Drinking Water Contaminated, a Company Bankrupted, a Federal Emergency Declared: All Because of One Leaky Tank

Last January, when it was discovered that a single leaky tank had poured some 10,000 gallons of an industrial chemical into the Elk River in West Virginia, contaminating the drinking water of 300,000 residents, Freedom Industries, the company responsible, filed for bankruptcy within eight days.

But they weren’t the only business affected. In the aftermath of the incident, which was declared a federal emergency by president Obama, representatives from a range of industries, including tourism, hospitality, and food services, signed a letter to West Virginia’s government calling for increased regulation and stronger enforcement.

For a state known for its opposition to all forms of government intervention, the letter signaled a remarkable shift in sentiment. But when considered in light of recent history, the reaction among businesses becomes less surprising: the spill was the third such incident in the past five years, and Freedom Industries’ facilities had not been inspected since 1991.

Thus far, these efforts have helped strengthen regulations pertaining to above-ground chemical storage tanks, but it remains to be seen whether more sweeping changes are in store. Thus far, no additional legislation has been proposed, and lawmakers remain wary of provoking backlash from the state’s powerful coal industry.

Regardless of what happens, one lesson from this incident is clear: companies hoping to avoid Freedom Industries’ fate can’t afford to wait around for the government to prevent these disasters; they have to become better at regulating themselves.

If Freedom Industries had scheduled even very basic routine checks of their storage equipment, they likely would have caught the tank leak early and potentially prevented their demise. Instead, they appear to have taken an attitude toward regulatory compliance akin to the “run to failure” philosophy in maintenance, waiting for a major problem to arise before taking action.

Their example clearly illustrates the peril associated with this mentality: there’s no way to know for sure how big that problem will be when it does arise, and no guarantee that the resources necessary to address it will be available when they’re needed. As a result, companies that think they’re avoiding the costs associated with compliance are really just taking a serious gamble by deferring them to the future.

The fact that inspectors hadn’t visited Freedom Industries’ facilities since 1991 was considered an egregious oversight on the part of regulators, but at the end of the day, the company still bore the full brunt of the consequences. Ultimately, regulations aren’t perfect—it wasn’t even clear whether the chemical that contaminated the Elk River posed health risks—and companies are placing themselves at risk by over-relying on them.

Even if Freedom Industries had somehow managed to evade government sanctions in this case, they would have faced lawsuits from the residents who drank contaminated water for days before the government issued an alert about the problem.

This is why more and more companies are implementing preventive maintenance routines with preventive maintenance software that make it easy to schedule and execute routine checks and inspections, and create a solid book of record to prove compliance. By establishing a consistent schedule and tracking their work, these companies both minimize the likelihood of catastrophic failures, and also equip themselves to stave off the worst consequences when unavoidable issues do arise.

Companies watching the events in West Virginia unfold are likely to fall into two groups: those who stand by and wait to see what regulations, if any, the government will impose on them next, and those who get busy shoring up their inspections and preventive maintenance routines. If history is any guide, it shouldn’t be too hard to predict which group will produce the next company to suffer Freedom Industry’s fate.  

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