Arco to Pay $45.8 Million to Settle Tank Upgrade Case

California officials on Wednesday announced a $45.8-million settlement in a case against Atlantic Richfield Co. The oil company was accused of failing to make required safety improvements in underground tank systems at 59 service stations throughout the state.

Arco, now owned by BP, has agreed to pay the state $25 million in costs and penalties and said it has carried out an additional $20.8 million in upgrades not required by law. Those improvements mean that all 1,178 Arco service stations statewide now exceed state underground tank regulations, a BP spokesman said.

Even on the day settlement papers were filed in San Francisco Superior Court, key parties disagreed on some aspects of the case.

The office of Gov. Gray Davis hailed the settlement amount as a national record for a case of its kind. The oil company, however, characterized it as a $25-million settlement, saying it had already spent the additional money on the station upgrades.

State officials said that, as part of the settlement, the oil company still must demonstrate that it has spent the money on the improvements.

Many of the stations are in Los Angeles, Orange and Ventura counties, including Malibu, Anaheim, Garden Grove, Simi Valley, Culver City, Bellflower and Buena Park.

Despite the settlement, state officials said that some of the 59 sites have been or are still contaminated with the gasoline additive MTBE or other chemicals.

California Environmental Protection Agency spokesman Bill Rukeyser could not say late Wednesday afternoon how many of the sites are still being investigated for contamination.

Nothing in the settlement, however, “closes the book” on Arco’s potential liability if leakage is found to have occurred from delays in tank improvements at the 59 sites, state officials said.

“The complaint was about failure to upgrade. We didn’t have to prove leaks, and the settlement does not let anyone off the hook if there are leaks” still not found, Rukeyser said in an e-mail response to questions.

“There is contamination at many of the sites, as there is at a high percentage of stations in the state,” said Will Brieger, a deputy attorney general who worked on the Arco case for two years.

“We’re not alleging that these violations caused that contamination specifically.”

Some of the service stations with chemical leaks already have been cleaned up and some will be cleaned up in the future, Brieger said.

Ground water contamination occurred at some sites, he added. State officials could not give a specific count Wednesday, but Brieger said, “Their potential liability for those problems has not been resolved.”

The state in 1987 gave gasoline stations 10 years to comply with tougher standards meant to prevent corrosion and spills and to detect leaks from underground tanks. The state claimed that Arco failed to perform required upgrade work at 59 stations by the deadline and continued selling gasoline.

BP spokeswoman Cheryl Burnett said the company has been working with the state for two years on the issue. She disputed several points stated in a news release from the governor’s office, saying it misrepresented Arco’s actions.

“There is no evidence that because of this issue there’s been any contamination. The state’s been by our side on this,” she said, adding, “It’s been a long two years. We want to move ahead with it.”