BP Settles Lawsuit for $81 Million

The South Coast Air Quality Management District on Wednesday won a record $81-million settlement with energy giant BP, which regulators accused of illegally spewing toxic gases from its Carson refinery for nearly a decade.

Under the settlement, BP will pay $30 million for a new community outreach program in which doctors will attempt to diagnose possible asthma and other health problems in thousands of the refinery’s neighbors.

Air regulators believe some people exposed to gases including hydrogen sulfide -- a poisonous substance that gives off the smell of rotten eggs -- suffered from dizziness, headaches and breathing problems. They said the outreach effort is designed to determine how many people have become ill and treat them. “The message here is that to do business in Southern California, you need to be a good environmental steward,” said Barry Wallerstein, executive officer of the AQMD. “In order for the region to achieve clean air, we need to have strict adherence to rules and regulations, and this tells everyone that this will occur one way or another.”

The settlement is by far the largest the agency has ever recorded, dwarfing the previous high of $17 million involving the AES Alamitos power plant in 2000 for excessive emissions.

In addition to the health outreach, BP will spend $25 million in penalties, $20 million in new refinery improvements and pay $6 million in past emission fees.

BP did not admit wrongdoing but said settling the suit was the prudent move.

“We were quite confident in our legal defenses. But we were not interested in a protracted legal battle with our regulator over this,” said BP spokesman Phil Cochrane. “This allows us to put this contentious dispute behind us, and work collaboratively with AQMD on our shared goal of improving operations and ensuring compliance.”

The agreement won cheers Thursday from neighbors who live in the shadow of the hulking refinery, located off the San Diego Freeway. They said they are used to the strange smells and thick air emanating from the refinery -- and the runny noses, headaches, dizziness, breathing problems and irritated eyes that come with them.

“On one day when they had a big release of sulfur into the air, I was home with stinging eyes thinking, ‘What the heck is this awful smell?’ ” said Jesse Marquez, a community activist in nearby Wilmington. “Teachers and principals at a school not far off were closing windows and putting towels at the bottom of doors.”

Officials say that at its worse, the refinery’s emissions of hydrogen sulfide caused students from nearby schools to be placed on lockdown in classrooms.

“They had to physically seal the door edges so none of the noxious hydrogen sulfide fumes would come into the classroom,” said Peter Mieras, AQMD’s chief prosecutor. “A number of students got sick, got dizzy, got headaches and a number were not able to come to school the following day.”

The settlement ends lawsuits filed by the AQMD over the last few years charging illegal emissions and other problems between 1994 and 2004. The AQMD also alleged that BP submitted false reports to regulators, failed to maintain, inspect and repair thousands of pieces of equipment, and failed to properly inventory 140,000 joints, valves and other potential places in its labyrinth of pipes where leaks could occur.

Air quality experts called the settlement a landmark for Southern California not just because of it size but because it requires the company to fund efforts to combat health problems caused by pollution.

“For a single facility, this is definitely a significant penalty,” said Lisa Fasano, spokeswoman for the U.S. Environmental Protection Agency regional office in San Francisco.

In a similar case in 2000, Chevron USA Inc. agreed to pay $7 million to settle charges that it violated the Clean Air Act at a facility off the coast near El Segundo. The settlement required Chevron to pay $500,000 to help build and operate a health clinic in Wilmington to diagnose and treat respiratory diseases. That $7-million settlement was hailed at the time as the largest ever paid nationally for Clean Air Act violations.

Under the BP settlement, mobile clinics with respiratory therapists, physicians and nurses will be set up at area schools to examine students who might have health problems related to the leaks. Physicians will also visit neighbors’ homes.

The AQMD has been particularly concerned about flare gases and noxious fumes, which regulators worried were the cause of headaches and nausea at two local campuses: Broad Avenue Elementary School and Wilmington Middle School.

Officials said those schools would be among those targeted by so-called asthma vans. The program will last for at least three years, and up to 10 years, air regulators said.

Wallerstein said that until recently, the relationship between AQMD and BP was strained. At first, BP barred agency regulators from inspecting equipment in their facility to check for compliance, he said.

Regulators eventually gained access when they secured a search warrant and were accompanied by Los Angeles County sheriff’s deputies.

Officials said BP made major improvements to some of its operations in the last few years. In the course of several suits, the AQMD has sought more than $500 million from BP. But it ended up receiving a fraction of that in Thursday’s settlement.

Physicians treating asthma in urban areas of Los Angeles County said money is badly needed to stem the disease, especially among children.

“This is extremely important for people who have asthma,” said Dr. Craig Jones, director of allergy and immunology at County-USC Medical Center, which treats children in 90 schools in the area in a joint program with the Southern California chapter of the Asthma and Allergy Foundation of America. “Everywhere we are, the rate of under-treated and poorly controlled asthma is very high,” Jones said.

In urban Los Angeles County, 14% of all children appear to have poorly controlled asthma, he added. “That’s a lot of hospitalizations and emergency room visits. A lot of lost schooldays.”

Researchers have determined that high levels of air pollutants can trigger asthma symptoms, Jones said. Now research suggests that the particulate matter found in air pollution may trigger allergic disease or make it worse, he said.

Asthma cases have increased nationally over the past two to three decades, making the $30 million even more important in diagnosing and treating it, said Dr. James Gauderman, associate professor of preventive medicine at the Keck School of Medicine. Gauderman is one of the eight investigators in the 12-year-old Children’s Health Study that is examining the health effects of air pollution throughout Southern California.

Scientists remain baffled exactly why asthma is on the rise.

Some theorize that air pollution contains different ingredients than it did 30 years ago, with a big increase in diesel exhaust and other emissions, Gauderman said. More people live near freeways and in urban areas. Child obesity is rising, and obesity is a risk factor for asthma.

The stretch of the South Bay from Torrance south through Harbor City, Wilmington and into Carson is dotted with refineries as well as other smokestack industries. In these neighborhoods, residents said they are hopeful.

Carson Planning Commissioner Ricardo Pulido said he and his family have allergies of some sort. They assume the illnesses are caused by the refineries but don’t know for sure.

“We had our suspicions, but we’re glad AQMD and the other agencies were acting like diligent watchdogs for the community,” Pulido said.

Carson Mayor Jim Dear said he was pleased that the settlement brings medical attention to residents immediately instead of after years of litigation.

“What will benefit the community will be improvements in the operation of the facility,” he said.

Times staff writers Susanna Enriquez and Deborah Schoch contributed to this report.