4 Company Executives Indicted in West Virginia Chemical Spill Case

By JOHN RABY | December 19, 2014

Four former chemical company executives have been indicted on pollution charges over a January spill that triggered a ban on drinking water for days for 300,000 West Virginia residents.

The indictment unsealed Wednesday charged ex-Freedom Industries presidents Gary Southern and Dennis P. Farrell and two others with failing to ensure that the company operated the steel storage tank that leaked the coal-cleaning chemical in a reasonable and environmentally sound manner.

Southern also faces federal fraud charges related to the company’s bankruptcy case. Freedom filed for bankruptcy eight days after the Jan. 9 spill of the chemicals into the Elk River in Charleston. West Virginia American Water uses the river for its water supply a mile and a half downstream.

U.S. Attorney General Eric Holder said in a statement that the tank conditions at Freedom Industries “were not only grievously unacceptable, but unlawful. They put an entire population needlessly at risk. As these actions make clear, such conduct cannot, and will not, be tolerated.”

The others charged are William E. Tis and Charles E. Herzing, who along with Farrell owned Freedom until December 2013. They sold it to Pennsylvania-based Chemstream Holdings for $20 million, after which Southern became president.

Farrell, 58, served as Freedom’s president from October 2001 until the sale, after which he continued to work at the terminal in a management role.

Herzing, 63, also was Freedom’s vice president and Tis, 60, served as secretary.

All four, along with Freedom Industries, were indicted for alleged violations of the federal Clean Water Act.

In addition, U.S. Attorney Booth Goodwin said Freedom environmental consultant Robert J. Reynolds and tank farm plant manager Michael E. Burdette were charged in a federal information with Clean Water Act violations. A federal information typically signals a defendant’s willingness to cooperate in the investigation.

“It’s hard to overstate the disruption that results when 300,000 people suddenly lose clean water,” Goodwin said in a statement. “This is exactly the kind of scenario that the Clean Water Act is designed to prevent.

“This spill, which was completely preventable, happened to take place in this district, but it could have happened anywhere. If we don’t want it to happen again, we need to make it crystal clear that those who engage in the kind of criminal behavior that led to this crisis will be held accountable.”

During their time as Freedom corporate officers, Farrell, Tis, Herzing and Southern “proved funding only for those projects that would result in increased business revenue for Freedom or that were necessary to make immediate repairs to equipment that was broken or about to break,” the indictment said.

The men ignored or failed to fund other projects to repair, maintain and improve equipment and systems needed for compliance with environmental regulations, including addressing drainage problems in the containment area.

Southern’s attorney, Robert Allen, didn’t immediately return a message left at his office Wednesday.

More than a dozen aboveground storage tanks at the facility were removed. The World War II-era tank that leaked had two holes, just a few millimeters each, and had subpar last-resort containment walls.

The federal Chemical Safety Board is conducting its own investigation.

According to health officials, after the spill, more than 400 people were treated at hospitals for symptoms that patients said came from exposure to the chemical, known as MCHM.

Southern, 53, was arrested last week, accused in a criminal complaint of lying about his role with the company in bankruptcy court hearings and meetings to protect his personal wealth of nearly $8 million from lawsuits.

If convicted of all charges, Southern faces up to 68 years in prison.

(Associated Press writer Pam Ramsey contributed to this report.)

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