AT&T; Settles Fuel-Tank Lawsuit

State and local prosecutors announced Tuesday that AT&T; California was paying up to $25 million to settle a lawsuit alleging that the telecommunications company repeatedly failed to test and repair hundreds of underground fuel tanks in California.

State Atty. Gen. Bill Lockyer said at a news conference that the settlement was the nation’s second largest related to violations of underground storage tank laws.

The suit brought by Lockyer’s office and prosecutors in six counties alleged violations at AT&T; California’s 531 underground facilities that stored fuel for emergency backup generators and vehicles. Investigators found that the company had failed to meet deadlines for testing of piping and that when problems were detected, it failed to report them to government regulators and did not fix them.

Although no tank leaks were uncovered, Lockyer said, there was potential danger to underground water supplies and public health.

Every day the company “postponed inspections and repairs, they risked catastrophic leaks and spills of MTBE and other toxic chemicals into our environment and surrounding communities,” he said.

State officials said that about 10% of the tanks -- mostly 500 to 1,000 gallons each -- had contained vehicle fuel with methyl tertiary-butyl ether, or MTBE, a gasoline additive that the state phased out by Jan. 1, 2004, to avoid drinking water contamination. Company officials said they no longer were using MTBE and are now using the tanks for diesel for backup generators.

In a statement, AT&T; California spokesman John Britton said the suit was settled to avoid costly litigation and “to maintain our good working relationship with local regulatory agencies.

“This was not a case about actual environmental harm,” Britton said. “The main focus is a dispute about whether AT&T; met a deadline for testing emergency generator tank secondary containment systems.”

The state contends that the company failed to meet the 2001 deadline, and the company maintains that it has complied with the law.

The civil complaint, which was filed in San Joaquin County Superior Court, charged Pacific Bell Telephone Co., now doing business as AT&T; California, with 17 violations of health and safety codes.

The litigation covered 96 sites in Los Angeles County, said Assistant Head Deputy Dist. Atty. Stanley P. Williams, who appeared with Lockyer.

“Most [tanks] were for fuel for ... emergency backup generators if the grid goes down,” Williams said.

Alameda County Dist. Atty. Tom Orloff said 122 sites were in the San Francisco Bay Area. “A large national corporation such as AT&T; is subject to these laws just like the corner gas station,” he said.

The settlement calls for $14 million in civil penalties to be paid to prosecutors’ offices and regulators; $2.5 million in penalties to be suspended if the company does not violate the law; $4.5 million to improve the company’s underground tank compliance program; $1.5 million for reimbursement of investigation costs; and $2.5 million to environmental enforcement agencies for training.

Joining in the settlement were district attorneys from Los Angeles, Alameda, Monterey, San Joaquin, Solano and San Diego counties, as well as the San Diego city attorney.

After previously purchasing the holding company of Pacific Bell Telephone Co., SBC Communications Corp. last year acquired AT&T; and took its name.