Hazardous chemical operations should carry insurance for aworst-case scenario, an industry consultant has testified beforeCongress in outlining a host of critical issues exposed by the WestFertilizer plant explosion in April.

Amongst the problems is that while West Fertilizer had $1million in liability insurance, the cost of the disaster couldreach as high as $230 million, according to Rafael Moure-Eraso,chairman of the U.S. Chemical Safety Board.

This is "an unimaginable blow to a town of just 2800residents—more than $80,000 for each man, woman, and child livingin West, [Texas]," he said.

The Insurance Council of Texas estimates the insured propertylosses at about $100 million. That figure includes estimatedinsurance payments for the plant, 140 homes, an apartment complex,a middle school and a retirement center.

Read PC360′s coverage of the West Fertilizer explosionhere and look for the feature story, based onour visit to West, in the July edition ofPropertyCasualty360-National Underwriter.

Paul Orum, a consultant to the Coalition to Prevent ChemicalDisasters, also testified June 27 before the Senate Environment andPublic Works Committee chaired by Sen. Barbara Boxer, D-Calif.

Orum said companies holding large amounts of extremely hazardoussubstances should be required to maintain sufficient liabilityinsurance to cover a worst-case chemical release.

"Such a requirement would provide a reasonable cost incentivefor companies to develop and use feasible alternatives," Orumsaid.

In addition, transportation obligations encourage widespreadoveruse of railcars for shipping and storing extremely hazardoussubstances.

"Railroads have sought to have shippers share liability risksassociated with extremely hazardous substances (which they arerequired to carry) and to have shippers develop safer substitutes,"he said.

Orum testified that sustained improvement in chemical hazardprevention, preparedness, and response is long term and involves arange of actions.

"Among the most immediate lessons from the West Fertilizerexplosion are for Environmental Protection Agency to make suremajor recognized hazards are 1) included in the programs designedto address them, 2) subject to safer alternatives analysis by thecompanies that hold them, 3) covered by appropriate lists andthresholds, and by the general duty to operate safely," hesaid.

Besides the insurance issues, testimony made clear that the lossof life was mitigated by the fact the explosion occurred at night,after a nearby school had closed.

West Fertilizer was storing hundreds of tons of ammoniumnitrate, which was ignited by an intense fire at the retailer.Federal and state authorities could not determine the cause of thefire.

Two schools—the high school and the intermediate school—werestructurally damaged beyond repair and will be torn down, and athird school was also badly damaged.

"Because of the hour of day, all the schools were unoccupied.Had the explosion taken place during the day, severe casualtiescould have occurred in the intermediate school, which wasdevastated by both blast and fire," Moure-Eraso said.

"Post-explosion damage assessments indicate that it would havebeen difficult for children and others to escape from thebuilding," Moure-Eraso added.

He said the CSB is currently evaluating the vulnerability ofthis structure, to understand the potential consequences had theexplosion occurred when children were present, and to inform futuresiting decisions.

"Nearly 200 homes were severely damaged or destroyed, a sizeablefraction of all the houses in West," said Moure-Eraso, adding thatalthough 15 people have been officially listed as killed in thedisaster, the toll is actually much higher.

For example, "Residents of the [nearby] West Rest Haven nursinghome were severely affected, and according to nursing homeofficials 14 patients have passed away since the April 17explosion, dying at twice the expected rate," Moure-Eraso said.

Moure-Eraso said the ammonium nitrate that was the cause of theexplosion was stored in wood-framed bins with wooden walls in theWest's fertilizer warehouse building.

He said that both the warehouse building and the bins wereconstructed of combustible wooden material, and the building alsocontained significant quantities of combustible materials such asseeds stored near the bins of ammonium nitrate.

The building had no automatic sprinkler or fire suppressionfeatures, Moure-Eraso said.

He also said that the facility straddles the city limit in thenortheast section of West, Texas.

When it was first built, in 1961, the area was rural and therewere few other structures nearby but the nursing home, apartmentcomplex, high school and intermediate school were constructed witha 200-foot radius of the fertilizer retailer.