Explosive liability: Takeaways from the Beirut tragedy

The recent catastrophic explosion in Beirut, Lebanon, is a tragic but important reminder that companies must comply with safe storage and handling practices for ammonium nitrate (AN) and other hazardous chemical compounds.

AN is a crystalline solid made from ammonium and nitric acid that is widely used in fertilizers and certain explosives. While generally safe and stable, AN can become a ticking time bomb when improperly stored. Confined storage space, exposure to contaminants and high temperatures, from fire or otherwise, can all cause AN to undergo chemical decomposition sufficient to cause an explosion.

On August 4, 2020, a large quantity of AN stored at the Port of Beirut caught fire and exploded.  Years before that explosion, Lebanese authorities confiscated a large quantity of AN from the M.V. Rhosus, a cargo ship abandoned in the port since September 2013. According to early reports, a fire broke out in one of the port’s warehouses, which contained both fireworks and more than 2,750 tons of AN.

An initial but comparatively small explosion occurred shortly after 6 p.m. local time, which caused the stored fireworks to ignite. Approximately thirty seconds later, the stored AN also exploded, but in a far more horrific fashion.

The second explosion generated seismic waves comparable to a Magnitude 3.3 earthquake. Individuals living 150 miles away on the island of Cyprus also reported hearing the blast. According to the Lebanese Red Cross, the entire incident has claimed the lives of more than 200 people and injured at least 6,000.

The threat of AN is maximized by regulatory shortfalls

While tragic, the Beirut explosion is the most recent example of a major accident involving the improper storage of AN and other hazardous chemicals. Indeed, the United States has seen a number of explosions and other incidents involving AN throughout the years.

Perhaps the best example is the April 16, 1947, Texas City disaster, often deemed the worst industrial accident in the history of the United States. The Texas City disaster was caused by a fire aboard the cargo ship S.S. Grandcamp, which carried 7,000 tons of AN. The fire triggered an explosion that ultimately caused 581 deaths and started a chain reaction of fires and explosions in nearby ships and oil fields. Survivors of the Texas City disaster notably filed the first class-action lawsuit against the United States government under the Federal Tort Claims Act.

More recently, on April 17, 2013, AN stored at the West Fertilizer Company storage and distribution facility in West, Texas, caught fire and exploded. A subsequent investigation found that the company improperly stored some forty to sixty tons of AN inflammable wooden bins, of which approximately thirty tons detonated.

The explosion killed 15, injured more than 260, and damaged approximately 350 homes — with 142 damaged beyond repair. It also seriously damaged a middle school located next to the fertilizer company, as well as a nearby nursing home. The West Fertilizer Company explosion resulted in multiple investigations and lawsuits lasting for years. Former President Barack Obama also issued an Executive Order in its aftermath, which aimed to improve chemical facility safety and security.

Given AN’s destructive history, the Beirut explosion may be a wake-up call for federal, state and local regulators. Current regulations, however, provide manufacturers and consumers of AN with only limited guidance on its storage and handling practices. The Trump administration has also rolled back the Obama-era chemical facility safety and security rules designed to protect against another West Fertilizer Company explosion.

With more limited oversight, it is incumbent upon those companies storing and handling AN and other hazardous chemicals to be aware of applicable rules and regulations. The violation of such rules could result in increased exposure following a future explosion or incident.

How the U.S. manages AN threats

The Department of Homeland Security (DHS) is presently the primary regulating body of AN. As of 2007, the DHS’s Chemical Facility Anti-Terrorism Standards require facilities in possession of certain threshold quantities of AN and other chemicals of interest to submit a “Top-Screen” questionnaire. Doing so allows the DHS to identify certain high-risk facilities that could be subject to additional regulations.

The Occupational Safety and Health Administration (OSHA) and the Environmental Protection Agency (EPA) also play key roles in ensuring the safe storage and handling of AN and other hazardous chemicals.  Both agencies have issued regulations encompassing AN, including the following:

• OSHA Explosives and Blasting Agents standard (29 C.F.R. § 1910.109(g), (i));
• OSHA Process Safety Management (“PSM”) standard (29 C.F.R. § 1910.119);
• EPA Risk Management Program regulations (40 C.F.R. pt. 68, subparts A through H).
• EPA Emergency Planning and Community Right-to-Know Act (“EPCRA”) (42 U.S.C. §§ 11001-11050(1988)).

Companies should be aware that in addition to federal oversight, state and local entities have also issued rules and regulations related to the storage and handling of AN. Such rules often implicate worker safety, reporting requirements, environmental protection and public safety, among other things.

This complex web of rules and regulations has resulted in some confusion. Indeed, a somewhat recent report by the U.S. Government Accountability Office (GAO) underscored the need for improved AN storage practices and regulations. According to that report, “OSHA and EPA’s regulations contain gaps with respect to ammonium nitrate that may allow unsafe facilities to operate and poor planning to persist.”

The GAO added that without “voluntary compliance with ammonium nitrate regulations through various industry initiatives,” federal regulators “will not know the extent to which dangerous conditions at some facilities may continue to exist.”

The complexity and uncertainty created by the current regulatory scheme for AN and other hazardous chemicals put companies in an odd position.

On one hand, companies should strive to become intimately familiar with the applicable rules and regulations to ensure compliance. On the other hand, current regulatory gaps mean that compliance with rules and regulations may not be sufficient to prevent future accidents, as some watchdog groups have warned. By extension, this means that mere compliance with the rules may not be enough for companies to avoid liability following future AN incidents.

Preventing the next AN disaster

Moving forward, companies involved in the storage and handling of AN and other hazardous chemicals should engage in proactive practices to decrease the likelihood of another Beirut disaster. Prior to any incident, companies should do the following:

• Ensure compliance with applicable federal, state and local regulations;
• Identify high-risk facilities;
• Develop necessary remedial and inspection procedures;
• Provide employees with proper safety training;
• Alert federal and state authorities to the presence of potentially hazardous chemicals;
• Alert first responders to the presence of potentially hazardous chemicals, as well as their exact location;
• Perform routine compliance audits of with potential litigation protection;
• Analyze and understand the potential for exposure; and
• Obtain proper insurance coverage.

As with any catastrophic event, a potential defendant can engage in certain practices that can help prevent the event or shield exposure should the worst-case scenario occur. Doing so also protects local communities and the environment from potentially catastrophic damage. The alternative, as the world witnessed in Beirut, is both deadly and economically devastating.

Should a worst-case scenario become a reality, companies must act quickly to increase the chances of a successful defense or limit the extent of their liability. Indeed, companies should:

• Alert first responders and other relevant federal, state, and local authorities;
• Notify insurance carrier(s);
• Issue any relevant breach of contract or force majeure notices;
• Preserve evidence;
• Alert or obtain outside counsel;
• Perform witness interviews as soon as possible; and
• Perform an independent root cause analysis.

Only time will tell whether the Beirut explosion will prompt government officials to improve the storage, handling, and general oversight of hazardous chemicals. Companies should not wait or solely rely upon government regulation, however. The Beirut explosion, as well as other serious incidents in the past, should motivate companies to take proactive measures to protect their employees, communities and financial futures.

Brian Jackson, Andrew F. Gann, Jr., and Mitchell D. Diles are all members of McGuireWoods’ Products, Environmental and Mass Tort Litigation group. In addition, each author is a member of McGuireWoods’ Rapid Deployment Risk Management (“RDRM”) team. Miles O. Indest, also a member of McGuireWoods, is a Houston-based member of the firm’s energy group.

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