Environmental
Jun. 21, 2002
Arco to Pay Nearly $50 Million in Fines and Upgrades
SAN FRANCISCO - Atlantic Richfield Co. agreed Wednesday to pay $45.8 million to settle claims that its underground gasoline storage tanks failed to meet state standards.
Standing on the steps of San Francisco City Hall with a length of rusted pipe at their feet, Attorney General Bill Lockyer and San Francisco City Attorney Dennis Herrera announced the settlement, calling it a record amount for an underground tank case. That claim could not be independently verified Wednesday.
The figure includes $25 million in fines and penalties and $20.8 million that Atlantic Richfield, or Arco, must spend to upgrade the tanks.
The state enacted stricter laws in 1987 regulating underground storage tanks. Stations were required to strengthen tanks, install fiberglass siding and replace pipes made of corroding steel. Stations were given until 1998 to comply.
The main danger posed by leaking tanks is MTBE, a chemical added to gasoline to make it burn cleaner, the officials said. A suspected carcinogen, MTBE moves quickly through groundwater and has contaminated some drinking water supplies.
The San Joaquin district attorney's office first discovered a problem with Arco tanks, and it filed a lawsuit accusing the company of using steel tanks and piping instead of fiberglass. The company settled that suit. A subsequent investigation by state agencies found 59 sites across the state with problems, from San Diego to Sacramento.
Lockyer and Herrera filed the lawsuit and settlement simultaneously Wednesday in San Francisco Superior Court. The suit was filed under the state's Unfair Competition Law, seeking injunctions, civil penalties and profits the company made as a result of the non-complying tanks. People v. Atlantic Richfield Co., 409327
A spokeswoman for the company emphasized that officials cooperated with the investigation and quickly upgraded the stations.
"There is no evidence that our not being in compliance had any environmental impact," Cheryl Burnett said. "As soon as we heard there was a problem, we fixed it as quickly as we could."
Lockyer agreed that nobody knows whether the Arco tanks actually leaked gas or MTBE into the ground.
"I don't believe we've contaminated a huge amount of groundwater and certainly no drinking water as a result of this," he said. "But whatever was put into the ground will be there for a long time, because MTBE doesn't break down very easily."
Most of the settlement will go to the state water board to fund future cleanups. San Francisco will receive about $1.5 million.
The final dollar amount was big, but not as big as it might have been. The law allows for fines up to $5,000 per tank per day, said Hans Herb, a Santa Rosa lawyer who has advised small-station owners regarding the new storage tank laws. The amount probably was kept down because the Arco violations were not intentional, Herb said.
The state is not investigating other gas companies, Lockyer said. But he left open the possibility of filing a similar suit if he receives information about other stations not complying.
A settlement of this size is unlikely to be repeated, Herb said, as the state increasingly regulates underground tanks and oil companies have been alerted to the potential liability posed by MTBE.
"There are probably a whole bunch of stations that don't comply," Herb said. "But I don't think they'll be discovered and announced in these mass ceremonies. We will probably just discover and correct individual tanks and joints."
Tyler Cunningham
For reprint rights or to order a copy of your photo:
Email
Jeremy_Ellis@dailyjournal.com
for prices.
Direct dial: 213-229-5424
Send a letter to the editor:
Email: letters@dailyjournal.com