People in Institute, W. Va., are astounded by the magnitude of violations found at the nearby Union Carbide plant by the U.S. Occupational Safety and Health Administration, which included asking employees to "sniff" for leaks of deadly phosgene gas.

"They used to use canaries for that," Labor Secretary William Brock said.

OSHA on Tuesday announced fines against Union Carbide of $1.377 million - the largest in the agency's history - for 221 alleged violations of 55 safety and health laws at the Institute plant, where a toxic leak sent 135 residents to hospitals last year.

"I'm shocked," said Thomas Cole, a chemist and president of West Virginia State College next to the plant, which company officials had repeatedly declared safe. A summary of a few of OSHA's findings "gives more than cause for alarm," Cole said.

President Robert D. Kennedy said Union Carbide will contest the allegations. OSHA "grossly distorted the actual safety conditions and attitudes at the plant," he said.

"Most of the alleged violations involve paperwork, no chemical process safety, operating integrity or employee safety."

As for Brock's charges that plant officials had "willful disregard for health and safety" at Institute the past three years, Kennedy called that "an outrageous misrepresentation of the truth."

Meanwhile, Gerald Baty, OSHA director for a 26-county area around Houston, said OSHA officials are examining procedures at three plants that manufacture phosgene, in the first of a number of special inspections here. The three plants are Dow Chemical Co. and PPG Industries in La Porte and Mobay Chemical Corp. in Baytown, he said.

About 100 people were evacuated when an estimated 20 to 40 pounds of phosgene leaked at the PPG plant on March 13. OSHA investigated, but Baty said any enforcement action will not be taken until completion of the newly begun special inspection, expected to last six to eight weeks.

The special inspections are part of an OSHA pilot program, prompted by the Institute leak, that will last at least through September.

In February, the Chronicle reported that more than a pound of phosgene had leaked at Houston-area plants on at least seven occasions in 1984 and 1985.

They included a leak at Dow in 1984, when the plant was owned and operated by The Upjohn Co., of an estimated 5,000 pounds of phosgene. That amount could be dangerous more than 12 miles away, according to a federal Environmental Protection Agency formula.

OSHA uncovered the violations at the Union Carbide plant in Institute in a "wall-to-wall" six-month inspection undertaken after a leak of toxic aldicarb oxime and methylene chloride sent 135 people to hospitals Aug. 11.

In December 1984, a leak of methyl isocyanate gas at a Union Carbide plant in Bhopal , India, killed more than 2,000 people. Union Carbide also makes methyl isocyanate - known as MIC - at Institute.

"A lot of people gradually became complacent after Aug. 11," said Edwin Hoffman, a history professor at West Virginia State and founder of People Concerned About MIC, a citizen action group. "They were outraged then, but by the end of winter, they had put their concerns in the back of their mind. I think this OSHA report is a reminder to one and all that we're not safe."

John Harrison, administrator of West Virginia Rehabilitation Center next to the plant, said he still thinks Union Carbide is sincere about safety, but he expressed shock at the allegation the company had made workers sniff for phosgene leaks. "That's inconceivable," he said.

Phosgene, used as a weapon gas in World War I, is one of the most highly toxic chemicals made.

Federal officials "just were surprised to find conscious, willful, overt violations on such a widespread basis," Brock said in a Washington, D.C., press conference. "We found what we believe to be very serious problems with the Institute plant's safety systems, its recordkeeping, its safety and health programs, and its safety management systems."

OSHA "found deficient equipment design, inadequate maintenance and a lack of monitoring devices which limit the company's effectiveness in preventing chemical releases," Brock said.

"We found employees without respirators being asked to detect the presence of deadly gas by sniffing the air after alarms indicated a leak. We used to use canaries for that."

OSHA classified 130 violations as "willful," with a top fine of $10,000 each. Another 72 were "serious," with fines of $1,000 each. The 19 others were described as "housekeeping," with fines totaling $5,700.

Acting OSHA Administrator Patrick Thomas said Union Carbide employees sometimes suffered injuries from phosgene that were never reported as required.

The investigation uncovered 120 injuries reported by the company at the plant from 1983-85, but found "that number in fact should have been two or three times that amount," he said.

OSHA officials conceded that the size of the fines marks a major change in enforcement policies for the Reagan administration. Previously OSHA combined violations and sought one fine for each category. Against Union Carbide, it is seeking the maximum penalty for each specific violation.

"Some people in this country simply have an attitude that a few accidents here and there are the price of production," Brock said.

"I just don't think this country thinks like that any more. We will impose the full penalties of the law on those who blatantly or repeatedly violate safeguards necessary to protect American workers."

Brock said the Labor Department last week sent the results of the Institute investigation to the Justice Department for pursuing possible criminal violations.

Union Carbide has 15 days to appeal the civil fines. The case then would be litigated before an administrative law judge and then the three-member federal Occupational Safety and Health Review Commission.

OSHA last October proposed fines of $32,100 against Union Carbide in the Aug. 11 leak, but settled last month for a payment of $4,400.