Unocal to Pay $43.8-Million Fine in Spill

Unocal Corp. has agreed to pay $43.8 million--believed to be the largest state environmental penalty in California history--for contaminating the Central Coast with millions of gallons of petroleum for four decades, officials announced Tuesday.

Polluting the ocean, beaches, a river and ground water, Unocal allowed large volumes of a refined oil product, called diluent, to gradually leak from an underground pipeline at its Guadalupe Oil Field in San Luis Obispo County.

Last month, Unocal agreed to excavate the beach and tear up 15 to 20 homes and businesses in the town of Avila Beach to clean up the contamination. But in a new settlement with Atty. Gen. Dan Lungren, the oil company has also agreed to pay fines to settle charges that it violated several environmental laws.

Most of the money will be used to restore damaged natural resources and conduct other environmental work along the Central Coast.

In a statement, Lungren said it is “possibly the largest environmental settlement in the history of California.”

“It will be a long process to completely remove the millions of gallons of diluent that have leaked over the years, but we intend to hold Unocal to its promise to remove the hazard and the threat it poses to the environment,” Lungren said.

Unocal spokesman Barry Lane said the settlement culminates four years of studies and negotiations.

“It’s a large settlement that was mutually agreed upon, and it was appropriate for the situation in the best interest of all of us involved,” he said.

Officials said the largest previous settlement was $40 million paid by Southern Pacific for a rail accident that spilled pesticide into the Sacramento River in 1995. The other comparable case in terms of the size of the penalty is a long-running suit against cities and companies that dumped DDT in the ocean off Palos Verdes. So far, about 150 cities and Los Angeles County have agreed to pay roughly $45 million in that case. Litigation against the companies continues.

Of the $43.8 million that Unocal will pay, $9 million will be used for restoring natural resources, $15 million will fund water quality improvement projects, and $11.1 million will go toward creating emergency response programs for oil spills and other pollution incidents in the Central Coast.

The settlement also includes $7.4 million in penalties and litigation costs and $1.3 million paid to San Luis Obispo County to settle criminal charges.

Unocal officials say that the spill probably began in the 1950s and continued until 1994, when production at the 2,700-acre oil field ended. In all, 8.5 million to 12 million gallons leaked out.

State officials say that Unocal learned of the problem in 1989, but failed to deal with the leaks or notify the government as required by law. The state began its investigation in 1992 after an informant called the Department of Fish and Game.

The company must begin excavation of 17 underground plumes of contamination this fall, under an order issued by the Central Coast Regional Water Quality Control Board in April. The initial work will eliminate the contamination of the ocean and a nearby river, which are considered the most sensitive waters. Then, the company must mount a study to find ways to clean up deeper ground water.

Unocal says that the excavation will last three to four years. The work is expected to close down virtually the entire town of Avila Beach.

Digging up beaches and tearing down buildings to excavate waste is highly unusual, but state officials could think of no other expedient way to eliminate the pollution, which threatens ground water. The ground water is not used as drinking water, but it is considered a potential supply.

One environmental group involved in the case, Communities for a Better Environment, estimates that the cleanup could cost Unocal as much as $200 million. The company has not estimated the cost.

“Quite frankly, it is really premature to speculate on the ultimate cost of the cleanup,” Lane said. “This is going to be a long-term cleanup.”