Spend Settlement on Seismic Work, Lungren Suggests

Atty. Gen. Dan Lungren announced Wednesday that he will recommend that an $80-million settlement from an oil industry price fixing case be spent on earthquake repairs to highways and the seismic strengthening of vulnerable bridges.

Lungren said he will argue before U.S. District Judge A. Wallace Tashima of Los Angeles that the upgrading and repair of structures on California’s financially troubled highway system is the best use for money that seven major oil companies owe the state.

Although several other uses for the money had been proposed by state agencies and individuals, Lungren said he decided to recommend the investment in highways because it could attract federal money. With some federal programs matching state money 10 to 1, he said the $80 million had the potential to grow to $800 million.

But Caltrans officials said the settlement money is unlikely to attract federal matching funds because the state has reached a cap on such assistance.

“There is no additional $800 million. This would only be an additional $80 million,” Caltrans press secretary Jim Drago said.

A spokesman for Lungren, Dave Puglia, insisted that the attorney general’s information about the federal funds had come directly from Caltrans, which proposed several weeks ago that the settlement money be used for earthquake repairs and bridge retrofitting.

Drago said there apparently was a misunderstanding between Lungren and Caltrans.

Caltrans officials nonetheless said they would welcome the $80 million from the settlement.

The state’s highway improvement program is facing a $2-billion shortfall and the settlement funds certainly would be needed if a $2-billion quake bond issue in June fails to pass. Even if the measure passes, the settlement money will allow Caltrans to shift resources to other highway programs.

At his Wednesday news conference, Lungren said the $80 million was the state’s share of a $112-million settlement of an antitrust lawsuit brought by California, Oregon, Arizona and Washington against seven major oil companies.

The suit, filed nearly 20 years ago, alleged that the companies illegally conspired to fix gasoline prices in the 1960s and 1970s. It also accused the companies of creating a fake gasoline shortage in the early and mid-1970s to justify higher prices.

The companies--Shell, Exxon, Arco, Chevron, Unocal, Mobil and Texaco--agreed to the settlement in January, 1993, without admitting liability. Lungren said the $80 million is expected to available by September. In addition, he said his office would be paid an additional $9 million in legal fees.

Lungren, who is responsible for recommending how the money will be spent, said he also considered using it for a onetime reduction in license plate fees. He said he ultimately decided against that because it would have saved motorists only about $3 each.