Nearly three months before leaking methyl isocyanate killed at least 2,000 people at Union Carbide Corp.'s plant in Bhopal, India, inspectors at Carbide's sister plant in Institute, W.Va., warned that "a real potential for a serious incident" existed there in the way the company handled the deadly chemical.

The internal report, made public yesterday by a congressional subcommittee, warned that "a runaway reaction could occur" in the storage tanks at Institute and that "the planned response . . . would not be timely or effective enough to prevent catastrophic failure of the tank."

The Carbide team also reported several incidents of water contamination of the Institute tanks. An Indian scientist said earlier this month that he believes that water entering an underground storage tank at the Bhopal plant set off a violent runaway reaction, spewing clouds of poison gas into the air.

The Bhopal plant was modeled after the West Virginia facility. The investigation into the Bhopal disaster has not been completed,

Rep. Henry A. Waxman (D-Calif.), chairman of the House Energy and Commerce subcommittee on health and environment, said the company document "completely discredits" a report by the Environmental Protection Agency Wednesday that, despite 28 instances of leaking MIC over a five-year period, safety at the West Virginia plant was "above average."

Rep. Robert E. Wise Jr. (D-W.Va.), whose district includes Institute, said Carbide board chairman Warren M. Anderson told him that the report was a "worst-case scenario" and that some of the remarks in it were "taken out of context."

Dick Henderson, a Carbide spokesman at Institiute, said the Carbide safety audit team "plays the role of a devil's advocate."

EPA said yesterday that while it "shares many of the concerns regarding worker and plant safety" raised by Waxman, plant safety is regulated by the Occupational Safety and Health Administration. An OSHA spokesman said that agency's report on MIC handling at Institute and at plants to which it is shipped will be completed next month.

J.M. Poulson, the Carbide employe in charge of the July 9-13 plant inspection, wrote that although "no imminent hazards requiring immediate correction were noted, two concerns classified as major were identified by the team."

Poulson wrote that while the incidents of contamination were handled without problems, they "may have created a degree of confidence or lack of concern that could allow a situation to proceed to the point where it is not controllable." The report added that "incidents of water contamination may be warnings, rather than examples of successfully dealing with problems."

Waxman said the Carbide memorandum "raises serious questions" about the corporation's conduct.

"Why did Union Carbide conclude that the possibility of a runaway reaction that would be catastrophic was not something that should be dealt with immediately?" he asked. "Did anyone in Union Carbide communicate this information to Bhopal prior to the largest air pollution disaster in history? Was the document ever given to EPA or state officials?"

Waxman yesterday contacted Anderson, who was on Capitol Hill meeting with the West Virgnia delegation, and told him that the report "raises all sorts of questions" about safety measures at the plant.

"We need answers from you about what Union Carbide has done" in response to the report, said Waxman, who asked Anderson to testify before a special meeting of his subcommittee next week.Waxman recalled that Anderson, in testimony before his subcommittee at a hearing Dec. 14 at Institute, said, "It never entered my mind" that an accident such as Bhopal could happen.

Jackson Browning, who is in charge of health, environment and safety affairs for Carbide, testified at that hearing that the Institute and Bhopal plants "both respond to the same process safety standards."

Waxman called the EPA report released Wednesday "disgraceful." He said the EPA did not uncover the Carbide document "because they didn't ask the right questions" and added, "The fallacy of EPA is that it thinks the industry should regulate itself."

Waxman said it may be necessary for Congress to set standards for the hundreds of life-threatening chemicals used by the nation's 5,000 chemical plants and to require strict safety standards.