Flanges recall puts U.S. pipelines’ integrity in doubt
Unanimous verdict returned in favor of the plaintiffs
In the culmination of a lengthy period of litigation, in February, Judge Andrew S. Hanen of the United States District Court for the Southern District of Texas, issued a permanent injunction and ordered a recall of flanges made by the Spanish company, Ulma Forja and its U.S. subsidiary, Ulma Piping. The Court found that Ulma, which furnishes flanges for use in American pipelines, refineries and chemical plants, “intended to deceive customers by mislabeling the flanges.”
The ruling followed a jury verdict in favor of two American flange manufacturers, Boltex and Weldbend, which in 2017 had filed a lawsuit alleging that Ulma falsely claimed that it normalized its flanges in accordance with ASTM A105 standards.
The question now is what, if anything, happens to the over 3.7 million flanges sold in the U.S. by the defendants since about 1998?
The lawsuit filed by Boltex and Weldbend alleged ULMA deliberately stamped these flanges “A105N,” issued documentation with each flange stating they had undergone the normalization process specified by the ASTM and shipped the flanges into the U.S. for use in pipelines — all when testing showed the flanges were not normalized.
The verdict delivered
In late September 2019, the Texas federal jury, after deliberating for less than a day, returned with a unanimous verdict in favor of plaintiffs. They also found that Ulma Piping owed roughly $31 million to the American pipe makers for undercutting their business by falsely advertising its oil pipeline parts as being strengthened by heat treatment.
“American companies like Weldbend and Boltex can compete with anyone in the world on a fair and level playing field,” said James Coulas Jr., president of Weldbend.
Flanges are a key part of pipeline systems, and defects in them can lead to catastrophic failure. The normalizing heat treatment at issue makes a metal more ductile and tough following its subjection to thermal or mechanical hardening processes. The process of heating, followed by slow cooling, alters the metals microstructure, which in turn reduces hardness while increasing ductility.
Ductility is the ability of a material to deform plastically without fracturing. Carbon steel can be normalized after it is cold rolled to reduce the brittleness caused by work hardening.
While reducing the total amount of damages owed in the suit, in ordering the permanent injunction, Judge Hanen stated that “an injunction would greatly benefit the public,” and that “mislabeling the qualities and characteristics of a product like the flanges in question, which are used throughout the petroleum industry, is a dangerous practice.” He added that the “public deserves truthful product information especially on products as critical as these flanges potentially are.”
What’s at risk?
The ruling also ordered Ulma to “recall any product which purports to be normalized,” which has not been normalized per ASTM international standards.
“Ulma’s intentional acts and cover-up regarding their substandard flanges were outrageous,” Coulas said. “We remain extremely concerned about the more than 3.7 million substandard flanges — valued over $100 million — that Ulma sold into the United States. Engineers design refineries, pipelines, pressure vessels and other piping systems based on the product fully complying with the standard.”
Judge Hanen’s order permanently enjoins Ulma from manufacturing, selling or otherwise distributing, directly or indirectly through distributors, any flange that is marked, engraved, advertised or labeled as complying with ATSM A105 and ATSM A105N or as being normalized, that does not comply with ASTM standards.
Furthermore, according to the court’s ruling, Ulma distributors should recall any product that purports to be normalized or to be ASTM A105 or ASTM A105N compliant that has not been normalized according to ASTM A961 or ASTM A941. Recalling those flanges may be avoided if they relabel/rebrand or otherwise redesignate by some means that is either actually on the flange or accompanies the flange in question so they accurately reflect that they have not been normalized or are not compliant with the standards set out in ASTM A105.
The U.S. market is the world’s largest for oil & gas industry materials. Many foreign companies looking to enter these markets almost invariably do so by pricing themselves below already competitive domestic prices. The question must always be, what steps were taken, or not taken, to allow them to profitably do so?