County Suit Claims Arco Shaved Sewer Bill $670,000

Arco, whose Carson refinery is the biggest user of the Los Angeles County sewer system, has systematically underpaid its bill for four years and now owes almost $670,000--the largest amount ever billed an industrial user for shortchanging the sewage system, county officials said.

The officials, who have been quietly trying to settle the dispute for two years, lost patience with Arco, which has rebuffed demands for payment, and voted Wednesday to file suit against the company.

Sewer officials charge that from 1983 to 1986, Arco employees failed to follow the standard industry practice of stirring waste-water samples when measuring solidsand thereby missed what had settled to the bottom.

Arco denied Thursday that the company had underpaid its sewer bill and asserted that its sampling methods followed standard procedures, including stirring, and were more accurate than those of sewer officials.

Indicator of Cost

Industrial sewage fees are based in part on the amount of solids in waste water, which is an indicator of the difficulty and cost of processing it. Industries conduct their own sampling for solids, then pay the county based on the results. In effect, it is an honor system, subject to audits by the county Sanitation Districts.

“You rely on industry being a good citizen, but you don’t totally rely on that. . . . We are not fools here,” said Robert Miele, head of technical services for the Sanitation Districts.

“We realize not everyone is honest, and people can make honest mistakes. We go out on a periodic basis and check,” he said.

According to Sanitation Districts officials, the flawed sampling technique used by Arco resulted in payments averaging about 26% below what the company should have paid. Arco paid $1.8 million but still owed four years of back payments, plus interest, for a total of $669,300, they said.

‘Awful Lot of Money’

“I can’t think of anyone else who has been nicked for almost 700 grand. It is an awful lot of money,” said Jim Stahl, assistant chief engineer for the districts.

In the summer of 1986, sewer system officials were conducting a routine audit of Arco for the period from July 1, 1983, to June 30, 1985, when “we realized that our data was substantially different from theirs,” Miele said.

It was almost a year later, after being unable to reconcile the differences, that county officials discovered what they describe as the cause.

“Our engineers and sampling crews went down there and said: ‘Let’s see how you do this.’ ” Miele said. “What we ultimately discovered in . . . watching them is that instead of shaking the beaker, they would decant the clear liquid. . . . They were not adequately mixing their sample. So it wouldn’t have the correct amount of solids. . . .

“We said, ‘My God, that is the problem.’ ”

Districts Criticized

An Arco lawyer, who declined to be named, criticized the Sanitation Districts for basing their entire 4-year case on this incident. He would not say whether the practices used by Arco employees that day were standard company procedures. “I really don’t care to try this case in the press,” the lawyer said.

Paul Martyn, the sewage system’s supervising engineer for industrial waste, said failing to stir or shake samples falls short of standard procedures for sampling water.

“The bible for waste-water testing is called ‘Standard Methods for Examination of Water and Waste Water,’ ” Martyn said. “It is basically a cookbook on how to do waste-water analysis, and it says (that) for the suspended-solids test, the samples should be well mixed.”

Martyn said he knows of no other refinery failing to stir samples before measuring and no other refinery with as big a difference between its measurements and audit results.

‘No Attempt to Conceal’

But he added: “I’m writing this off as ignorance rather than as an attempt to defraud. . . . There was no attempt to conceal when our crews went out.”

Since sewer officials observed Arco’s method of sampling, Martyn said, the company has changed its procedures and now stirs samples. He said measurements of solids by Arco and county sewer officials are now in substantial agreement. The Arco lawyer, however, said: “Our position is that we are doing essentially what we have been doing all along.” He declined to say whether his use of the term essentially was meant to imply that Arco had changed its procedures in what it considered to be minor ways.

In any case, differences remain over Arco’s payments from July 1, 1983, through June 30, 1987.

“In a couple of meetings with their attorneys, we have been unable to come to any middle ground, Martyn said. He said he hopes that the Sanitation Districts board’s authorization for the lawsuit will make Arco “understand we are serious.”

Said the Arco lawyer: “Our position is that our arithmetic is better than their arithmetic.”