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Rockwell: Explosive Woes


The Corporation: INVESTIGATIONS

ROCKWELL: EXPLOSIVE WOES

It was over in an instant. At precisely 9:07 a.m. on July 26, 1994, a brilliant flash and deafening boom swept through a Rockwell International Corp. bunker where five scientists were mixing volatile chemicals. Chemist Edgar Wilson turned away for a moment to open a cabinet. As he did, Wilson later told investigators, an explosion ripped through the open-air structure. When the smoke cleared, he saw a scene of stark devastation: Two colleagues lay dead, a third was badly burned.

The blast that killed Otto Heiney and Larry Pugh and injured Lee Wells, three accomplished propellant experts, apparently is now the focal point of a sweeping federal investigation into alleged environmental abuses at Rockwell's Rocketdyne division, which makes and tests engines for Delta rockets and the space shuttle. On July 13, more than 40 federal agents, including officials of the FBI, Environmental Protection Agency, NASA, and the Energy Dept., swooped onto the 2,700-acre Rocketdyne test facility, 35 miles northwest of Los Angeles, where the accident occurred, and took reams of documents.

TIGHT LIPS. The U.S. Attorney's office in Los Angeles, which is supervising the probe, confirmed the visit but declined any further comment. Sources familiar with the investigation, however, claim that the federal probe was prompted by the California Division of Occupational Safety & Health (Cal/OSHA), which had prepared two separate reports on the incident. One looks at possible criminal conduct, while the other examines alleged civil violations that may have caused the accident. The reports, completed earlier this year, got scant attention until June, when the one on possible criminal behavior was forwarded to federal authorities by the Ventura County District Attorney's office.

Both reports suggest that the Rockwell scientists involved in the accident may have been illegally disposing of hazardous solvents and rocket fuel by incinerating them, to save money. Federal investigators are also looking into whether Rockwell, which has a troubled environmental record, may have wrongfully billed the government for proper disposal, according to state government sources. Rockwell won't comment on specific allegations but says its scientists were conducting experiments on the materials, not disposing of them.

The most damaging evidence is contained in the sealed report on the alleged criminal conduct, say sources familiar with it. The report contains a memo to state investigators from Ronald Simmons, an explosives expert and friend of Heiney's, who says the scientist was concerned about disposing of excess chemicals and propellants. Rockwell was planning to close Heiney's department. "Otto said that they could not legally store the materials any longer, they could not ship them anywhere, and they could not obtain a permit to burn them. He said, `What the hell are we going to do?"' according to a copy of the Feb. 21 memo Simmons gave to BUSINESS WEEK.

Meanwhile, the civil report prepared by Cal/OSHA states that Jon Rozas, director of safety, health, and fire for Rocketdyne, told an investigator that personnel at the test site may have been disposing of the hazardous material. Rozas couldn't be reached.

HUGE CLAIM. Rockwell's legal problems don't end there. The families of Pugh and Heiney recently filed separate lawsuits against Rockwell, alleging wrongful death and seeking damages. In their suit, filed in California Superior Court on July 25, Pugh's wife and children claim Rocketdyne concealed "its intention to cause hazardous wastes to be disposed of, improperly mixed, handled, treated, burned, stored, and transported" in violation of state and federal law. Rockwell says it has yet to be served with the suits.

As for the federal probe, Rockwell says it's cooperating fully with authorities. The company won't comment on the ongoing investigation, except to say that there was no excess propellant at Rocketdyne. "We are as determined to get to the bottom of this as any of the investigative agencies," says John Stocker, a Rockwell attorney. Rockwell says an internal investigation into the causes of the blast was inconclusive. Still, the company claims that its scientists were developing a new test for determining whether rocket fuel could be safely transported.

This latest probe comes as Rockwell is beginning to reap huge benefits from its diversification strategy. Chief Executive Donald R. Beall has made big strides in weaning the $13 billion giant away from defense contracting. Distancing Rockwell from its long and controversial history of environmental problems has been another matter. The most serious incident: In 1992, Rockwell pleaded guilty to 10 criminal counts and agreed to pay an $18.5 million fine after a federal grand jury found that its workers had illegally sprayed and stored nuclear waste at the Rocky Flats nuclear weapons plant in Colorado. Rockwell managed the facility, which was owned by the Energy Dept.

Nowhere, however, has Rockwell had more persistent problems than at its Rocketdyne test facility, set among the rugged Santa Susana Mountains. In 1989, an Energy survey found widespread nuclear contamination. Rockwell says it had already begun a lengthy cleanup. More recently, state regulators claim that they have been frustrated in their attempts to get Rocketdyne to clean up its act. In 1990, California's Environmental Protection Agency fined the company a total of $280,000 for hazardous-waste violations, including burning toxic solvents in open barrels. In 1992, the state fined Rockwell another $650,000 for similar problems at Rocketdyne and other facilities. Rockwell says it won't respond to charges by state regulators, but it says there has been no recurrence of problems. Rockwell also says its environmental record has improved. Last year it won an EPA award for reducing toxic emissions.

It's last year's fatal accident that now most concerns state and federal agencies, say sources familiar with the investigation. The Cal/OSHA reports, which include internal corporate memoranda, interviews with witnesses to the accident, and handwritten notes of investigators, give the most detailed account yet of the events surrounding the explosion. According to eyewitnesses quoted in the report on alleged civil violations, Pugh, Heiney, and three other Rockwell scientists began experimenting with explosives and various chemicals at 8 a.m. The third experiment created a huge explosion and fire that charred five acres. Pugh and Heiney died instantly, according to the state report.

Rockwell says it was conducting legitimate experiments. But sources familiar with the federal investigation say authorities are questioning whether there was any intention of performing a scientific test, given the amount of the material burned and the speed with which the scientists worked. Separately, in February, Cal/OSHA fined Rockwell $202,500 for five workplace safety violations that allegedly contributed to the accident. Rockwell denies any wrongdoing and is appealing.

If federal investigators determine that Rockwell violated environmental laws, the company could face criminal charges and hefty fines. No one believes that would affect Rockwell's bottom line. But the company's efforts to put its long history of environmental woes behind it may have been blown sky-high in the Santa Susana Mountains.

ROCKWELL'S GREEN BLUES

The industrial giant has been implicated in numerous pollution violations over th years. Among the most recent:

1995

In July, federal agents swoop onto facility in Santa Susana, Calif., after state investigation suggests scientists may have been illegally disposing of rocket propellants and other hazardous material. Rockwell, which is cooperating with investigators, says its scientists were conducting legitimate experiments.

1993

Local property owners sue Rockwell, alleging its Russellville (Ky.) aluminum die-casting plant spewed industrial pollutants into nearby creeks and streams in prior years. Rockwell no longer owns the plant and has agreed to assist in $12 million cleanup. It won't comment on the suit.

1992

Rockwell pleads guilty to five felonies and five misdemeanors and agrees to pay $18.5 million in fines after grand jury finds it was discharging hazardous nuclear waste and chemicals into nearby creeks at its Rocky flats (Colo.) nuclear weapons plant. Total cleanup cost estimated in excess of $3 billion.

DATA: BUSINESS WEEKBy Eric Schine in Los Angeles


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