Arco Scholarship Fund Results From Oil Spill

Atlantic Richfield agreed to establish a $450,000 environmental scholarship fund at UCLA after pleading no contest Thursday to charges that it illegally discharged oily waste from its Carson refinery into the sewer system, Los Angeles County Dist. Atty. Ira Reiner announced. He said the settlement would serve as a warning to major corporations.

In addition to the scholarship fund, Arco will pay a $50,000 fine, reimburse the district attorney’s office $72,000 in investigative costs and pay the Los Angeles County Department of Health Services $9,000 for its costs during the investigation.

The discharge last May 31 threatened to cause explosions at a nearby sewage treatment plant, causing its closure for 1 1/2 days and resulting in the dumping of 350 million gallons of inadequately treated sewage into the Pacific Ocean at White Point on the Palos Verdes Peninsula.

At the time, an automatic alarm at the refinery warning of the discharge was ignored and then turned off by refinery employees.

The scholarship program announced Thursday by Reiner was imposed on top of the maximum $50,000 fine prescribed by law, and he made it clear that he intends it as a precedent in dealing with major polluters.

“We’re going to be doing this more and more with corporations that have a deep pocket and can afford to do this,” Reiner said in an interview. “This is the first time this has been done, and we’re going to be using this as an example to other corporations . . . to take these laws seriously.”

In 1985, Reiner sent a tremor through the business community when, at his suggestion, courts ordered companies convicted of violating hazardous waste laws to place full-page newspaper advertisements warning others of the consequences of breaking the law.

Arco had entered a plea of no contest in Los Angeles Superior Court on a charge of illegally disposing of hazardous waste.

Reiner, who received his bachelor’s degree from USC in 1959, said he suggested UCLA as the recipient of the scholarship because the money would go further. “You can get more scholarships out of UCLA for the same money. USC is awfully expensive,” Reiner said.

Reiner said the money would fund at least three permanent scholarships for environmental sciences graduate students.

The settlement means that Arco will pay more than $1.31 million in fines and costs as a result of the incident. The company previously paid $80,000 in fines to the state Regional Water Quality Control Board, $6,000 in fines levied by the County Sanitation Districts of Los Angeles County and $45,430 for sanitation districts’ costs. Arco said Thursday that it also spent $600,000 for cleanup.

‘Good Corporate Citizen’

Reiner said he believes that Arco agreed to the scholarship fund because the firm wants to be pictured as a “good corporate citizen.” He added that, had the case gone to court, it could have resulted in bad publicity for the company.

Arco attorney Richard C. Morse said Thursday: “It would be an expensive case to defend. The issues involved were multiple. One problem was that the release of the material did, in fact, occur.”

Morse said the scholarship funds were scheduled to be delivered to UCLA Thursday. He confirmed that such a donation is considered a business expense and, unlike fines, is tax-deductible.

Arco, in a press release Thursday, described the discharge as “unintentional and accidental.”

Reiner disagreed. “It was not accidental. If it was accidental, there would not be a violation of law,” Reiner said. He said that although he believes that there was no intention to illegally dump more than 200,000 gallons of oily wastes and sludge into the sewer, Arco has a history of relatively minor violations. Those violations and previous actions had a cumulative effect and resulted in the May 31 spill.

“It was a worst-case scenario of everything that could go wrong, did go wrong, all at the same time. Relatively minor violations that occurred over the previous 18 months suddenly became a massive violation,” he said.

Morse disagreed, saying: “The facts would clearly support the proposition that the earlier minor exceedences of the permit were in no way related to the totally different type of accident which resulted in the May 31 release.”