Four owners and managers of Freedom Industries have been indicted by a federal grand jury in connection to the chemical leak that tainted the drinking water of thousands of West Virginians.
Former Freedom Industries President Gary Southern, 53, and owners Dennis P. Farrell, 58, of Charleston; William E. Tis, 60, of Verona, Pa.; and Charles E. Herzing, 63, of McMurray, Pa.; are alleged to have committed violations of the Clean Water Act, negligence and schemes to defraud.
Two other men, Robert J. Reynolds, 63, of Apex, N.C., and Michael E. Burdette, 60, of Dunbar, also face charges in connection to the chemical spill.
“Freedom Industries’ flagrant disregard of the law allowed a chemical tank to fall into disrepair, causing a spill which affected 300,000 people in the state,” U.S. Attorney Booth Goodwin said as he announced the charges Wednesday in Charleston.
“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 this kind of criminal behavior that led to this crisis will be held accountable,” he said.
The four men — Southern, Farrell, Tis and Herzing — have been charged with negligent discharge of a pollutant, which is a violation of the Clean Water Act. The act prohibits the discharge of any pollutant into waters without a permit from the Environmental Protection Agency.
Additionally, the indictment includes charges that the company failed to maintain the containment area surrounding the tanks at the Charleston-based Etowah River Terminal facility, failed to inspect the tank that leaked the chemical, and failed to develop and implement spill prevention procedures.
In addition to those violations, Southern also faces wire fraud and several bankruptcy fraud charges, which are the same as those outlined in the criminal complaint filed Dec. 8. Southern knowingly devised a scheme to defraud those who filed lawsuits against Freedom Industries after the chemical spill, the indictment says.
It further states Southern concealed facts about his role with Freedom Industries before he became president of the company. Southern began serving as chief operating officer for Freedom Industries in 2009 and became president in December 2013, after Chemstream Holdings purchased Freedom Industries and its affiliate, Etowah River LLC, for $20 million.
During bankruptcy proceedings, Southern said he was not part of the Freedom organization before the company’s purchase by Chemstream. Southern did so, the indictment alleges, to evade claims from creditors and protect his personal wealth. Southern had more than $7 million in assets as of fall 2014.
Federal investigators filed applications for warrants to seize Southern’s property subject to forfeiture Monday.
If convicted on all the charges he faces, Southern could receive a maximum sentence of 68 years in prison.
Farrell, Tis and Herzing formed Etowah River in 2001 to purchase an aboveground storage tank facility in Charleston. The facility stored and processed chemicals, including 4-methylcyclohexanemethanol, known as MCHM. That substance, used in the coal mining industry as a cleansing agent, was found to be leaking into the Elk River on Jan. 9.
“At all times pertinent to this indictment, Freedom and its officers and agents, including responsible corporate officers, failed to exercise reasonable care in its duty to operate the Etowah Facility in a safe and environmentally-sound manner,” the indictment reads. “Freedom’s failure to exercise reasonable care was a proximate cause of the unpermitted discharge of the pollutant MCHM into the Elk River.”
When Farrell, Tis, Herzing and Southern were corporate officers of Freedom Industries, they allegedly approved funding only for those projects that would result in increased business revenue for Freedom, or that were immediately necessary for required equipment maintenance, Goodwin said.
The company did not examine and assess any corrosion found in the tank that leaked the chemical and did not repair the containment wall that enclosed the tanks at the Etowah plant. In addition, Freedom Industries did not have spill prevention procedures in place prior to the chemical leak.
Farrell, Tis and Herzing could receive a maximum of three years in prison, if convicted of all their charges.
Burdette, a former plant manager for the Freedom facility, and Reynolds, an environmental consultant, as well as Freedom Industries, had information charges filed against them for violating the Clean Water Act. An information charge is when the defendant agrees to have charges filed against themselves without formal grand jury proceedings.
According to Freedom Industries’ information charge, the safety data sheet for MCHM included a warning which read: “WARNING! HARMFUL IF SWALLOWED, CAUSES SKIN AND EYE IRRITATION.” The data sheet also said, “Avoid release to the environment ... prevent runoff from entering drains, sewers, or streams. Dike for later disposal.”
Freedom Industries had its own safety data sheet that warned of the dangers of MCHM.
Goodwin said the federal indictment sends a clear and powerful message as to the importance of water. He said while the charges each man faces are allegations, an arraignment is likely to be set in the near future.
The West Virginia American Water Company, which distributes and treats water for the region, commended Wednesday’s announcement.
“On behalf of our customers, West Virginia American Water appreciates the efforts of the U.S. Attorney’s Office, the FBI and the EPA to hold the responsible parties accountable for the Freedom Industries spill. As Mr. Goodwin stated, the indictments brought forward by his office today send a clear and powerful message about the importance of our water supply. We believe that vigorous enforcement of the Clean Water Act and other environmental regulations is imperative to protecting public water supplies and public health and avoiding incidents like the Freedom Industries spill which, as Mr. Goodwin mentions, was completely preventable with proper maintenance and secondary containment.”