Attorney General Lockyer Announces $25 Million Settlement With AT&T For Failing To Inspect And Repair Underground Storage Tanks

(OAKLAND) - Attorney General Bill Lockyer today announced that AT&T has agreed to pay $25 million to settle a lawsuit that charges the company with repeatedly failing to test and repair its web of underground storage tanks throughout the state, and failing to shut down tanks with inadequate pipe systems. The settlement is the second highest in the nation related to violations of underground storage tank laws.

“An intensive investigation conducted together with local prosecutors and regulators concluded that AT&T repeatedly failed to comply with laws that require the company to inspect its underground tanks and make repairs to faulty systems,” said Lockyer. “Every day they postponed inspections and repairs, they risked catastrophic leaks and spills of MTBE and other toxic chemicals into our environment and surrounding communities. This settlement will force AT&T to overhaul its business practices throughout the state so that its underground storage tanks, and the public, are safe.”

Lockyer was joined in the lawsuit by 6 District Attorneys and 1 City Attorney: Thomas Orloff, Alameda County; Steve Cooley, Los Angeles County; Dean Flippo, Monterey County; James Willett, San Joaquin County; Bonnie Dumanis, San Diego County; David W. Paulson, Solano County; and San Diego City Attorney Michael J. Aguirre.

“This case involves one of the most important areas of California environmental regulations -- preventing underground storage tanks that contain petroleum products from leaking into our ground and groundwater,” said Alameda County District Attorney Thomas Orloff. “A large national corporation such as AT&T is subject to those laws just like the corner gas station. When such violations occur they will be addressed by the environmental prosecutors throughout the state.”

The lawsuit alleges violations at AT&T’s 531 underground facilities throughout the state. Nearly 50 of the non-compliant systems have been used for motor vehicle fuel, which contains MTBE. The lawsuit also alleges that AT&T not only failed to meet deadlines for inspection at many of its facilities, but that even when it did conduct some tests, AT&T failed to report containment system problems to state and local safety regulators. Furthermore, the prosecutors found that when AT&T discovered problems, it delayed repairs and continued to operate the systems that had potential to pollute the environment.

The complaint and settlement, which was filed in San Joaquin Superior Court, charges AT&T with 17 violations of California’s Health and Safety Code and Unfair Competition Law.

To resolve the violations, AT&T will pay $25 million to cover penalties and costs, fund projects that benefit the public, and make environmental improvements:

• $14 million in civil penalties, which will be paid to prosecutors’ offices and local regulatory agencies that are responsible for compliance with the law.
• $2.5 in additional civil penalties, which is suspended, provided AT&T does not again violate the law.
• $4.5 million to enhance AT&T’s underground storage tank compliance program.
• $1.5 million will reimburse the prosecuting offices for their costs of investigation and enforcement
• $2.5 million for environmental training programs for enforcement agencies.

Today’s action is the latest effort by the Attorney General to work with local prosecutors and investigators in prosecuting companies who violate environmental laws at facilities throughout the state. Many of California’s environmental laws, such as those governing underground storage tank inspections, are enforced by local agencies. Coordinated investigations and prosecutions ensure that industries that are in violation of the law institute company-wide fixes.

The settlement with AT&T for underground storage tank violations is second only to a lawsuit Lockyer settled in 2002 with BP-ARCO for $45.8 million.