ROCKWELL PENALIZED $6.5 MILLION : FIRM ADMITS TO BOGUS TESTS IN BLAST THAT KILLED 2.

Byline: Tony Knight Daily News Staff Writer

Rockwell Corp. admitted guilt Monday to criminal charges of illegally storing and disposing of hazardous waste and agreed to pay a $6.5 million fine in connection with a 1994 explosion that killed two physicists.

As part of a plea agreement, company officials admitted that the scientists had been conducting bogus tests with explosives at the company's remote field laboratory west of Chatsworth with the real objective of simply getting rid of the hazardous wastes by burning them up.

If approved by a federal judge, the fine would be the largest penalty for an environmental crime ever collected in California, said U.S. Attorney Nora M. Manella.

``This is not a case where the law failed us,'' Manella said Monday. ``The laws were on the books, and had those laws been complied with, two scientists would be alive today.''

The plea agreement was scheduled to come before a federal judge for a hearing Monday, but the hearing was postponed. Manella said the company was arraigned on three criminal counts earlier in the day.

Manella said the investigation by the FBI and Defense Department into the incident will continue to see if any individual company employees would be criminally charged.

``No immunity has been granted to any individuals,'' Manella said. ``Similarly, no relief from civil liability has been granted to Rockwell. Obviously, in any incident of this nature where you're dealing with a corporation and corporate individuals you want to find out what did they know, and when did they know it.''

Donald R. Beall, president of the Seal Beach-based conglomerate, held a press conference with Rocketdyne officials in Canoga Park on Monday to accept ``full accountability'' for the illegal handling of waste explosives that led to the fatal accident.

``We have a set of responsibilities as a company to see that all of our activities are carried out safely and legally, and any failure to meet those expectations is a corporate failure for which we accept responsibility as demonstrated today,'' Beall said.

Beall said the company would cooperate fully with federal investigators as the probe continues. The plea agreement specifically states that Rocketdyne will turn over to the FBI all records from its internal investigation of the incident.

In return for the guilty plea, the U.S. attorney agreed to file no additional criminal charges against the company related to the ongoing investigation, or the treatment or storage of hazardous waste prior to the agreement. In addition, no charges will be filed for health, safety and labor violations related to hazardous materials prior to the agreement, or for billing by Rocketdyne under government contracts for handling hazardous wastes.

Physicists Otto Heiney and Larry Pugh were killed, and mechanic Lee Wells was seriously injured in the July 26, 1994 explosion as the scientists were working with a mixture of three highly explosive chemical compounds.

The accident occurred at the Santa Susana Field Laboratory in the Simi Hills, a 2,700-acre mountainous test facility run by the company's Canoga Park-based Rocketdyne Division.

The California Occupational Health and Safety Administration conducted the initial investigation concluding that Rocketdyne had been guilty of numerous worker safety regulations and fining the company $252,000.

State records show that federal agents were called in when the state investigators began to suspect that the scientists were involved in conducting bogus tests to dispose of hazardous waste illegally.

Facilities in Canoga Park and at Santa Susana were raided by federal agents who seized hundreds of boxes of documents.

Also involved in the raid were agents from the Defense Criminal Investigation Service, the Navy and Air Force, the National Aeronautics and Space Administration and the U.S. Environmental Protection Agency.

The company also was slapped with civil wrongful death lawsuits by the widows of Pugh and Heiney which were settled earlier this year for undisclosed amounts.

Judith Heiney, Otto's widow, said Monday that the criminal fines could never make amends for her husband's death.

``If they would have gotten $100 million or 50 cents, it just won't ever come close to replacing the loss or the devastating affect on the family,'' she said.

The announcement of the plea agreement Monday capped a year of investigation into work the scientists were doing with three highly explosive substances: nitrocellulose, glycidyl azide polymer and triaminoguanidine nitrate, also known as TAGN.

All three criminal counts against the company involved the illegal storage and disposal of TAGN, a violation of the federal Resource Conservation and Recovery Act. Two counts involve bogus tests conducted on July 21 and 26, 1994, and one involves the illegal storage of TAGN for 55 days.

Each illegal disposal count carries a maximum penalty of $500,000. The illegal storage count carries a maximum penalty of $100,000 per day.

Questions still remain over who ordered the bogus tests, who knew the true reason they were being conducted and how high up that knowledge went. Federal and company officials acknowledged said these questions would be the focus of the continuing investigation.

``It's going to be very thorough, and we're going to look into everyone's potential culpability and what did they know and when did they know it,'' said Charles Parsons, FBI special agent in charge. ``And there are a number of other statutes that are potentially in play here.''

He said agents will be looking into whether there was any violation of the False Claims Act governing federal contractors and the criminal statutes governing ``knowing endangerment,'' that carry penalties similar to state manslaughter charges.

Pugh and Heiney had been working in Rocketdyne's Chemical Technology Department, a small group of 17 researchers which was disbanded after the explosion.

Rocketdyne President Paul Smith said Monday that after the company's investigation of the incident some employees were fired or suspended without pay for their role in the incident.

But Rocketdyne officials refused Monday to name any company employees or to divulge the names of those managing the Chemical Technology Department.

Federal officials also refused to comment on who would be the focus of the continuing grand jury investigation.

Cal-OSHA records on the state investigation into the accident indicate that Joseph E. Flannagan of Woodland Hills was director of the Chemical Technology Department at the time of the accident, and chemist James F. Weber was a manager involved in the tests.

Efforts to reach Flannagan on Monday were unsuccessful. Weber refused to comment.

In a statement to state investigators, Flannagan said he met with Heiney the day before the explosion to go over the test procedures.

Navy chemist Bert Moy, who worked for Flannagan in the Chemical Technology Department for more than seven years, said in a telephone interview Monday that the department was chronically short of staff.

``I considered it sort of hazardous to my health,'' Moy said. ``If you don't have enough people, things can happen.''

In an interview last year, Maryland chemist Ronald L. Simmons, a longtime friend of Heiney's said his friend had been deeply concerned about how to dispose of old chemicals as the department was being phased out.

``He told me it was an accumulation going back in some cases 20 years,'' Simmons said. ``Several conversations I had with Otto that apparently a lot of those things had not been gotten rid of over the years.''

Rocketdyne President Smith, who after the fatal accident publicly stated that the scientists were conducting legitimate tests on the explosives, conceded Monday that the tests were bogus and criminal.

He explained that company officials investigating the mishap had been misled by employee statements, and that even a team of outside investigators were unable to conclude that the tests were not legitimate.

However, he conceded that although he publicly maintained the company's innocence in the beginning, company officials privately harbored doubts about what the scientists had been up to.

``Our internal investigation raised some real questions about how the tests were conducted,'' Smith said. ``For example, we could find no data that had been recorded on the test instruments that were at the site.''

A letter from Rockwell President Beall was distributed Monday to Rockwell employees acknowledging that federal environmental laws had been violated.

``The violations went undetected within a small department at Santa Susana,'' Beall said in the letter. ``We as a corporation must accept full accountability for these violations, for the fact that they went undetected, and ultimately for the resulting tragedy.''

CAPTION(S):

2 Photos

Photo: (1) Rockwell President Donald R. Beall, left, and Rocketdyne President Paul Smith discuss the plea agreement at a news conference.

(2) U.S. Attorney Nora Manella points to a photo of the blast site where two Rocketdyne scientists were killed.

Bob Halvorsen/Daily News