings (Tr. 8366, 9767-69, 9774). No calculations were made
computing either the corrosion rate or the retirement thickness of the R-2
liner (Tr. 2147; Exh. G-70A).

ANALYSIS

Inspection
interval. Complainant failed to establish that the urea manufacturing
industry in general required annual inspection of the pressure vessels such as
the R-2 reactor. However, Arcadian had ample notice that the R-2 vessel was
reaching the end of its useful life and required at least annual inspection to
ascertain its continued integrity. In 1988, Olin estimated that the vessel
would reach retirement thickness in five years, or in 1992. Arcadian knew,
therefore, that the R-2 reactor was nearing the end of its useful life in 1990.
In 1988 Olin’s insurer recommended annual inspection in its accident prevention
report, noting the susceptibility of repair welds to corrosion. In 1989, after
the extensive repairs anticipated by the insurer, Schoeller-Bleckman
recommended reinspection in no more than a year based on the vessel’s past
corrosion rates.

The
evidence establishes that Arcadian actually knew, or should have known, based
on the R-2 vessel’s age and well documented history, that the vessel was
nearing its retirement thickness, and that annual inspections were required to
maintain the vessel’s integrity. It is clear that undetected defects or
corrosion in the R-2 liner could result in leakage. It has already been shown
that such leakage presages the vessel’s eventual rupture, a recognized hazard
likely to cause death and/or serious physical harm to employees.

Arcadian’s
contention that it believed its inspection schedule was substantially
equivalent to that recommended by its consultants, based on its computation of
the vessels on line time, is not persuasive. The record shows that in the urea
manufacturing industry inspection frequency is computed on calendar time,
unless the reactor to be inspected is off-line for an extended period. The
record shows only one shut down of any length, in September of 1989, which
would not materially alter the inspection schedule recommended by Schoeller
Bleckman.

The
Secretary has established this item as a violation of §5(a)(1).

Qualification
of Inspectors . The record establishes that the urea manufacturing industry
recognizes a need to utilize qualified pressure vessel inspectors to assure
that defects and corrosion in pressure vessels are detected in regularly
scheduled inspections, utilizing API and NBIC guidelines. It does not, however,
demonstrate that the industry recognized a hazard in failing to use API and
NBIC certified inspectors. Complainant also failed to show that Arcadian, or
the urea industry would have recognized a hazard in having Dana Bahm perform
the inspection of the R-2 reactor, due to his lack of authoritative welding
experience, or his association with production.

The
evidence establishes that otherwise qualified inspectors were considered
acceptable regardless of whether they were actually board certified and
regardless of their connection with production. Specifically, Stamicarbon
personnel were deemed qualified by Complainant, though they were not shown to
be board certified. The record shows that Baham was familiar with urea
processes and the R-2 reactor. His testimony demonstrated a familiarity with
the appearance and mechanisms of corrosion. His education and experience
exceeded the qualifications required under the API and NBIC, less a
demonstrated familiarity with the contents of the API itself. Complainant
failed to prove that Baham was insufficiently familiar with the API to conduct
an inspection in conformance with its principles.

The
evidence further shows that plant personnel, including production personnel,
conducted inspections at Olin, prior to its sale of the R-2 reactor to
Arcadian, and at C.F. Industries. Although the better practice might be to use
independent inspectors to avoid any conflict of interest, as suggested in the
NBIC guidelines, the evidence does not demonstrate that the industry recognized
a hazard likely to result in serious harm in the failure to adhere to the
particularities of those advisory standards.

Lastly,
nothing in the codes suggests any particular metallurgical background necessary
for routine inspection, or the certification of inspectors. Without specific
criteria against which to gauge Dana Baham’s qualifications, it is impossible
either for this judge, or for Arcadian, to ascertain the adequacy of those
qualifications.

Complainant
failed to establish this item by a preponderance of the evidence.

Adequacy
of the inspection. The record shows that during their 1991 inspection,
Baham and Bartley visually inspected the R-2 liner looking for deformation
and/or corrosion. Using the 1989 inspection as a guide, they measured and
documented thicknesses in the R-2 liner with a permascope.

Complainant
has not proven that the industry recognized as hazardous the failure to use
ultrasound to take thickness measurements; its own experts admitted that the
permascope would provide the necessary information. Complainant also failed to
prove that Bartley and Baham did not take measurements in previously measured
locations for purposes of comparison. The record shows that the 1991
measurements were patterned after those taken in 1989, not the earlier Olin
inspections relied upon by the Secretary. Complainant has not shown that
Bartley and Baham’s inspection was so deficient as to be recognized as
hazardous by the urea industry.

In
the end, the Secretary’s case rests on its contention that Bartley and Baham
missed open and obvious welding defects which caused the 1992 rupture.
Complainant’s argument is unconvincing, as it can only be based on evidence
examined with the benefit of hindsight, obtained a year and a half and a
catastrophic explosion after the inspection at issue.

Complainant
has failed to prove this item. 

Characterizations
of the Violation

To
prove a willful violation, the Secretary must demonstrate Respondent committed
the violation "with intentional, knowing, or voluntary disregard for the
requirements of the Act or with plain indifference to employee safety". Williams
Enterprises, Inc., 13 BNA OSHC 1249, 1256-1257, 1986-87 CCH OSHD, §27,893,
p.36,589 (No. 85-355,1987).

As
Williams further states:

A willful violation is differentiated by a
heightened awareness - of the illegibility of the conduct or conditions - and
by a state of mind - conscious disregard or plain indifference. There must be
evidence that an employer knew of an applicable standard or provision
prohibiting the conduct or condition and consciously disregarded that standard.
. . .It is, therefore, not enough for the Secretary simply to show carelessness
or lack of diligence in discovering or eliminating a violation.

Against
this background, the question of whether the Secretary has established a
willful violation will now be addressed.

The
Secretary sets forth several arguments as to why Arcadian should be found in
willful violation of the general duty clause as charged. First, he relies on
the evidence of record as establishing that the violative conduct described
above was done intentionally or with plain indifference to employee safety. He
goes on to contend that even a good and honorable management employee can be
plainly indifferent to or intentionally disregard the requirements of the Act.
He emphasizes that Arcadian management had an additional incentive with respect
to this conduct, i.e., pressure to produce as much urea as they could make
during the subject time period. He also contends that a showing of evil or
malicious intent is not necessary to establish willfulness. Stated another way,
the Secretary indicates that it does not matter what caused an employer to
intentionally disregard or be plainly indifferent to the safety of the
workplace. Rather, all that matters is that they were plainly indifferent
(Secretary’s reply brief 45-46).

Respondent
counters that Arcadian did not willfully violate the Act. Arcadian contends
that Respondent’s management team, including Dana Baham and Bartley, was not
plainly indifferent as required for a finding of a willful violation. It
contends the evidence of record shows that Arcadian used its best judgment and
made reasonable choices in determining to continue running the reactor. It goes
on to argue that even if the incorrect decision was made, that does not
necessarily equal a violation, no less a willful one (Respondent’s brief
306-314).

The
undersigned has had the opportunity to closely evaluate the evidence referred
to and relied on by both parties in support of their respective positions. In
addition, I have had the opportunity to observe the demeanor for several weeks
at a time of two of Respondent’s key witnesses in this area (Baham and
Bartley). My observations and evaluation of their answers indicate that they
were indeed sincere in their belief that they believed they acted responsible
in this case. I am able to definitely conclude that they were not driven by my
desire to make as much urea as possible at the time of the leaks in order to
take advantage of a good market price and, therefore, kept the reactor running.
In addition, based on their testimony and that of their fellow employees, I
agree with the Respondent that management, Baham especially, had a genuine
concern for the safety of their co-workers. That can indeed by classified as
honorable men.

Having
said that, the undersigned still concludes that the actions of Arcadian
management in not following the industry practice of shutting down the R-2
reactor upon detection of a leak in the lines of the vessel constituted plain
indifference as defined above. The undersigned Judge disagrees with the
Respondent that one cannot be in willful violation of the Act and at the same
time have no evil or malicious intent and/or be an honorable person. As noted
above, Baham and Bartley’s attribution twice in a six-month period, of weep
hole discharges to sources other than tanks was unreasonable. In the absence of
clear evidence to the contrary, Baham and Bartley should have assumed that
discharges from the weep holes did, in fact, indicate one or more leaks. As
noted above, neither Baham or Bartley could adequately explain what in the
records made them believe that the weep holes at the C-5 weld were different
that the other weep holes, monitoring the space between the two repair patches
at C-5 rather than the annules. Additional written records were never
consulted. It is these factors and my instinct based on over 18 years as a
Commission judge that have tipped the scales in favor of the Secretary on the
issue of plain indifference to employee safety and, therefore, a willful
violation is found. It is my finding that the Secretary for the reasons set forth has
shown more than carelessness or lack of diligence in discovering or eliminating
a violation as required by Commission precedent..

The
undersigned has pointed out that Arcadian management, including Baham and Bartley,
the principal players were indeed honorable men not driven by evil intent. I
would be remiss if I did not also comment on the Secretary’s initial inspection
that came under some attach during the hearing. OSHA’s conduct, as set forth in
the record, from the field inspection to the highest level has been reviewed. I
conclude that OSHA conducted a professional investigation that was objective
and unbiased at all levels. There is no basis to conduce that there were any
irregularities during the inspection and priority proposal phases of the
investigation which ultimately led to the issuance of the subject citation.

Before
turning to the penalty issue, the undersigned would like to make a few comments
of a general nature. First, I would like to compliment both teams of lawyers
for the truly outstanding presentation of their respective cases. Their passion
from the pre-trial discovery through post-trial briefs for their clients was
evident. Actually, it is an understatement to characterize this matter as
hard-fought on both sides. However, what was so helpful to me was the fact
that, while protecting their clients, they never lost focus and kept the matter
on course. The lead attorney for the Government, Ms. Withrow, as well as all
the litigators, were able to present a complicated case in a clear manner
regardless of which attorney presented the witness on a particular day. This
took intense preparation. Many times, these thoughts are left unsaid by a trial
judge.

Having
said this, the next step in the process if for my aggrieved party to seek
review from the Commission for any perceived errors of law or fact by the trial
judge. Having been on the bench for several years now, I am, of course,
completely familiar with this procedure. Rest assured, the above comments,
earned by Counsel on both sides, should not be interpreted to deter, as I am
sure they would not be, from aggressively seeking review of any part of my
decision they disagree with. That is the system in place and it is there for
that purpose. However, I do make one request. At times, Counsel sent me copies
of their petitions for review and appeal briefs to keep me informed of
appellate actions in this case. I would specifically discourage that practice
since the history of this case makes it the first one in my 18 years on the
bench that I would like to dispatch to Washington and go on to other cases. It
is anticipated that I will be back on case rotation in the near future and I
can return to my previous adjudicatory duties. Let me emphasize that the
history I refer to does not pertain to the actual litigation, trial counsel and
writing of the decision. My interaction with counsel, the noel issues, hundreds
of trial rulings, etc. had definitely kept this trial judge on his toes. In
fact, I sincerely believe that, if we began this litigation today, there is not
one ruling on decision that I would change with respect to both this case and
the serious portion, presently pending before the Fifth Circuit.

Finally,
I think it appropriate to thank the support staff of the now closed Dallas
office for their invaluable help in keeping up with the volume of work this
case generated up to the April 30, 1996 closing, while managing that other full
caseload in the office. It is also appropriate to recognize the Denver support
staff, which inherited the task of typing, docketing, indexing, etc. the
voluminous record in this case for transmission to Washington, D.C. in the next
three weeks. At the same time, it is important to point out the invaluable
assistance the undersigned judge has received from two Commission attorneys at
the Regional level that enabled me to expeditiously move this case along. Their
assistance was invaluable in, among other things, meeting the novel issues, etc.
raised by counsel from day one of this trial. I am referring to Ms. Pamela
Merrifield of the now closed Dallas office and Ms. Christian Reid here in the
Denver Regional Office. With the complexity of Commission cases increasing as
we speak, their presence at the regional level and at the Chief Judge’s office
in Washington, D.C. are greatly appreciated.

Penalty

The
Secretary has proposed a penalty of $50,000.00.

The
gravity of the cited violations is high, the evidence supports the Secretary’s
contention that the rupture of a pressure vessel placed 87 employees in danger
of serious harm, including possible loss of life. No credit is available based
on size, as Arcadian is a large company, with over 250 employees. Nor is any
credit available based on history; Arcadian has a significant history of prior
OSHA violations. ( See, testimony of Berrien Zettler, and Mark Briggs;
Tr. 5394-97, 5628-39). No credit for good faith is available for good faith
where a violation is found to be “willful.”

The
maximum statutory penalty allowed for a “willful” citation is $70,000.00. The
Secretary found that the maximum penalty was not warranted in this case because
there were no fatalities, the number of employee injuries was relatively low,
and the employer had made some, albeit inadequate, efforts to come into
compliance with the OSHA’s recently promulgated process safety management
standard (Tr. 5398).

Taking
into account the relevant factors, I find that the proposed penalty of
$50,000.00 is appropriate, and that amount will be assessed.

ORDER

1.         Willful
Citation 1, items 1(a), and 1(b), alleging violations of §5(a)(1), are
AFFIRMED.

2.         Citation
1, item 1(c) is, alleging violation of §5(a)(1) is AFFIRMED as a Serious
violation.

3.         A
combined penalty of $50,000.00 is ASSESSED.

_/s/____           

Stanley M. Schwartz

Judge,
OSHRC

Dated: March 12, 1997