ROCKWELL DEBACLE: HOW DID IT START? : INVESTIGATORS PROBE WASTE VIOLATIONS.

Byline: Tony Knight Daily News Staff Writer

The odyssey that led to Rockwell International's guilty plea and $6.5 million fine last week for hazardous waste violations began in March 1994 with a small chemical fire at the company's remote test facility near Chatsworth.

``It was a few grams of material that had been just neglected inside of a glove box and started a fire,'' said Stephen Lafflam, director of environmental safety for the company's Rocketdyne Division. ``It caused about $5,000 in damage.''

But that small fire focused Lafflam's attention on a little-known research group at Rocketdyne called the Advanced Chemistry Technology Department - and on roughly 13 tons of toxic materials and high explosives that the group had stored in labs and bunkers at the mountain site.

``And that's when we knew we had some housekeeping problems and we had an inadequate inventory of the material, and we started to do some housekeeping and cleanup,'' Lafflam said.

Late that summer, the company spent more than $1 million to hire a highly specialized hazardous waste hauler to package and cart away the 26,000 pounds of chemicals, nearly two tons of which was old, off color, mislabeled or otherwise unusable, Lafflam said.

But before the waste was properly disposed, some was illegally burned on site, and physicists Otto Heiney and Larry Pugh were killed in the process.

The two scientists died in an accidental explosion July 26, 1994, at the company's Santa Susana Field Laboratory while they were illegally burning explosive waste from the chemical storehouse.

The deaths sparked an FBI investigation that led to a July 1995 raid by federal agents on Rocketdyne's Canoga Park headquarters and the Santa Susana laboratory, and to last week's record corporate fine for an environmental crime in California.

It also led to the unprecedented public admission by Rockwell Chairman and CEO Donald Beall that the scientists were in fact conducting bogus experiments with the real motive of disposing of hazardous wastes simply by burning them up.

Beall conceded that company executives had been wrong in early statements that the scientists were conducting legitimate tests. In fact, he said, they had been been breaking the law.

Standing before reporters and television cameras, Beall wondered how the incident could have happened in the first place. How could the company have wound up with 13 tons of explosive hazardous waste that should have long ago been disposed of properly?

After all the emphasis he had put on environmental safety at the corporation's 82 facilities worldwide, Beall wondered, what had gone wrong?

``I can't imagine that there was a financial incentive for keeping these materials,'' he told reporters. ``It's inconceivable to me that a financial motive would have been involved here.''

Rocketdyne President Paul Smith said he could think of no reason that the scientists would have been trying to dispose of the hazardous explosives illegally when the company routinely ships hazardous waste from its manufacturing operations.

Legitimate tests That was why, Smith explained, he initially believed employees who were interviewed after the fatal blast and maintained that legitimate tests were being conducted.

``It just seemed to be a very legitimate activity,'' Smith told reporters last week. ``Every employee that we did interview told us the same thing: That these were legitimate tests for legitimate purposes.''

But in hindsight, Smith conceded, the internal Rocketdyne investigation raised some disturbing questions about what the scientists had been doing.

``For example,'' Smith said. ``We could not find any data that had been recorded on the test instruments that were at the site.''

Still, what was the motive? Indeed, the chemistry group had only 160 pounds of the explosive compound, triaminoguanidine nitrate, better known as TAGN, Lafflam said.

The company pleaded guilty to three counts of illegal storage and disposal of TAGN last week, and no other chemicals or explosives were mentioned.

Lafflam said it would have cost $15,000 maximum to legally ship that much waste to a licensed hazardous waste dump.

``We spend nearly $11 million a year on environmental management trying to do the right thing, the right procedures and go beyond compliance,'' Lafflam said. ``I have to ask myself why they would do this. But I'm not sure what the answer would be.''

Federal prosecutors said last week that they will be looking for the answer as they continue the criminal investigation before a grand jury.

Although the plea agreement precludes further criminal charges against the corporation, it does not prevent new criminal charges against individual employees, said Assistant U.S. Attorney William Carter.

Only the first step

``We're continuing to investigate, and as a condition Rocketdyne has agreed to give us the information from their investigative materials,'' Carter said. ``This is just one step in a long process. We are still moving forward.''

Asked how high up the corporate ladder the investigation might reach, Carter said there is ``no limit.''

Among the questions that remain are: Who ordered the bogus tests; who knew the real reason they were being conducted; and how high up did the knowledge go?

The answers almost certainly lie with the company's now-defunct Advanced Chemistry Technology Department. But neither company officials nor government prosecutors would discuss the department or any individuals who ever worked there.

All Rocketdyne officials would say is that some employees were either fired or placed on suspension without pay in the wake of the fatal explosion. Officials would not name any employees.

``We don't want to point fingers at anybody today,'' Smith said last week.

The Advanced Chemistry group was composed of only 17 people in early 1994 and was in the process of winding down operations, company officials said. The department was to be completely gone by the end of 1994.

According to court documents, the group of brainy chemists and physicists had been developing gun propellants and flares for the Department of Defense.

The director of the department was Joseph E. Flanagan, who had been a Rocketdyne employee for more than 32 years, according to Flanagan's statement to investigators with the California Occupational Health and Safety Administration.

``(O)n July 25 (1994), I met with Otto Heiney to discuss his revised procedures for the testing scheduled the next day,'' Flanagan wrote in a statement to Cal-OSHA investigators.

``He took the fall''

Rocketdyne officials refused to discuss Flanagan's tenure at the company.

But one chemist who had worked in the chemistry department years before the explosion said Flanagan was forced into retirement after the accident.

``He took the fall for this. It was his group,'' the chemist said.

Flanagan did not return phone calls, and family members said he refused to comment for this article.

Whatever scientific work Flanagan's 17-person group was doing, it was not well known within the Rocketdyne Division of 5,200 employees. Lafflam said he had never heard of the group until the March 1994 fire.

But after the fire, Lafflam's 60-person environmental safety department became intensely interested in the chemistry group's toxic storehouse.

A critically important question, Lafflam said, was whether any of the arcane chemical compounds and highly explosive materials being stored there were unused and unneeded.

Under federal law, such materials are considered hazardous wastes that can only be stored for 90 days before being shipped to a licensed waste dump.

In August 1994, the month after the fatal explosion, Rocketdyne hired UXB International Inc., a Virginia firm that specializes in disposal of highly explosive wastes, to inventory the chemistry department's stores and dispose of them.

``I don't know how they picked UXB, but I do know the handling of this type of material is highly specialized,'' said Dave Wilma, head of criminal investigation for the U.S. Environmental Protection Agency in San Francisco.

``I don't think you can get somebody by looking in the phone book.''

UXB (whose name derives from a term for ``unexploded bomb'') was paid more than $1 million to remove 26,000 pounds of chemicals and explosives.

Taken to the dump

About 60 percent of the material was taken to a licensed waste dump and destroyed, Rocketdyne officials said. About 40 percent was shipped to U.S. government facilities for reuse.

``It was a whole variety of stuff, lots of different materials,'' Lafflam said. ``Some very basic stuff: fuse cord, primer, black gunpowder. Some simple things and some more exotic things that they made.

``These were typically scientists who were experts (at making) some special stuff for the government.''

Reviewing the UXB inventory, Lafflam said there were 3,700 pounds of toxic materials and explosives that were unusable and clearly qualified as hazardous waste.

``So we could say that we probably clearly had 3,700 pounds of waste that should have been gotten rid of prior to this accident,'' Lafflam said.

``You know, in hindsight you can go in and say, I'm not sure when it changed color or when the label fell off. But at the time of the inventory by UXB, I would have looked at that material and said, you know, let's get rid of this as waste.''

Last week's plea agreement expressly states that Rocketdyne will turn over to prosecutors the UXB report and inventory of the chemicals and explosives.

``Thirty-seven hundred pounds is almost two tons. That's a lot,'' said the EPA's Wilma.

In a written response to Daily News questions in August, Rocketdyne said 80 pounds of TAGN was shipped to Alliat Techsystems, a waste disposal firm in Elk River, Minn., and 70 pounds were shipped as useful product to Air Force Phillips Laboratories at Edwards Air Force Base.

Well before the fire, Rocketdyne policies and procedures were in place requiring the Advanced Chemistry department to notify environmental engineers of the wastes and have it disposed of within 90 days, Lafflam said.

Why that didn't happen is unknown, he said.

Details of fine

Of the $6.5 million fine that the company paid last week, $5.5 million was for illegal storage of TAGN for a period of 55 days. The other $1 million was for two counts of illegal disposal of the waste in the bogus experiments.

``I had not given any orders to anybody to dispose of it,'' Lafflam said of the chemical stores in the days after the fire.

``We were asking (the Advanced Chemistry group) the tough questions: Do we still need it? What do we need it for? Which programs is it going to support?'' Lafflam said.

``And it's really these scientists, these world experts who handled the material and who manufactured the stuff, who really know when they are going to need it.''

How Flanagan's group responded to these questions is unclear. But a chemist who formerly worked with the group told Cal-OSHA investigators that Heiney had expressed grave concerns about the situation.

``Otto and I talked quite frequently and attended the same technical conferences,'' Ronald L. Simmons, now a chemist for the Navy in Maryland, said in a written statement to state investigators.

``As a matter of fact, we talked about the need for Rocketdyne to dispose of excess chemicals and explosives only a week or so prior to the incident,'' Simmons wrote.

``Otto said that they could not legally store the materials any longer, they could not ship them anywhere and could not obtain a permit to burn them. He said, `What in the hell are we going to do?' ''

Did not have permit

One of the problems the company faced was that it no longer had a Ventura County permit to burn explosive chemicals as wastes, as it had done at Santa Susana from 1958 until 1982, according to documents from the state Department of Toxic Substance Control.

The company stopped the practices in 1982 because the new federal Resource Conservation and Recovery Act prohibited such disposal without a federal permit.

In California, those federal permits are issued by state toxics officials. Rocketdyne applied for a new federal permit in 1990, according to state documents.

The company was granted an interim permit to burn no more than five pounds of wastes in May 1990, while its application for a permanent permit was being processed. But the company abruptly withdrew the permit application in November 1990, according to state records.

Company officials said they decided it would be cheaper and easier to ship the waste to a licensed waste dump.

But during a routine inspection, state investigators found company logs indicating that far more than five pounds of wastes was burned while the interim permit was in effect. The company was fined $650,000, which it paid in 1992.

Sources close to the current federal case said investigators will be looking closely at what the company was doing with its solid explosive and chemical waste after it gave up trying to get a federal permit to burn it.

``Where was it going between 1990 and 1994?'' the source said. ``You have to look at what they were shipping.''

In hindsight, Lafflam said that he should have moved more quickly when he discovered the chemical and explosive stores were going to present a problem, especially since the chemistry group was in the process of being phased out.

``A lot of things were in the works that weren't being handled as aggressively as they probably should have,'' Lafflam said.

SOURCE: Daily News Staff Writers Jaxon Van Derbeken and Chip Jacobs contributed to this story.

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Photo

Photo: Two scientists were killed in a 1994 explosion while illegally disposing of hazardous chemicals at a structure on the Rocketdyne site.

Roger W. Vargo/Daily News