Unocal Pays a Record Fine in O.C. Pollution : Environment: Company denies gas station tank leakage charges, but settles case for $903,846.

SANTA ANA —  Unocal Corp. on Wednesday paid a $903,846 settlement--the largest ever in an Orange County environmental case--to avoid civil prosecution for allegedly violating a major pollution law at about half its service stations in the county.

The Los Angeles-based oil company endangered public health and water supplies by failing to check for leaks and obtain necessary permits for underground gasoline tanks at 72 of its 143 stations throughout Orange County, according to allegations by Dist. Atty. Michael R. Capizzi.

Deputy Dist. Atty. Christopher Kralick said it was one of the most serious and widespread violations of a pollution law ever investigated in Orange County. The fine--which was four times larger than any other in an Orange County environmental case--is believed to be the largest in Southern California, and probably the state, paid by an oil company to resolve alleged violations of underground storage tank regulations.

“This fine is appropriate given the magnitude and duration of the problem,” said Kralick, one of Orange County’s three environmental prosecutors. “The public is concerned about the safety of underground drinking water supplies, and they want the oil companies to comply so they can drink clean water.”

The district attorney in December threatened to file a civil suit and seek a court order to shut down the stations, an announcement which spurred two months of negotiations and culminated in Thursday’s settlement.

Unocal officials Thursday denied all of the alleged violations but said they decided to settle to avoid lengthy, costly litigation. The company maintains that the problems stemmed from misunderstandings with the county Health Care Agency’s environmental health office and charged that documention was lost by health officials and that there were inconsistencies in how the law was enforced.

“Throughout the whole process of trying to resolve our misunderstandings with Orange County, there has not been a threat to the ground-water supplies,” said Unocal spokesman Jeff Callender in Los Angeles. “This has been a paperwork issue, not a threat to the environment.”

Health officials said there is no immediate risk from the tanks. Drinking water has not been contaminated.

Despite repeated warnings, the company--which earned about $9 billion in 1989 and is the third largest oil supplier in California and the largest in Orange County--has missed by 4 1/2 years a state deadline for inspecting and improving gasoline tanks, county health officials said.

Unocal promised in the settlement to comply with the law within 30 days at all of its stations. Each station must follow specific orders, such as installing electronic leak monitors on underground tanks and providing inventory records proving that there are no leaks. The company also has begun a program to perform comprehensive, ongoing tests of all tanks.

“This sends a message to the industry that we are going to enforce the law,” said Bob Merryman, director of Orange County’s environmental health office. “Hopefully, the (oil industry’s) chains and independents will understand that they must meet the requirements.”

Prompted by the problems in Orange County, several other county health departments, including those in San Diego, Ventura and San Mateo counties, are reportedly investigating Unocal for similar violations with fuel tanks, officials said.

Fuel tanks, which are prone to corrosion and faulty lines, are one of the biggest threats to Orange County’s valuable ground-water basin, which supplies about half of the county’s drinking water. Gasoline contains volatile, cancer-causing chemicals such as benzene that are difficult and costly to remove from ground water.

Leaks have been found in from one-quarter to one-third of the estimated 10,000 fuel tanks in Orange County since 1983, when the Legislature required owners to conduct annual inspections, keep daily storage records for each tank and install leak-detection monitors.

Orange County has a statewide reputation among environmental officials and prosecutors for vigorously regulating underground tanks and prosecuting violators. But until now, most of the cases have involved a single station, with the average fine ranging from $5,000 to $30,000.

The county’s prosecutors also have begun reviewing compliance of seven other major oil companies--Mobil, Arco, Chevron, Exxon, Thrifty, Texaco and Shell--said Deputy Dist. Atty. Gerald G. Johnston. No suits have been filed.

Merryman said the Unocal settlement is so big because of the large number of sites involved. More than 350 tanks are located at the 72 stations.

“We’re talking about $10,000 per station, and that’s really a small settlement for each when you consider it,” he said.

The county government’s general fund will receive $750,000 of the fine, while $75,000 will reimburse the environmental health agency for costs related to the investigation and $78,845.86 will be used to buy laboratory equipment that will allow the agency to measure soil and water contamination.

The district attorney did not investigate whether tanks actually leaked, but only allegations that Unocal failed to perform the inspections and improvements needed to obtain permits.

But county records show that fuel leaks and contamination have been found at 79 Unocal stations in Orange County since the law was adopted, Merryman said.

Twenty-seven of the stations have polluted both soil and ground water, 14 have leaked into soil only, three have polluted ground water only and the extent of pollution at 35 others is unknown so far, he said. Twenty-five stations have been cleaned up, and the remaining 54 are undergoing cleanup.

Callender of Unocal disputed the county’s report of leaks at 79 of its stations. He said any soil contamination found there was probably not from leaks, but perhaps minor spillage from past improper filling of tanks 15 or 20 years ago.

But Merryman said Unocal’s daily records showed discrepancies between how much gasoline was pumped into and out of tanks and how much remained there, which is an indication of leaks.

“There were errors going on and nothing being done about it,” Merryman said. “These stations were supposed to be in compliance in September of 1986.”

Callender said the company has performed annual tank tests at its stations since 1985. During the most recent tests on 311 tanks in Orange County, all but four passed. Those four were tanks holding used motor oil, not gasoline, and contamination was found at only one site, and it was minor and was immediately corrected, he said.

“We have our own monitoring process. We continue to monitor them and our tests show we have a very sound underground tank system in Orange County,” Callender said.

Before this, the largest settlement collected by the Orange County district attorney’s office in an environmental case was $250,000, paid in January by W.C. Richards Co., which owned an Anaheim paint-manufacturing plant that allegedly disguised chemical waste in ordinary garbage for several years.