0 BP-ARCO Fined Millions for Storage Tank Leaks

BP-ARCO Fined Millions for Storage Tank Leaks

SAN FRANCISCO, California, June 20, 2002 (ENS) - Oil giant BP-ARCO will spend $45.8 million to settle charges that it installed inadequate underground storage tanks in at least 59 Arco gas stations in California. The leaky tanks may have allowed gasoline and the additive MTBE to leak into soil and groundwater, prosecutors charged.

"My administration has moved forcefully to make sure that California's vital water supply is protected now and for years to come," said California Governor Gray Davis. "Protecting our ground water from potentially leaking tanks, with or without MTBE, is a top priority."


Unprotected steel, single walled fuel storage tanks found at an ARCO station in Hayward, California. California law required that such tanks be replaced with fiberglass or double walled units. (All photos courtesy California Environmental Protection Agency)
California Attorney General Bill Lockyer filed the agreement Wednesday, noting that the settlement includes the largest penalty ever imposed for underground tank violations.

"Gasoline stations were given 10 years to make required safety upgrades to underground fuel storage tanks to better safeguard our water supplies and protect the environment from unseen leaks," Lockyer said. "The landmark settlement ends our two year investigation which found that ARCO failed to make required safety improvements at 59 service stations spread across the state from San Diego in the south to Sacramento and Marysville in the north and failed to disclose the truth to government officials."

The case was based on investigations of underground tanks by the California Environmental Protection Agency, state Water Resources Control Board and the San Francisco Department of Health.

"This is an example of state and local officials working together to protect our environment," said San Francisco City Attorney Dennis Herrera. "By combining our resources, we have been able to avert a long court battle and get a settlement that is good for the health and safety of the entire state."


Bare steel, single walled piping in direct contact with surrounding soil at an ARCO station in Gardena, California.
In 1987, California gave gasoline stations a 10 year deadline by which to meet strengthened underground fuel tank standards for corrosion protection, leak detection, spill prevention and environmental protection. Upgrades such as the use of double walled or non-corrosive fiberglass linings were required to be installed by December 22, 1998.

Responding to industry concerns that delays in government inspections could result in service stations closures, oil companies were allowed to self certify completion of upgrade work. Violations could result in civil penalties of up to $5,000 per day.

ARCO sponsored the legislation allowing self certification, and in 1998, the oil company sued several local regulatory agencies in California who would not issue the upgrade certification without actual on site inspections.

The state's investigation found that ARCO falsely self certified some of its own stations, claiming they had fiberglass tanks and piping, when portions of the piping were actually unprotected steel, which can corrode and leak.

Prosecutors argued that ARCO's actions provided the company with an unfair business advantage. While other companies were shutting down service stations to meet the deadline for underground tank improvements, ARCO continued selling gasoline at 59 stations, postponing upgrade costs and hiring contractors to do the work after the rush by other companies seeking to meet the state deadline.


Unprotected steel piping and braided steel flex coupling at an ARCO station in Malibu, California.
The settlement provides for $25 million in penalties and costs to be paid by ARCO and $20.8 million in improvements that the oil company claims it has already made, but must now demonstrate have been completed at its gas stations. The payment includes civil penalties, reimbursement of investigation and enforcement costs and funding for the prosecution of other environmental protection cases.

The company also agreed to court enforceable monitoring, inspection and enforcement conditions at more than 900 ARCO stations in California. ARCO merged with BP Amoco in April 2000.

"We believe that ARCO, which cooperated in this enforcement case, is now in full compliance with the upgrade standards at all its gasoline stations," Lockyer said. "As further assurance, the oil company under the settlement must provide state inspectors with access to ARCO stations and close immediately any gasoline stations discovered with upgrade violations until required improvements are made."